by "John Norris (AngryDrifter)" (angrydrifter)
Published 03/09/2017 at 23:39
by "John Norris (AngryDrifter)" (angrydrifter)
Published 03/09/2017 at 23:39
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STARS: 2
So I’m looking at Tesla’s stock price again. And wondering, again, why it’s so high.
Looking at the Market Capitalization Tesla is in the same league as GM and Ford. That’s the stock price times the number of outstanding shares.
Looking at their debt, they have done an excellent job of building up the value of their company with running up comparatively little debt.
That’s however where the goodness ends for Tesla’s current numbers. For other practical measures of an auto company’s worth, revenue, profit, and 2016 car sales, Tesla is still a tiny little niche company compared to GM and Ford. In 2016 car sales they barely move the needle.
The value in the stock price that drove the market capitalization so high is all a bet that Tesla is going to become big enough in revenue, profit, sales, or some combination thereof to justify the huge capitalization. They have accomplished an incredible amount in a short time. However they still have a long ways to go.
I lifted the financial data from Yahoo finance today.
I lifted the 2016 GM, Ford, and Tesla car sales data from:
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Go ahead an hit me with your critique. I’m sure my data collection is not perfect. But I think I am in the neighborhood. If you can point out an error in my representation of this I’m happy to learn and correct it.
Update comment #1: Geez, come on media, I was way ahead of you.
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Update comment #2: Full disclosure, I’m a shareholder as a result of the mutual fund that has a fair chunk of my 401k funds invested in it. But I think they are significantly over valued and I wish they’d get out of it before it collapses. But in the current life and times of corporate politically correct speak, I love this sort of stuff:
Bossy shareholders:
“We expect that as companies make the transition to publicly-traded status, the governance structures and practices in place at the time of the IPO will evolve to align with the company’s changing strategy,”
Defiant CEO:
“This investor group should buy Ford stock,” Musk posted on Twitter on Wednesday afternoon. “Their governance is amazing...”
"GE90man" (ge90man)
03/09/2017 at 23:47, STARS: 4
i’m not sure if it’s just me that’s noticing, but Musk is gaining some weight
"Highlander-Datsuns are Forever" (jamesbowland)
03/09/2017 at 23:50, STARS: 4
It wouldn’t be the first time a technology company is overvalued.
"CRider" (crider)
03/10/2017 at 00:04, STARS: 3
Only one way to reach his goal of being another planet.
"Flynorcal: pilot, offshore sailor, car racer and panty thief" (flynorcal)
03/10/2017 at 00:26, STARS: 1
You’re missing the point entirely.
Tesla isn’t a car company. It’s a power company that happens to make neat but relatively shitty quality cars. Tesla just built a solar powered battery backup for L.A. in three months. There’s an island no longer using diesel generators and beholden to shipping companies to get them fuel. They get it for free without outages due to union strikes or bad weather making shipping unsafe or impractical.
Power wall, solar tiles that look nice, plus Solar City to install it all.
Widen your focus and you’ll see that they’re very undervalued in the long run. Oil is a loser. It’s still in the ring and people keep thinking it’ll last forever because people have too narrow a focus thinking the few years they’ve been sentient are the ones that matter and set the standard.
Your grandchildren will not drive and the cars will be electric. Or it’ll be so much in that direction that exceptions will be just that.
"The AE86 of Mt. Akina (Hachi)" (theae86)
03/10/2017 at 00:49, STARS: 0
It’s a bubble for sure.
"Short-throw Granny Shifter is 2 #blessed 2b stressed" (cuneor)
03/10/2017 at 01:11, STARS: 0
Tesla is a vertically integrated manufacturing/engineering/technology firm, and seems to be valued more like silicon valley tech forms than traditional car makers in the minds of investors. This is perfectly OK if you believe in the equities market tends towards price efficiency i.e. Tech companies are highly valued because they should be!
Now I don’t fully buy into the view that tech companies are highly overvalued, but then again it’s a fundamental characteristic of bubbles that no one realizes they’re in one.
