Tesla: a big bubble or only a bet?

"There is much to admire in the Tesla story but there is one aspect of the story that I find puzzling, and if I were an equity investor, troubling. It is the way in which Tesla has chosen to, and continues to, finance itself. Over the last decade, as Tesla has grown, it has needed substantial capital to finance its growth. That is neither surprising nor unexpected, since cash burn is part of the pathway to glory for companies like Tesla. However, Tesla has chosen to fund its growth with large debt issues, and burn cash"

FCFF predicted negative for the next 6 years.

Reading the new valuation update about Tesla of the professor Damodaran: your thoughts?

This is the link: http://aswathdamodaran.blogspot.it/2017/08/a-tesla...(Musings+on+Markets)
This is the valuation statement of the prof:

Honestly I can only echo what the prof said.

Comments (116)

Aug 13, 2017

They're clearly expecting major cash flows in the future to cover all this, and I think they may be right if they can really get other companies to buy batteries from them. If the industry keeps up the way it is, the demand for the batteries they build is going to skyrocket, and manufacturers would certainly rather buy them ready-made from the leader in the field than figure it out themselves, then build their own giant factory.

In addition, the passenger car market is just the start for them, and hasn't even hit full swing. Once the model 3 starts to sell in volume, that will help. They also have yet another model coming. And they look poised to make a big entry into the trucking market.

Finally, they've made big moves towards electrifying the home, and I think this has potential as well. Solar tech is getting better and better all the time, and they seem to be taking advantage of this. I think having the ability to generate most or all of your electricity usage without relying on the power grid (which is in dismal shape in many places) is going to be a big deal in the near future. In addition, their home battery negates fears about reliability.

So far, everything is going according to plan for them, as far as I can tell.

"When you stop striving for perfection, you might as well be dead."

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Aug 14, 2017

Interesting point. But as investor honestly I would doubt, a company that burn that quantity of cash could face with problems asap. Good ideas can change the world, btw

Nicest haircut than Bateman

Aug 19, 2017

To be sure their burn rate is concerning....the Model 3 will, I think, be a major make-or-break factor, but they seem to have far more orders than they can even handle at this point, which may or may not be a good thing.

I'd say they are very similar to Amazon in that the company is always playing catchup to its share price.

"When you stop striving for perfection, you might as well be dead."

Aug 22, 2017

TBH -Tesla only has the first mover advantage. Once other big competitors flood the market, Tesla is not going to survive because of their manufacturing is so poor compared to well established auto-maker. automotive supplier market is another issue Tesla is going to deal with. Electric cars are very easy to build. Easier than gasoline combustion engine. Even the Chinese know how to build electric cars! Yet Chinese can not design their own gasoline engine. Only reason big automakers are not seriously in the game is because of the infrastructure needed to layout through out the city for charging stations.

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Aug 14, 2017

Damodaran is brilliant, you're on the right path by reading him.

as far as Tesla goes, if Musk's operations and production can match his ego and promises to the marketplace, the company will win. however, if they make missteps, capital will dry up for them and they will shrink (probably not fail, just shrink). it's a wonderful concept but I wonder how long capital will be available to them at this burn rate without a history of efficient operations.

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Aug 14, 2017

Hit the sign. btw they issued junk bonds few days ago.. what a flawed growth

Nicest haircut than Bateman

Aug 14, 2017

TESLA stock will never go DOWN!

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Aug 14, 2017

Maybe yes, maybe not. But they are absolutely overpriced

Nicest haircut than Bateman

Aug 14, 2017

Your mom's overpriced.

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Aug 14, 2017

I know bro but this is good for me, more money for contact the your one

Nicest haircut than Bateman

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Aug 22, 2017

ARSENE WENGER?

Aug 14, 2017

I promise this company will be in bankruptcy.

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Aug 15, 2017

Explain, please?

Aug 15, 2017

It will never make money and once investors stop being batshit crazy and giving it money it will burn what money it has left and can't afford to pay back debt, residual value guaranties, and payables and thus will go bk. Major losses for banks coming.

Aug 15, 2017

I love commercial bankers

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Aug 19, 2017

Short it then, put your money where your mouth is.

"When you stop striving for perfection, you might as well be dead."

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Aug 15, 2017

A stock's price is a function of supply and demand, and non-dividend stocks don't necessarily trade in relation to their underlying intrinsic economics. So if I'm a Tesla investor, I'm less concerned about the 10-year outlook and more concerned with when I'm going to sell to realize my maximum capital gain.

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Aug 22, 2017

removed: replied to wrong post.

When I pull a deal off the table, I leave Nagasaki behind

Aug 22, 2017

So it's a trading sardine. That works out great until people remember that sardines are for eating, not trading.

"Successful investing is anticipating the anticipation of others". - John Maynard Keynes

Aug 22, 2017
SvenS:

So it's a trading sardine. That works out great until people remember that sardines are for eating, not trading.

Hey, I don't make the rules.

Aug 22, 2017

I know. I'm just saying that the logic of your hypothetical Tesla investor is highly flawed. Speculator would be a better description. Maybe Tesla will be different, and I hope they are, but it rarely turns out well when a company loses more money as they spend more money. Similar companies were often heralded as amazing innovators and game-changers, before they went bust. Enron is obviously the classic example, but SunEdison is a more recent one.

"Successful investing is anticipating the anticipation of others". - John Maynard Keynes

Aug 22, 2017

True, it is speculation, but thus far, a lot of speculators have done quite well on Tesla.

Best Response
Aug 15, 2017

Personally, I feel as soon as big market players like Mercedes, BMW, Volkswagen, Etc start creating proper mass market electric cars...Tesla is more or less done. They'll create cars that are less expensive with better build quality.

