Tesla Passes Ford by Market Value • Hacker News Board

Re: Tesla Passes Ford by Market Value

#241

Post by mywittyname » Mon, Apr 03, 2017, 6:17 PM UTC

stellar678 wrote: post #11

John23832 wrote: post #7

Earlier quoted context omitted.

If they can properly pivot into the electric car market, a lot. Ford has all the infrastructure that Tesla is attempting to build now (aside from the batteries, but that is something that Ford could easily partner with another manufacture to get). They know how to mass produce cars (granted right now, ICE cars). That's not an easy feat. They have a large manufacturing and maintenance base that, frankly, Tesla can't r…

> This is why Ford is unlikely to succeed at pivoting into the electric car market. The power and pull inside their company doesn't want them to. It will take superhuman leadership to overcome that force.

Ford is unique because it's controlled largely by the Ford family still, all of whom having a vested interest in the long-term profitability of Ford. If someone demonstrates to them that pivoting to electric vehicles is the best long-term strategy for the company, even at the expense of short-term profitability, they will do it.

Also, don't discount the importance of the cashflow from pickups. The only reason Chrysler and Dodge still exist is because of their anchorage to Jeep and RAM. Ford could eliminate their entire car division and still retain like 80% of their profits.

Re: Tesla Passes Ford by Market Value

#242

Post by austenallred » Mon, Apr 03, 2017, 6:17 PM UTC

plandis wrote: post #235

austenallred wrote: post #143

Earlier quoted context omitted.

There will always be overvaluations and undervaluations of companies relative to how they'll perform in the future. It's notoriously difficult to predict. In my opinion, however, while there may be some overvaluations now, we're not even in the same universe as we were in 1999/2000. Back then you could take an MBA with a powerpoint, put the word "Internet" on it, and they could conceivably IPO for hundreds of million…

I'd be very very interested in hearing why you invested everything into Tesla. Was your decision based on cold rational logic? Or was it simply "from the gut"?

I did a ton of analysis, and basically at the end of the day it came out to "will they hit their targets in Q3/Q4 2016 and Q1/Q2 2017?"

There's so much unknown that Tesla continuing to de-risk the business step by step gets them in line with the current valuations, and forward-looking it should go up.

So I figured that at $180 (a very low price for Tesla historically) that if they did what they were predicting (which no one thought they could) that they would crush the current stock price. They have since hit (or come very close to) all of their targets.

Now the entire question short-term is around how the M3 performs. Long-term Tesla is playing a game no one else even sees, so we'd be OK with a couple stumbles.

Re: Tesla Passes Ford by Market Value

#243

Post by hammock » Mon, Apr 03, 2017, 6:18 PM UTC

dabeeeenster wrote: post #208

Bill Ford gave a talk at SXSW, and I asked him the question "Why hasn't Ford built the gigafactory". He gave IMHO a really weak answer about how they weren't sure the economics of it worked out. Big car OEMs have so much invested in terms of R&D, brand and emotionally in the combustion engine that I think most are just not going to be able to make the jump to EVs. Nissan and BMW are trying, but they are still making…

He's right, the economics don't work out for a Ford. They only work out for a smaller, separately owned disruptor. Inevitable truth and pattern seen across all mature industries

Re: Tesla Passes Ford by Market Value

#244

Post by apexalpha » Mon, Apr 03, 2017, 6:19 PM UTC

dkrich wrote: post #204

seanmcdirmid wrote: post #168

Earlier quoted context omitted.

Market perception. Ford's P/E ratio is 9.89. IBM's P/E ratio is 14.02. Facebook's P/E ratio is 40.79. Tesla's P/E ratio is infinity since the E is negative. I'm sure Ford has done many incremental innovations, I didn't say they didn't. IBM does the same thing, and has "record profits" every few years also. Its just the market isn't expecting the next big thing to come from Ford, while they are expecting that from Tes…

I don't really like the analogy for several reasons, but what's wrong with IBM? Have you looked at their share price over the past 12 months? As of today, IBM is trading at around $164 billion market cap and paying out a dividend of over 3%. I'd say that's pretty good. I don't short stocks because I don't believe in trying to time the market. I actually think Tesla could move well north of where it is currently tradi…

In general people who invest in stock are people who work at big financial institutions. Not 'regular' people trading on their own. For individuals, picking stock in stead of just buying accross the board is really risky. So it doesn't matter what 'lots of people' think, really.

The only thing happening now is that investors seem to be extremely worried of 'missing the boat' on automated driving. See the big investment in Uber, a taxi company with an app that essentially anyone can copy. But they raised billions on the promise of automated driving.

The only thing here is the idea that the organisation that perfects automated driving first will dominate every transport sector. That seems far fetched to me though.

But hey, I'm just a regular person too. So maybe I'm dead wrong.

Re: Tesla Passes Ford by Market Value

#245

Post by jnicholasp » Mon, Apr 03, 2017, 6:21 PM UTC

TFortunato wrote: post #219

jnicholasp wrote: post #196

Earlier quoted context omitted.

