Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Tesla races past $100B in market valuation

reuters.com

Post reply on HN
Print view View original

161–170 of 360 posts

Re: Tesla races past $100B in market valuation

#161

Post by davidivadavid »

TekMol wrote: post #109
davidivadavid wrote: post #85

Earlier quoted context omitted.

What's your discount rate for Tesla? Now, taking that into account (profits past a certain time period are essentially discounted to 0), over what period of time should they realistically collect that money for the valuation to make sense?

It is not specific to Tesla. https://en.wikipedia.org/wiki/Present_value If we assume a 3% inflation rate, 2030s earnings need to be discounted by 34%. 2040s earnings by 56%. And 2040s earnings by 71%. As you can see, even 2040 earnings still have a substantial impact on today's value.

Erm, I know what present value is. The discount rate for Tesla is not 3%, unless you think it's a risk-free asset (it's not).

Re: Tesla races past $100B in market valuation

#162

Post by xedeon »

stanferder wrote: post #48
xedeon wrote: post #39

Earlier quoted context omitted.

That upgrade process on the app is a three step-process when two confirmations. That's not including unlocking a phone, opening the Tesla app and selecting the upgrades menu... Quite impossible to "fat-finger" it.

I don't have the app (or car) so I can't verify for myself, but now it's hard to reconcile your statement with the twitter thread analysis I referenced above. EDIT: Maybe it's a discrepancy about what a "confirmation" is? If the author of the twitter thread is correct, the "confirmation" is just a large button on the screen that doesn't require password re-entry, which is not much of a confirmation. He proposes that…

I have the app and now exactly how it works. That's why I replied. I can even do a screen recording and show you, if you want.

Re: Tesla races past $100B in market valuation

#163

Post by mediaman »

trhway wrote: post #42
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…

Tesla ARR (edit as it seems to get some people confused: "Annualized Run Rate") is something like $25B/year. That for tech company easily makes for $250B+ valuation. (and yes i do own some) >than Volkswagen those dinosaurs are still not getting it. They continue to stay car companies instead of becoming tech companies. Paradigm shift must be very well familiar to tech people here at HN.

ARR is not a synonym for "revenue." Tesla's total revenue was $6.3bn for the last reported quarter, an annual run rate of $25.2bn. That's all sales, nearly all of which are sales of new vehicles.

Sales of durable new vehicles does not fit the definition of "annual recurring revenue" by any stretch of the imagination. ARR is valued highly because it implies steady revenue from each customer. Less the churn rate, it makes for a super steady long tail of cash flows. Once you've made a sale, you can count on that sale again the next year, and success of new sales builds on that existing base of recurring sales. These kinds of revenues tend to be more resistant to recessions, changes in preferences, etc., versus churning through new customers every year.

Car companies are the exact opposite. Sell a car? Great, you have to sell another car to someone else next year just to tread water. Your customers don't buy new cars every year. Maybe in five to ten years they'll come back to you.

That's why ARR is worth so much more, and why a durable goods maker does not get a high valuation because of their ARR. They're different business models.

In short, one can't justify Tesla's revenue valuation multiple based on multiples of ARR subscription companies.

Re: Tesla races past $100B in market valuation

#164

Post by KoftaBob »

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…

If all they did was produce cars, then yes, the valuation wouldn't make sense.

But you're completely ignoring their solar panel and battery production business. Those two things on their own will make them a powerhouse in the upcoming renewable energy industry. Solar panels on residential homes with batteries for storage/backup + utility level solar fields with utility level battery arrays = a massive business on its own.

People make the mistake of comparing them to GM or Ford, when in reality they're the equivalent of General Motors + General Electric.

Re: Tesla races past $100B in market valuation

#165

Post by njarboe »

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.

The Model-X is really like a mini-van. High price, but similar functionality. Seats five adults + two kids. Maybe Tesla will drop the price over time. I think Elon Musk built it as the car he would want to take his family around in. He later said he regretted building that model as it took too long to develop and set back introducing the model three by a year or two.