Brand recognition wise, I feel people will be more inclined to spend 60-70k on a Mercedes Benz rather than a Tesla. The car itself is extremely overpriced. Let's take a look at Tesla's top of the line model, the P100D. Why would someone spend about $150,000 on a poorly built car with a promise to drive itself one day? "Technology and speed" most Tesla fans would say, if you mean slapping an iPad in the middle of the car is good enough for you and you live on the drag-strip...by all means, go ahead. If you don't mind a car that's 0.8 seconds slower, for the same price, you could get an S63 AMG. Look up some images of Google and compare the interiors.

Tesla is valued higher than BMW, Ford, etc...Although BMW delivered over 2 million cars last year and Ford delivered over 2.6 million while Tesla delivered less than 80,000 vehicles during the same period. That's about 29x more. Yet, as of today, investors value BMW at $61.2 billion, Ford at $43.49 billion and Tesla at just over $61.6 billion. I know Tesla does more than just cars, but this isn't the first time in the world a company's making solar panels and storage batteries.

PeteMullersKeyboard:

...and I think they may be right if they can really get other companies to buy batteries from them. If the industry keeps up the way it is, the demand for the batteries they build is going to skyrocket, and manufacturers would certainly rather buy them ready-made from the leader in the field than figure it out themselves, then build their own giant factory.

These kinds of market players do not have to buy batteries from Tesla. They have R&D budgets that are 10x bigger than Tesla's. Volkswagen is going to spend $22 billion over the next 5 years solely on the development of electric vehicles. Compared to Tesla with an annual budget of about $718 million. Daimler spent $7.6 billion on R&D in 2015 and VW had the largest R&D budget of $15.3 billion. Short and sweet, Volkswagen spends 21 years worth of Tesla's R&D budget in 1 year.

Tesla's Gigafactory is estimated to cost around $5 billion. Linking with their R&D budget, all they have to do is build a factory to make the batteries and develop their cars. With a big R&D budget like that, they won't spend a long time figuring it out. Good ideas can indeed change the world but you need resources to make it happen.

When I pull a deal off the table, I leave Nagasaki behind

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Aug 15, 2017

I don't think comparing R&D budgets of these companies is a correct way to judge their abilities in R&D. They are all different in size, Tesla has 7% R&D/LTM Sales, Daimler has 4.7% and VW 6.9%. While Daimler and VW need to split that budget among a large amount of models Tesla focuses only on three, which may lead to building a quality vehicle more faster. Their lack of beta tests and purchase of SolarCity is a totally different story, though.

You killed the Greece spread goes up, spread goes down, from Wall Street they all play like a freak, Goldman Sachs 'o beat.

Aug 15, 2017

True the overall budget has to be split among a lot of models but as I said before VW is pledging $5 billion to develop their line of electric cars. R&D budgets are somewhat helpful in knowing how far a company can go and develop a product. Smart people won't work for free right? I don't know how relevant this is...but German car manufacturers are known for their inventions and technology.

When I pull a deal off the table, I leave Nagasaki behind

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Aug 15, 2017
Aech:

Tesla is valued higher than BMW, Ford, etc...Although BMW delivered over 2 million cars last year and Ford delivered over 2.6 million while Tesla delivered less than 80,000 vehicles during the same period. That's about 29x more. Yet, as of today, investors value BMW at $61.2 billion, Ford at $43.49 billion and Tesla at just over $61.6 billion. I know Tesla does more than just cars, but this isn't the first time in the world a company's making solar panels and storage batteries.

This is completely irrelevant information. A stock price's intrinsic value is the present value of future cash flows. Tesla only delivering 80,000 cars in 2016 is almost as irrelevant as what I had for lunch last Tuesday. Now, I'm not saying Tesla's investors are correct, but what is essentially a start-up company (although it's 16-years-old, technically) isn't being valued by investors using P/E ratios.

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Aug 15, 2017

I get what you mean but the rate at which it would have to grow and the market share it would have to eventually get to in order to justify that stock price is outrageous. If I had balls as far as timing I'd short the stock.

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Aug 15, 2017

Yeah, personally, I think it's a pretty crazy valuation. Although, I'm pulling hard for Musk to succeed.

Aug 16, 2017

I'm not being a smartass, but I remember hearing very similar sentiments when GOOG ipo'd.

This isn't just another auto manufacturer. They're the Apple of the auto industry; more concerned with controlling the cutting edge, than selling the most cars.

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Aug 21, 2017

So you just pulled a random tech company out of the bunch to compare to TSLA and thought that would drive your point? I mean why not just compare it to FB while you're at it? Or twitter? Or blue apron? Or Pets.com? Or snap chat? What market does TSLA even dominate similar to FB when it IPO'd with social media and GOOG with search? Fact of the matter is those business models have zero to do with each other.

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Aug 24, 2017

Au contraire, mon capitaine

Comparing Tesla 2017 to Google 2006 is very much the way Tesla investors and stock holders are thinking. At hand is a company with the potential to create a new industry and be the centerpiece of it. The perception of Tesla is that they may be the GE of this coming era in history. Investors are willing to look past the current crummy returns and buy a piece of the future.

Now whether they're right is another story :D

Get busy living

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Aug 15, 2017

agree that the market cap argument is a silly one

I think the more concerning thing here is that the company is still being valued like a startup when it's clearly not. every founder knows that you have that dip in the J curve when you'll have negative cash flow and earnings so traditional valuation metrics don't work. what then happens is within 2-5 years, you cross over and begin turning a profit. I think the product itself is decent, but from a business standpoint, when can we see some bottom line? even if you pull a Bezos and invest earnings back into R&D, what about cash flow? the company is priced to perfection, unlike AMZN & GOOG which were highly valued companies but had positive and growing cash flows early on.

I think Tesla will survive, but I think investors will get burned. maybe I'm biased cause I can't fucking stand Musk

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Aug 15, 2017
thebrofessor:

I think the more concerning thing here is that the company is still being valued like a startup when it's clearly not.

