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Tesla Passes Ford by Market Value

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Re: Tesla Passes Ford by Market Value

#361

Post by moomin »

akhatri_aus wrote: post #345
Hermel wrote: post #328

Earlier quoted context omitted.

In financial theory, enterprise value corresponds to the sum of all discounted cash flows (after tax). Thus, it is the market's best estimate for the value of the business. The question of capital structure should not really matter according to the Miller-Modigliani theorem.

The value of a business is what someone would be willing to pay for control over it, or its market cap (value of all shares). This is typically disconnected from its DCF which is a modelled value based on expected future returns. Enterprise value is also market cap + net debt, not its cumulative present value DCFs. [1] http://www.investopedia.com/terms/e/enterprisevalue.asp

Strictly speaking market cap is what someone is willing to spend on a small portion of the company scaled up. The actual price someone is willing to pay for the whole thing is a different number, typically larger.

It isn't the EV either, though

Re: Tesla Passes Ford by Market Value

#362

Post by seanmcdirmid »

iamacynic wrote: post #251
seanmcdirmid wrote: post #111

Earlier quoted context omitted.

It is like comparing a spunky startup to an entrenched corporation. Ya, IBM once spent more than Facebook, but Facebook was worth more because it had potential while IBM didn't. Ford doesn't have any good ideas for the future, they are too busy with the here and now and haven't shown an ability to do anything but incremental improvements with their R&D spending. Like we don't expect much more from IBM, we don't expec…

> Ford doesn't have any good ideas for the future, they are too busy with the here and now according to who? your average HN reader who basically hates cars? yeah, sure. the guy who hates cars is bearish on ford, shocking. what about all the people buying raptors and gt350s and fgts and fists and fosts, hand over fist? do you even know what i'm talking about? do these insanely popular cars even register on your radar…

I just bought an Acura ILX this year and I really like it (despite the reviews that it is just a luxury Civic), and I never even considered buying a Tesla.

People misunderstand post car like post PC: it doesn't mean the market is going away, but merely that it is no longer growing. Therefore, WYSIWIG on earnings, because they aren't going to change dramatically. Ya, Ford might have record earnings that are slightly more than last year, but no one sees them doubling before inflation makes that happen naturally.

> do you even know what i'm talking about? do these insanely popular cars even register on your radar?

I have to admit, I prefer Japanese cars and would never consider buying an American brand. I found them unreliable in the past, and got burned more often than not. But I still don't see the Japanese companies pulling a Tesla in the future, they are fairly stable companies with stable market share and profits. They don't change the game.

> -not even a ford guy. porsche, there is no substitute.

German cars break down too much. Ya, you can get one, but after the warranty is up, you are toast. Better to lease instead.

Re: Tesla Passes Ford by Market Value

#363

Post by seanmcdirmid »

bigtimeidiot wrote: post #334
erikpukinskis wrote: post #275

Earlier quoted context omitted.

The kind of people who buy raptors and gt350s are a tiny fraction of the market compared to the people who just want to get to work. Tesla isn't interested in car enthusiasts, they want to be the default answer to the question "How do I get from point A to point B for $1?"

> people who just want to get to work. People who "just want to get to work" aren't buying cars that start at $35,000, either.

Depends on the market. I see a lot of CLAs in LA, and they are probably paying more than $35K for them.

Re: Tesla Passes Ford by Market Value

#364

Post by vitiral »

karpodiem wrote: post #211

This is a perfect slice of Americana here. I can't find a number through Google but the number of Ford Hourly/Salaried employees has to be over 125,000. As a guess. Tesla has 30,000 hourly/salary employees. Despite being valued 'less' Ford has a huge economic impact for many peoples lives. This may decline, over time, but don't be surprised if Ford/GM/Chrysler combine forces for a huge battery factory of their own. T…

As far as suppliers go, Tesla is tightly vertically integrated and is willing to build anything in house if it increases their quality or delivery date. This is their buisness strategy for beating companies like Ford, and with baby-hands Trump in the office killing international trade left and right, it looks like it might be a winning bet (free trade is required for cheap supply chains).

