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> I really don't understand those investors and how they price a struggling company so highly. Struggling, not so much: '24/'25 revenue of just under $100B, wi
by andsoitis 11mo ago
> I really don't understand those investors and how they price a struggling company so highly.
Struggling, not so much: '24/'25 revenue of just under $100B, with Q3'25 record profitability and deliveries yielding $1.5B net income. Strong liquidity and a current ratio of about 2, boosting short-term financial stability. Solid cash reserves and relatively low debt ratio.
High stock price: far exceeds that of traditional auto makers even though Tesla's revenue is significantly lower. High valuation reflects investor expectations of growth and future tech upside. Exuberant? Probably. OTOH, Tesla has delivered better ROI for investors than the other automakers.
- stingraycharles 11mo agoIt has delivered a better ROI in the same way a ponzi scheme can deliver higher ROI.
- andsoitis 11mo ago> It has delivered a better ROI in the same way a ponzi scheme can deliver higher ROI. It sounds like you're arguing that high valuation compared to fundamentals means buyers expect gains from future buyers paying more sounds like a Ponzi, but it isn't, it is speculation. The comparison doesn't make sense. Some surface features of speculative markets can look Ponzi-like, but the underlying mechanics are very different. A Ponzi-scheme returns to earlier participants directly from money contributed by later participants, with no real underlying business generating value. In a Ponzi-scheme, there is no real product (or it is irrelevant), the operator controls payouts, and investors are promised steady or guaranteed returns. None of that applies to Tesla stock. Ponzi-schemes hide losses, smooth returns, collapse suddenly. Tesla stock is volatile, has had large drawdowns, and public reflects bad news, margin compression, demand shifts. Volatility is a sign of a market, not a Ponzi.
- boroboro4 11mo agoMechanics is exactly the same - it's not Tesla revenues driving returns for investors, it's new investors putting their money into the stock at very high price.
- andsoitis 11mo agoIf you believe Tesla is a Ponzi scheme then you also believe that the SEC is either knowingly keeping a Ponzi scheme going (and it is getting included in indexes) OR the SEC doesn’t know OR you are wrong.
- majormajor 11mo ago> In a Ponzi-scheme, there is no real product (or it is irrelevant) This part is the smell. "It's not a car company, it's a AI/Robot/whatever company." The valuation is supposedly justified by a future product that perpetually fails to materialize. It's obviously not a classical Ponzi scheme in the mechanical sense where payouts are controlled by a central party. It has major Ponzi vibes though, with new money continuing to reward old money even though the fundamentals and products haven't done anything to justify that continued influx - only the hype has.
- stingraycharles 11mo agoYeah, the target keeps moving. Earlier it was “it’s not a car company, it’s a battery company”. Then it was all about FSD and robotaxis. Now that that is not working out, it’s going to be a robot company. The actual underlying product, the cars, don’t match the crazy valuation.
- andsoitis 11mo agoPonzi schemes don’t make $100B revenue, traded on the stock exchange, or make profit.
- grim_io 11mo agothe clever ones at least avoid the stock exchange. Generating revenue and profit at the expense of the participants is literally the ponzi scheme.
- lanstin 11mo agoIt also has the characteristics that most of the dupes are not pleased that the fraud was discovered to be a fraud. People swindled by Madoff swore that it was all legit. It's not easy to give up a belief one has held fervently for years.
- knuppar 11mo ago> collapse suddenly If BYD was in the US I think we could check this box reeeeaaally quickly. It would make Tesla irrelevant.
- andsoitis 11mo ago> If BYD was in the US I think we could check this box reeeeaaally quickly. It would make Tesla irrelevant. Why? What's your logic?
- vkou 11mo agoBYD makes good, cheap cars. There's a reason why the US raised every protectionist barrier against it - it would destroy Detroit.
- array_key_first 11mo agoThe cars are higher quality and, more importantly, cheaper. US manufacturers can't make a cheap car to save their lives. The average age of cars on US roads is now 13 years, nobody can afford new cars. There's a huge market opportunity here that all our manufacturers are missing, seemingly on purpose. BYD, and others, would absolutely sweep the competition.
