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Why Tesla stock is vastly overpriced

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Re: Why Tesla stock is vastly overpriced

#51

Post by shyn3 »

ashtonkem wrote: post #46
shyn3 wrote: post #21

Earlier quoted context omitted.

I think they will all die because they are too far to innovate it's why I finally bought shares after the split [1]. [1] https://news.ycombinator.com/item?id=25214484

Betting that every single one of those car companies will die is a wildly risky bet. One can believe that Tesla might replace one of them, but all of them? Be reasonable.

There are a lot of companies dedicated to EVs. The larger companies are going to have to buy the smaller winners to be relevant. The issue is the dealer network laws are going to hurt the existing companies, I think.

NKLA (seems like a scam), NIO (seems really good), and with a huge amount of SPACs buying EV companies, they are going to have lots of room to grow. Also many of these companies have been operating for a decade trying to create a product like KNDI, PLUG and they are getting closer with their products. I didn't jump into TSLA early as it wasn't profitable, but now they are making money so it fits my investment principles.

Take a look and do some research here at the competitors to the traditional car dealers [1].

[1] https://docs.google.com/spreadsheets/d/1sKMfBZNkHdvaVKmweuv3...

Re: Why Tesla stock is vastly overpriced

#52

Post by gamblor956 »

pkulak wrote: post #40
foepys wrote: post #20

Earlier quoted context omitted.

> and will likely have to license There are already a dozen other electric models on the streets. Why should they have to license from Tesla? The electric engine part of the vehicles is actually not that hard - it's the battery that is complicated and Tesla doesn't even produce the batteries in their cars. That's done by Panasonic. VW, Toyota, Nissan have supply chain management under control, they don't need to lear…

That new motor that Tesla uses is pretty amazing, and must at least be difficult since almost no other companies use it and instead just deal with reduced range and efficiency.

Tesla's motor isn't what drives the range and efficiency; the battery assembly is their key differentiator. Tesla currently has the industry-leading thermal design; it's ability to cool batteries and prevent thermal-based degradation is far more efficient/effective than anything that competitors have yet been able to put on the market.

Supposedly GM's Ultium battery platform will equal or exceed Tesla's batteries, but that remains to be seen as the first Ultium-based cars don't come out until 2H 2021 and all we have to go on right now are press releases.

VW holds some patents and exclusive licenses on solid state batteries, and is planning to go all EV within the next few years, though the SSB autos aren't expected until 2025 at the earliest, assuming VW is able to commercialize the technology.

Re: Why Tesla stock is vastly overpriced

#53

Post by cronix »

gamblor956 wrote: post #24
mattnewton wrote: post #16

Earlier quoted context omitted.

I too think tesla is overvalued, but your comparison to ICE companies strikes me as missing that they have fundamentally different technologies those other companies are no where near developing on their own and will likely have to license. Tesla investors are betting that a lot of the ICE based car expertise will be worth just pennies on the dollar if the shift to electric cars happens en masse.

What fundamentally different technologies do you believe they are nowhere near developing? Multiple other manufacturers already make and sell EVs, in some cases outselling Tesla in their home territories. Moreover, while Tesla assembles their own batteries, the underlying battery cells are made for them by Panasonic, which owns the IP to the chemistry. (Tesla's IP relates to the assembly, referring both to the proces…

What are your thoughts on the upcoming battery tech from Tesla they announced during their "battery day" in September? Your comments don't seem to reflect what they've been working on and what's coming.

https://www.youtube.com/watch?v=l6T9xIeZTds

Re: Why Tesla stock is vastly overpriced

#54

Post by proverbialbunny »

This is a pretty great walk down memory lane, but it helps to keep in mind _why_ Yahoo failed so badly. After all, history does not repeat itself but it does rhyme.

Yahoo failed, because a new competitor popped up, Google. Yahoo at one point in time was the market leading search engine, which was a pretty big deal. But then when Google popped up, not only did it take users from Yahoo, it took its market cap as well. If you had invested in Yahoo, gotten out when its customers started moving to Google, and then invested in Google when it went IPO you'd be quite rich today. Value investing wins again.