Re: Tesla Passes Ford by Market Value

#365

Post by seanmcdirmid »

emodendroket wrote: post #340
mee_too wrote: post #336

Earlier quoted context omitted.

Sure, if (your_universe == USA).

OK, sure, the picture becomes a lot more complex if we want to talk about international markets. Anyway the car I see in the Tesla showroom does not say "car for practical people who just want to get from point A and point B." The article claims they're selling to the kind of people who would normally buy a Porsche.

Beijing has a lot of Tesla Model S's these days, up from virtually nil a few years ago. Chalk it up to Beijing separating the plate lottery for EVs, and the people that normally buy Audi aren't going to buy a Chinese EV.

Re: Tesla Passes Ford by Market Value

#366

Post by username223 »

criley2 wrote: post #342
username223 wrote: post #300

Earlier quoted context omitted.

> The automobile industry will contract as we move from individual ownership to mobility. What does this even mean? People like to leave stuff in their cars (e.g. mug, gym bag). They like them to be at their preferred level of cleanliness or disorder. Some even use them as a means of personal expression. If "mobility" were so desirable, ZipCar would have taken off 10 years ago. The "mobility" market will be about the…

I find it shocking that something as simple as personal belongings would be a "lock in" to existing technology. It's like saying "I prefer my horse, I can feed it grass off the side of the road, but you have to find some fancy petro-chemical station for your auto-mobile? Insane! My gas grows next to the road!" I get it, but try to put yourself in the place of someone younger who doesn't make decisions like "I would n…

It's not "personal belongings," it's "personal space." Hot-sheeting happens where sleeping space is extremely limited, like oil drilling camps, but it hasn't taken off among the general population, despite the fact that you only use your bed for around 1/3 of the day. People are willing to pay for their own beds and, frequently, their own apartments or houses, despite the fact that most of that space goes unused most of the time for someone with normal work and sleep schedules. Do you AirBnB your bed (at hourly rates)? Do you AirPantsAndT your clothes? Most people don't.

I doubt I'll last another 50 years, but I'll probably live long enough to see the end of the current robot taxi fad.

Re: Tesla Passes Ford by Market Value

#367

Post by berberous »

akhatri_aus wrote: post #345
Hermel wrote: post #328

Earlier quoted context omitted.

In financial theory, enterprise value corresponds to the sum of all discounted cash flows (after tax). Thus, it is the market's best estimate for the value of the business. The question of capital structure should not really matter according to the Miller-Modigliani theorem.

The value of a business is what someone would be willing to pay for control over it, or its market cap (value of all shares). This is typically disconnected from its DCF which is a modelled value based on expected future returns. Enterprise value is also market cap + net debt, not its cumulative present value DCFs. [1] http://www.investopedia.com/terms/e/enterprisevalue.asp

A change of control of Ford would likely trigger a default under Ford's debt, at which point it must be paid back. So if you are not financing with debt, an acquiror would really need the $150bn EV in order to afford to acquire the company. Of course, in reality, an acquiror would either replace such debt with new acquisition financing or work out a way to keep the existing debt in place.

DCF is indeed a method to estimate the fair value of a company's EV, not it's market cap. People will usually do a DCF, then subtract net debt in order to get an estimate of equity value from the DCF. Here's a citation: http://macabacus.com/valuation/dcf/overview

Re: Tesla Passes Ford by Market Value

#368

Post by Judgmentality »

criley2 wrote: post #342
username223 wrote: post #300

Earlier quoted context omitted.