- overfeed 11mo ago> US manufacturers can't make a cheap car to save their lives. They have a fiduciary duty to their shareholders to never make low-margin (read "cheap") cars. If someone is looking for a competitive automotive market, they won't find it in the US. The financial engineering is world-class though.
- refurb 11mo agoHigh quality? I’ve ridden in several. It’s an all plastic deal with a flimsy feel. The ride is horrible and from the reviews I e read the handling is terrible.
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- elAhmo 11mo ago> High valuation reflects investor expectations of growth and future tech upside. Yeah, sure.
- fsh 11mo agoTesla is probably the only EV maker with declining sales for the last two years. Quite a feat in a booming market, and remarkable considering that the stock already has a few orders of magnitude of growth priced in.
- renewiltord 11mo agoThe declining sales is a concern. Was curious though so I looked it up and Tesla is currently selling more than Volkswagen, Ford, Rivian, Mercedes, and Toyota combined. Interesting. The big dog is BYD though. Twice as many as 2nd place Tesla.
- foobarian 11mo agoFigured that metric is for EV only, which is not that surprising. But even for overall sales it's #11 on the list for first 3 quarters of 2025, which is not too shabby: https://www.carpro.com/blog/2025-year-to-date-u.s-auto-sales-results https://www.carpro.com/blog/2025-year-to-date-u.s-auto-sales...
- andsoitis 11mo ago> Figured that metric is for EV only, which is not that surprising. But it is stunning that legacy automakers are sticking to fossil fuels.
- LunaSea 11mo agoThe infrastructure just isn't there to make EVs interesting for a lot of people in the US and EU. They also know that this means that the EU will push the target date for the end of fossi fuel cars.
- riffraff 11mo agoThe problem is Tesla's valuation is overpriced even if they owned 100% of the car market, their P/E ratio is > 300. "But it's high margin", sure it is, but so is Ferrari, and their P/E is 30-40.
- pretzellogician 11mo agoQ3'25 was a known blip due to the rush to get the $7500 U.S. tax break, which IIRC, even Elon noted.
- AnimalMuppet 11mo ago1.5B net on $100B revenue is not great. 1.5%? If that's not struggling, it's uncomfortably close.
- jedberg 11mo agoFor comparison, GM brought in $1.3B on $48B.
- mxschumacher 11mo agoand Tesla is valued at over 21x more than GM
- awesome_dude 11mo agoSorry, I lost the thread - GM looks twice as profitable, the same profit on half the revenue How does that justify Tesla's valuation? Is it based on the idea that the margin can be improved?
- andsoitis 11mo ago> Sorry, I lost the thread - GM looks twice as profitable You got it reversed. For Q3'2025, GM net income $1.3B on $48B revenue (down 0.3% YoY). Tesla, in contrast, generated $1.5B income on $28B revenue (up 12% YoY). GM's income was down 56.6% while Tesla's was down 37%. GM had higher operating income than Tesla, however. Explained by Tesla's more aggressive investment in R&D and AI.
- awesome_dude 11mo agoAh, got it now, thanks
- moogly 11mo agoIt's based on "Tesla shareholders want the stock to live in a parallel universe".
- Retric 11mo agoPast performance is meaningless here. They lost the massive US subsidy making EV’s appealing and are getting outcomes in China. Model E and Cybertruck have anemic and shrinking sales numbers etc.
- hvb2 11mo agoModel E?
- Retric 11mo agoSorry Model X, a friend calls their’s an E as in the letter grade. I sometimes forget that’s not the real name, which gets confusing.
- cosmicgadget 11mo agoLetter grade E?
- Retric 11mo agohttps://en.wikipedia.org/wiki/Academic_grading_in_Sweden https://en.wikipedia.org/wiki/Academic_grading_in_Sweden Not quite failure in Sweden. Something about how the car is not quite bad enough to break the lease. Thus explaining the joke in such excruciating detail as to kill any humor.