Re: Tesla races past $100B in market valuation

#166

Post by _ea1k »

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%.)

Yeah, Apple has targetted 40% for a long time and tends to stay pretty close to it. Tesla has often said that their target is 25%, but they've rarely been able to hit it.

OTOH, if they were able to get margins back to 25%, these valuations would start to look a lot less crazy.

Re: Tesla races past $100B in market valuation

#167

Post by ctdonath »

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…

ICE autos are locked into three near-monopoly supports:

- Manufacturing scale is enormous, with vast supply chains and deeply ingrained middlemen & unions locking in prices.

- Sales is via local monopolies(-ish) which dictate what models & variants of a few brands are available & manufactured.

- Power comes from an infrastructure of commodity stations which are not controlled by vehicle manufacturers.

Most EVs are a modification of this: made by the same few brands, defined & sold by the same few dealers, powered by a mundane infrastructure of independent power suppliers.

Tesla has transcended this model:

- Manufacturing is extremely concentrated & efficient, built ground-up in-house.

- Sales is online to-your-door. The few showrooms are just that: show rooms, letting you experience a couple premium builds. (I expect one benefit of self-driving is your by-credit-card purchase will literally deliver itself; ~$0 delivery cost.)

- [Inter-]national "supercharger" network assures you can go anywhere; owned by Tesla, it is optimized for the vehicle and cuts out independent business' cut of profits.

This is huge.

Apple succeeded in large part because it's a one-stop-shop for personal information tools; the entire ecosystem is owned & optimized by one business, keeping TCO relatively low yet profits for that business high & sustained. Not beholden to anyone else, Apple can perfect a few devices for a total 24/7 user experience.

Tesla is following similar: I can tap a couple buttons on my phone and a car will appear a couple days later, having extreme longevity & desirability, powered mostly at home and nationally by cheap & optimized chargers - with no third-party overhead & complications. That vs the EV I last had, involving needless extra costs & confusion from a dealer, unable to fast-charge, and otherwise (while nice) failed to go above-and-beyond.

Eagerly awaiting Cybertruck.

Re: Tesla races past $100B in market valuation

#168

Post by jansan »

kgwgk wrote: post #133

The article doesn’t mention (or I’ve missed it) the short squeeze aspect which is definitely one of the drivers. https://investorplace.com/2020/01/play-tesla-stock-short-squ...

In 2008 Volkswagen was the highest valuable company on the planet due to a massive short squeeze. Something similar seems to be happening right now with Tesla and it will be interesting to see who is on the losing side this time. In 2008 one German billionaire lost all his money and committed suicide.

Re: Tesla races past $100B in market valuation

#169

Post by cmpolis »

trhway wrote: post #42
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…

Tesla ARR (edit as it seems to get some people confused: "Annualized Run Rate") is something like $25B/year. That for tech company easily makes for $250B+ valuation. (and yes i do own some) >than Volkswagen those dinosaurs are still not getting it. They continue to stay car companies instead of becoming tech companies. Paradigm shift must be very well familiar to tech people here at HN.

Why should it be valued on a revenue multiple similar to a tech company? Tesla has gross margins more similar to other auto manufacturers.

Re: Tesla races past $100B in market valuation

#170

Post by mlyle »

ethbro wrote: post #152
Reedx wrote: post #120

Earlier quoted context omitted.

That's a good point, though this may still happen between superchargers and Telsa apps/games - which could leverage your historical driving data.

> Telsa apps/games This is the only thing that remotely justifies their current valuation. If you expect them to crush it in China + monetize their install base via creating an app platform for 3rd party apps + get to self-driving. People forget that EVs are going to likely be on the road a lot longer than ICEVs, due to lower wear-and-tear. Past battery capacity degradation, there isn't much to break.

App stores are lucrative and all, but there's just not that many cars compared to iPhones / Android phones to sell apps to.
Post reply on HN