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Comment by tonylo | Hacker News Reader

The analyst in question, David Tamberrino, ranks 10,337 out of 10,667 on TipRanks, meaning he is one of the worst analysts and has been wrong all the time. Link: https://www.tipranks.com/analysts/david-tamberrino

Those who keep repeating that Tesla stock is "overvalued" should understand that a stock's "value" is based on the current value of all future cash flows. Ford and basically all the other incumbent car companies are generating profits now, but are stagnant and waiting to be disrupted. Meanwhile Tesla's revenue is $7B last year, will be $10B+ this year, $20B+ next year, and $60B in 2020. Which companies are overvalued and which would you rather own?

There's a reason Wal-Mart's top and bottom lines are both several times that of Amazon, yet Amazon is now worth twice as much as Wal-Mart. It's about growth and future addressable market.

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To quote Marc Andreessen:

"A few common fallacies about valuation of public and private technology companies: First, ask any MBA how to value tech companies, she'll say "discounted cash flow, just like any other company!"

Problem: For new & rapidly growing tech companies, up to 100% of value is in terminal value 10+ years out, so DCF framework collapses. You can run as many DCF spreadsheets as you want and may get nothing that will help you make good tech investment decisions.

Related to fact that tech co's don't have stable products like soup or brick companies; future cash flows will come from future products.

Instead, smart tech investor thinks about: A future product roadmap/opportunity, B bottoms-up market size & growth, C talent and skill of team. Essentially you are valuing things that have not yet happened, and the likelihood of the CEO and team being able to make them happen.

Finance people find this appalling, but investors who do this well can make a lot of money. Spreadsheet investing is often disastrous. Doesn't mean cash flow doesn't matter, in fact opposite: this is the path to find tech companies that will generate tons of future cash."

> ask any MBA how to value tech companies, she'll say "discounted cash flow, just like any other company"

No she won't. Discounted-cash flow methods have been around since the 1500s [1]. We've had the time to figure out it's good for predictable cash flows and bad for everything else.

I used to be tolerant of (non-financial) Silicon Valley's anti-intellectualism towards economics and finance. Sort of like the Graham-Dodd speculator-investor line [2], I thought it was a handy, if comically-simple, rhetorical device. I've become more suspicious. It seems like an easy way to deter reasoned economic discussion.

For growing companies without earnings, you work out from production capacity (for existing markets) or down from the expected customer base (for new markets). Nobody finds this appalling. Few venture investors use spreadsheets to make decisions, though many use checklists or spreadsheets to idiot test valuations, i.e. understand what assumptions must pan out for their thesis to hold.

[1] https://poseidon01.ssrn.com/delivery.php?ID=5371001000070250...

[2] https://blogs.cfainstitute.org/investor/2013/02/27/what-is-t...

> Instead, smart tech investor thinks about: A future product roadmap/opportunity, B bottoms-up market size & growth, C talent and skill of team. Essentially you are valuing things that have not yet happened, and the likelihood of the CEO and team being able to make them happen.

This thinking is what led me to buy GOOG(5x), TSLA(12x), NFLX(7x), YELP (ouch) and LC (oucher). I am buying what I believe the company will become, not what the company is. It's risky, and only a portion of my portfolio goes into these high-risk investments. Much of the rest is in mutual funds.

MBAs might do a little better in income investing for dividends. It's a totally different view, but investors need to understand that as well when it comes time to transition from growth to income stocks.

You could also invest in the Vanguard Information Technology ETF (VGT) fund, which is an ETF of 365 tech stocks.

Very well said (to Andreessen I suppose). I started off with spreadsheets, but have evolved to this over time, even though it feels less rigorous and more intuitive. To some extent, I wonder how much investment banks suffer from the fact that they have to explain their picks with rigour\quantitatively forces them into missing the biggest payoffs which can only come from following sound intuition. And then, also if you are communicating your choices qualitatively you probably rely on familiar thematic 'stories' (big data! deep learning!) which leads to Thiel's aversion to stories.

> For new & rapidly growing tech companies, up to 100% of value is in terminal value 10+ years out, so DCF framework collapses

No, it doesn't collapse.

Mr Andressen seems to be defining Discounted Cash Flow very narrowly - as the the kind of spreadsheet an MBA creates where cash flow from each year is relatively predicatable.

His approach of simply making an educated guess about market size and team talent is still essentially DCF analysis.

Isn't all this just a way to get an idea of future cash flows, though?

Tesla is a technology company that also happens to make cars. Ford is an automotive company, that also happens to make technology.

Lets talk about models - Tesla doesnt make a mass market car - even their basic sedan, starts at 35k - I can buy a nicely equipped Taurus, Fusion, Malibu , Impala, Camry or Avalon for less than that - and from a size perspective its far closer to a Prius or Volt (23k or 33k starting respectively).