- cosmicgadget 11mo agoHaha makes sense now thank you.
- mxschumacher 11mo agothere was a rush to buy electric cars in the US for as long as the $7500 incentive was in place, so the Q3 2025 number if inflated; it's a pull forward effect. Sales have been flat for 3 years and the delivery numbers in Europe are catastrophic on a fully diluted basis, the market cap is above $1.6tn, so at a PE of 20, they'd have to generate something like $80bn in profit per year - hard to do in an industry that is as brutally competitive and low margin as passenger cars.
- abirch 11mo agoNot to mention China heavily subsidizing BYD.
- mxschumacher 11mo agothere are around 140 EV companies in china competing very aggressively, they have excess capacity and are flooding the world market with cheap EVs, tough for Tesla to have a healthy margin in that environment
- _t9ow 11mo agoIt's a myth that China heavily subsidises its EV industry. See e.g. this Bloomberg article titled "China Can't Cut EV Subsidies It Isn't Paying": https://archive.ph/5olix https://archive.ph/5olix
- Analemma_ 11mo agoLately I've realized that "Chinese subsidies" are psychologically useful for people outside China to believe in, as cope to handwave away their own failing industries. Solar panels aren't really subsidized in China either.
- abirch 11mo agoChina has a plan. It subsidizes technology that it sees as important. There's nothing wrong with that per se. It'd like me saying that Barry Bonds only won the home run records because he used steroids. It wasn't entirely the steroids but I'm sure they certainly didn't hurt.
- lawn 11mo agoThat the stock has gone up a lot does not mean it will continue going up. On the contrary, Teslas remarkably high stock price means it's less likely to go up and a big correction is more likely.
- FloorEgg 11mo agoI wonder if there are still legacy short positions (from 2018-2020 era) that prop up the stock price by covering during dips.
- jillesvangurp 11mo agoWith many traditional auto makers you at this point have to wonder if they are still going to be around in ten years. Companies like Ford, Toyota, BMW, etc. are not looking so great. They each have the dilemma of a market that's shrinking by double digit percentages year on year (ICE cars) while another market is growing by the same percentage (EVs). The way Toyota and Ford deal with this is reducing investments in EVs while at the same time meeting increased EV demand by heavily leaning on other companies to make them some EVs. Ford is working with VW and Renault in Europe. Toyota is working with big Chinese manufacturers in China. So is Ford. BMW has some success with their recent EV models but it is taking big hits with demand for their overall products in markets like the US and China. The US is clearly lagging the EU and China when it comes to electrification. It's not at all clear that Tesla is doing much better. Their market share has tanked in markets where EVs do well (China, EU). However, it does have its own tech and still plenty of money. Where other manufacturers are leaning on outside suppliers, Tesla is pushing their own technology hard for just about everything. Including self driving cars and batteries. It's a different strategy at least and one that isn't dependent on the ICE market doing well or Chinese manufacturers doing all the technical heavy lifting. Tesla's stock price is based on investor expectations on some of those bets working out eventually. Even if a lot of that stuff seems like it is struggling right now, it's too early to write all of it off as failed. The 4680 is still expected to be a big part of the semi's Tesla is expected to finally start mass producing in 2026. Self driving tests are still continuing and might eventually add up to something that works well enough. And it's also a relavant format for LFP based chemistries. The problem for all of them have right now (especially Tesla) is that the Chinese are moving full steam ahead and are doing really well on technology and growth currently. Including things like self driving and of course batteries. The 4680 seems like it is old news when solid state is happening and new chemistries other than NMC are starting to dominate. And FSD while impressive has plenty of competition from other vendors at this point. Rivian has its own version. So do several Chinese vendors. And of course Waymo is actually moving lots of passengers autonomously at this point.
- ulfw 11mo agoIf revenue or profit was the deciding factor TSLA wouldn't be valued as highly as it is.