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Tesla has to accomplish all of that just to meet market expectations and stay at it's current valuation. For comparison, Tesla sells 33,000 cars and is valued

Tesla has to accomplish all of that just to meet market expectations and stay at it's current valuation. For comparison, Tesla sells 33,000 cars and is valued at $25B GM sells 10,000,000 cars and is valued at $60B. The market has already priced phenomenal growth into Tesla's valuation which is why it's one of the most short sold stock in the world.

adventured 12y ago
It's the same argument used on Amazon of course. Pumpers that proclaim: why just imagine how much Amazon will be worth once they start generating a meaningful profit! Back in reality, were Amazon generating $8 billion per year in net income, their market cap probably wouldn't move at all unless their forward profit growth projections were dramatic. It's maybe most common mistake I see inexperienced, or delusional, investors make - failing to understand the concept of future returns being pulled forward. There's a Chinese stock I always think of when it comes to this, China Life Insurance (LFC). Back during China's market bubble of 2006/07, the stock was pumped to the moon, projections were for perpetually high growth for decades. It was trading at something like 80 to 100 times earnings in 2007 at the peak... eight years later it hasn't moved higher than that (predictably the growth collapsed and the PE compressed).
- shalmanese 12y ago
  Isn't that an argument that the market priced LFC exactly correctly and that exactly what they expected to happen did happen?
GreenPlastic 12y ago
While I agree, for the most part, that future growth is risk adjusted and priced in, I also believe that the market doesn't quite understand all the nuances. One, Tesla's margins are actually significantly than GMs. Two, they're losing money on a gaap basis because of a. how you account for residual lease values when they most likely won't have to pay any of that back and b. large capex expenditures in preparation for model x and model 3. If they weren't spending so much on capex, this would be a very cashflow positive company. Third, the average person doesn't quite understand how much better of an experience driving a Tesla is than a normal ICE vehicle (I know several people who would never buy > 50k car who own Teslas, know another 20 who would go buy a 3 immediately if it was available). Finally, projections don't really account for the stationary storage market, which is all gravy. Are there risks? Of course - you can have a giant first mover advantage, giant technological moat, and ISO chooses a different charging standard, Elon Musk gets hit by a bus, etc. I think there's enough optionality here for those willing to wait 5 years.
loceng 12y ago
I imagine the thought behind the valuation is that Tesla could very quickly switch to be the one selling 10,000,000 vehicles.
simonebrunozzi 12y ago
I didn't know that TSLA is "one of the most short sold stock in the world." What tool do you use to get this data point?
- shalmanese 12y ago
  http://my.teslamotors.com/fr_CH/forum/forums/tesla-makes-it-10-mostshorted-stock-list http://my.teslamotors.com/fr_CH/forum/forums/tesla-makes-it-...

adventured 12y ago

It's the same argument used on Amazon of course. Pumpers that proclaim: why just imagine how much Amazon will be worth once they start generating a meaningful profit! Back in reality, were Amazon generating $8 billion per year in net income, their market cap probably wouldn't move at all unless their forward profit growth projections were dramatic. It's maybe most common mistake I see inexperienced, or delusional, investors make - failing to understand the concept of future returns being pulled forward. There's a Chinese stock I always think of when it comes to this, China Life Insurance (LFC). Back during China's market bubble of 2006/07, the stock was pumped to the moon, projections were for perpetually high growth for decades. It was trading at something like 80 to 100 times earnings in 2007 at the peak... eight years later it hasn't moved higher than that (predictably the growth collapsed and the PE compressed).

shalmanese 12y ago
Isn't that an argument that the market priced LFC exactly correctly and that exactly what they expected to happen did happen?

GreenPlastic 12y ago

While I agree, for the most part, that future growth is risk adjusted and priced in, I also believe that the market doesn't quite understand all the nuances. One, Tesla's margins are actually significantly than GMs. Two, they're losing money on a gaap basis because of a. how you account for residual lease values when they most likely won't have to pay any of that back and b. large capex expenditures in preparation for model x and model 3. If they weren't spending so much on capex, this would be a very cashflow positive company. Third, the average person doesn't quite understand how much better of an experience driving a Tesla is than a normal ICE vehicle (I know several people who would never buy > 50k car who own Teslas, know another 20 who would go buy a 3 immediately if it was available). Finally, projections don't really account for the stationary storage market, which is all gravy. Are there risks? Of course - you can have a giant first mover advantage, giant technological moat, and ISO chooses a different charging standard, Elon Musk gets hit by a bus, etc. I think there's enough optionality here for those willing to wait 5 years.

loceng 12y ago

I imagine the thought behind the valuation is that Tesla could very quickly switch to be the one selling 10,000,000 vehicles.

simonebrunozzi 12y ago

I didn't know that TSLA is "one of the most short sold stock in the world." What tool do you use to get this data point?

shalmanese 12y ago
http://my.teslamotors.com/fr_CH/forum/forums/tesla-makes-it-10-mostshorted-stock-list http://my.teslamotors.com/fr_CH/forum/forums/tesla-makes-it-...