Being innovative at small details of existing concepts isn't likely to produce huge gains in stock value, as opposed to being innovative at entire categories of new industry- and infrastructure-disrupting products. Ford does the former, Tesla does the latter, and the market is valuing them accordingly. The market could be wrong, Tesla could fail to achieve their vision, Ford and other existing big companies could som…

Maybe that's part of it. I'm sure another part of it is that Ford is already big enough, that there isn't a lot of growth potential there. That said, it's not like they are exactly just making small refinements to gasoline engines, while SV companies are the only real innovators, chasing electric and self-serving vehicles. We just tend not to talk about it as much on HN (compared to Tesla, for example): https://www.g…

Ford doesn't have much room to grow because they are a mature company in a mature field. Tesla is creating new fields. Ford doesn't know how to create new fields, therefore they're stuck making small improvements to existing things, and, once someone like Tesla makes it very clear that a new field exists and is viable, Ford will reluctantly follow the market trend.

Ford does normal science [0], Tesla does revolutionary science [1].

[0] https://en.m.wikipedia.org/wiki/Normal_science [1] https://en.m.wikipedia.org/wiki/The_Structure_of_Scientific_...

Re: Tesla Passes Ford by Market Value

#246

Post by vkou » Mon, Apr 03, 2017, 6:22 PM UTC

MR4D wrote: post #233

iamatworknow wrote: post #142

Earlier quoted context omitted.

>What is this based on? It's based on nothing other than the weird contempt you see for large, established corporations in the SV crowd. Big established corporation = big established rule book and management hierarchy = stifled innovation. Nevermind the fact that most of the major technological breakthroughs of the past 100 years were developed by the research wings of big corporations (Bell Labs, defense contractors…

I'm not the parent poster, but I'd offer one reason why some people feel this way - Ford is a car company, while Tesla is a software company. Big difference in expectations, capital expenditures, etc. Based on committed capital, I think this is at least partially correct.

If Tesla is a 'software company', the last thing I'd ever want to do is buy a car from them.

As anyone who has every used software will attest to: Most of the time, we can count our lucky stars if our commercial software 'works' for a year and a half.

Cue all the: "If Microsoft/Apple/Google/Facebook/Snapchat made cars" jokes.

Re: Tesla Passes Ford by Market Value

#247

Post by Fricken » Mon, Apr 03, 2017, 6:24 PM UTC

dan1234 wrote: post #2

Interesting, but market cap isn’t everything - FTA: "While Tesla’s market capitalization has swelled in size, Ford still overshadows the Palo Alto, California-based company in most other financial metrics. Over the last five years, Ford has posted net income totaling $26 billion, while Tesla has lost $2.3 billion. Last year, Ford had annual revenue of $151.8 billion compared with Tesla’s $7 billion. And when it comes…

A study from Navigant research ranking leaders in automated driving ranks Ford 1st. Tesla ranks 12th:

https://techcrunch.com/2017/04/03/ford-tops-the-list-of-auto...

Re: Tesla Passes Ford by Market Value

#248

Post by imgabe » Mon, Apr 03, 2017, 6:26 PM UTC

dkrich wrote: post #126

seanmcdirmid wrote: post #111

Earlier quoted context omitted.

It is like comparing a spunky startup to an entrenched corporation. Ya, IBM once spent more than Facebook, but Facebook was worth more because it had potential while IBM didn't. Ford doesn't have any good ideas for the future, they are too busy with the here and now and haven't shown an ability to do anything but incremental improvements with their R&D spending. Like we don't expect much more from IBM, we don't expec…

What is this based on? Ford has had record profits over the past few years and has continually improved their vehicles and manufacturing processes, including remaking two assembly plants to make aluminum body F 150s. They also invested a billion dollars in Arvo AI and are making aggressive moves into self driving technology.

Pretty much everyone who wants a Ford has one, or could buy one. There's not a lot of growth left for Ford. Their only hope is to steal a few customers from the other automakers, but those other automakers will steal a few back. It's unlikely that large numbers of people who don't currently own a Ford are going to buy one any time soon.

Tesla on the other hand, has millions of potential customers who would and will buy one once they become a little more affordable and the charging infrastructure becomes more built out. We already saw how fast the pre-sales for the Model 3 went. And that was just people who were willing to put down money on a car that wasn't even available yet.

It's not just about innovation or not. Tesla has a lot of room left to grow. Ford is about as big as it's ever going to get.

Re: Tesla Passes Ford by Market Value

#249

Post by 5ilv3r » Mon, Apr 03, 2017, 6:27 PM UTC

ovulator wrote: post #119

dsugarman wrote: post #55

Earlier quoted context omitted.

Tesla is potentially a trillion dollar company and it's biggest current hurdle is getting it's production up to meet an enormous demand. The reason it's trading at a higher market cap is because Ford doesn't have any growth potential and Tesla is still trading at a fraction of what it could be. Of course there is still a ton of risk factors for them, but expected value for investing should be based on the chance of s…

What are you basing that trillion dollar evaluation off of? Combining the 5 largest auto manufactures on earth and you are still well short of a trillion dollar company.

While the biggest 5 are spending in R&D to meet tesla in product, tesla will be enjoying (presumably) apple level profit margins on their established product.

Or at least that is how I understand it.

Re: Tesla Passes Ford by Market Value

#250

Post by paulpauper » Mon, Apr 03, 2017, 6:27 PM UTC

Part of this huge surge in tesla stock has to do with enthusiasm over their battery technology. tesla is a battery company that also makes cars, too. I think the share price goes as high as $500 soon.