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This works in a zirp environment after the Steve Jobs era where a single company released one success after the other. People believe anything and have personal
by dkrich 3y ago
This works in a zirp environment after the Steve Jobs era where a single company released one success after the other. People believe anything and have personal interest in pumping claims they know to be at best exaggerated, at worst outright fraudulent.
The problem for Tesla, though, is that we aren’t in a zirp environment anymore so money will become harder and harder to come by and they have exhausted the early adopters. They are already suffering deflation in their prices, having to cut prices to stimulate demand which still seems to result in lackluster numbers relative to valuation.
I don’t see how this company is going to sustain its valuation given the basic fundamentals at play.
BTW, it’s important to understand that Elon is incredibly focused on the share price and his genius perception. This was made evident in 2022 when he split the stock in an attempt to create incremental buyers during a very tumultuous time, but he was careful to do a 3 for 1 split so that the stock price would still be three digits (it was around $900 at the time) so that the perceived value wouldn’t be diminished.
He’s also made reference to the share price and worked frantically on Twitter to try and pump the share price and hurt short sellers on many occasions. CEOs who are overly concerned with share price fluctuations are always a red flag for me and in Elon’s case it is abundantly clear he needs to keep the savior image going. I would not be at all surprised if the timing of the CT delivery event came about due to nervousness over the slumping share price.
- DavidPiper 3y agozirp = Zero Interest-Rate Policy
- tehbeard 3y agoThank you.
- ArtTimeInvestor 3y agoRobotaxis. Car rides are a big market. There are 2 billion cars on the road. If 10% of car rides are done in a robotaxi, that is over 200 million rides a day, over 70 billion rides a year. Sell a ride for $10 and that's a 700 billion dollar market. Capture 10% of that and you make $70B a year. One taxi can do over 100 rides a month. That is $1000 in revenue. Operating cost should be less than half of that. So you have 50% margin: $35B profit per year. At a p/e of 30, that is over $1T market cap. Teslas current market cap is $700B.
- dkrich 3y agoI can’t tell if this is sincere or a joke.
- lvncelot 3y agoIt kind of reads like some sort of VC version of the Drake Equation.
- consp 3y agoThis is simply "calculating yourself into richness", and in the mean time forgetting a lot of cost and failure modes. If you can get money from a VC that way the joke is on the VC.
- adhesive_wombat 3y agoI've heard the same flavour of equations from everyone I've ever heard talking about starting a company. One guy was calculating that if he sold his gadget to "just" 10% of people in Africa, he'd make so much money. Spoiler: he did not sell a thing to 10% of people in Africa.
- bagels 3y agoRobotaxi is not a foregone conclusion. Maybe they'll pull it off. I don't know if there's going to be a giant leap like GPT, or a continued slow indefinite grind like we've seen so far with self driving. I'd be skeptical of anyone who claims to know unless they've already accomplished it.
- ArtTimeInvestor 3y agoI think it is. The current generation of neural networks already seem to do pattern recognition better than humans. And that is all that is needed to press the brake in a dangerous situation. All that is needed is to train them on enough examples of different situations that occur on the road.
- 3y ago
- sisve 3y agoI do not follow tesla that closely, but do they not work hard on lowering the manufacturing price (fewer parts, creating batteri themselves) do that they can sell at a lower price, and if they can sell and still make money but the competitors have to either sell with a loss or have highere prices?
- dkrich 3y agoI think their strategy is to charge the highest prices they can, early adopters pay up, demand gets exhausted and they have to keep the illusion alive that supply is the growth constraint, not demand. Demand falling is a death knell for them so that is one thing they absolutely must avoid at all costs. They want people to believe that the demand is a foregone conclusion and they need to build more factories to satisfy it. But clearly they are trying to maximize the profit. Of course they would like to lower their costs in pursuit of that but it’s not to charge the least they can, otherwise they’d have led with a compact EV instead of an $80k luxury sedan.
- kortilla 3y agoI’m struggling to understand what insight you think you are providing. Tesla had a very explicit plan for a long time to make high margin luxury cars and keep scaling up production to make cheaper and cheaper cars to make electric cars dominate. Lowering prices isn’t some sign of “struggling to hold on”.
- Retric 3y agoLowering prices for same product is very different from lowering prices of a new product. This is why Luxury brands are normally split off into different sales channels.
- solarkraft 3y agoThe insight is that they may intentionally be propagating the "supply limited" story despite it not being true. I believed it (while thinking "but why? the chinese seem to have none of these problems").