What you're saying is objectively true, but I think a lot of people see it as a start-up because the youngest successful car company pre-dates World War II, right? In that context, Tesla is quite young. And the first decade or so of Tesla basically consisted of a few concept cars sold to some car aficionados.

So yeah, valuation is crazy. My main point is that looking backwards isn't how people are valuing Tesla.

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Aug 22, 2017

Aech, I think you're correct on the battery issue. I don't think Tesla produces all its batteries either. I believe Phillips also produces them (correct me if I'm wrong though). Batteries are basically a commodity as well. It's not particularly challenging to make a battery or fiddle with the chemistry. It's all about price. Otherwise Tesla could use Formula 1 style batteries. I don't think there's any competitive advantage when it comes to battery manufacturing. No reason other players can't enter the market and kill returns. The Chinese will probably do that at some point, if they aren't already. They've already done the same in wafers and solar panels.

"Successful investing is anticipating the anticipation of others". - John Maynard Keynes

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Aug 15, 2017

If WSB is bullish, I'm bullish

Aug 15, 2017

long tesla, long musk

What is the answer to 99 out of 100 questions?

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Aug 16, 2017

Tesla uses laptop batteries. Ever had to buy one? Laptop batteries usually drop dead after 3 years, and they're so expensive it's easier to buy a new computer. That "logic" won't work for cars. Are you prepared to junk your new Tesla after 3 or 4 years? Wait till you discover how much the batteries cost. Tesla is doomed, once the facts dawn on people. Reality is a mean teacher.

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Aug 16, 2017

just visited their forum. replacement batteries are $45k but the stock battery comes with an 8 year warranty.

I wonder if you can get a car loan for just a battery!

Aug 21, 2017

$45k for the battery for the tesla is ridiculous. Absolutely ridiculous that's way more than commercial batteries for underground mining equipment costs and that equipment hauls tons of materials all shift long.

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Aug 22, 2017

It's really the pack cost (batteries + wiring and other components). Tesla's packs are very expensive not just because lithium ion batteries are expensive to begin with, but also because of the design and size of the packs. Tesla uses thousands of small cells that get bundled into modules that make up the cell portion of the battery pack. Other manufactures have mostly gone the cheaper route and used a smaller number of bigger cells. For example, the Chevy Bolt's pack costs just under $16k and has 288 Li cells (I think). Other designs are similar, like the Nissan Leaf and BMW i3. Those may or may not hold up as well. Time will tell.

And yes, you can get a loan for replacement packs. I don't know about Tesla specifically but Nissan offers loans for replacement packs for the Leaf ($5500 before labor). Great money maker for them on the financing side, but they likely lose money on every pack. And it's stupid for an owner to do that. But then again, it's stupid to buy a Leaf brand new. (Leaf's have notably bad battery degradation. Although the 2015+ model years shouldn't be quite as bad, maybe...)

"Successful investing is anticipating the anticipation of others". - John Maynard Keynes

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Aug 24, 2017

Yes and on top of that it's like that battery technology will be substantially enhanced and better priced in 8 years.

Get busy living

Aug 22, 2017

You need to do a lot more reading about their batteries. They don't just use "laptop batteries"

"When you stop striving for perfection, you might as well be dead."

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Aug 21, 2017

Tesla CANNOT be compared to Apple, Google, or even Amazon. The auto industry is a very capital intensive and low margin industry. It is also a consumer business and therefore more cyclical than tech. To say a cyclical business with high operating leverage deserves a tech multiple is insane because it harbors much more risk.

I also don't think the threat of other auto makers entering into the EV market is fully baked into the valuation at this time. It makes much more sense to pay an auto multiple for the companies 2nd or 3rd best positioned to enter the EV market than it does to buy Tesla at startup multiples. (The other players have EV plans more under wraps because they don't aren't dependent on selling the story to raise capital to stay alive)

A good company and good product don't necessarily make a good stock. With scale this company can be profitable by 2020, but it boils down to three questions.
1. Can they decrease cash burn enough to get them to profitability without majorly diluting shareholders or overleveraging?
2. Can reach the lofty production goals they have without delays or hiccups?
3. Will consumer demand be sustained through 2020 despite increased competition from other players?

The bottomline is that this company has a high amount of risk and much more risk than the FANGS due to the auto industry being highly capital intensive and a consumer cyclical. If a recession/market crash were to happen, consumers would stop buying cars (especially premium Teslas, valuations would contract, and Tesla would not be able to raise capital enough to mitigate cash burn without absolutely raping shareholders or choking itself in debt.

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Aug 21, 2017

But isn't Tesla kind of a tech company?

Tesla is a leader (not necessarily the leader) in autonomous car technology. What if in 5-10 years Tesla launches an autonomous ride sharing business? I've seen the business model on that and it absolutely prints cash. The first trillion dollar company valuation will be in the autonomous ridesharing business. What if Tesla successfully launches its autonomous truck? There's a multimillion person labor shortage in the trucking industry and the human aspect is the single most expensive aspect of shipping. Every trucking company in the world will want a piece of that.

Tesla is a leader in car battery technology and is building I believe the largest and most advanced battery manufacturing plant in the world. It could license out its technology and/or manufacture it for other car companies and print money. I'd also argue--for better or worse--that Elon Musk is a fantastic crony capitalist. I'd imagine a scenario where he finagles city/town contracts for transportation needs from countless municipalities (especially across the blue states, and especially California).

I don't necessarily believe Tesla's valuation is justified, but to reach a $100 billion valuation, it really only needs to make--what?--$5-7 billion per year to legitimately justify the valuation. There were 88.1 million cars sold globally in 2016. Imagine a scenario in 5-10 years where Tesla licensed its car battery technology to 5 million annual car sales at $1,000 profit per sale. That would throw off $5 billion in operating income by itself. That's the kind of stuff investors are betting on in Tesla.