What if we look at TSLA from a value investing lense as a way to compare and contrast: Tesla is currently leading the market when it comes to electric cars and self driving cars. However, Cruise (GM's baby) filed with the CA DMW two weeks ago to have commercial fully self driving cars on the road in the near future. It looks like in the coming years GM will take a large chunk out of Tesla's self driving technology. However, unlike Yahoo to Google, do you really want to buy a GM car? Will GM steal customers from Tesla? GM's rapport is ruined. Their cars go 80,000 to 120,000 thousand miles, fall apart, are a maintenance burden, are not amazing in any way, and let us not forget: They filed for bankruptcy only 10 years (or so) ago, and haven't exactly improved since then. So, yes they may be able to take some market share from Tesla, but until Toyota, BMW, or similar gets fully autonomous self driving tech, I imagine Tesla is still going to be the most desirable car on the road, which will keep its stock strong.

Re: Why Tesla stock is vastly overpriced

#55

Post by gamblor956 »

cronix wrote: post #53
gamblor956 wrote: post #24

Earlier quoted context omitted.

What fundamentally different technologies do you believe they are nowhere near developing? Multiple other manufacturers already make and sell EVs, in some cases outselling Tesla in their home territories. Moreover, while Tesla assembles their own batteries, the underlying battery cells are made for them by Panasonic, which owns the IP to the chemistry. (Tesla's IP relates to the assembly, referring both to the proces…

What are your thoughts on the upcoming battery tech from Tesla they announced during their "battery day" in September? Your comments don't seem to reflect what they've been working on and what's coming. https://www.youtube.com/watch?v=l6T9xIeZTds

Tesla announced plans to eventually make tabless batteries, which theoretically could increase range by 16%. With everything Musk related, take the original deadline given and add 3 years. As no deadline for this was given, I assume this tech is not yet commercially viable.

Note that Panasonic, which will actually be making the batteries, has indicated in its own investor releases that it is working on developing the batteries but they aren't anywhere close to production-ready yet.

The other announcements relate to making the batteries cheaper, but would not otherwise extend performance (and in some cases would reduce performance, but due to the reduced costs would come out ahead on a $/kWh basis).

Re: Why Tesla stock is vastly overpriced

#56

Post by ksec »

zaroth wrote: post #42
ksec wrote: post #41

Earlier quoted context omitted.

Thank You. Are there any easy way to simply get this Data without manually looking up each Stock's balance sheet?

Basically that’s what I had to do, but on macrotrends.net

Thank You again for your time and input.

Re: Why Tesla stock is vastly overpriced

#57

Post by valuearb »

sb057 wrote: post #9

Here's a two-second method to determine whether TSLA is overpriced: currently, their market cap is $659B. The combined caps of Toyota, Volkswagen, Mercedes-Benz, Porsche, BMW, Honda, General Motors, Ford, and Nissan is only $629B. So unless Tesla is worth $30 billion more than all of those companies combined, either those companies are undervalued, or Tesla is massively overvalued. Keep in mind, Tesla sold 367,500 ca…

Ignoring debt and actual enterprise values, the more important point is that any business valuation produced by comparing to market prices of other businesses is flawed at best.

Unless you are one if the few and nearly extinct economists who believe the stock market is perfectly efficient, comparing by market price often leads to justifying one mis-pricing by another mis-pricing.

For example, Yahoos ridiculous pricing during the bubble could always be justified by even more ridiculous prices for companies with near zero revenues by pointing out Yahoo had revenues and was growing them incredibly fast.

The only question you need to ask about Tesla is how can a $30B revenue company be worth a $680B valuation? How long before Tesla’s earnings catch up to the risk free returns on $680B (roughly $32B/year)?

Assuming an optimistic 15% after tax profit margin for the rest of its life, Tesla would have to grow revenues seven times. At 15% a year, revenues double ever 5 years. So in roughly 14 years Tesla would be reach an annual after tax profit of $32B. And it would still be $200B behind in total net profits, it takes nearly 20 years for Tesla to generate more total net profit than the risk free investment.

Is that reasonable? It all depends on the risk Tesla falls short, and whatever assumptions are in your DCF analysis. That’s a long time to catch up, I’m gonna go out on a limb and say far from a slam dunk.

