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Tesla Passes Ford by Market Value

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Re: Tesla Passes Ford by Market Value

#531

Post by cmarschner »

aanm1988 wrote: post #317
cmarschner wrote: post #110

Earlier quoted context omitted.

>Says who It is foreseeable that ICEs will become banned, at least in Europe. Right now there is still too much lobbying by the traditional car makers, but long term there is no other choice for reaching climate goals. Edit: See e.g. http://bigthink.com/scotty-hendricks/the-end-of-the-internal... https://www.autoevolution.com/news/germany-asks-eu-to-think-...

That would never work in the US. It would be both impractical and politically impossible. Most people don't have 35k to drop on an electric car, and even if they did the infrastructure doesn't exist.

If American car companies want to sell in the EU, which is about 500 million people, they will soon have no other choice.

Re: Tesla Passes Ford by Market Value

#532

Post by anko »

Spooky23 wrote: post #441
tbabb wrote: post #369

Earlier quoted context omitted.

> 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…

This is a common pattern to electric and self-driving enthusiasts, but unfortunately it's the automotive equivalent of Wired articles about the internet circa 1996. Problems include: - Cost. All of the (limited) Tesla automation technologies cost more than my last car. - Liability. Who is liable for mishaps? As Uber has demonstrated accidents and traffic violations happen with automated tech. - Utility. The majority…

> Cost: We're not there yet, but not paying registration/insurance/repayments/garage space will make this economical in time - at first at least for second car owners > Liability: Insurance - I think automation will be safer i.e. less accidents > Utility: I think door to door driving without looking for parking is a pretty good perk > Pool vs. own: Both of these models will be competitive with each other, so in the end it won't matter

plus there will be additional benefits Safety: Less drunk drivers on the road, less accidents from fatigue, etc. Cost: at a minimum, it will bring cab prices down Efficiency: Less traffic jams as autonomous systems won't slam on the brakes when they see a police car, etc. Smoother flowing traffic, higher legal road speeds if reaction time is shorter

And then there are other non-car transport which will benefit: logicistics, mail, deliveries etc. Minibuses that could pick you up door to door through automated route planning etc.

Re: Tesla Passes Ford by Market Value

#533

Post by robzyb »

peterbonney wrote: post #482

Former finance professional here: Ford is actually worth 3 times as much as Tesla, once you factor in debt. The total value of the Ford capital structure ("enterprise value") is about 150 billion. When two companies have wildly different capital structures, you have to compare them on enterprise value, not the market cap of their equity. So while I give kudos to Tesla for building a valuable business, it still has a…

[edit]: Current finance professional here.

> When two companies have wildly different capital structures, you have to compare them on enterprise value, not the market cap of their equity. So while I give kudos to Tesla for building a valuable business, it still has a long way to go to catch up to Ford.

That is not necessarily true.

Market cap and enterprise value are two equally valid ways of measuring value or worth. There are even more ways to measure value, such as DCF or value of assets. All of these have their pros and cons.

In this case, my personal opinion is that market cap is a very meaningful way to measure Tesla/Ford and that it's noteworthy that Tesla has passed Ford.

I think it is very meaningful because it (loosely) implies that the present value of Tesla's profits (i.e. net profit after tax) is higher than Ford's. Even on a risk-weighted basis. Or, at least, that's roughly-kinda-sorta what the market believes.

I would argue that enterprise value would be more meaningful that market cap if we were talking about which company was 'bigger'. However, the interesting thing here is that Tesla has become more 'valuable' than Ford, for this definition of value.

Re: Tesla Passes Ford by Market Value

#534

Post by elcritch »

Spooky23 wrote: post #448
breser wrote: post #433

Earlier quoted context omitted.

Calling Tesla just another car company is really missing the boat on their business. Tesla started as a car company. It's how most people are aware of them. So I don't really blame you for this mistake. However, Tesla today is an integrated energy company. They make Solar Cells (the part of the business formerly called SolarCity), Stationary Battery Systems (generally referred to as Tesla Energy) that range in size f…

That's a great point. I guess the question to test your assertion is whether distributed electricity generation and storage is the cash cow AWS is. AWS took long lead time, high cost, high risk tasks and made them like ordering Chinese food. End of the day, even with all they have achieved, the whole machine blows up once the hype train pulls to a halt.

> took long lead time, high cost, high risk tasks and made them like ordering Chinese food.

Come to think of it, that almost sounds like what Tessa is beginning to achieve with large scale electrical storage. [1]

[1]: https://mobile.nytimes.com/2017/01/30/business/energy-enviro...

Re: Tesla Passes Ford by Market Value

#535

Post by robzyb »

peterbonney wrote: post #491
imjk wrote: post #485

Earlier quoted context omitted.

Sorry, can you elaborate a little more on how debt factors into enterprise value? I've heard this before and don't fully understand.

Sure! Think about two companies that just started up in the widget business, each raising $1 million of capital. Company A issued $1 million worth of equity. Company B issued $500,000 worth of equity and borrowed $500,000. Which company is more valuable? Obviously both are worth the same amount: each company has an "enterprise value" (the value that all investors in all securities place on the underlying enterprise)…

> Obviously both are worth the same amount: each company has an "enterprise value" (the value that all investors in all securities place on the underlying enterprise) of $1,000,000. The only difference is that company A has only one class of investor, while company B has investors that own a riskier asset (the equity) and a less risky asset (the debt).