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Aug 21, 2017
Rags to Hermes:

If a recession/market crash were to happen, consumers would stop buying cars (especially premium Teslas, valuations would contract, and Tesla would not be able to raise capital enough to mitigate cash burn without absolutely raping shareholders or choking itself in debt.

https://www.theguardian.com/business/2013/feb/15/r...
Maybe. The recession was a boon for the wealthy, with incredible wealth created among the wealthiest and with little dropoff in luxury good purchases. There's a global wealthy elite now that is always doing well no matter the economic circumstances in a particular country.

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Aug 24, 2017

The fact that they're offering debt not equity might say something about how they view the current pricing of their stock...

Aug 21, 2017

But Tesla is looking to build itself to be a high volume mass producer with the Model 3 right? Am I right? They have to build massive scale to reach profitabilty. There is a reason why we had to bailout automakers last recession. Cyclical industry, high capital intensity, and low margin.

On the battery point, Tesla plans the gigafactory to be able to produce 500,000 batteries, and they also have the plan to produce 500,000 cars. They may be successful producing batteries, but I don't know if they plan to license batteries at any time in the midterm. They need that production just to keep pace with their own production ambitions.

If Tesla makes it to year 10 and is able to fulfill father Elon's dreams then you will be right. I just don't see upside-downside scenario being strong enough to justify the immense risk at this time. If the model 3 ramp goes successfully, they grow into their multiple a bit, and they can make some progress on autonomy then maybe we are talking about looking.

I wish I still had the Tesla model I built (lost somewhere on old employers computer). Basically they were trading at like 30X 2020 earnings.

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Aug 24, 2017

True enough. And if they know this, then I wonder how they are going to be able to sell this to investors.

Aug 21, 2017

I'm not necessarily disagreeing with anything you're saying. I'm just adding on to the discussion.

You make a solid point about the gigafactory, but you could also straight-up license the technology on a per-unit basis to other car manufacturers. Even at $500/unit on 1 million units, you're talking about creating a healthy profit out of that stream (if I'm, say, Mazda, maybe I'd rather pay a licensing fee than spend the R&D on potentially inferior battery design). Tesla is a bit unique in that there could be legitimately a half-dozen different revenue streams that get them to the $5 billion in operating profits that they need to justify their admittedly crazy valuation.

I think at the end of the day, Tesla/its investors are betting on being the leader in autonomous technology and being the "cool kid" that everyone wants to ride with and advertise with (some ride-sharing models are predicated on an advertising model), or having the best software that they can license to larger users. In other words, I don't think investors see Tesla as an alternative to Ford--I think they see Tesla as an AI company that also designs attractive cars. (As an aside, it's amazing how poorly designed for aesthetics most cars are--I bet you 25% of Tesla's value is solely in its desire to build attractive cars.)

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Aug 24, 2017

who are the DCM monkeys behind this

Aug 21, 2017

I think the cars they produce are less innovative/exciting than some other ideas like the solar panel shingles. That's fucking brilliant. My brother is an EE for a utility and that idea made a bit of a stir in the industry. Most of your major utilities are scared of Elon Musk to some degree because of this and non-centralized energy production.

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Aug 21, 2017
Big4please:

I think the cars they produce are less innovative/exciting than some other ideas like the solar panel shingles. That's fucking brilliant. My brother is an EE for a utility and that idea made a bit of a stir in the industry. Most of your major utilities are scared of Elon Musk to some degree because of this and non-centralized energy production.

Agreed. Personally, I love the solar roof for new homes (especially luxury new homes) because the economics really start to make sense vs. replacing an already-usable roof (which makes zero economic sense). If I'm a luxury homebuilder, I throw on a solar roof and lead my advertising with "Elon Musk's solar roof installed and ready to take on [xx%] of your energy bill. Be super green and love the planet." Every bleeding hearter in America who can afford it will buy it if in the market.

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Aug 21, 2017

Right. Huge thing to brag about to their rich friends and then their rich friends will want solar powered roofs as well. if they can get the economies of scale to bring prices down or efficiencies continue to increase to make the roofs have a sound ROI over the next decade or two then we are talking something that is truly disruptive.

Nothing else they're doing is going to be as promising in that time span imo. Not unless they can really make some amazing breakthroughs on battery prices. If they can do that then I'll be more hyped about their core vehicle products.

Aug 24, 2017

Come on man, don't you baboons know that Elon was exiled from Mars and now he's just trying to take us there to help him get his revenge on his ppl

Aug 24, 2017

Story breaks that Elon Musk is an alien
Tesla stock up 10%

Aug 24, 2017

In all seriousness though, read his biography and you'll know what this guy is capable of. In the short run there prob won't be any large surges but in the long run I have my eyes dead set on this guy

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Aug 24, 2017

It's a piece o crap company and musk is a scammer.

Aug 24, 2017
Pio nono:

It's a piece o crap company and musk is a scammer.

when your paypal acc. from when you were 17 is still -$760

"It is not our circumstance that controls us, but our thoughts that control our circumstance." -James Allen

Aug 24, 2017

I don't know if Musk is a scammer, but he's a hell of a pitchman. He also seems to understand how to take advantage of government programs.

Tesla, Solar City, and Space-X. Three business in seemingly very different markets.

Yet the economic success of all three depend heavily on government subsidies and programs. And still nonr have actually had any financial success.

He's a genius all right. But not in the way most think.

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Aug 24, 2017

I think the controversy comes from the fact that Tesla's biggest (perceived?) assets aren't entirely quantifiable. Sure the cars cost a small fortune and the manufacturing process still causes plenty of pollution, but the Tesla brand is pure gold in the hearts of many Americans who can afford them. Sure the company's market value versus the real value of its tangible assets and earnings is sky high, but Musk simply cannot lose in the minds of Americans. The goodwill is enormous.

I'm not bashing the company or Musk and I hope Tesla continues to prosper. But it is a unique case.

