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P/E tells most of what you need to value a company that is stable in size. Tesla could grow earnings 10x and it would still have a higher P/E with the same valu

P/E tells most of what you need to value a company that is stable in size. Tesla could grow earnings 10x and it would still have a higher P/E with the same valuation. It's way out of line unless you believe they are going to own half the world market for cars one day. I suppose if SpaceX can obtain 90 percent of the launch market, why not Tesla?

Gustomaximus 3y ago
Also I feel there are 2 other significant variables in play. Software is often an oligopoly type market. Self driving is likely to rewrite car manufacturers to those that solve this well and those that don't. Tesla for right or wrong has been viewed as one of the best bets here. Elon factor. He's been a significant factor in quite a number of significant companies created. That seems an attractive bet he will do good things vs anyone else.
- ChuckNorris89 3y ago
  >Elon factor. He's been a significant factor in quite a number of significant companies created. That seems an attractive bet he will do good things vs anyone else. I'm pretty skeptical on all things Elon these days.
  - Reimersholme 3y ago
    [dead]
- _hypx 3y ago
  There is no "elon factor." This is pure hype.
- simiones 3y ago
  I think most have realized by now that self-driving is not a serious possibility anytime soon for anything other than a nice option to upsell the car by some small margin. And Tesla FSD is not even best-in-class between car manufacturers (Mercedes is, with actual approved and shipped commercial L3), not to mention the entire self-driving market (where Waymo is way ahead).
- kelnos 3y ago
  > Tesla for right or wrong has been viewed as one of the best bets here. Really? From what I've read and seen, Tesla's self-driving is starting to feel like the butt of most jokes in the space. And Musk's absurd insistence that cameras are the only sensors anyone needs isn't doing their technology any favors. > Elon factor. I think Musk might be running out of steam. The Twitter fiasco shows how unstable and unfocused he is; the whole thing could collapse like a house of cards at any time. I had extreme respect for him 7 years or so ago, but that has eroded over time, and now I see him as a delusional, abusive asshole who happened to have the charisma (a nice way of putting "talent for emotional manipulation") to help build some successful businesses. (And it still remains to be seen if Tesla and SpaceX will continue to be successful in the long term.)
Retric 3y ago
Toyota and Tesla don’t just manufacture and sell cars they have a more complicated business model. Tesla’s EV charging network for example should clearly be part of their valuation and is unrelated to Toyota’s business strategy. IMO people are heavily discounting Toyota’s stock compared to their car/total sales for two reasons. Most critically their 200+ Billion dollars of debt, but also the significant sign of mismanagement from their useless investment in Hydrogen. Hydrogen aircraft/heavy equipment could have real utility, but it’s simply not compelling for passenger vehicles. High capital and operating costs + low energy density + low efficiency all for faster fueling times.
- fomine3 3y ago
  What tend to be missed is that Tesla's superior charger network is primary North America and part of Europe thing. Car market is bigger than them.
- _hypx 3y ago
  This is delusional. Hydrogen is a fundamentally superior technology compared to BEVs. Tesla is the facing the next big crisis when the limitations of battery reveal itself. Batteries are simply not a sustainable technology. It is Tesla that is being disruption by innovation, not Toyota.
  - deleted 3y ago
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  - deleted 3y ago
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  - martindbp 3y ago
    Do you want to bet some money on that?
    - BluePen7 3y ago
      He's not wrong, but the world has picked a different path. Hydrogen only creates water, and can be refuelled as quick as gas. Wouldn't have minded driving one of those Toyota Mirais, but there isn't even a Hydrogen station at the other end of the long trip I regularly do, nor is it any cheaper than gas anyways. And that's the story all over, better tech environmentally and practically but no infrastructure, no hype, and no momentum. It's dead.
_ea1k 3y ago
Sure, but why only look at one half of the equation? Why is the rest of the industry so low? GM has a P/E ration of less than 6. Are they distressed? If not, isn't that absurdly cheap?
- frumper 3y ago
  The only people I know wanting a Chevy already own chevys. Of course, most of the people that I know that own chevys would be happy with something else too.
- martindbp 3y ago
  The car market is switching quickly to EVs, GM has not shown that they can produce them, they recently discontinued their Chevy Bolt. They keep promising wonders in 3-5 years, but the years are ticking by. You don't want to be stuck trying to sell ICE cars in 10 years... Their only bright spot is Cruise, which has a shot at making a lot of money. Right now they're burning billions though, which means that at any sight of trouble, GM might cut their losses there, or try to sell it.
- goodbyesf 3y ago
  > GM has a P/E ration of less than 6. Are they distressed? If not, isn't that absurdly cheap? Reminds me of amazon vs everyone or nflx vs blockbuster. The 'market' seems to think tsla is just going to keep growing and gobble up much of the auto market share. Both amazon and nflx had absurd PEs for a long time. Eventually their grew into it. 6 P/E looks enticing as long as you think the 'E' is going to maintain itself over the long term. Do you think GM is going to maintain their earnings?
  - _ea1k 3y ago
    Exactly! TBH, I made a few bucks on F back when their PE was similarly low. Their EV strategy made sense and their current product line was in demand too. It seemed like an easy and relatively safe bet, and it worked out. GM is a more difficult case. Their current efforts around Ultium haven't gone so well so far, and their ICE product line isn't even that much better. I think they will do well, but they have a lot of work to do.

