Tesla races past $100B in market valuation • Hacker News Board

Re: Tesla races past $100B in market valuation

#141

Post by onlyrealcuzzo » Wed, Jan 22, 2020, 5:12 PM UTC

SpicyLemonZest wrote: post #107

onlyrealcuzzo wrote: post #94

Earlier quoted context omitted.

The important thing Tesla doesn't have that Apple does have is a 70% gross margin.

Where'd you get that number from? The sources I can find say Apple's gross margin is a bit under 40%. (Tesla's by comparison hovers around 20%.)

Most of Apple's profits -- as of a few years ago -- came from iPhone sales. I'm pretty sure this is still true. In ~2015, the iPhone had a 63% margin.

It looks like the company as a whole averages a ~40% gross margin [1]. Tesla's appears to be closer to ~15%, with many highly negative quarters [2].

Of course, net income to revenue is probably more important to look at in this case. Apple's is consistently above ~20%. Tesla's has mostly been negative, and the highest it's ever been is around ~2%.

Tesla would need to sell roughly 10 times as many cars at the same margin to meet Toyota/Volkswagen/GM valuations. If Tesla were based on it's current financials, it would be valued at $5-$10Bn. It wouldn't be valued at $100Bn now if people thought it could be reasonably valued at $100Bn in the future. People must think it could reasonably be valued at $1T in 10 years.

For that to be true, Tesla would need to be selling 200% of cars on the planet. A lot of people think car sales have peaked. It's possible in 10 years there will be less cars sold. It's highly improbable there will be twice as many cars sold, and that all of them will belong to Tesla.

[1] https://ycharts.com/companies/AAPL/gross_profit_margin

[2] https://ycharts.com/companies/TSLA/gross_profit_margin

Re: Tesla races past $100B in market valuation

#142

Post by shuckles » Wed, Jan 22, 2020, 5:13 PM UTC

sillysaurusx wrote: post #52

If you're wondering what could possibly justify $100B, think in terms of "What if Tesla put all the other car companies out of business?" This isn't as unlikely as it seems: https://twitter.com/whyvert/status/1219288360096694273 Trucking revenue was $700B in 2017. There's a lot of room to grow.

The issue is that to justify a $100B valuation at current revenues means that the standard of proof is "likely" and not "not unlikely."

Re: Tesla races past $100B in market valuation

#143

Post by [deleted] » Wed, Jan 22, 2020, 5:13 PM UTC

xenospn wrote: post #50

fjabre wrote: post #30

Earlier quoted context omitted.

Musk is a disrupter and he is disrupting this industry turning it on its head. We've been stuck in the same boring recycled car designs and concepts for decades and here comes Elon with the promise of self driving flying cars on their way to Mars with SpaceX in the background making incredible strides forward everyday. To be honest I think this valuation is too low. Elon continues to eat the competition's lunch on a…

Correct me if I'm wrong (and I've been a Tesla fan for years, and invested back when they first IPOd), but isn't the Porsche Taycan superior to the Model S in every way (except for a slightly shorter range)? If Porsche can "catch up" and leapfrog the Model S in just their first iteration, I'm pretty sure Tesla's growth is going to slow down significantly going forward.

[deleted]

Re: Tesla races past $100B in market valuation

#144

Post by sixQuarks » Wed, Jan 22, 2020, 5:13 PM UTC

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…

It's simple, I don't see why more people don't get it.

The stock is mostly about anticipation about the future. Tesla has hit all of its stated goals from 2009. Elon's other venture, SpaceX has also hit most of its stated goals or is on track to hit them.

These are world-changing goals, not your normal everyday corporate goals. Elon has proven he can hit them. The goals set out for the next 10 years are also incredible goals, which should set the company up to be a trillion dollar market cap if the goals are reached.

Re: Tesla races past $100B in market valuation

#145

Post by slg » Wed, Jan 22, 2020, 5:13 PM UTC

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 shouldn't look at Tesla as just a company that sells cars. Uber has a market cap of $64b. If Tesla ever nails self driving, they could turn themselves into Uber almost overnight by deploying that tech to their already sold fleet of vehicles. That obviously isn't a guarantee and I wouldn't even say it the most likely outcome, but even at a low probability it is a possibility that likely adds billions to the company's valuation. There are similar scenarios for other industries with their solar, battery, and trucking businesses.

Re: Tesla races past $100B in market valuation

#146

Post by _ea1k » Wed, Jan 22, 2020, 5:13 PM UTC

gonehome wrote: post #135

stephencanon wrote: post #113

Earlier quoted context omitted.

> Also, Musk is right: no one else has even come close to matching the 2012 Model S. Tesla's lead is starting to look unassailable (in the medium term). This is kinda sorta true, if you ignore non-performance factors, but also no one actually needs what Model S provides. In the classic setup for disruption Tesla isn't the disruptor, it's the established "high quality use" getting disrupted. It is not very unreasonabl…

This still sounds like the iPhone to me. A lot of other competitors will make android devices that are similar and eventually get a large market share, but the iPhone still dominates the higher end with better margins.

Indeed... its already happened with the Bolt. It beats the Model 3 on several objective practicality metrics.

It is also slower and perceived as less attractive. Due to poor marketing, I suspect most perceive it to be much slower, rather than just somewhat slower.

It sells really poorly. Most of these other competitors are going to run into the same fate for years.

Re: Tesla races past $100B in market valuation

#147

Post by cestith » Wed, Jan 22, 2020, 5:13 PM UTC

This is near the market valuation on IBM. https://seekingalpha.com/article/4318281-ibm-turnaround-is

Watch for some adjustments when people take (legal or publicity) action over troublesome app and website design.

https://twitter.com/tedstein/status/1144270122959417346

https://twitter.com/tedstein/status/1219406746868953088

Re: Tesla races past $100B in market valuation

#148

Post by bryanlarsen » Wed, Jan 22, 2020, 5:13 PM UTC

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…

A $100B market cap for a fast growing company with $25B in annual sales is on the cheap side, if anything.

The real question is why is VWAGY valued so poorly? A $100B market cap for a company with $240B in annual sales means the market is quite pessimistic about VW.

Re: Tesla races past $100B in market valuation

#149

Post by philosopher1234 » Wed, Jan 22, 2020, 5:14 PM UTC

aynyc wrote: post #40

I don't know how to value a stock, but after riding in my friend's Tesla a few times on road trips. I seriously doubt I'll buy a ICE car ever again unless for specific purposes (mini-van). I know 10 people who owns Tesla, the 6 or so friends I've spoken about it feel the same way as I do. If this keeps up, I think Tesla's stock price is under valued.

I appreciate that you liked the experience, but since I have not had that experience, would you mind explaining what it is that made you feel so strongly about the car?

Re: Tesla races past $100B in market valuation

#150

Post by hnarn » Wed, Jan 22, 2020, 5:14 PM UTC

Beyond the expected comments about Tesla being the iPod of the auto industry, I personally feel like these types of valuations during the beginning of an economical slowdown can be judged by the duck test. If it looks like a bubble, and sounds like a bubble, it will probably pop like a bubble. Unfortunately, most of the time this opinion will be grouped together with "Tesla haters", of which I'm definitely not one. I love Tesla and I want them to succeed, but runaway valuations based on hopes and dreams are normal in a bubble, and when you look around I see a lot more factors saying "yes" than those saying "no" when I wonder if this is another tech bubble or not. When valuations will level out though, noone knows.