This isn't a very technical analysis, but I don't see how TSLA can be worth this much - they'll never be able to produce enough to substantiate this value in the near term.

The thing with Tesla is that it isn't structured as a traditional automaker.

Tesla has the world's largest charging network, built out at immense cost and while not currently profitable certainly an asset of considerable value.

Tesla owns its own stores/service centers (most auto manufacturers leave all of that to independently owned dealer/service networks)

Owns its own software (no need for Apple or Android)

Tesla solar business

Tesla energy storage business

Self driving car effort

Battery R&D and production efforts

Fizban said:

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The thing with Tesla is that it isn't structured as a traditional automaker.

Tesla has the world's largest charging network, built out at immense cost and while not currently profitable certainly an asset of considerable value.

Tesla owns its own stores/service centers (most auto manufacturers leave all of that to independently owned dealer/service networks)

Owns its own software (no need for Apple or Android)

Tesla solar business

Tesla energy storage business

Self driving car effort

Battery R&D and production efforts

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Lol, the adoption of standard CSS chargers has forced Tesla to make it standard on the model 3 in Europe. Tesla isn't the largest charging network, there are more CSS charge locations (because it is standardized and offered by multiple companies) than Tesla locations.

bmks270 said:

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Fizban said:

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The thing with Tesla is that it isn't structured as a traditional automaker.

Tesla has the world's largest charging network, built out at immense cost and while not currently profitable certainly an asset of considerable value.

Tesla owns its own stores/service centers (most auto manufacturers leave all of that to independently owned dealer/service networks)

Owns its own software (no need for Apple or Android)

Tesla solar business

Tesla energy storage business

Self driving car effort

Battery R&D and production efforts

---

Lol, the adoption of standard CSS chargers has forced Tesla to make it standard on the model 3 in Europe. Tesla isn't the largest charging network, there are more CSS charge locations (because it is standardized and offered by multiple companies) than Tesla locations.

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You are comparing Level 2 chargers to superchargers? Lol indeed...

That's a clip from HBO's Silicon Valley - its the best explanation for a market that enables the valuation of TSLA that we see today.

Musk can't make billions selling sedans. But selling a dream of the future? Sure, people in CA will line up around the block and slap down $500-$1000 sight unseen for that.

No DCF model can price that - don't be a Luddite and try and come at me with your growth scenario and terminal value calculations supported by your critical flaw identification. You can't stop the world's accelerating transition to sustainable energy, and Musk doesn't care how much lithium he needs or you need to take to believe it!

Deputy Travis Junior said:

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Yea but still, in q3, they generated 6B in revenue. GM generated 36B in revenue. I get that Tesla has some other potential revenue streams, but it's generating 1/6 of the revenue and has twice the valuation.

Its current valuation is completely detached from reality. Good for Elon and I hope they continue to do well, but let's be honest: their current stock price is total bull****

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Their current stock price has made some of us a lot of money! Who cares if their revenue is 0 if trading the stock puts a million in my pocket!

Deputy Travis Junior said:

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Yea but still, in q3, they generated 6B in revenue. GM generated 36B in revenue. I get that Tesla has some other potential revenue streams, but it's generating 1/6 of the revenue and has twice the valuation.

Its current valuation is completely detached from reality. Good for Elon and I hope they continue to do well, but let's be honest: their current stock price is total bull****

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I will admit that I'm impressed with what they're managed to do. Several months ago I was still on the fence, but I didn't think they were going bankrupt either.

I think the stock is inflated at this point. It's priced like a tech stock, not an auto manufacturer stock. Kind of makes sense with the possible alternate revenue streams, but some of those have yet to be realized. They still have a lot of debt and not a lot of sustained profits.

I'm also curious as to how battery gate will affect them. For those who don't know, Tesla reduced the range and charge rates for thousands of Model S's through an OTA update, possibly to avoid a battery fire issue that should have resulted in a recall instead. People noticed, and the NHTSA is investigating them. They're also being sued.

They're also being looked at for calling warranty claims "goodwill" work to avoid lemon laws. Seems like fraud.