Gustomaximus 3y ago

Also I feel there are 2 other significant variables in play. Software is often an oligopoly type market. Self driving is likely to rewrite car manufacturers to those that solve this well and those that don't. Tesla for right or wrong has been viewed as one of the best bets here. Elon factor. He's been a significant factor in quite a number of significant companies created. That seems an attractive bet he will do good things vs anyone else.

ChuckNorris89 3y ago
>Elon factor. He's been a significant factor in quite a number of significant companies created. That seems an attractive bet he will do good things vs anyone else. I'm pretty skeptical on all things Elon these days.
- Reimersholme 3y ago
  [dead]
_hypx 3y ago
There is no "elon factor." This is pure hype.
simiones 3y ago
I think most have realized by now that self-driving is not a serious possibility anytime soon for anything other than a nice option to upsell the car by some small margin. And Tesla FSD is not even best-in-class between car manufacturers (Mercedes is, with actual approved and shipped commercial L3), not to mention the entire self-driving market (where Waymo is way ahead).
kelnos 3y ago
> Tesla for right or wrong has been viewed as one of the best bets here. Really? From what I've read and seen, Tesla's self-driving is starting to feel like the butt of most jokes in the space. And Musk's absurd insistence that cameras are the only sensors anyone needs isn't doing their technology any favors. > Elon factor. I think Musk might be running out of steam. The Twitter fiasco shows how unstable and unfocused he is; the whole thing could collapse like a house of cards at any time. I had extreme respect for him 7 years or so ago, but that has eroded over time, and now I see him as a delusional, abusive asshole who happened to have the charisma (a nice way of putting "talent for emotional manipulation") to help build some successful businesses. (And it still remains to be seen if Tesla and SpaceX will continue to be successful in the long term.)

Retric 3y ago

Toyota and Tesla don’t just manufacture and sell cars they have a more complicated business model. Tesla’s EV charging network for example should clearly be part of their valuation and is unrelated to Toyota’s business strategy. IMO people are heavily discounting Toyota’s stock compared to their car/total sales for two reasons. Most critically their 200+ Billion dollars of debt, but also the significant sign of mismanagement from their useless investment in Hydrogen. Hydrogen aircraft/heavy equipment could have real utility, but it’s simply not compelling for passenger vehicles. High capital and operating costs + low energy density + low efficiency all for faster fueling times.

fomine3 3y ago
What tend to be missed is that Tesla's superior charger network is primary North America and part of Europe thing. Car market is bigger than them.
_hypx 3y ago
This is delusional. Hydrogen is a fundamentally superior technology compared to BEVs. Tesla is the facing the next big crisis when the limitations of battery reveal itself. Batteries are simply not a sustainable technology. It is Tesla that is being disruption by innovation, not Toyota.
- deleted 3y ago
  [deleted]
- deleted 3y ago
  [deleted]
- martindbp 3y ago
  Do you want to bet some money on that?
  - BluePen7 3y ago
    He's not wrong, but the world has picked a different path. Hydrogen only creates water, and can be refuelled as quick as gas. Wouldn't have minded driving one of those Toyota Mirais, but there isn't even a Hydrogen station at the other end of the long trip I regularly do, nor is it any cheaper than gas anyways. And that's the story all over, better tech environmentally and practically but no infrastructure, no hype, and no momentum. It's dead.

_ea1k 3y ago

Sure, but why only look at one half of the equation? Why is the rest of the industry so low? GM has a P/E ration of less than 6. Are they distressed? If not, isn't that absurdly cheap?

frumper 3y ago
The only people I know wanting a Chevy already own chevys. Of course, most of the people that I know that own chevys would be happy with something else too.
martindbp 3y ago
The car market is switching quickly to EVs, GM has not shown that they can produce them, they recently discontinued their Chevy Bolt. They keep promising wonders in 3-5 years, but the years are ticking by. You don't want to be stuck trying to sell ICE cars in 10 years... Their only bright spot is Cruise, which has a shot at making a lot of money. Right now they're burning billions though, which means that at any sight of trouble, GM might cut their losses there, or try to sell it.
goodbyesf 3y ago
> GM has a P/E ration of less than 6. Are they distressed? If not, isn't that absurdly cheap? Reminds me of amazon vs everyone or nflx vs blockbuster. The 'market' seems to think tsla is just going to keep growing and gobble up much of the auto market share. Both amazon and nflx had absurd PEs for a long time. Eventually their grew into it. 6 P/E looks enticing as long as you think the 'E' is going to maintain itself over the long term. Do you think GM is going to maintain their earnings?
- _ea1k 3y ago
  Exactly! TBH, I made a few bucks on F back when their PE was similarly low. Their EV strategy made sense and their current product line was in demand too. It seemed like an easy and relatively safe bet, and it worked out. GM is a more difficult case. Their current efforts around Ultium haven't gone so well so far, and their ICE product line isn't even that much better. I think they will do well, but they have a lot of work to do.