Tesla races past $100B in market valuation • Hacker News Board

Re: Tesla races past $100B in market valuation

#81

Post by jfengel » Wed, Jan 22, 2020, 4:56 PM UTC

reilly3000 wrote: post #17

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…

With each car they get a lifetime of service revenue, mostly without competition. They expand their network effect, their supercharger footprint, and their technology lead as they maintain momentum. Cybertruck is poised to be a giant success, reaching into new markets outside of traditional EV buyers and into rural and suburban light trucks, the highest margin section of auto sales. Finally, its prominence attracts u…

Though part of the point of a Tesla is that it requires less service than an ICE vehicle. It doesn't need oil changes and its brakes last basically forever. It lacks belts and gears to wear out. It only has around 20 moving parts all told.

Apparently, non-Tesla EVs are having trouble selling for precisely that reason. Dealers expect to sell the cars with only modest profit, but make revenue on maintenance. EVs require less maintenance, and so the dealers don't feature them.

That's yet another reason Tesla vehicles are good value, and if they can capture a major piece of the $4 trillion yearly car market[1], that makes a $100B valuation seem quite reasonable -- even without a dime of service revenue.

[1] https://www.ibisworld.com/global/market-research-reports/glo...

Re: Tesla races past $100B in market valuation

#82

Post by ec109685 » Wed, Jan 22, 2020, 4:57 PM UTC

donogh wrote: post #53

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 is the Apple of the auto industry. They are getting stellar customer satisfaction ratings, which is translating into brand loyalty[1]. They've built an ecosystem between their above-average EV hardware, industry-leading software (with frequent improvements), and a top-notch charging network. I can see some automakers matching them on hardware, but they have a huge lead in software. Traditional car manufacturers…

One thing Tesla doesn’t have is the lock in that Apple has. If you are using iPhoto, iWatch and iMessage, switching to another manufacturer is hugely disruptive.

I totally agree that Tesla’s software chops are light years ahead.

Re: Tesla races past $100B in market valuation

#83

Post by bob33212 » Wed, Jan 22, 2020, 4:58 PM UTC

donogh wrote: post #53

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 is the Apple of the auto industry. They are getting stellar customer satisfaction ratings, which is translating into brand loyalty[1]. They've built an ecosystem between their above-average EV hardware, industry-leading software (with frequent improvements), and a top-notch charging network. I can see some automakers matching them on hardware, but they have a huge lead in software. Traditional car manufacturers…

Some of us are not buying TSLA today because we like where the company is today. We buying because they like where the company may be in 5 years.

Re: Tesla races past $100B in market valuation

#84

Post by grey-area » Wed, Jan 22, 2020, 4:59 PM UTC

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…

They're not just a car company (seriously, that's what investors are betting).

Also, as a car company they are well positioned to take a lot of the market when evs take over and are only worth half of the market leader but executing better on evs.

If you believe we're shifting to evs, battery storage and integrated solar roofs, and automated transport, they could easily grow as large as Apple or Amazon say in the next decade (10x from current price).

Now that's a risky bet but it's certainly possible.

Re: Tesla races past $100B in market valuation

#85

Post by davidivadavid » Wed, Jan 22, 2020, 4:59 PM UTC

TekMol wrote: post #61

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…

Market cap is expected value of the sum of all discounted future earnings. So to be worth $100B, they have to earn that amount in future money eventually . Not within the next few years.

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?

Re: Tesla races past $100B in market valuation

#86

Post by cdiamand » Wed, Jan 22, 2020, 4:59 PM UTC

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…

You're not alone! I've been tracking /r/wallstreetbets for my new project https://topstonks.com and no one there seems to understand it. A lot of great theories though.

Out of the 6434 stock mentions in the last 24 hours ~10% of that is about TSLA and that's up 45% since yesterday.

Heres a bubble graph of the most mentioned equities over the last 7 days (as of yesterday) on /r/wallstreetbets. ignore F and C, still working on the filter :)

https://preview.redd.it/22mrpbh3g5c41.png?width=985&format=p...

Ps - we're doing our Show HN right now, feel free to come by and say hi :) https://news.ycombinator.com/item?id=22109610

Re: Tesla races past $100B in market valuation

#87

Post by joering2 » Wed, Jan 22, 2020, 4:59 PM UTC

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…

Short answer: because when it comes to stock market, people invest in future of the company, not its present. And Musk is unpredictable. Tesla only car allowed to drive on Mars? Why the heck not?? Who knows.

People been investing in Tesla for many years now and barely were ever disappointed unless you were shorting the stock in which case when expiry date came (futures) many were taking second mortages to clear their calls. There is too much money on the market for enough people needing to exit Tesla stock and enter something else that would possibly give them better gains over next 5-10 years, so they hold long term, making less stock moving on the floor and giving it longer stretch.

Re: Tesla races past $100B in market valuation

#88

Post by UncleMeat » Wed, Jan 22, 2020, 4:59 PM UTC

reilly3000 wrote: post #17

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…

With each car they get a lifetime of service revenue, mostly without competition. They expand their network effect, their supercharger footprint, and their technology lead as they maintain momentum. Cybertruck is poised to be a giant success, reaching into new markets outside of traditional EV buyers and into rural and suburban light trucks, the highest margin section of auto sales. Finally, its prominence attracts u…

I really don’t like the “well if you feel strongly why don’t you short” argument.

I think it is insane that Tesla is worth so much. But shorting stocks is not part of the asset allocation that meets my long term goals and needs. I can certainly believe something without wanting to bet on it.

Re: Tesla races past $100B in market valuation

#89

Post by nicoburns » Wed, Jan 22, 2020, 5:00 PM UTC

ec109685 wrote: post #82

donogh wrote: post #53

Earlier quoted context omitted.

Tesla is the Apple of the auto industry. They are getting stellar customer satisfaction ratings, which is translating into brand loyalty[1]. They've built an ecosystem between their above-average EV hardware, industry-leading software (with frequent improvements), and a top-notch charging network. I can see some automakers matching them on hardware, but they have a huge lead in software. Traditional car manufacturers…

One thing Tesla doesn’t have is the lock in that Apple has. If you are using iPhoto, iWatch and iMessage, switching to another manufacturer is hugely disruptive. I totally agree that Tesla’s software chops are light years ahead.

Do most apple hardware users use those apps? I'd imagine at least as many if not more use google photos + whatsapp or facebook messenger.

Re: Tesla races past $100B in market valuation

#90

Post by matthewdgreen » Wed, Jan 22, 2020, 5:00 PM UTC

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.

The hallmark of a "tech" company, and the reason it can have such huge valuations, is that they don't do silly and expensive things like build relatively low-margin physical objects. Tesla has not demonstrated its plans beyond that yet.