> The automobile industry will contract as we move from individual ownership to mobility. What does this even mean? People like to leave stuff in their cars (e.g. mug, gym bag). They like them to be at their preferred level of cleanliness or disorder. Some even use them as a means of personal expression. If "mobility" were so desirable, ZipCar would have taken off 10 years ago. The "mobility" market will be about the…

I find it shocking that something as simple as personal belongings would be a "lock in" to existing technology. It's like saying "I prefer my horse, I can feed it grass off the side of the road, but you have to find some fancy petro-chemical station for your auto-mobile? Insane! My gas grows next to the road!" I get it, but try to put yourself in the place of someone younger who doesn't make decisions like "I would n…

Some people just like owning cars. I live in San Francisco and don't currently own a car, but I want one. Perfect example where Uber fails - I can't take my dog anywhere.

Different people have different values. Also I'm quite young, so I don't think age is a strict delineation.

Re: Tesla Passes Ford by Market Value

#369

Post by tbabb »

username223 wrote: post #300
erikpukinskis wrote: post #273

Earlier quoted context omitted.

> There are so many car makers, there is no monopole they could get. Same for solar and batteries. The automobile industry will contract as we move from individual ownership to mobility. But along with that transition some manufacturers will keep up and others will not. Tesla is hoping to be one of the winners, taking perhaps 25% of the mobility market as the car buying market dries up. Tesla's valuation is also base…

> The automobile industry will contract as we move from individual ownership to mobility. What does this even mean? People like to leave stuff in their cars (e.g. mug, gym bag). They like them to be at their preferred level of cleanliness or disorder. Some even use them as a means of personal expression. If "mobility" were so desirable, ZipCar would have taken off 10 years ago. The "mobility" market will be about the…

> The "mobility" market will be about the size of the taxi, bus, and train market.

- A personal, individual vehicle which comes to pick you up where you are and take you to exactly where you want to go is a much MUCH higher value proposition than public transit.

- Add self-driving to the mix, and the cost of that service will plummet.

- When the car providing that service can drive itself, then there is little to no inconvenience to the vehicle owner to offer that service, and significant financial incentive.

- Because car owners will be able to make "rent" from their capital investment, owning a car will start to look more like property ownership than a depreciating investment-- especially as maintenance and operation costs fall for electric vehicles.

- There will be very strong financial incentive to use self-driving ride pools instead of putting up a large wad of cash to own a car. So total car ownership will go way down, and will be done much more by the wealthy and much less by the working/middle class.

- Cost of ownership is especially high in cities (parking), and the market for ride sharing is highest. So probably many fewer city dwellers will own cars.

- Families that own can shrink to one car instead of two, since the car can drop people off or pick them up.

I think there are a lot of pretty good reasons why the vehicle market is going to change significantly in the next 15 years.

Re: Tesla Passes Ford by Market Value

#370

Post by seanmcdirmid »

dkrich wrote: post #204
seanmcdirmid wrote: post #168

Earlier quoted context omitted.

Market perception. Ford's P/E ratio is 9.89. IBM's P/E ratio is 14.02. Facebook's P/E ratio is 40.79. Tesla's P/E ratio is infinity since the E is negative. I'm sure Ford has done many incremental innovations, I didn't say they didn't. IBM does the same thing, and has "record profits" every few years also. Its just the market isn't expecting the next big thing to come from Ford, while they are expecting that from Tes…

I don't really like the analogy for several reasons, but what's wrong with IBM? Have you looked at their share price over the past 12 months? As of today, IBM is trading at around $164 billion market cap and paying out a dividend of over 3%. I'd say that's pretty good. I don't short stocks because I don't believe in trying to time the market. I actually think Tesla could move well north of where it is currently tradi…

Tesla is RISKY: it is a bigger gamble, higher volatility, higher upside if it works out, bigger chance of it going completely bust. Put Tesla in your portfolio if you want to add some risk to it. You want stability with a healthy dividend? Well, add some Ford to it.

Shorting is the way you capitalize on a stock that you think is overvalued. It is an advanced maneuver but can be done for the long term as well.

IBM...man, IBM is a tech company that got rid of most of its R&D to focus on consulting and accounting tricks. But ignoring that, IBM has a huge R&D division but has been unable to come up with any breakthroughs for quite some time now, it is the canonical mature tech company that isn't going to have rapid growth like a startup.

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