You really must hate being right, because you say a bunch of shit that will assuredly see you wrong, and do so regularly.
You just assumed it will be easy for Tesla to sell 1 million cars. This is the company that struggled and fudged numbers in order to cross 50,000 for 2015? lol. The same company struggling to keep up with weak demand? The same company whose CEO is more interested in a space business than selling cars.
Anyway, here’s what we know
today, TESLA as a business doesn’t work. As shown in the OP and the rest of this thread. Terrible financials, a marginal product and a model (electric cars) that will be obselete when Hydrogen takes hold. Not to mention the big guys are coming to eat tesla’s lunch.
today, TESLA as an investment doesn’t work either. The fundamentals of the business are horrendous. The marketplace in which they’re attempting to operate is disintegrating and the appetite for cars that cost double what similar cars cost is diminishing rapidly.
We know these things today. Let’s wait 5 years to see about the rest. But today , which I care about and which we can actually talk about (rather than throwing around projections), is pretty plain.
Here’s a hint: equity prices are changing right now and it has little to do with performance at the underlying companies. It’s only a matter of what price is low enough to make people buy and bid the price back up. It’s called a correction. It has nothing to do with Tesla’s 10 year plan. Even if gasoline was free, cars with on board combustion are still expensive to maintain in the long run.
You raise a good point about hydrogen. I remember one top gear episode where they made an offhand joke saying that whoever figures out how to cheaply extract and store hydrogen from water will be a rich man - close to the truth.
It pisses me off how eco friendly these battery cars are presented as. Still need to mine the earth for resources, still need oil to ferry the battery materials around the world
actually that’s not the case. Prices are indeed changing, however the pie-in-the-sky, no earnings, need-perfection for continued growth companies are getting crushed here. Maybe you’re not listening. Let’s remind you.
i.e. Tesla, your favourite, is coming up on being down 50% in 5 months. The stock market is down 10% over that same period. When multiples compress, the high multiple companies get destroyed, along with those who were wreckless enough to overpay. Why does that happen? because quite simply when times are good, wreckless investors will pay anything for something that is going up. When times are bad, people care about revenue, earnings, execution…you know, the important items that determine how you value a business. They don’t have as much ‘faith’. They want facts.
But hey, maybe it’s going to be different this time.
Let’s look at the simple math
Ford and GM, established automakers that everyone hates, trade at 5x next years earnings.
BMW, an established maker seeing good growth and great margins, is trading at 8x.
Let’s pretend Tesla will trade at 10x earnings 15 years from now when it’s a big automaker selling 500,000 cars a year at about $50,000/car . West maintains their big moment sales wise will be the $35,000 cheap car, whenever that thing shows up and cross compare that to the Model S and X at about $90,000/car we’ll come up with about $50,000/car on average assuming 3/4 sold are the cheap one.
Selling half a million Teslas…what are they making on each one? We know today they lose a fortune, but let’s pretend they make a 10% margin like the lux makers (which is a pretty fat margin in that industry).
500,000 cars x $50,000 x 0.08 = $2 billion a year profit (if everything goes perfectly for the next 15 years)
What’s the multiple?
5x like GM/Ford? That’s a $10 billion company
8x like BMW? That’s a company that is worth $16 billion.
15x like no large carmaker on earth today? That’s $30 billion
20x like a wet dream? That’s $40 billion
It’s still well below VW’s $55 billion market cap…and this assumes VW won’t grow or do anything in the next 15 years, and certainly don’t return to their recent market cap closer to $80 billion.
Anyone seeing the problem yet? Maybe west will say Tesla is going to sell 1 million cars. Sure, let’s make some more shit up to help him out.
1 million cars with a reasonable margin of around 10% and a reasonable valuation of about 10x means $5 billion in profit, and a $50 billion valuation. AKA less than VW today.
Saki says it’s hard to value pre scale businesses. No shit? If Tesla is trading above $50 that’s great and they’re way ahead. No one can control what happened 2013-2016 as the market considered the possibilities. Their biggest obstacle now is how resilient their buyers are. Some people will put off a $100k car if their portfolio is down 25%.
I don’t know why you’re comparing car company multiples to Tesla. They make computer hardware and sometimes it has wheels attached to it.