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Aug 24, 2017

From a conceptual and operating perspective, it makes sense. Here's an electric car that will eliminate your gas bill (but INCREASE your electric bill). What...you don't want your electric bill to increase, either? Well then have some solar panels...

That said, with the price point Tesla sells at, I'm not entirely sure this type of back-end marketing for Solar City will necessarily make sense -- TSLA isn't exactly selling to the most price-sensitive of buyers. It does, however, tie everything together in a nice little bow.

Beyond that, I'm not so sure I see the appeal. Ford and GM have built fully electric vehicles that are more price competitive...with enough production capacity to build these. Tesla is still rather new in this space and only has 2/3 models on the road.

There are enough dynamics in both the car space (autonomous driving, safety features, etc.) and the solar space (net metering caps, end of federal subsidies, competition from other renewables etc.) that I think it'd be better to focus on one or the other...not both.

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Aug 24, 2017

Tough call to say exactly what will happen with Tesla. Personally, I love the vision/idea and the actual cars look awesome; the business difficulties speak for themselves though.
It seems like long term Tesla may actually want to be more of an energy company/battery producer and the automotive side of Tesla was about creating a market for the battery/renewables space that Musk eventually wants to dominate? Just a theory though.

Aug 24, 2017

The bad part was absorbing the debt that SolarCity has...

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Aug 24, 2017

Copied and pasted part of this from the Mars thread.

Many shareholders of Tesla/Solar City are going to lose a lot of money if Musk cannot pull out the tight timelines he set in place to scale production. Tesla is significantly overleveraged and has a short 3-5 year window to get to profitability.

If you don't believe that the big 3 aren't currently developing similar capabilities as Tesla, then you are oblivious. They just aren't public about it. Tesla has to get people to feed off the dreams and visions of Musk in order to maintain it's EXCESSIVE valuations to raise capital. At these valuations, a successful ramp-up and good execution is priced in. The downside risk is much greater if they miss a deadline, delay vehicles, miss on execution, vehicle demand wavers, lithium prices skyrocket etc. Too many variables have to fall in place perfectly for Tesla to have meaningful upside, and so far the company has not had a good history of execution with missed deadlines, delays etc. The risk-reward ratio is not favorable.

Bottom-line they are trading like a high growth tech company despite having insane leverage in a cyclical, highly capital intensive industry. Cars are not high margin people. Massive scale and a large EV market share is needed for them to reach profitability.

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Aug 24, 2017

SHORT SHORT SHORT!

Aug 24, 2017

That Elon Musk guy must be happy. Now he can pay back the money he owes his friends and give his wife the $6 million cash she wants in the divorce. I bet he's celebrating.

Aug 24, 2017

ELon is no longer broke, well sort of, his ex wife is the one thats really happy

Aug 24, 2017

Who are these idiots pouring money into this company?

Aug 24, 2017

This company is a serious buzz around the office today and I can't even begin to figure out why.

Aug 24, 2017

There is a ton of hype surrounding this IPO and for good reason. They have an all-star team of Silicon Valley veterans on their board, a 450 Mill loan guarantee from the Energy Department and they still are the only company to successfully produce a full-size, highway capable vehicle. There are still a ton of uncertainties and risks that are raising eye-brows, profitability projections, rival companies, even Elon Musk's person finances. Despite the huge potential for Tesla to go down in flames, I still want to get in on this. Not on the basis of fundamental analysis, but out of an innate desire to see this work. I would love to see the US frog leap Japan and regain some ground in the auto industry as well as see electric cars become a staple of transportation. Something about Musk's vision just resonates with me (both Tesla and SpaceX) and despite some shaky preliminary valuations I think Tesla's (semi) revolutionary idea deserves the attention it's been getting.

Aug 24, 2017

Coogan,

All valid points and sentiments. Certainly, your thoughts on the subject were (I would say) the across-the-board norm a few years back. Now that the world has changed, I am seeing lots of issues with Tesla that nobody even thought about before.

The real questions for me are: "what is the future of the automobile industry going forward?". "Is an electric car really the great move it was pumped up to be?". "Is there a large enough customer base to make this a product worthy of all the money being pumped into R&D?" etc...

Just something to consider.

Aug 24, 2017

Magoo,

Agreed. There is still the major issue of actually charging the cars too. Outfitting homes with the right equipment is a small task compared to actually generating and distributing the millions of kilowatt hours that would be required to enable a nation-wide transition to electric vehicles. It seems (in my opinion) that the future of the automobile industry does involve "electrification" but to what extent and how soon, I can't say with a whole lot of confidence. While I find it hard to believe that cars will run on gas forever, Tesla may be getting ahead of itself.

I hope not though.

Aug 24, 2017

What worries me about your last comment is FERC. That DOE loan combined with the aforementioned regulatory agency's tactics make me think "state sponsored vehicle" a lot more than "free market car company".

Aug 24, 2017

The fundamentals are so bad for this company that Warren Buffet might not buy into it (well maybe he will, considering his investment in BYD) Anyways the company has a long way to go as the critics say, but don't forget even before they went public Tesla had backing from an all star group of investors such as Abu Dhabi, Co-Founder of Google, Daimler, and even Toyota (sure I am missing some from this group). I wonder why the clowns on CNBC's, "Squawk on the street," didn't mention any of this. So concerned about why the relics in Detroit didn't think Tesla was going to make it. Anyways, the problems facing Tesla can be overcome with time, as is with any start up company. If I knew for sure it would be like another Google or Apple I would jump on that stock right now, but then again there are the Palm's and Yahoo's of the world.

Aug 24, 2017

Ended the day up 40%.

Nice.

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Aug 24, 2017

you guys are fools for not buying into this. Such an easy stock pick. I'll pocked my 40% gain.

Fundamentals aren't working in this market. You gotta rely on technicals my friends.

Aug 24, 2017
PA:

you guys are fools for not buying into this. Such an easy stock pick. I'll pocked my 40% gain.

