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AMD passes Intel in market cap

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Re: AMD passes Intel in market cap

#61

Post by itsoktocry »

Aloha wrote: post #56
njarboe wrote: post #51

Earlier quoted context omitted.

The top ten automakers have huge amounts of debt and pension liabilities. Tesla has neither. None of them are making profitable EVs at scale. Tesla has been hitting their goal of growing at 50% per year for a decade and plans to continue until they are making 20 million cars a year in 2030. Their gross margin on cars is the highest in the industry. The next 5 years are critical for the existing players and many will…

I dont think they can continue to grow at that rate and preserve their gross margin. The high end part of the market isnt large enough to sustain 20m cars a year. To give you an idea, for scale, the two largest producers made 10m each in 2019 roughly respectively - and those two are VW and Toyota. I cannot see in any way for Tesla to displace that many units and maintain their margins at the level they have them. The…

>and maintain their margins at the level they have them.

Tesla's margins shrunk quite a bit last earnings report, so I agree. Selling high-end cars in a niche market is easier than selling 20 million cars annually (which no one has ever done before).

Re: AMD passes Intel in market cap

#62

Post by game-of-throws »

The_Colonel wrote: post #40
mimikatz wrote: post #21

Earlier quoted context omitted.

Yes we do, that's literally what a marketcap is. People who are sure it isn't correct can beat against it and profit in the correction.

Shorting is much more risky than buying stocks. Compare: 1) I'm confident that in the long term, company X will grow in value. I invest $1000 and will wait however long it will take, 10 or more years. I risk these $1000 only, but can earn multiple of it. 2) I'm confident that in the long term, company Y will decrease in value. I can short it with $1000, however either I risk much more than $1000 or I can't set the ti…

There are ways to bet against stocks that don't expose you to unlimited downside.

Re: AMD passes Intel in market cap

#63

Post by victor106 »

njarboe wrote: post #51
elromulous wrote: post #18

So I'm very much in camp AMD. But, market cap has proven over and over again to be kind of bogus. E.g. do we really think Tesla is actually worth more than the rest of the top 10 or so automakers?

The top ten automakers have huge amounts of debt and pension liabilities. Tesla has neither. None of them are making profitable EVs at scale. Tesla has been hitting their goal of growing at 50% per year for a decade and plans to continue until they are making 20 million cars a year in 2030. Their gross margin on cars is the highest in the industry. The next 5 years are critical for the existing players and many will…

> a stealth bailout of the domestic auto industry with a $7500 tax credit on cars that have just $750 worth of batteries in them.

As it currently stands the $7500 limit is only for the first 200,000 cars. Tesla benefited a lot from it and exhausted its limit back in 2018.

https://www.reuters.com/article/us-tesla-tax-credit/tesla-hi...

Re: AMD passes Intel in market cap

#64

Post by The_Colonel »

game-of-throws wrote: post #62
The_Colonel wrote: post #40

Earlier quoted context omitted.

Shorting is much more risky than buying stocks. Compare: 1) I'm confident that in the long term, company X will grow in value. I invest $1000 and will wait however long it will take, 10 or more years. I risk these $1000 only, but can earn multiple of it. 2) I'm confident that in the long term, company Y will decrease in value. I can short it with $1000, however either I risk much more than $1000 or I can't set the ti…

There are ways to bet against stocks that don't expose you to unlimited downside.

Do you have more information? I'm interested.

Re: AMD passes Intel in market cap

#65

Post by itsoktocry »

theropost wrote: post #30
elromulous wrote: post #18

So I'm very much in camp AMD. But, market cap has proven over and over again to be kind of bogus. E.g. do we really think Tesla is actually worth more than the rest of the top 10 or so automakers?

Yes, people think Tesla is more valuable than the other car markets combined. I honestly don't see the ICE manufacturers really having an edge when it comes to the future of transportation. If anything, I see them having a huge liability - that is a large workforce to reskill, pensions to pay, antiquitated plants to upgrade/maintain, old supply chains to wind down, new supply chains to wind up - if anything, newer en…

>antiquitated plants to upgrade/maintain

Compare a state-of-the-art BMW plant to any Tesla plant. Modern auto OEMs have been full automation for a long time.

Re: AMD passes Intel in market cap

#66

Post by 300bps »

wavefunction22 wrote: post #49
mimikatz wrote: post #21

Earlier quoted context omitted.

