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Tesla races past $100B in market valuation

reuters.com

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Re: Tesla races past $100B in market valuation

#61

Post by TekMol »

nerdkid93 wrote: post #2

I for the life of me cannot figure out what could possibly justify this valuation for Tesla. Sure, their cars are pretty great, they have a ravid fanbase, and they have a pretty entertaining CEO who excels at driving interest in the company. They would need to execute perfectly and deliver more cars to customers than Volkswagen in a few years to justify such a valuation right now, and I just don't see that happening…

Market cap is expected value of the sum of all discounted future earnings.

So to be worth $100B, they have to earn that amount in future money eventually.

Not within the next few years.

Re: Tesla races past $100B in market valuation

#62

Post by rjkennedy98 »

sombremesa wrote: post #49
reilly3000 wrote: post #17

Earlier quoted context omitted.

With each car they get a lifetime of service revenue, mostly without competition. They expand their network effect, their supercharger footprint, and their technology lead as they maintain momentum. Cybertruck is poised to be a giant success, reaching into new markets outside of traditional EV buyers and into rural and suburban light trucks, the highest margin section of auto sales. Finally, its prominence attracts u…

> Perhaps it’s still overvalued beyond all of those factors. If you feel strongly about that, why not take out a short position? The issue with that is that GP is arguing that this stock's investors continue to behave irrationally. There is no reason to believe they are going to suddenly behave rationally. Thus, a short position is inadvisable. If you are a value investor, the right thing to do is to just not invest…

> why not take out a short position?

To quote John Maynard Keynes, “The market can stay irrational longer than you can stay solvent"

Re: Tesla races past $100B in market valuation

#63

Post by jrbuhl »

7777fps wrote: post #43
himinlomax wrote: post #28

Earlier quoted context omitted.

I can see one good reason: the rest of the auto industry is playing catch up with Tesla. Nobody else afaik is even able to do over the air updates (reliable updates, that is). They have a charging network, the competition basically doesn't and can't seem to get their act together, and that's not even really a technological issue.

Isn't the "charging network" a thing that shouldn't be vendor locked? Imagine if every petrol pump was tied to specific makes of cars? Any current vendor lock-in of charging is surely at risk at being legislated away, by insisting that EV charging is done through a standard port like refueling petrol/diesel vehicles. If governments were serious about electric vehicles as a way of improving air quality they would legi…

Tesla payed a lot of money (billions) to build the super charger network. Money no government or other company seems to want to spend. Legislating away vendor lock-in would just cause companies to be even more averse to capital investment in recharging infrastructure.

Re: Tesla races past $100B in market valuation

#64

Post by bryanlarsen »

nerdkid93 wrote: post #2

I for the life of me cannot figure out what could possibly justify this valuation for Tesla. Sure, their cars are pretty great, they have a ravid fanbase, and they have a pretty entertaining CEO who excels at driving interest in the company. They would need to execute perfectly and deliver more cars to customers than Volkswagen in a few years to justify such a valuation right now, and I just don't see that happening…

IMO, the best metric for comparison of the two companies is the ratio of Enterprise Value to Sales. (P/S doesn't work as well because of the massive debt loads of car companies).

For VWAGY, the ratio is about 1: $240B of sales and $260B EV. For Tesla, the ratio is about 4.5: $24B of sales and $108B EV.

4.5 is not a massive number for this ratio. It indicates the market expects growth, but not hit-it-out-of-the-park growth.

1 is a relatively small number; the market is expecting Volkswagen to shrink slightly.

Re: Tesla races past $100B in market valuation

#65

Post by kire2345 »

agumonkey wrote: post #57
reilly3000 wrote: post #17

Earlier quoted context omitted.

With each car they get a lifetime of service revenue, mostly without competition. They expand their network effect, their supercharger footprint, and their technology lead as they maintain momentum. Cybertruck is poised to be a giant success, reaching into new markets outside of traditional EV buyers and into rural and suburban light trucks, the highest margin section of auto sales. Finally, its prominence attracts u…

> Cybertruck have they published pre-orders numbers ? I thought it was pretty much a PR stunt without any real product line behind.