Fundamentals aren't working in this market. You gotta rely on technicals my friends.

You go enjoy your IPO allotment and the lockup while I pocket some gains shorting this sucker.

Aug 24, 2017

PA-

Congrats on the payday, can you elaborate a little on what you mean by technicals?
I admit I don't know much about technical analysis, but I thought it was predicated on past market data, primarily price and volume.

What did your technical analysis of Tesla involve in the place of historical price and volume?

Aug 24, 2017

I'm short this bullshit company...

"The higher up the mountain, the more treacherous the path"
-Frank Underwood

Aug 24, 2017

I will short this company on high as well. Before I bring you guys back down to the reality, have you guys checked the oil price recently? I don't think we will ever see oil price above $100. Electric car is totally a joke. This is hardly an alternative when oil is sub $100 range.

Aug 24, 2017

What I'd really like to do is play the volatility-- I'm pretty confident that It'll swing big in one way or another soon. I looked into options following the IPO and found nothing. Forgive me if this is a noob comment, but are options not available on new stocks? How long do we have to wait to trade options on TSLA?

Aug 24, 2017

This thing is really going bananas.

Aug 24, 2017

Anyone short this sucker? give some bananas

Aug 24, 2017

Unsure about the future, but a massive short squeeze is coming soon.

Aug 24, 2017

What a ride Tesla has had so far... the stock is up a lot this week.

Aug 24, 2017

Shorts failed to see that Tesla is Musk's baby. As long as he's alive, Tesla will not die.

"Those who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety."- Benjamin Franklin

Aug 24, 2017

Tesla..very bullish..good concept..

Aug 24, 2017

It's a POS company that's only kept alive by Musk, his political connections and favorable legislation/subsidies, and how much democrats and west coast VC/celebs love the idea of a sexy environmentally friendly car. The problem is that it can only sell to people who value that kind of crap more than, ya know, reliability and cost effectiveness. Even in liberal strongholds those people don't number enough to support an entire car company.

Who the F is their market? Europe is in the dump while Asia is suffering AND nobody there gives a shit about the "environment". Americans paying $60k for a no-name sports car that runs on coal (coal-fired power plants generate electricity - sorry to burst anyone's bubble) when they could buy a BMW M3 that runs on cleaner burning oil? Oh jee golly, put me down for one.

Anybody who buys this stock because they think it's a good "concept" should not be allowed to manage money. It's a horrible concept. It's like the fools who promote ethanol as a good "concept; on the surface it sounds great, but then you stop being a gullible twit and realize it's all hype.

Having said that, if you're buying it due to the greater fool theory then you're onto something. There's a lot of foolish lefties out there who will let their emotions on the issue pull them into this crap stock. Plus, this company is about to get shoved down America's throat by the media (again).

Just make sure you get out before the JasonLohs of the world lol.

---------------------------------------------------------------------------------------
Tesla unsuccessfully sued Top Gear for the review of their Tesla Roadster in a 2008 episode in which Jeremy Clarkson could be seen driving one around the Top Gear test track, complaining about a range of only 55 miles (89 km) before showing that car being pushed into the garage, supposedly out of charge. Tesla filed a lawsuit against the BBC for libel and malicious falsehood, claiming that two cars were provided and that at any point, at least one of them was ready to drive. In addition, Tesla believes that neither car ever dropped below 25 percent charge, and that the scene was staged.[153][154][155][156] On October 19, 2011, the High Court in London rejected Tesla's libel claim.[157] The falsehood claims were also struck out by February 2012, with Mr. Justice Tugendhat describing Tesla's malicious falsehood claim as "so 'gravely deficient' it too could not be allowed to proceed."

Tesla: If you have two, at least one will work.

All we need to do is show a little class, a little sophistication, and we're in like a dirty shirt.

    • 1
Aug 24, 2017

Well...empirically wise, you have been wrong. 100% since your post. But anyway, i think you are looking at the company as something static, but it is not. What you want for a ceo, is a problem solver, and that is what musk is. Once past certain inflection point, i believe tesla will eventually prevail. As you know they are opening up numerous charging station. I believe this is a great asset if the world eventually does go electric, which i believe is highly likely when we eventually reach solar parity.

    • 1
Aug 24, 2017

JasonLoh is right on point in regards to looking at the company as something static...

Most of you are probably too young to remember what the first Apple computer "did" relative to what it "cost". Had there been Internet forums that far back, I'm sure the shorts would have been raging the same way they are here. You can't assume a company's future cash flows will be based solely on a current product line, particularly when the CEO is committed to R&D and innovation the way Musk is. I'm not arguing whether Telsa's current stock price is justified given the current lineup, but this is likely the tip of the iceberg, and you'll probably see a convergence of product price to feature/benefit pool (i.e. maximum value to the consumer) happen within the next 5-10 years.

I think Tesla is a good buy (with a long horizon of course) given that you have an opportunity to own something at what is essentially the ground floor. Honestly, I'd throw out all FCF models/predictions and focus on the long term macro-trend in regards to electric vehicles and which companies are poised to be industry leaders.

Aug 24, 2017

this company is crazy man.

Aug 24, 2017

^Someone just lost their shit. You don't buy it based off whether or not YOU think its a good idea. You buy it if you think OTHER people will think it's a good idea. That's how the price is determined. By the market. If the market as a whole likes it, then the price goes up. If you think it's shit, then short it. Then watch yourself get bit in the ass when it hits triple digits. So far, TSLA has made me nothing but money. I've seen a few Model S sedans in the flesh, and they're beautiful. Everyone seems to love them. I will never own an electric car, I love cars, I love driving, and I love the way engines sound. But Tesla is here to stay, in one form another.

"When you stop striving for perfection, you might as well be dead."

