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Tesla Passes Ford by Market Value

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Re: Tesla Passes Ford by Market Value

#321

Post by dkrich »

imgabe wrote: post #248
dkrich wrote: post #126

Earlier quoted context omitted.

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 b…

I don't understand this argument. Tesla is currently trading at a higher valuation than Ford. Ford has saturated the North American market. Tesla could eventually grow to saturate the North American market but is just a fledgling auto maker right now full of potential but not many sales.

But they are already trading at a higher valuation than Ford.

So unless you think that Tesla can command much higher margins than Ford does, then shouldn't Tesla only trade at a similar valuation when they are making similar amounts of cash?

Re: Tesla Passes Ford by Market Value

#322

Post by mhermher »

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.

What software have they made?

Re: Tesla Passes Ford by Market Value

#323

Post by aanm1988 »

skalkin wrote: post #37
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…

Let me disagree with some of the points: > Ford has all the infrastructure that Tesla is attempting to build now * no battery production facilities * no charging infrastructure * no vertical integration (unlike Tesla, Ford has to sell through the dealershits - I see it as a big disadvantage) > They know how to mass produce cars Yes - but can they produce the car the public will want in three years from now, when affo…

> unlike Tesla, Ford has to sell through the dealershits - I see it as a big disadvantage

My, what a strong argument.

Re: Tesla Passes Ford by Market Value

#324

Post by cynicalkane »

calpaterson wrote: post #254
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…

No, market cap is not everything. Specifically it is not enterprise value, which is the correct measure of the value of a business. Market cap is the value of the equity. Enterprise value is the value of the business (ie including debt). Tesla's EV is $52bn. Ford's EV is $150bn.

> enterprise value, which is the correct measure of the value of a business

Not even Warren Buffet thinks this. In economics, the correct measure of a value of a business is the future discounted expected value of cash flow and external utility. There's almost no way to measure this directly so major simplifying assumptions are made when applying this definition in practice.

Re: Tesla Passes Ford by Market Value

#325

Post by bluGill »

username223 wrote: post #300
erikpukinskis wrote: post #273

Earlier quoted context omitted.

> There are so many car makers, there is no monopole they could get. Same for solar and batteries. The automobile industry will contract as we move from individual ownership to mobility. But along with that transition some manufacturers will keep up and others will not. Tesla is hoping to be one of the winners, taking perhaps 25% of the mobility market as the car buying market dries up. Tesla's valuation is also base…

> The automobile industry will contract as we move from individual ownership to mobility. What does this even mean? People like to leave stuff in their cars (e.g. mug, gym bag). They like them to be at their preferred level of cleanliness or disorder. Some even use them as a means of personal expression. If "mobility" were so desirable, ZipCar would have taken off 10 years ago. The "mobility" market will be about the…

Exactly. I like knowing that there are extra diapers and a change of clothing for each kid in my car should I need them. I carry enough in to cover my current needs, but as anyone with kids known sometimes that isn't enough.

I know many people who keep golf clubs in their car because sometimes a salesman is looking to round out a 4-some. I like going to walmart/lowes... over lunch and leaving my treasures in my car.

Car sharing won't actually work out anyway because everyone needs their car during rush hour. Everyone is driving then anyway, and then the cars sit idle.

Re: Tesla Passes Ford by Market Value

#326

Post by jhpankow »

erikpukinskis wrote: post #303
dabeeeenster wrote: post #282

Earlier quoted context omitted.

That makes no sense to me - can you explain further? Why don't Ford produce a 60KWH car as cheaply as they can?

The dealerships won't sell it. Any marketing they do for it will hurt their other brands. Any marketing they do for their other brands will hurt it. It's like McDonalds selling an organic, grass fed burger. If they talk about the quality of the beef, they're basically saying the Big Mac is low quality beef.

Interesting they haven't done a sub-brand like a Saturn or Scion.

Re: Tesla Passes Ford by Market Value

#327

Post by bigtimeidiot »

austenallred wrote: post #242
plandis wrote: post #235

Earlier quoted context omitted.

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…

>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?"

The analysis upon which you went "all-in" on Tesla rests on a non-GAAP "delivery" figure (rather than a sales number), covering a few quarters, 1 year before the first model 3 is even built? I'd be interested in seeing that work. What did you think when they missed 2016 delivery estimates by 5%?

Re: Tesla Passes Ford by Market Value

#328

Post by Hermel »

akhatri_aus wrote: post #301
calpaterson wrote: post #254

Earlier quoted context omitted.

No, market cap is not everything. Specifically it is not enterprise value, which is the correct measure of the value of a business. Market cap is the value of the equity. Enterprise value is the value of the business (ie including debt). Tesla's EV is $52bn. Ford's EV is $150bn.

Enterprise value isn't the value of the business, its the cost to acquire a business and assume its debt. You've assumed that you have to take on a company's debt as an acquirer to take over a company. The market cap is closest to its value representing what it takes to control/own/sell the company.

In financial theory, enterprise value corresponds to the sum of all discounted cash flows (after tax). Thus, it is the market's best estimate for the value of the business. The question of capital structure should not really matter according to the Miller-Modigliani theorem.

Re: Tesla Passes Ford by Market Value

#329

Post by TheSpiceIsLife »

crabasa wrote: post #57
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…

> Over the last five years, Ford has posted net income totaling $26 billion, while Tesla has lost $2.3 billion. Ford: "We have no idea how to invest this money. I guess let's just put it in the bank." Tesla: "We have so many idea for investments, we're only constrained by cash. Let's go back to the capital markets!"

That sounds simple. Maybe overly simple. As though if only Ford could spend money on growing it's business and building more cars per year they could be in a better position.

Ford share holders, presumably, received a return on their investment in the form of a dividend. While Telsa haven't and won't in the "foreseeable future".[1]

So your overly simplified analysis is complicated somewhat by the individual investor carrying out a risk assessment and deciding which companies should or shouldn't be in their share portfolio.

1. http://ir.tesla.com/faq.cfm

Re: Tesla Passes Ford by Market Value

#330

Post by dkrich »

kamaal wrote: post #181
dkrich wrote: post #126

Earlier quoted context omitted.

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.

Sorry but this is like Nokia saying they are spending all this money to make their phones and manufacturing processes awesome, all the while when a iPhone is getting designed somewhere. Incremental changes is what most senior management folks at places like Ford can do because that is what they teach at MBA schools using linear growth graphs. Self driving tech is really novelty thing now. And nobody expects it to wor…

That all sounds good in theory, but where are the numbers to back it up?

Apple was making billions in profit on the iPhone at launch. Tesla has never made a profit and sold 70k vehicles last year. Companies like Ford and GM have huge numbers of loyal customers and move millions of vehicles a year and quite profitably. So while it sounds great to pretend that the automobile industry is dying and Tesla is capturing their market share by sheer innovation, the numbers tell a different story.

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