- ikrenji 3y agotesla valuation is a meme.
- fallingknife 3y agoThey are planning a new cheaper model which will allow them to offer a car to a lower priced market. Also, Tesla buyers are very loyal so they will get a lot of sales when existing owners get new cars https://jalopnik.com/tesla-buyers-are-remarkably-loyal-to-the-brand-1850853217 https://jalopnik.com/tesla-buyers-are-remarkably-loyal-to-th.... And BEVs are still the fastest growing segment of the market, but not even 10% share yet, so there is the other 90% of the market to go after. Not sure why you bring up interest rates as a weakness when Tesla is the least dependent on debt of all the major car companies. High interest rates will be much more of a burden on their leveraged competitors. Same thing with the price deflation. Yes, that will hurt Tesla's profits, but it will hurt competitors that are selling BEVs at a loss even more.
- dkrich 3y agoBecause higher interest rates make everything more difficult. It incentivizes people to save instead of buy expensive cars. It makes it more expensive to finance expensive cars. It makes it more expensive to raise financing to pay for factories and workers. It can very well bring about a recession where unemployment rises and your TAM shrinks. Tesla is still trying to convince people it is in hyper growth mode constrained only by its ability to supply cars with robots, self driving cars, semis and compact cars all in the pipeline. Let’s see how that plays out with fed funds at 5.5% for a few more months.
- fallingknife 3y agoTesla is in hyper growth mode. Q3 revenue was up 50% year over year, which is absolutely hyper growth mode for a car company, or really any company as big as Tesla. Fed funds rate during Q3 was 5.25-5.5%.
- sinuhe69 3y agoIf you have to rely on bank and external financing, your stock price is absolutely critical, no question.
- openopenopen 3y agoMusk compensation package is tied to Tesla's share price(and profitability). Sp there is a high insensitive to pump the stock, hence the countless empty promises. Tesla bots have been pumping TSLA stock since 2013[1]. https://www.mdpi.com/2032-6653/14/2/43 https://www.mdpi.com/2032-6653/14/2/43
- dangerface 3y agoThey will keep selling cars but put more focus on their AI capabilities to stay on trend. I think we can already see this with their llm and robots, once they start making their own chips Elon will want vertical integration and start making their own silicone. the focus will be more on the autonomy of the car and larger tesla ecosystem rather than on the fact the cars are electric since every car is now electric.
- pyrale 3y ago> I don’t see how this company is going to sustain its valuation given the basic fundamentals at play. Goodwill has always been the main driver of Tesla's valuation. This may become a problem, with Musk turning into a cartoon villain recently.
- concordDance 3y agoIt's odd to me how people perceive him as a cartoon villain. He's fairly ordinary in terms of views and actions other than being childish.
- TheCleric 3y agoI'd hardly call endorsing conspiracy theories like "PizzaGate" to be ordinary.
- DontchaKnowit 3y agoI dont recall him endorsing that- But, frighteningly enough, it is rather ordinary these days.
- TheCleric 3y agohttps://www.nbcnews.com/tech/tech-news/elon-musk-boosted-pizzagate-conspiracy-theory-rcna127087 https://www.nbcnews.com/tech/tech-news/elon-musk-boosted-piz...
- Gud 3y agoNot a single link to what Elon Musk actually did, just an opinion piece from a competing media company. Show me the exact tweet please.
- TheCleric 3y agohttps://twitter.com/NikkiMcR/status/1729532438508941359?ref_src=twsrc%5Etfw https://twitter.com/NikkiMcR/status/1729532438508941359?ref_...
- 1vuio0pswjnm7 3y agoPerhaps at some point the other manufacturers will be able to sell direct to consumer like Tesla. Then it's game over.
- concordDance 3y agoTSLA's valuation has been insane for a while. I would probably buy them as a car manufacturer if their price was more in the $70b range rather than $700b.
- FooBarBizBazz 3y agoThere is a grain of truth: Tesla's P/E makes no sense. However, we should count the lower EV prices they have achieved as a great success. Musk stated from the beginning that that was the goal: Prices would be high initially to fund development, and as they scaled the learning curve, prices would come down. If anything, they haven't gotten cheap enough! They need to get to BYD's prices and lower -- both for "altruistic" reasons (to achieve EV ubiquity) and "selfish" ones (to appeal to remaining consumer segments, who do not have demand for EVs at these prices). Finally, our cheerleading or hate of public figures and of companies should not distract us from what's in our best interests. We should be happier as EVs are cheaper.