Aug 24, 2017
EvanM:

^Someone just lost their shit. You don't buy it based off whether or not YOU think its a good idea. You buy it if you think OTHER people will think it's a good idea. That's how the price is determined. By the market. If the market as a whole likes it, then the price goes up. If you think it's shit, then short it. Then watch yourself get bit in the ass when it hits triple digits. So far, TSLA has made me nothing but money. I've seen a few Model S sedans in the flesh, and they're beautiful. Everyone seems to love them. I will never own an electric car, I love cars, I love driving, and I love the way engines sound. But Tesla is here to stay, in one form another.

Learn to read. And no, it's not "here to stay" for all the reasons I pointed out.

Having said that, if you're buying it due to the greater fool theory then you're onto something. There's a lot of foolish lefties out there who will let their emotions on the issue pull them into this crap stock. Plus, this company is about to get shoved down America's throat by the media (again).

Just make sure you get out before the JasonLohs of the world lol.

All we need to do is show a little class, a little sophistication, and we're in like a dirty shirt.

Aug 24, 2017
Grouse:
EvanM:

^Someone just lost their shit. You don't buy it based off whether or not YOU think its a good idea. You buy it if you think OTHER people will think it's a good idea. That's how the price is determined. By the market. If the market as a whole likes it, then the price goes up. If you think it's shit, then short it. Then watch yourself get bit in the ass when it hits triple digits. So far, TSLA has made me nothing but money. I've seen a few Model S sedans in the flesh, and they're beautiful. Everyone seems to love them. I will never own an electric car, I love cars, I love driving, and I love the way engines sound. But Tesla is here to stay, in one form another.

Learn to read. And no, it's not "here to stay" for all the reasons I pointed out.

Having said that, if you're buying it due to the greater fool theory then you're onto something. There's a lot of foolish lefties out there who will let their emotions on the issue pull them into this crap stock. Plus, this company is about to get shoved down America's throat by the media (again).

Just make sure you get out before the JasonLohs of the world lol.

Look I'm a republican/libertarian/whatever you want to call it too, but I can't deny how great their cars are. Just because they are electric doesn't make them bad. As far as I'm concerned, let all the normal people buy electric cars, drops demand for oil thereby leaving more for us who enjoy conventional cars, at al lower cost of ownership. Must've missed the part where you kind of begrudgingly the stock itself has value. Either way though, I think you are being way too pessimistic on Tesla. By the way, I'd wager a bet I know more about cars than anyone else on this entire website. Their cars have no inherent problems, and the only bad press they've ever gotten was from Top Gear, who (and I love them to death, and Jeremy Clarkson is like a god to me) admitedly fixed the review in order to make sure Tesla came out looking impractical. They admitted it. There was no real problem. They haven't had any real problems in the real world. That jackass moron from the Times also lied about his experience with the Model S, and people knew it, and he was called on it. Consumer Reports, which hates everything that isn't a hybrid/electric/fuel-cell green machine gave the Model S a 99. They don't even know what cars are. Like it or not, they are building the perfect car for the modern, doesn't know shit about cars middle class families. And that's fine. I'll never buy one, but many people should. And I will continue to put faith in their stock.

"When you stop striving for perfection, you might as well be dead."

Aug 24, 2017
EvanM:

Look I'm a republican/libertarian/whatever you want to call it too, but I can't deny how great their cars are. Just because they are electric doesn't make them bad. As far as I'm concerned, let all the normal people buy electric cars, drops demand for oil thereby leaving more for us who enjoy conventional cars, at al lower cost of ownership. Must've missed the part where you kind of begrudgingly the stock itself has value. Either way though, I think you are being way too pessimistic on Tesla. By the way, I'd wager a bet I know more about cars than anyone else on this entire website. Their cars have no inherent problems, and the only bad press they've ever gotten was from Top Gear, who (and I love them to death, and Jeremy Clarkson is like a god to me) admitedly fixed the review in order to make sure Tesla came out looking impractical. They admitted it. There was no real problem. They haven't had any real problems in the real world. That jackass moron from the Times also lied about his experience with the Model S, and people knew it, and he was called on it. Consumer Reports, which hates everything that isn't a hybrid/electric/fuel-cell green machine gave the Model S a 99. They don't even know what cars are. Like it or not, they are building the perfect car for the modern, doesn't know shit about cars middle class families. And that's fine. I'll never buy one, but many people should. And I will continue to put faith in their stock.

The model S with the smaller 60 kwh battery starts at $62,500 WITH a $7500 government tax credit (so $70k before the government subsidy, which will get canceled if the company ever starts selling any appreciable number) and the one reviewed by consumer reports that got the dazzling review was $90,000. "The perfect car for the modern middle class family?" What planet are you on bud?

It takes 30 minutes to half charge the battery at a commercial charging facility. It takes ALL NIGHT if done at home. How is anyone in the real world going to buy that? "Oh no I am running low on gas on the way to work...better stop for an hour to fill 'er up...at a charging station 20 minutes out of my way...the boss'll understand.

It only gets about 215 (estimated at 265 when driving a steady 55 mph) miles in real life driving per charge according to the Car&Driver test, and that's the 85 kwh battery NOT the 60 kwh battery that comes with the basic package. So assuming a roughly 50 mile drop on the smaller battery as well gives you about a 150 mile TRUE range in REAL driving conditions. Couple that with how long it takes to charge at a professional station and you're going to be waiting at a charging station for a minute for every 3.6 miles you drive. You also better hope to god you don't ever have to make unplanned trips from home, or forget to plug it in at night, or unplug it before driving out of the garage. According to tesla, when charged at home you'll get 31 miles of range for every HOUR of charging. Or you can pay an extra $1200 to get an extra charger for 62 miles of range for every hour of charging.

Also, it's basically guaranteed to need a new battery after 8 years. This will cost either $10 or $12,000 depending on the size, if you pre-purchase, according to Tesla.

???

