Ask HN: How in the world is $TSLA worth more than $TM? • Hacker News Board

Re: Ask HN: How in the world is $TSLA worth more than $TM?

#31

Post by xkjkls » Wed, Jul 01, 2020, 6:41 PM UTC

playingchanges wrote: post #15

I wonder what the perception of Tesla will be in a few years when people start wanting to upgrade / sell these cars. I can’t imagine the resale being comparable to a Toyota. There is certainly a reason Toyota is the worlds most popular auto manufacturer, and it is very different from the reasoning people use to justify Tesla bullishness.

They already have some of the worst resale values in the business. Driven by a huge number of price cuts they've done to their current models. Why buy a used Tesla when prices have dropped on new Teslas?

Re: Ask HN: How in the world is $TSLA worth more than $TM?

#32

Post by xkjkls » Wed, Jul 01, 2020, 6:43 PM UTC

haltingproblem wrote: post #13

Company "worth" is calculated as: last sale price * number of shares outstanding stock is held by founders and fans ==> few sellers more buyers than sellers ==> stock price goes up ==> inflates worth Company worth is an imperfect metric at best and non-sensical at worst.

I mean, market cap is probably better than most as a metric for valuing companies. If it wasn't, you could make a killing in the stock market by finding companies that are off-base of their value.

Re: Ask HN: How in the world is $TSLA worth more than $TM?

#33

Post by xkjkls » Wed, Jul 01, 2020, 6:44 PM UTC

tinus_hn wrote: post #25

Do you think the future is cars running on fossil fuels, or electric cars?

That's not the question though. Even if you believe EVs are the future, you still have to convince people that Toyota can't make them.

Re: Ask HN: How in the world is $TSLA worth more than $TM?

#34

Post by xkjkls » Wed, Jul 01, 2020, 6:47 PM UTC

jackson1442 wrote: post #22

bryanlarsen wrote: post #19

It's not. Enterprise value of Toyota: $318B Enterprise value of Tesla: $205B

According to the NYSE, the market cap of $TM is $171.88B and $TSLA is $205.88B.

Market cap is just a reflection of the total value of shares, enterprise value is a greater reflection of the perception of future cash flows, since it includes debt in the calculation.

Basically, Toyota has more debt, therefore its future earnings are assumed to be greater, because the market is valuing it at the current price, even knowing its debt burden. (Though there is alot of problems with this analysis based on how debt is accounted for, especially given companies like Toyota that have large financial units attached to them for loans).

Re: Ask HN: How in the world is $TSLA worth more than $TM?

#35

Post by rich_sasha » Wed, Jul 01, 2020, 6:48 PM UTC

ksec wrote: post #7

If you believe in all of the following, Model Y, Semi, Truck and Model 3 will being in 5x the revenue, RoboTaxi, Lv5 AV coming in anytime, Tesla has the largest Battery Manufacturing Plant on the Planet, Tesla has 5 years lead in Battery Production, SolarCity taking over Solar Energy production, Elon Musk..... But Yes... I still dont understand how on earth is it worth $200B.

Agree, but would extend: company “value” as in market cap is also affected by other things, notably debt; given two identical companies but one with more debt, it will have lower market cap.

There is a bit on this here: https://mondaynote.com/tesla-and-apple-valuation-questions-c... apparently for Ford it’s pension liabilities are more than 2x it’s market cap; so if you were to exclude them, the company is worth 3x more. Tesla, as a young company (and born in a different era) doesn’t have such liabilities. Etc etc

Re: Ask HN: How in the world is $TSLA worth more than $TM?

#36

Post by xkjkls » Wed, Jul 01, 2020, 6:49 PM UTC

Spinosaurus wrote: post #10

h2odragon wrote: post #9

Seems insane to me. For some time its been my opinion that "the markets" weren't connected to any reality I can see. From my hilltop in the woods I don't see far; so that doens't necessarily signify much. From my limited perspective it sure looks like there's so much play money seeking return that "brand recognition" is the only real reason to choose between one offering and another.

I wonder how many individuals received one of the recent stimulus checks and parked it right into Tesla stock.

Probably all of them followers of Dave Portnoy.

Re: Ask HN: How in the world is $TSLA worth more than $TM?

#37

Post by buboard » Wed, Jul 01, 2020, 6:56 PM UTC

refurb wrote: post #3

Because stock prices reflect future earnings, not past earnings. Basically, people buying TSLA stock believe future sales will be larger than Toyota.

> people buying TSLA stock believe future sales will be larger than Toyota

... until the day they sell

Re: Ask HN: How in the world is $TSLA worth more than $TM?

#38

Post by xkjkls » Wed, Jul 01, 2020, 7:32 PM UTC

qwerty456127 wrote: post #14

Spinosaurus wrote: post #6

Earlier quoted context omitted.

> Perhaps because Tesla is less bloated? Is that simply a perception you think many might investors have? Tesla has lost money every year, while Toyota has showed substantial profit. Without knowing anything else about these companies, an outside observer might think Tesla was the "bloated" of the two.

I don't know the proportion of investors who think this way yet I simply can't believe there is going to be much place for non-electric cars in cities in future. So, given how strongly do electric cars associate with the Tesla brand, I find it improbable that Tesla is going to fail or stagnate. Cities probably are going to start phasing gas/diesel cars out as soon as they recover from the CoV-caused economic crisis o…

The company has never made a profit. Why do you think it is impossible for it to fail?

Re: Ask HN: How in the world is $TSLA worth more than $TM?

#39

Post by tinus_hn » Wed, Jul 01, 2020, 9:40 PM UTC

xkjkls wrote: post #33

tinus_hn wrote: post #25

Do you think the future is cars running on fossil fuels, or electric cars?

That's not the question though. Even if you believe EVs are the future, you still have to convince people that Toyota can't make them.

Why would you have to convince anyone? If you believe Tesla is better positioned for the future than Toyota, buy Tesla stock and not Toyota stock.

Re: Ask HN: How in the world is $TSLA worth more than $TM?

#40

Post by adventured » Thu, Jul 02, 2020, 2:25 AM UTC

xkjkls wrote: post #29

refurb wrote: post #3

Because stock prices reflect future earnings, not past earnings. Basically, people buying TSLA stock believe future sales will be larger than Toyota.

Future Earnings + Current net assets. I have a hard time seeing how future earnings of Tesla even exceeds the liquidation value of Toyota, given the stock has never made earnings a year in its life.

You're contradicting yourself in the skepticism.

You recognize the valuation premise is based on expectations of future results, then you nail Tesla for its past results (no history of annual profit) for a supporting argument ("given the stock has never...").