Nobody can be sure if they’ll make $12,000 margin per car selling them at $60k or $5k of margin selling them at $40k. You’re unable to separate the unit economics from the cost of building new factories, so you mischaracterize each car sold as a loss leader. The ironic part is the companies you cite as having great “profits” have obscene recall liability, retiree liability, healthcare liability, and vendor financing liability which they hide in credit companies (it’s easier to bankrupt and rename the finance company every decade to wash away its sins).
good to see the numbers were so disconcerting that you’re abandoning the discussion. Don’t forget that a margin takes into account factory costs etc. Nobody is new to investing here. I’m trying to turn your attention to facts. It’s fun watching you squirm.
In your perfect world, Tesla sells 1 million cars, makes more of a margin than anyone in the history of large scale automobile production, and nothing goes wrong. All the other problems of other major corporations don’t apply because Tesla is from California and is cool. Last time I checked, Tesla is learning all about recall liability and hardware failures right now. The cars are crap.
p.s. Apple makes hardware and they trade at 9x earnings
I like to picture you standing on the freeway entrance screaming “it just doesn’t work” as caravans of Tesla’s go by, ferrying their owners to work on autopilot where they will get dropped off in front, while the cars find an open space to charge themselves.
You’re the only guy following the equity of car companies as a forward looking indicator of success. VW got their bond rating downgraded to BBB in December because, and I quote Standard and Poors, “fraud on that scale does not merit an A rating”. Tesla can borrow at B rates, so in the eyes of the market there’s only about 190 basis points between them.
You’re pretty slow so I’ll spell it out for you. Over $1 trillion of managed money is rotating from growth funds into value funds. Whatever was overweight in a growth ETF is being indiscriminately sold. That’s the reason Tesla rose 800% in 12 months. And it’s the reason it fell 25% in a month. If Deutsche Bank and Credit Suisse are contained or perceived to be contained, the growth stocks will recover the fastest with 10% gains in a single day. Like I foreshadowed, we’re going to end this decade with oil under $50 and it’s going to create massive deflation in the global economy. That’ll be with us for a while. Low input costs for combustion engines don’t change Tesla’s destination. They’re thinking on a century scale and you’re thinking about yesterday. They will be a Dow component one day.
The fact that you can’t separate the innovation activity of the company from the investing activities of the wealth management industry means your thesis is wrong.
You’re right, broad growth stock selling is a condemnation of the Tesla business model. I had assumed there would be no stock market corrections before Tesla formed a monopoly position in electric cars. The world’s first 25 year bull run was a precondition and you called me out on it.
On a 1 year chart VW is down 50% and Tesla is down 30%. Since you started this thread Tesla is down 39% and VW is down 42%. The EURUSD cross has oscillated a bit but is flat on a 1 year basis so no currency headwind to speak of.
This could almost be taken to the war room. Would you guys mind getting in a bar fight together, record it, and then post back the video and results here
Terms: If Saki loses he will be forced to rent or at least test drive a Tesla and buy one share of the Tesla stock. If Saki win’s, he can post that he is right and West is Wrong and the thread is closed and stickied as a grave site, and West has to buy one stock of equal or lesser value of Tesla in the automotive industry that Saki believes will outperform Tesla over the next century.
I heard Saki is like 6’8" and 280lbs…he actually just removed the front seat in his RS4 and sits on the back bench when driving. Besides his car being in Canada, therefore lighter than a US RS4, this seat removal is another reason why he has the Stock RS4 1/4 mile record.
west, you were proclaiming that tesla would be the biggest market cap automaker in the world. A few pages back. You, nobody else, was using market cap as a determinant of success with your bold future prediction.
I pointed out that your thesis has fallen flat on its face since then despite a monstrous scandal at VW and ‘sunny ways’ for Tesla. You stand alone in your thesis. Sure 25 year timelines are helpful for never being held accountable for bogus predictions. But we live in the now, and right now, you look like a moron. Your proclamation was the top for Tesla. That was the prodigal canary in the coalmine.
I showed that if Tesla gets to your 500,000 or 1 million car fantasy, the numbers still won’t support the current stock price, let alone anything making it largest in the world at that time. You deflected, talked about a bunch of nonsense.
This is why you’re of no use. You have no salient thoughts…just fantasy which you attempt to cloud with a bunch of technical jargon. Useless.
You sound like a person who says motorcycles are cheaper and better than cars, ergo everyone will prefer bikes. You might be a visual learner and it might he hard for you to do that from Canada. You’re obsessed with how the Model S won’t scale to a million units a year, and you’re right about that but no one is arguing it.