Like I said, no market except upper income lefties who want to feel smug/hip and the otherwise emotionally-attached. If they can cut the price in half, then that changes things. Otherwise it's coming down like a lead balloon after the hype dies. Am I saying Tesla is worthless? Not entirely. But is it worth a market cap of $10 billion? Absolutely not. That is OVER ONE QUARTER of GM's market cap! That is 20% of Ford's! All for a company that has sold like 5000 cars and has yet to produce a non-paper profit after 10 years.

And the car isn't even environmentally friendly. Regardless of any POTENTIAL battery issues that come with the mining of rare earth in China, the electricity it uses comes from coal - one of the dirties fuels out there. It's no better than gas powered cars in terms of pollution and is significantly worse in terms of convenience. The fact that Tesla hasn't commissioned a SINGLE study to verify whether this "green" car is actually "green" at all is pretty telling.

So if it's more expensive, less convenient, and no better for the environment...why get one?

All we need to do is show a little class, a little sophistication, and we're in like a dirty shirt.

Aug 24, 2017

I agree that there is a lot of hype, but this is just generation 1 tech we're seeing. Honestly, if they cut the power of the motors (and they could, an S is quicker than an M5), range would be much increased. Not sure why they don't, but I'm just saying, it is not for everyone now. Not at all. But I know lots of people that certainly don't drive 200 miles in a day and would love one of these things. Funny you compare them to Ford, all day on CNBC they've been talking about TSLA vs F and AAPL. I think its hard to compare it GM and Ford...they are so different. And neither of those companies are truly doing anything amazing. Ford more than GM, if you buy GM stock, you might as well burry it in the mattress. I think that Tesla has the potential to become a more exciting company, and I think that will drive price in the short term. Long term though, I really think they will succeed with continued tech evolutions.

"When you stop striving for perfection, you might as well be dead."

Aug 24, 2017
EvanM:

I agree that there is a lot of hype, but this is just generation 1 tech we're seeing. Honestly, if they cut the power of the motors (and they could, an S is quicker than an M5), range would be much increased. Not sure why they don't, but I'm just saying, it is not for everyone now. Not at all. But I know lots of people that certainly don't drive 200 miles in a day and would love one of these things. Funny you compare them to Ford, all day on CNBC they've been talking about TSLA vs F and AAPL. I think its hard to compare it GM and Ford...they are so different. And neither of those companies are truly doing anything amazing. Ford more than GM, if you buy GM stock, you might as well burry it in the mattress. I think that Tesla has the potential to become a more exciting company, and I think that will drive price in the short term. Long term though, I really think they will succeed with continued tech evolutions.

Well if you're in it, I hope it works out for you. I'm not in it long or short, so I'm pretty well hedged haha.

All we need to do is show a little class, a little sophistication, and we're in like a dirty shirt.

Aug 24, 2017
Grouse:
EvanM:

I agree that there is a lot of hype, but this is just generation 1 tech we're seeing. Honestly, if they cut the power of the motors (and they could, an S is quicker than an M5), range would be much increased. Not sure why they don't, but I'm just saying, it is not for everyone now. Not at all. But I know lots of people that certainly don't drive 200 miles in a day and would love one of these things. Funny you compare them to Ford, all day on CNBC they've been talking about TSLA vs F and AAPL. I think its hard to compare it GM and Ford...they are so different. And neither of those companies are truly doing anything amazing. Ford more than GM, if you buy GM stock, you might as well burry it in the mattress. I think that Tesla has the potential to become a more exciting company, and I think that will drive price in the short term. Long term though, I really think they will succeed with continued tech evolutions.

Well if you're in it, I hope it works out for you. I'm not in it long or short, so I'm pretty well hedged haha.

Haha I'm in it with paper right now, don't have the free cash to make any real worthwhile investments. I will say that the guy whose portfolio I managed for a while better remember his Scottrade password because I had him in at like $10.

"When you stop striving for perfection, you might as well be dead."

Aug 24, 2017
EvanM:

Haha I'm in it with paper right now, don't have the free cash to make any real worthwhile investments. I will say that the guy whose portfolio I managed for a while better remember his Scottrade password because I had him in at like $10.

Nobody gave this comment the attention it deserved.

I hate victims who respect their executioners

Aug 24, 2017

True story. I felt good about it, had just had a nice little run with both Sprint and HTC, but I felt that there was quite a bit of energy behind the stock right after the IPO. Unfortunately, we're not friends anymore, he was the boyfriend of a girl I used to be much better friends with, so no real reason to talk to him. My old laptop crashed, took everything with it. Somewhere out there is potentially a brokerage account with 10-15k in it. Not bad for starting with less than $500.

"When you stop striving for perfection, you might as well be dead."

Aug 24, 2017

hey just out of curiosity, has any of the negative comments on Tesla changed? How about the positive ones? Seeing that it has doubled pretty much since the last post and seems to be pretty steady. Think it would be interesting discussion. I

Aug 24, 2017

According to http://shortsqueeze.com/?symbol=TSLA&submit=Short+Quote%99 there is still about 40% shares short out of total float. Things have changed considerably since may so it's not worth going into a ton of detail about. Anyone with interest in this stock is waiting for ER after market on wednesday. I'd expect it to move up or down by a large margin depending on how their numbers look. It's a tough stock to play when there's so few shares in float and elon musk owns 25% of them and refuses to sell. Makes the stock real volatile and very susceptible to being overbought and oversold consistently. I still think the company is massively overvalued but it doesn't really matter what anyone thinks if momentum propels the price upward.

Aug 24, 2017

Tesla has spent 0 on advertising in China, hasn't even shipped 1 car yet, but the Beijing store is the most active in the world already.

Tesla is expecting its China sales to match its US sales by this time next year.

The Chinese government might also allow EV tax credits for foreign manufacturers as well too.

...today was delicious.

Aug 24, 2017

Hum, soared 12% after hours, when will the carnival end?

The Auto Show

Aug 24, 2017

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