250k 100€ refundable deposits

Re: Tesla races past $100B in market valuation

#66

Post by xedeon »

nerdkid93 wrote: post #2

I for the life of me cannot figure out what could possibly justify this valuation for Tesla. Sure, their cars are pretty great, they have a ravid fanbase, and they have a pretty entertaining CEO who excels at driving interest in the company. They would need to execute perfectly and deliver more cars to customers than Volkswagen in a few years to justify such a valuation right now, and I just don't see that happening…

You're missing quite a few more... Solar, Energy Storage, Battery and Drivetrain tech, Supercharger Network, and the possibility of the cars becoming the"third screen" a curated app store would bring tons of revenue.

They are more than just an "auto manufacturer".

Re: Tesla races past $100B in market valuation

#67

Post by close04 »

reilly3000 wrote: post #17
nerdkid93 wrote: post #2

I for the life of me cannot figure out what could possibly justify this valuation for Tesla. Sure, their cars are pretty great, they have a ravid fanbase, and they have a pretty entertaining CEO who excels at driving interest in the company. They would need to execute perfectly and deliver more cars to customers than Volkswagen in a few years to justify such a valuation right now, and I just don't see that happening…

With each car they get a lifetime of service revenue, mostly without competition. They expand their network effect, their supercharger footprint, and their technology lead as they maintain momentum. Cybertruck is poised to be a giant success, reaching into new markets outside of traditional EV buyers and into rural and suburban light trucks, the highest margin section of auto sales. Finally, its prominence attracts u…

> a lifetime of service revenue

That's a fraction of what a regular ICE car brings in. Unless you include a battery swap an EV is unlikely to be able to command the same maintenance costs over its lifetime. That's actually one of the big pro-EV arguments, isn't it?

And having exclusivity on service revenue doesn't necessarily have to work in their favor if the network of garages is not extensive enough. People also want convenience and if you're locked in to a service network that can't deliver it you may only do it until the next purchase. There's only so much exclusivity you can impose until the market starts to reject you locking them in or you cross a legal boundary (think "right to repair" type discussions).

I think the valuation is based on the expectation that the trend continues, Tesla will stay market leader for EVs. If that's the case and they maintain or expand their lead as the market grows than the current valuation might even be too small. If not it will probably stabilize somewhere lower, just like any other car manufacturer not at the top today.

Re: Tesla races past $100B in market valuation

#68

Post by zip1234 »

Quarrelsome wrote: post #59
himinlomax wrote: post #28

Earlier quoted context omitted.

I can see one good reason: the rest of the auto industry is playing catch up with Tesla. Nobody else afaik is even able to do over the air updates (reliable updates, that is). They have a charging network, the competition basically doesn't and can't seem to get their act together, and that's not even really a technological issue.

they do "over the air" updates? Of the software that powers the vehicle? Isn't that an _exceptionally_ dangerous vector?

It depends on how they do it. It very well could be :)

Re: Tesla races past $100B in market valuation

#69

Post by jotakami »

alharith wrote: post #18
maxdo wrote: post #11

Key answer is margin , their margin is high , traditional Automakers - low . With things like cyber truck , the gap is getting bigger.

My speculation (and this is all speculation at the end of the day to some degree) is I also think the success of other companies impact each other, such as the recent successful SpaceX abort test. For homework one night I will run an analysis showing the rise and fall of Tesla and SpaceX stock over each other mapped to positive news. I am hypothesizing there is a correlation.

SpaceX is not publicly traded, so there’s no stock price to use for such an analysis

Re: Tesla races past $100B in market valuation

#70

Post by dangerlibrary »

Quarrelsome wrote: post #59
himinlomax wrote: post #28

Earlier quoted context omitted.

I can see one good reason: the rest of the auto industry is playing catch up with Tesla. Nobody else afaik is even able to do over the air updates (reliable updates, that is). They have a charging network, the competition basically doesn't and can't seem to get their act together, and that's not even really a technological issue.

they do "over the air" updates? Of the software that powers the vehicle? Isn't that an _exceptionally_ dangerous vector?

yep
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