A stock market correction doesn’t mean you’re right. Robots build Tesla’s regardless of what today’s stock price is. I’m sorry the automobile replacement cycle isn’t faster? I’ll be on The Internets in 10 years posting pictures of whatever stupid shit I’m into. Let’s meet back here.
6- If Tesla’s sales growth continues and oil production isn’t curbed to compensate, we’ll be looking at an oil surplus in less than ten years (translation: dirt cheap fuel prices for those of us still rocking a 2.0T).
Seriously. Elon Musk has it right. You sell the Model S as a fashion item, to early-adopters, at high-margins so you can burn overtime on R&D and establish economies of scale on your battery production. As your costs drop, you introduce the lower-price models to fill out your portfolio.
The Model S was never supposed to “compete” in a classic sense with high-end Audi or Mercedes-Benz; it’s a proof of concept! Just like MB testing new systems on the S-Class then trickling it down to the C-Class years later, eventually the lessons of the Model S will pay off with when the Model 3 starts at $35,000.
Yes, it will start at $35K and you can option it up to $60K (just like a 3 Series). But I wouldn’t be surprised if Tesla’s 3 Series fighter paves the way for an Accord fighter starting at $20K.
and i don’t understand why objective analysis of a business is deemed ‘hate’
if someone is a fan of a business, and someone points out some obvious holes in the business, just because the fanboy doesn’t like it doesn’t make it ‘hate’.
It’s a simple discourse on the facts.
at the end of the day the business has negative cash flow burn rates that are funded by the stock. When the stock gets cut in half, that makes it tough for the business to survive. On top of that the stock is already priced like it is BMW or Audi, operating at their margins, their sales and their average vehicle.
Disruptive doesn’t mean good.
Amazon - loses money to gather market share and get people used to a new model. Only thing is that new model is a shit model. Once they move prices to provide a realistic margin, those customers will likely move back to teh old model.
Uber - doesn’t comply with licensing or taxi standards; sells a taxi service that loses hundreds of millions a year because they undercharge customers and/or overpay drivers. What if they adjust one of those two things? Bye Bye retired Jim who likes to earn an extra 30,000/year driving folks around 3 hrs a day. Hello (insert immigrant name here) who just got here and will take any shit job to survive. Or the alternative, they make you pay $22 to ride with Jim instead of a cab who charges $15 (and that’s assuming they don’t get shut down for not being licensed)
All of these new ‘disruptive’ businesses have one thing in common. If we were to invest our life savings in them to earn money, we’d all be fucked because none of them make a penny, and all of them are decades from being profitable (if they ever will).
I don’t care. I’m Canadian. Neither does all of Europe, Asia or South America. You know…where 90% of earth lives?
Again…who cares? Also last time I checked Elon Musk is a Canadian educated South African. Not so American if you ask me. Any guesses what happens if they ever make a penny of profit?
Dirsuptive how?
Trying to, but really…are they? They’re creating dealerships already. Don’t forget you also don’t need dealerships when you don’t sell any fucking cars lol. Oh and last time I checked, their cars are unreliable as fuck (like a good American car company) and owners are already finding the whole ‘I bought a car that doesn’t need service or dealers’ is a crock of shit.
I guess you haven’t seen the hunchback of Model X? That thing is hideous. The Model S is maybe a 6 out of 10. The model 3 or whatever? Oh that’s right it’s already a year late and they haven’t shown a photo of it. They are fast…as long as you buy the $130,000 ones though. Last time I checked all $130,000 cars are fast as fuck.
Projecting parabolic sales is fun on paper, but newsflash…car sales are in the 15-18 million units per year range. If Tesla becomes BMW and sells 1.75 million, how is that going to disrupt oil consumption lololol. You realise that cars use only about a third of the oil consumed…right? So if Tesla takes away 10% of that you’re at what…3%? No, that’s not moving the needle. Further, the impetus for an electric car is primarily the need for a cheaper way to power vehicles. Guess what. Tesla is an insanely expensive way to save a pittance in fuel costs. And hey…oil is on sale for 75% off for the next 5 years. Oh and electricity rates are growing at a prodigious rate.
My question for you is…have you ever heard of hydrogen? Get to know it. Hydrogen fuel cells will be what we talk about 50 years from now when the world starts to make a concerted effort to move away from oil and the internal combustion engine. Not an environmentally destructive ass backwards blinders-on electricity based battery model.