ABATTBQ11 said:

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Deputy Travis Junior said:

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Yea but still, in q3, they generated 6B in revenue. GM generated 36B in revenue. I get that Tesla has some other potential revenue streams, but it's generating 1/6 of the revenue and has twice the valuation.

Its current valuation is completely detached from reality. Good for Elon and I hope they continue to do well, but let's be honest: their current stock price is total bull****

---

I will admit that I'm impressed with what they're managed to do. Several months ago I was still on the fence, but I didn't think they were going bankrupt either.

I think the stock is inflated at this point. It's priced like a tech stock, not an auto manufacturer stock. Kind of makes sense with the possible alternate revenue streams, but some of those have yet to be realized. They still have a lot of debt and not a lot of sustained profits.

I'm also curious as to how battery gate will affect them. For those who don't know, Tesla reduced the range and charge rates for thousands of Model S's through an OTA update, possibly to avoid a battery fire issue that should have resulted in a recall instead. People noticed, and the NHTSA is investigating them. They're also being sued.

They're also being looked at for calling warranty claims "goodwill" work to avoid lemon laws. Seems like fraud.

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And this is the problem with Tesla, they've always pushed the boundaries of innovation but they are constantly weaseling their way out of regulations/obligations. They sell the sizzle not the steak more than any brand in the country.

Sending injured employees in lyfts to the hospital to reduce their reported injuries, having an in house doctor that just lost his license, not responding to warranty claims, buying out solarcity, artificially spiking the stock price to try to trigger debt restructuring. Musk is a snake.

Don't worry, I've burned myself enough to not count the money until it's in my pocket. Here's hoping to an overnight tanking!

one MEEN Ag said:

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LCE said:

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I really hope people don't take stock advice off this thread. From the beginning it's been a clown show.

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The sentiments on this thread match any conversation about Tesla's stock. There is one camp that think Tesla's gonna take over the world with infinite, fully self driving cars any day now. And another group that looks at their debt and valuation and think the stock price is insane.

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If you assume Tesla is just an extremely fast growing automaker then their valuation is too high.

The issue is that Tesla is very much a tech company that is playing in several different significant areas.

Shoot look at just the valuation of things like self driving car technology efforts:


Alphabet's Waymo valuation cut 40% by Morgan Stanley to $105 billion amid challenges in self-driving car market

https://www.cnbc.com/2019/09/27/waymo-valuation-cut-40percent-by-morgan-stanley-to-105-billion.html


Or battery companies:

CATL, market cap $37 billion https://finance.yahoo.com/quote/300750.SZ/


so forth...

Fizban said:

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one MEEN Ag said:

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LCE said:

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I really hope people don't take stock advice off this thread. From the beginning it's been a clown show.

---

The sentiments on this thread match any conversation about Tesla's stock. There is one camp that think Tesla's gonna take over the world with infinite, fully self driving cars any day now. And another group that looks at their debt and valuation and think the stock price is insane.

---

If you assume Tesla is just an extremely fast growing automaker then their valuation is too high.

The issue is that Tesla is very much a tech company that is playing in several different significant areas.

Shoot look at just the valuation of things like self driving car technology efforts:


Alphabet's Waymo valuation cut 40% by Morgan Stanley to $105 billion amid challenges in self-driving car market

https://www.cnbc.com/2019/09/27/waymo-valuation-cut-40percent-by-morgan-stanley-to-105-billion.html


Or battery companies:

CATL, market cap $37 billion https://finance.yahoo.com/quote/300750.SZ/


so forth...

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Until Tesla monetizes and turns a profit on any product they should be valued as a growing loss producing automaker.

Acquiring a failed solar energy company doesn't inspire confidence.

bmks270 said:

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Fizban said:

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one MEEN Ag said:

---

LCE said:

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I really hope people don't take stock advice off this thread. From the beginning it's been a clown show.

---

The sentiments on this thread match any conversation about Tesla's stock. There is one camp that think Tesla's gonna take over the world with infinite, fully self driving cars any day now. And another group that looks at their debt and valuation and think the stock price is insane.

---

If you assume Tesla is just an extremely fast growing automaker then their valuation is too high.

The issue is that Tesla is very much a tech company that is playing in several different significant areas.