"Decay buys too many beaters" (decay)
03/10/2017 at 01:35, STARS: 1
Shhh your logic, I bought in 2011.
It wasn’t much, and it was just so I could mention that I was also a shareholder back when I interviewed. Plus I thought the roadster was sweet.
"Birddog" (maintmgt)
03/10/2017 at 01:59, STARS: 0
I’ve been watching it hoping for a big enough dip to get my foot in the door and yank it back out before breaking a toe. It defies logic.
"MyJeepGetsStuckInTheSnow" (myjeepgetsstuckinthesnow)
03/10/2017 at 02:11, STARS: 0
Since when is the market rational?
"TheBimmerGuyWhoNowOwnsAChevy" (thebimmerguy)
03/10/2017 at 02:38, STARS: 1
I know next to nothing about economics, but with how much media I see about people trying to slander/sue tesla, all this press is being turned into potential customers. Something something bad press is free advertising yada yada.
"NotUnlessRoundIsFunny" (notunlessroundisfunny)
03/10/2017 at 03:01, STARS: 1
Your analysis seems solid to me.
There is a lot of momentum especially in certain tech companies where early investors are cheering on the next round of investors to buy in at a higher valuation, and the cycle repeats...until it doesn’t.
Tesla is valued like a tech darling, the other car companies are valued like...car companies. They’re doing a lot more, but people can imagine Tesla having an incredible future, and they’re willing to pay dearly for that for now.
"jimz" (jimz)
03/10/2017 at 07:14, STARS: 0
careful now, F’s “debt” shown there includes money borrowed by Ford Motor Credit (FMCC) to lend to dealers and buyers. it’s not “corporate” debt.
at any rate, TSLA’s share price reflects investors banking on them growing. the extant automakers have really nowhere to grow within their traditional markets; they can only steal a bit of marketshare from each other from quarter to quarter. if one of them hits on the “Hot New Thing” the share price would rise accordingly.
"Rico" (ricorich)
03/10/2017 at 08:13, STARS: 0
I wonder how they compare to other niche car makers like Pagani or Koenigsegg for example.
"diplodicus" (diplodicus)
03/10/2017 at 09:06, STARS: 0
I’m assuming they bundle it together for tax purposes?
"jimz" (jimz)
03/10/2017 at 09:51, STARS: 0
accounting isn’t my thing, but AFAIK on one hand there’s “debt is debt,” but on the other hand FMCC’s debt is closer to “revolving” where it’s constantly being serviced by money coming in from loan payments. keep in mind lenders like Ford Credit not only loan money to consumers to buy cars, they also do a lot of floorplan loans for dealers to finance their inventory.
"wiffleballtony" (wiffleballtony)
03/10/2017 at 12:10, STARS: 0
Stock prices are no longer indicative of a companies health as much as their popularity and visibility in public eye as a positive.
"John Norris (AngryDrifter)" (angrydrifter)
03/10/2017 at 17:54, STARS: 0
Thanks. Excellent point. And reading the article, to a point GM is in a similar state, with GMF comprising a large chunk of their debt. That makes Tesla’s debt look less impressive.
"John Norris (AngryDrifter)" (angrydrifter)
03/10/2017 at 18:14, STARS: 1
We’ve been running out of oil for a long time. For 130 years people have put forth failed predictions about running out.
https://www.wsj.com/articles/why-peak-oil-predictions-haven-t-come-true-1411937788
You may be right. But any bet against oil has some risk.
A friend in the late ‘70's got into solar panel installs. It was going to be the next greatest thing. It’s not new. It hasn’t become the silver bullet yet despite 40 years of tax credits to kick start it.
By the way, my oldest granddaughter can get her drivers permit in less than 5 years. Unless of course it all changes.
"jimz" (jimz)
03/11/2017 at 08:38, STARS: 0
this planet will never truly “run out” of petroleum, but there will be a point when it starts getting harder and harder to extract it.
"John Norris (AngryDrifter)" (angrydrifter)
03/11/2017 at 16:30, STARS: 0
Once it gets costly enough to extract then other more expensive forms of energy become more cost effective and everyone lives happily ever after.