Yes we do, that's literally what a marketcap is. People who are sure it isn't correct can beat against it and profit in the correction.

I think market cap is a bit misleading. Enterprise value (market cap + net debt) is a more consistent valuation measure. The house analogy is a helpful one. Let's say I buy a million dollar house but I only have $100K of equity in it so far. My market cap is $100K and my debt is $900K. I'd argue that the house is still worth a million dollars. This is important here since Tesla has much less debt vs. the rest of the…

Market cap should take into consideration debt and all other valuation variables of a company. It’s literally what people are saying the company is worth. If you subtract debt from market cap to get the value of a company you’ll be subtracting debt twice.

Your house analogy and the way you explained it does not make sense to me. Since market cap is what the market is saying a company is worth, it isn’t right to equate that to the “$100k of equity” in your example house. It’s more correct to equate it to the $1 million value the house has.

Re: AMD passes Intel in market cap

#67

Post by sorry_outta_gas »

UncleOxidant wrote: post #60
theropost wrote: post #30

Earlier quoted context omitted.

Yes, people think Tesla is more valuable than the other car markets combined. I honestly don't see the ICE manufacturers really having an edge when it comes to the future of transportation. If anything, I see them having a huge liability - that is a large workforce to reskill, pensions to pay, antiquitated plants to upgrade/maintain, old supply chains to wind down, new supply chains to wind up - if anything, newer en…

> I honestly don't see the ICE manufacturers really having an edge when it comes to the future of transportation. I honestly don't see that it's difficult for ICE manufacturers to compete in the EV space. We're seeing most ICE companies at least dipping their toes into the EV space, and in some cases they're going all in (Hyundai/Kia, VW, for example) and offering strong alternatives to Tesla.

If anything EV seems easier than ICE

Re: AMD passes Intel in market cap

#69

Post by mg »

Aloha wrote: post #56
njarboe wrote: post #51

Earlier quoted context omitted.

The top ten automakers have huge amounts of debt and pension liabilities. Tesla has neither. None of them are making profitable EVs at scale. Tesla has been hitting their goal of growing at 50% per year for a decade and plans to continue until they are making 20 million cars a year in 2030. Their gross margin on cars is the highest in the industry. The next 5 years are critical for the existing players and many will…

I dont think they can continue to grow at that rate and preserve their gross margin. The high end part of the market isnt large enough to sustain 20m cars a year. To give you an idea, for scale, the two largest producers made 10m each in 2019 roughly respectively - and those two are VW and Toyota. I cannot see in any way for Tesla to displace that many units and maintain their margins at the level they have them. The…

I heard the same arguments when Apple had a hit with the iPhone. The high end of the market is saturated, and soon the competition would bring down the prices. But the price of the iPhone continued to go up. It never stopped going up. Because it continued to offer more and more value.

People already see some value in Teslas self-driving technology. And that value will continue to go up for a long time.

Re: AMD passes Intel in market cap

#70

Post by jmyeet »

njarboe wrote: post #51
elromulous wrote: post #18

So I'm very much in camp AMD. But, market cap has proven over and over again to be kind of bogus. E.g. do we really think Tesla is actually worth more than the rest of the top 10 or so automakers?

The top ten automakers have huge amounts of debt and pension liabilities. Tesla has neither. None of them are making profitable EVs at scale. Tesla has been hitting their goal of growing at 50% per year for a decade and plans to continue until they are making 20 million cars a year in 2030. Their gross margin on cars is the highest in the industry. The next 5 years are critical for the existing players and many will…

Tesla's valuation is roughly $800,000 per car they shipped last year. Compare this to Ford, which is roughly $30,000. Quick googling shows Ford has $138B on total debt, a market cap of $60B and produced almost 2M cars. Tesla still has $30B in debt.

When you start looking at assets, it gets more interesting. Tesla's assets are ~$68B. Ford's $257B.

You can't just magically produce more cars. You need more people, more batteries, more factories and other significant capital expenditure.

My point is that "growth" is used as an excuse for Tesla's valuation but any look at comparative numbers should show you it's way out of whack compared to any auto maker. And as the F150 shows, Tesla's dominance of the EV market isn't as sticky as it would need to be to justify that valuation.

Cybertruck anyone?

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