Shoot look at just the valuation of things like self driving car technology efforts:


Alphabet's Waymo valuation cut 40% by Morgan Stanley to $105 billion amid challenges in self-driving car market

https://www.cnbc.com/2019/09/27/waymo-valuation-cut-40percent-by-morgan-stanley-to-105-billion.html


Or battery companies:

CATL, market cap $37 billion https://finance.yahoo.com/quote/300750.SZ/


so forth...

---

Until Tesla monetizes and turns a profit on any product they should be valued as a growing loss producing automaker.

Acquiring a failed solar energy company doesn't inspire confidence.

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Stock valuations are forward looking. If you want to wait until a specific product line has turned a profit before assigning any value to it at all then tech stocks aren't for you.

Better cross out pharma as well

one MEEN Ag said:

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LCE said:

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II really hope people don't take stock advice off this thread. From the beginning it's been a clown show.

---

The sentiments on this thread match any conversation about Tesla's stock. There is one camp that think Tesla's gonna take over the world with infinite, fully self driving cars any day now. And another group that looks at their debt and valuation and think the stock price is insane.

---

Can I go with Tesla will be the most important company of the next 20 years, AND the stock price is overvalued? It'll come down some before it goes back up.

I bought a token amount @194. It's been fun to watch, but I only play stocks with "Vegas money." It won't change anything if I lose it all or it goes to the moon.

Analyst estimate for 4Q is $1.50/ share earnings, roughly $270 MM per Yahoo finance.
That would make 2019's performance a net loss of $700 MM. 3Q and 4Q's combined profit would offset 2Q, but not the disaster of 1Q19.
Forward PE ratio is ~94. What is that? Implication of $17B in earnings, I work that out to be a 24% margin on average sales price of $70k/vehicle and 1MM vehicles sold.

Very positive earnings and outlook.

Model Y range increased significantly, going into production imminently, overall production capacity growth going well, 50% growth in 2020 with another 50% planned for 2021.

Record deliveries, and yet only $105 million of Q4 profit, and what would be a Q4 loss if it weren't for regulatory credit sales. Accrued liabilities increased $300 million, accounts payable increased $400 million. This quarter compared to this quarter last year's revenue is flat, gross profit is down, net income is down. Elon dodges questions about the Cybertruck, dodges questions about Tesla Insurance, falls flat on his face when asked about FSD, etc.

And the stock shoots up. I don't know how anyone in their right mind can invest in any direction on this stock. The valuation makes zero sense. It's 100% gambling.

Whoever had calls probably made a decent stack

All A&M said:

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'I think Musk is all about smoke and mirrors (his financial reporting is misleading at best), but I have to admit if I were buying an electric car with 200+ mile range for under $50K, I would buy the Tesla Model 3. The only other option is the Chevrolet Bolt which is smaller and uglier than the Model 3.

The problem for Tesla is VW, Audi, BMW, Ford, Chevrolet, Nissan, Lexus, Honda, Toyota, and others will enter new models in this space (200+ miles < $50K) in the next 6-18 months. Looking at pricing, specs, and body styles of those other cars.... I see several that I would rather have than the Tesla.

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Annual reports are audited.

Tesla killers are around the corner, just like they've been for 7 years.

Future electric vehicles from all manufacturers look great. Their marketing department has a bad habit of not asking the engineering department about those numbers.

Endo Ag said:

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All A&M said:

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'I think Musk is all about smoke and mirrors (his financial reporting is misleading at best), but I have to admit if I were buying an electric car with 200+ mile range for under $50K, I would buy the Tesla Model 3. The only other option is the Chevrolet Bolt which is smaller and uglier than the Model 3.

The problem for Tesla is VW, Audi, BMW, Ford, Chevrolet, Nissan, Lexus, Honda, Toyota, and others will enter new models in this space (200+ miles < $50K) in the next 6-18 months. Looking at pricing, specs, and body styles of those other cars.... I see several that I would rather have than the Tesla.

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Annual reports are audited.

Tesla killers are around the corner, just like they've been for 7 years.

Future electric vehicles from all manufacturers look great. Their marketing department has a bad habit of not asking the engineering department about those numbers.

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Yes, people have been floating the idea that the traditional auto manufacturers will launch a "Tesla killer" any day now for years and years.