Secondly, Brand Cachet - Tesla appears to be positioning itself from a branding perspective closer to where BMW or Audi does.

I'm more hopeful for Ford figuring out technology, than I am with Tesla figuring out how to be a really good mass market car company.

The reason I consider Tesla overvalued has to do with potential market share, as well as the traditional margin on cars - if they try to be a mass market manufacturer, I don't see Tesla capturing more than 10% of the (very crowded) marketplace nor do I see them easily besting the historic 5% margin most (mass market) automakers have, if they decide to be more like BMW or Audi - their margin could go up by a rather large amount - but their volume would go down by an almost an large amount... they might however have a bright future as a technology licensing company - that remains to be seen.

In short however, if you measure it by the "car company yardstick" its drastically over overvalued - if you measure it by the "technology company yardstick" however the numbers start to look a little friendlier. Consider though that the technology company yardstick seems to be mostly based on hype, rather than actualized returns basis.

Consider for a moment that Tesla isnt pioneering a new market here, it's trying to produce a better dohicky (thats really cool, but not revolutionary) in an already crowded market - this alone says that the technology yardstick shouldn't apply - you should instead measure it like its peers in that industry.

I hear very frequently that Tesla isn't a car company, it's a tech company. Mostly because they want to value Tesla stock like a tech company (very popular, high valuations, high profit margins), not a car company (cyclical sales, lower profit margins, heavily regulated).

But whatever Tesla is now, eventually if it sells cars it has to turn into a car company. It has to deal with things like logistics for spare parts, repair facilities, dealers (or whatever way they choose to sell cars). The fixed costs as Tesla goes on are only going to go up because of the legacy they are creating, as cars last a while (hopefully a long while), and need to be maintained/repaired, if only because of accidents.

Tech, on the other hand, usually means you don't have to worry about physical manufacturing. You don't have to worry so much about supply logistics, travel and transport costs, inventory, etc. Once you build the technology, at least with software it's easy to mass reproduce (especially with digital distribution and no physical media) at low overhead and sell at a reasonable price, sometimes direct to the user (higher profit %).

Now let's talk about another case study of a consumer discretionary company that uses tech a lot, Amazon. Amazon is leveraging tech to help the front end and the supply chain, to provide lower prices and easy shopping to people. By making a great website, they encourage people to find and buy more, attacking the "browsing at the supermarket" theory of impulse buying with their own impulse buys. They are using technology to do logistics cheaper, lowering prices to gain market share.

Tesla, and car companies in general, move a lot slower because people aren't buying cars every day. Do I think Tesla could turn into a great car maker? Sure.

But just because there's a new space (EVs) doesn't mean that current companies will own the space going forward, or even the leader today. Tesla is using its startup-ness to try to get there, but will they get over the hump of actually turning profitable while making cars? That's the big question, and if the futures earnings are in the stock price, that's a bet I'd rather pass. (but wouldn't short either)

> Tech, on the other hand, usually means you don't have to worry about physical manufacturing. You don't have to worry so much about supply logistics, travel and transport costs, inventory, etc.

Umm, Apple?

Apple is a great case to bring this up. Like I said, "usually".

In this case, you managed to pick the stock that is trading currently at a 16.85 P/E, which is about half of GOOG and MSFT. It's even less than the S&P average (25.73). And Apple has a huge amount of cash in reserve overseas.

If you look at tech hardware, such as Apple, Intel, TI, TSMC, QCOM, they are traded at a much lower P/E multiple than software companies. nVidia and AMD are the darlings of that sector now and are pushing valuations, but the whole semiconductor sector has had a huge run up in prices.

And yes, I'd say that is partially do to having a supply chain, and a lot of physical capital, such as semiconductor fabs. But that is the kind of capital that you can more easily sell off than software.

Tesla isn't making just electric cars. Most people don't realize how disrupting self driving cars can be. If they can get an Autonomous car before anyone, that enough makes a lot of people switch over.

Not only that, they can roll out a large fleet of cars and provide transportation on demand.

This means eating lunch from Uber, Lyft, UPS, Fedex, Food delivery, Hertz, Avis e.t.c

When iPhone came out, Blackberry and Nokia assumed it was an iPod (music player) that could make calls. In reality it was a computer that could fit in your pocket and do 100's of things.

Tesla is not just an electric car company. It's a personal computer on wheels. Their software is far ahead of any other car company. Their hardware is a lot simpler and efficient.

Thank You!

You did a fantastic job of illustrating the Tech vs Car yardstick!

