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The market is pricing in future growth. You can say the market is incorrectly evaluating the potential return, but it's hard to argue that Tesla and SpaceX aren

by wddkcs 3y ago

The market is pricing in future growth. You can say the market is incorrectly evaluating the potential return, but it's hard to argue that Tesla and SpaceX aren't going to cash in on that potential. How else should the market be treating companies with obvious high growth potential?

bmitc 3y ago
> The market is pricing in future growth. Does that answer the question, though? Future growth is an estimate and approximation, is not real, and says nothing about current revenues and losses.
- zamadatix 3y ago
  What you get paid for isn't realized gains rather selling your future gains at a rate lower than others (i.e. the market) expects them to actual be worth. If the question is about how this makes sense then sure, it answers the question - you're selling your future gains now to fund the company which means the current value of your shares will reflect that future predicted value as well. If the question is "why without involving any future possibilities" then no, it doesn't answer the question, but I'm not sure the question makes any more sense than "why is the sun so hot ignoring fusion". Another way to think of it is if I spent 10 billion to make a company which now successfully produces gold bricks from wood in a way most think I'll be historically net positive in 5 years then it's not really a mystery why waiting 5 years for the number to hit 0 is not particularly relevant to when people may be interested in buying parts of the company.
- wddkcs 3y ago
  It's the assumption of Capitalism that markets are the most fair pricing mechanism. I'd love to see that proven untrue
TheAlchemist 3y ago
It is very possible, even probable, that Tesla's glory days are already behind it. Their margin are contracting, and it's actually probable they will loose money in Q3, Q4 this year. They don't have any significant advantage on competition anymore, and China's competition is already well ahead Tesla. Elon himself suggested Tesla is worthless as a 'car making company' and it's value will come from solving autonomy with FSD. While Tesla is very good at marketing, there were 2 companies allowed to operate self-driving taxis in SF past month, and there are already several operating in China. It's hard to argue that Tesla still has the lead in that domain.
- asynchronous 3y ago
  I don’t understand how people say this with a straight face when Tesla is literally becoming the underlying charging network for the entire continental US. If anything they’re at a higher risk of the feds absorbing them as a public utility then they are of becoming irrelevant.
  - TheAlchemist 3y ago
    Not irrelevant - but not making money neither. Look at the financials of this 'underlying charging network for the entire continental US' - the optimistic ones, project that it will bring ... 10B$ in revenues in 5-10 years (revenues, not profit !). It's absolutely meaningless in the big picture of this company revenues and valuation.
  - ProfessorLayton 3y ago
    Is there a company with any sort of network (electrical, cellular, or otherwise) that's worth nearly 700B? No one said irrelevant either, but that their best days are behind them. From an investor's point of view that could certainly be correct.
- fredgrott 3y ago
  You need to re-read Elon, It's not that he will solve FSD, Tesla is valuable until FSD is solved as then it becomes just a car company. And he picked the correct impossible puzzle that will never be solved. Same with the SpaceX premise. The market value is the desire of groups of people that it be solved. The lesson here is what impossible problem is our domains that we can market that our company is attempting to solve it and which of those impossible problems happens to intersect with a large group of people wanting said problem solved.
  - phlipski 3y ago
    By this logic someone should start a company promising to cure cancer then just let the trillions roll in....
- 3y ago
lordnacho 3y ago
The problem with that argument is you have to have some sort of evidence that the market more or less does this correctly most of the time. We're depending on the feedback mechanism here working correctly. If it doesn't, we are rewarding unproductive behaviours.
- davmar 3y ago
  evidence: amazon.com

by wddkcs 3y ago

bmitc 3y ago

> The market is pricing in future growth. Does that answer the question, though? Future growth is an estimate and approximation, is not real, and says nothing about current revenues and losses.

zamadatix 3y ago
What you get paid for isn't realized gains rather selling your future gains at a rate lower than others (i.e. the market) expects them to actual be worth. If the question is about how this makes sense then sure, it answers the question - you're selling your future gains now to fund the company which means the current value of your shares will reflect that future predicted value as well. If the question is "why without involving any future possibilities" then no, it doesn't answer the question, but I'm not sure the question makes any more sense than "why is the sun so hot ignoring fusion". Another way to think of it is if I spent 10 billion to make a company which now successfully produces gold bricks from wood in a way most think I'll be historically net positive in 5 years then it's not really a mystery why waiting 5 years for the number to hit 0 is not particularly relevant to when people may be interested in buying parts of the company.
wddkcs 3y ago
It's the assumption of Capitalism that markets are the most fair pricing mechanism. I'd love to see that proven untrue

TheAlchemist 3y ago

It is very possible, even probable, that Tesla's glory days are already behind it. Their margin are contracting, and it's actually probable they will loose money in Q3, Q4 this year. They don't have any significant advantage on competition anymore, and China's competition is already well ahead Tesla. Elon himself suggested Tesla is worthless as a 'car making company' and it's value will come from solving autonomy with FSD. While Tesla is very good at marketing, there were 2 companies allowed to operate self-driving taxis in SF past month, and there are already several operating in China. It's hard to argue that Tesla still has the lead in that domain.

asynchronous 3y ago
I don’t understand how people say this with a straight face when Tesla is literally becoming the underlying charging network for the entire continental US. If anything they’re at a higher risk of the feds absorbing them as a public utility then they are of becoming irrelevant.
- TheAlchemist 3y ago
  Not irrelevant - but not making money neither. Look at the financials of this 'underlying charging network for the entire continental US' - the optimistic ones, project that it will bring ... 10B$ in revenues in 5-10 years (revenues, not profit !). It's absolutely meaningless in the big picture of this company revenues and valuation.
- ProfessorLayton 3y ago
  Is there a company with any sort of network (electrical, cellular, or otherwise) that's worth nearly 700B? No one said irrelevant either, but that their best days are behind them. From an investor's point of view that could certainly be correct.
fredgrott 3y ago
You need to re-read Elon, It's not that he will solve FSD, Tesla is valuable until FSD is solved as then it becomes just a car company. And he picked the correct impossible puzzle that will never be solved. Same with the SpaceX premise. The market value is the desire of groups of people that it be solved. The lesson here is what impossible problem is our domains that we can market that our company is attempting to solve it and which of those impossible problems happens to intersect with a large group of people wanting said problem solved.
- phlipski 3y ago
  By this logic someone should start a company promising to cure cancer then just let the trillions roll in....
3y ago

lordnacho 3y ago

The problem with that argument is you have to have some sort of evidence that the market more or less does this correctly most of the time. We're depending on the feedback mechanism here working correctly. If it doesn't, we are rewarding unproductive behaviours.

davmar 3y ago
evidence: amazon.com