Re: Why Tesla stock is vastly overpriced

#58

Post by WheelsAtLarge »

peter_d_sherman wrote: post #37

Er, yes, but... Everything in Economics/Business/Transactions can be thought of as having two separate dimensions: 1) Intrinsic Value 2) Perceptual Value (that is, all value that is not intrinsic) We might call #2 "Speculative Value" or value that can change relative to outside circumstances or conditions, and #1 value that cannot so easily change, perhaps "Fixed Value" or "Constant Value". Now, if your idea that Tes…

So true...

"2) Perceptual Value (that is not intrinsic)" i.e. extrinsic value. This is the part that most stock investors don't factor into their equations but is something that has a huge impact on how the stock is valued and priced.

In general accepted accounting practices there is something called "good will" that is similar. And it's how companies account for the value that is in addition to the economic value of an acquired company. It's completely legal and correct accounting. I think financial analysts need to have something similar so they can at least try to price a stock correctly.

Eventually all stocks find their true value. Right now people are thinking of a future where Tesla will dominate the car industry plus a few other industries. True or not that's where we are.

In reality Tesla is no different than many growth stocks of the past. The difference is that it has a CEO that can promote his dreams to a very large audience on a very short time. People are then compelled to buy the stock and drive it up.

I'm sure we'll see similar rising stocks like Tesla in the future.

All this to say that this article is not taking all variables into account when pricing the stock.

Re: Why Tesla stock is vastly overpriced

#59

Post by tekkk »

gamblor956 wrote: post #24
mattnewton wrote: post #16

Earlier quoted context omitted.

I too think tesla is overvalued, but your comparison to ICE companies strikes me as missing that they have fundamentally different technologies those other companies are no where near developing on their own and will likely have to license. Tesla investors are betting that a lot of the ICE based car expertise will be worth just pennies on the dollar if the shift to electric cars happens en masse.

What fundamentally different technologies do you believe they are nowhere near developing? Multiple other manufacturers already make and sell EVs, in some cases outselling Tesla in their home territories. Moreover, while Tesla assembles their own batteries, the underlying battery cells are made for them by Panasonic, which owns the IP to the chemistry. (Tesla's IP relates to the assembly, referring both to the proces…

Yes I also find these arguments absurd. These companies have been building cars for decades and now suddenly they would be somehow out of their element switching complex combustion engines to much simpler electric motors? Unless Tesla makes some fundamental advancement in battery technology (which again as you pointed out, is not even their IP) it doesn't seem there is that much of a gap.

This appears to have a lot of similarities with the dot-com bubble where the new internet companies were thought to quickly overrun the old, "uncool" companies. It just doesn't happen like that. Plus there is a vested interest in the home countries of these car companies to see that these companies survive. Sure some of them might be ripe for losing a lot of market share, but they still have time to catch up as the world is slowly turning to mostly EVs. It's not the same as with internet companies where people can switch their search engine the next day if they so desire.

Re: Why Tesla stock is vastly overpriced

#60

Post by pdog »

statguy wrote: post #50
zaroth wrote: post #19

Earlier quoted context omitted.

You’re trying to value a company without looking at debt, so you’re missing the big picture. Total Debt: VW. $237B GM. $192B Toyota. $190B Ford. $155B Daimler.$108B Nissan. $42B BMW. $80B Honda. $42B So your market cap analysis missed ~$1 trillion of enterprise value in your comparison set. Simply put, the stock market cap is the total company value minus the debt. Tesla debt by comparison is $14 billion. All those c…

Tesla sells less than 1% of the vehicles that these companies sell combined. Are you seriously suggesting that Tesla production will increase by 100x within a decade? Even if we assume that 100% of the vehicles sold in a decade are electric (highly unlikely), the majority of the increase is likely to come from the other companies. They are not going to sit still and let Tesla devour them.

> Are you seriously suggesting that Tesla production will increase by 100x within a decade?

Tesla scaling electric vehicle and battery production by 60% CAGR for a decade doesn't seem too ridiculous when you put it that way. And that doesn't factor in new products. Look at Apple in 2007.

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