There's an important issue that you aren't taking into consideration. The value of the equity is ultimately based on the profit that remains after interest/debt has been paid.

In your example, it is perfectly valid (if not MORE valid) to say that Company A is worth more than Company B.

The investors in Company B figured that at the end of the day they will only be eligible for half the cash that investors in Company A will be eligible for. So they paid a lower price.

You're insisting that debt is another form of investment, and depending on what you're looking at that makes sense, but when talking about 'value' it doesn't always hold true.

Re: Tesla Passes Ford by Market Value

#536

Post by aerovistae »

robzyb wrote: post #533
peterbonney wrote: post #482

Former finance professional here: Ford is actually worth 3 times as much as Tesla, once you factor in debt. The total value of the Ford capital structure ("enterprise value") is about 150 billion. When two companies have wildly different capital structures, you have to compare them on enterprise value, not the market cap of their equity. So while I give kudos to Tesla for building a valuable business, it still has a…

[edit]: Current finance professional here. > When two companies have wildly different capital structures, you have to compare them on enterprise value, not the market cap of their equity. So while I give kudos to Tesla for building a valuable business, it still has a long way to go to catch up to Ford. That is not necessarily true. Market cap and enterprise value are two equally valid ways of measuring value or worth…

Current amateur here. I feel like there's only one important thing to consider when comparing Tesla and Ford as investment opportunities: is their value likely to increase?

With Tesla, there's an obvious path for potential massive growth. It's not guaranteed, but the potential is obvious.

With Ford, it's like any other auto manufacturer. What surprises are we expecting? What new products or innovations? Does Ford have any path, even hypothetical, to massive market share growth relative to its current position the way Tesla does? It seems clear to me that the answer is no. Even if their Bolt is a success, they're not about to dominate the market, double their sales, and double their stock. They don't have any Model 3 type event on the horizon.

So all these comparisons of financial metrics on current value, to me, seem pointless. This is the only thing that should matter (along with whatever analysis you want to use to gauge whether Tesla is likely to be able to execute on its plans, which is a more complex question-- but performance so far makes it clear that they are experiencing steady and dependable growth of production and sales with clear, well-defined plans for further future growth.)

Re: Tesla Passes Ford by Market Value

#537

Post by zxcmx »

pembrook wrote: post #521
shawkinaw wrote: post #276

Earlier quoted context omitted.

More like Ford investors: "Let me soberly evaluate the company's present and future financial situation before I make any commitments" Tesla investors: "TAKE MY MONEY"

Dead on. The price of Ford is predominantly being determined by institutional investors with a strong understanding of the dividend discount model. Investors moving the market on Ford are buying/selling what they believe to be a stable, mature company and are pricing pretty much ZERO potential for innovation into Ford. Tesla on the other hand is a darling of retail investors attracted to the marketing machine of "Sil…

Right so for Tesla to make sense, it has to make the iPhone of cars with Ford analogously in the position of Nokia. It looks like that's the expected level of disruption priced in right now.

(Personally I have no idea whether this is likely or not).

Re: Tesla Passes Ford by Market Value

#538

Post by traviscj »

aerovistae wrote: post #536
robzyb wrote: post #533

Earlier quoted context omitted.

[edit]: Current finance professional here. > When two companies have wildly different capital structures, you have to compare them on enterprise value, not the market cap of their equity. So while I give kudos to Tesla for building a valuable business, it still has a long way to go to catch up to Ford. That is not necessarily true. Market cap and enterprise value are two equally valid ways of measuring value or worth…

Current amateur here. I feel like there's only one important thing to consider when comparing Tesla and Ford as investment opportunities: is their value likely to increase? With Tesla, there's an obvious path for potential massive growth. It's not guaranteed, but the potential is obvious. With Ford, it's like any other auto manufacturer. What surprises are we expecting? What new products or innovations? Does Ford hav…

Irrelevant nit that doesn't undermine your point: the Bolt is made by Chevrolet.

Re: Tesla Passes Ford by Market Value

#539

Post by aerovistae »

traviscj wrote: post #538
aerovistae wrote: post #536

Earlier quoted context omitted.

Current amateur here. I feel like there's only one important thing to consider when comparing Tesla and Ford as investment opportunities: is their value likely to increase? With Tesla, there's an obvious path for potential massive growth. It's not guaranteed, but the potential is obvious. With Ford, it's like any other auto manufacturer. What surprises are we expecting? What new products or innovations? Does Ford hav…

Irrelevant nit that doesn't undermine your point: the Bolt is made by Chevrolet.

Totally forgot, sorry. Right you are.

Re: Tesla Passes Ford by Market Value

#540

Post by qume »

seanmcdirmid wrote: post #421
iamacynic wrote: post #396

Earlier quoted context omitted.

http://www.businessinsider.com/2016-was-a-record-breaking-ye... india and africa will be china in 20 years. this is the market that tesla is fighting for a fraction of, not the other way around. you're out of your mind. people like cars. people will spend an irrational amount of money on their cars. they don't give a shit if it pollutes, or kills people, or doesn't because it drives itself sometimes. the trends show…

Every year is potentially a record breaking year for profits. That's how inflation works! India and Africa are going to buy Fords? China has been really nice to Ford, it has kept them afloat while the American market tanked at home, BUT let's not delude ourselves about how Chinese JVs work. Also, China has some weird tax games going on, so its not clear where demand will eventually settle (disclaimer, I lived in Beij…

Friendly note - disclaimer != disclosure. Although in this case neither would have been better.
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