If you take the time to actually look at the specs of what has been announced there is still nothing on the horizon that can compete with what Tesla has available today. The Ford Mach-E is probably the closest thing to a competitor for the Model Y for instance but its specs just don't come close.

The Mach E First Edition has a 98.8kWh battery (the same size Tesla uses in its Model X large SUV) and AWD. They say they are targeting a 270 mile range and mid-5 second 0-60. They plan for it to charge at up to 150kW.

The Tesla Model Y with AWD has 315 miles of range, 4.8 sec 0-60, and can charge at 250kW.

Due to the Tesla's higher efficiency the charge rate that matters (miles of charge per minute of charging) is likely considerably greater than implied by the different in their peak charge rates. Plus there are far more Tesla Superchargers available than high capacity chargers for the Mach E. (and in the Tesla's case they are actually integrated into the car's nav/trip planning functions)

I didnt realize that everyone drives the same car today; the one with the "best" specs...

Just bc Tesla has the specs and brand you want or prefer, doesnt mean the billions of other drivers out there feel the same.

Tesla stock is priced like they will literally become the sole auto manufacturer. It's ridiculous, regardless of how good the product is, or how much you and other owners love it.

jamaggie06 said:

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I didnt realize that everyone drives the same car today; the one with the "best" specs...

Just bc Tesla has the specs and brand you want or prefer, doesnt mean the billions of other drivers out there feel the same.

Tesla stock is priced like they will literally become the sole auto manufacturer. It's ridiculous, regardless of how good the product is, or how much you and other owners love it.

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Of course I never said anything to the effect of "everyone drives teh same car today, the one with the best specs," but then this is the internet.

The point is that for years people have been saying that once a "real" automaker decides to make an electric car Tesla will be doomed. When these new electric cars have arrived they haven't been remotely competitive. As it turns out building a good electric car is a very hard engineering problem and requires a lot of tech that is new to the older manufacturers.

So far the next wave of challengers don't appear to be on track to do much better.

The reason TSLA is priced the way it is is because it is disrupting one of the biggest industries on earth, and is a significant participant in several emerging fields with potential.

Quote:

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The reason TSLA is priced the way it is is because it is disrupting one of the biggest industries on earth, and is a significant participant in several emerging fields with potential.

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I can't believe I just read this on board dedicated to actual finance and business. Wow.

Fizban said:

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The point is that for years people have been saying that once a "real" automaker decides to make an electric car Tesla will be doomed. When these new electric cars have arrived they haven't been remotely competitive. As it turns out building a good electric car is a very hard engineering problem and requires a lot of tech that is new to the older manufacturers.

So far the next wave of challengers don't appear to be on track to do much better.

The reason TSLA is priced the way it is is because it is disrupting one of the biggest industries on earth, and is a significant participant in several emerging fields with potential.

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I think the point that the "Tesla killer" is basically a boogeyman is well taken. Tesla is finally finding its footing and moving past the "chippy startup" phase, and the brand has a lot of panache, so I don't think anybody is going to swoop in and kill it. But let's look forward:

Tesla is currently priced as the second most valuable car company in the world. However, in 2019 it shipped ~375k cars compared to 77M total car sales worldwide (Statista.com source: Link), which works out to half a percent. Toyota, meanwhile, sold something like 11M cars. Thus, I think you'd agree that to justify its current valuation, Tesla needs to approach 6-8M sales/year, which is a 16- to 20-fold increase for current production (it also needs to dramatically improve and optimize operations so that it can take advantage of the fatter margins present in the luxury car space, but let's assume they can do that).

When you look at EV sales growth projections over the next decade or two, you realize that Tesla will need to 1) own nearly all of the growth in that space and 2) continue to ramp up production without hiccups to make a real attempt at that 6-8M target. This brings us to the conclusion that while Tesla stockholders needn't fear a "Tesla Killer," simply a legitimate alternative (read: actual competition that grabs some market share) could derail the ultra-rosy future baked into the current stock price.

It's massively overvalued, and the fact that none of the traditional automakers have a nice alternative doesn't yet mean anything; the segment is still far too small for that to matter. They have years to develop and deploy true competition.