>Tesla doesnt make a mass market car - even their basic sedan, starts at 35k - I can buy a nicely equipped Taurus, Fusion, Malibu , Impala, Camry or Avalon for less than that - and from a size perspective its far closer to a Prius or Volt (23k or 33k starting respectively).

I don't know if we're comparing apples to apples here. Volt and Prius are hybrid cars, meaning they don't have the same drive capability as a fully electric car.

Tesla's model 3 is a fully electric car for the same price as your average hybrid car and for less than you can get many hybrid models.

There are many electric cars out there like the Nissan leaf and chevy spark at a lower price point, but they don't have the performance of the Tesla and none of them have anywhere near the 346 km range that the Tesla model 3 is expected to have. They average out at around 150 km - which is good for most every day use, but not really useful for long trips. Tesla's long range combined with it's supercharger network makes it different.

A Tesla can really compete with and likely replace the average fuel powered car in range and performance. The average American family spends 1500 on fuel per year and keeps their car for about 11.5 years, that's 17, 250.00. Further a tesla will likely need less maintenance because you don't have things like coolants or radiators or oil changes. Things makes Tesla a bargain compared to fuel powered cars.

Yes Tesla has been positioning itself as a luxury brand and competing with luxury brands, but I don't think this was necessarily a choice but rather due to the fact that they can't currently make an EV cheap enough to compete with the mass market brands. Musk has always said his vision was a mass market car and I think in many ways the model 3 is what the companies real goal has always been.

An electric car driven 15,000 miles a year would still cost about 540 dollars per year to fuel, so that'd come out to a difference of about 11k - you're correct there about oil changes - but I wouldnt consider cooling systems - most cooling systems go 100,000 miles without maintenance, that also goes for most other major systems in the car - the exception being brakes and oil changes.

I fully acknowledge that electric cars appear cheaper to run - I'm expecting additional taxation to appear to null out some of the fuel cost differential however.

Bear in mind, I'm not bullish on electric cars - I think once the battery issues have been solved, and the charging network is fully deployed - and once the issue of charging for non-homeowners has been solved - Electric is clearly cleaner and better. I still think Tesla is overvalued for the market it's in (making automobiles), because of its limited potential to capture market share in that (very crowded) market.

> [...] you don't have things like coolants or radiators or oil changes

Surely they must still require radiators/coolant for the batteries?

Model 3 won't have a radiator, it does have a battery cooling fluid but it's not fair to think of that as automotive fluid because it doesn't have to be replenished.

>Tesla is a technology company that also happens to make cars. Ford is an automotive company, that also happens to make technology.

From 2007: "Apple is a technology company that happens to make a phone. Motorola/Nokia/Palm/Blackberry are phone companies that can easily copy Apple's technology and execute better than Apple since they know all about making phones."

Apple was an established technology company with a wallet fat enough to see the iPhone through.

Cars aren't a new product line, they're Tesla's only product line. If they fail, Tesla fails. History is littered with good ideas that didn't get off the ground the first time and then got bought for pennies on the dollar by an established player in the industry.

The scenarios you described sound like straight from "The Innovators Dilemma". Except the companies thinking this way were disrupted out of business.

What is truly disrupting about Tesla?

Everyone keeps talking about the cars... when it's really about the car factory:

> Ford has 23 global assembly plants that built 6,651,000 cars and trucks in 2016. [...] Elon Musk can imagine a single Tesla factory producing 5.25 million cars per year per assembly line [...].

> If this becomes the way to go for global car makers then Ford has 22 assembly plants it needs to scrap. I wrote scrap rather than sell because if every one of Ford’s competitors is doing the same thing there won’t be any buyers for those old factories.

[1] http://www.cringely.com/2017/06/05/the-robots-are-coming/

Consider for a moment the logistics of moving 14,383 cars per day out of a single factory, nevermind all the parts needed to build them. (assuming a 15 foot long car, its (ballpark number) 43 miles of cars parked end to end.. per day).

The logistics and storage of both material and finished goods are part of why Ford has 22 factories to produce 6.5 million cars.

> 43 miles of cars parked end to end.. per day

So two miles per hour? That doesn't actually sound too bad.

around 560 cars per hour - consider that a normal auto plant runs at 60-100 cars per hour - so what was proposed by the linked post was a 600-1000% increase in production - its largely a impossibility - because imagine for a moment of parking 10 cars per minute (or so) of operation.

So you hire more people to do the parking...? What's impossible there?

That's if we assume they don't just self-park.

The hard parts by far are actual production and getting in enough materials. If you can get in a thousand each of every single part, it's easy in comparison to get a thousand assembled cars back out.

Thinking just a little further, once the autonomy of the vehicle is good enough, there's no need to park the vehicle at all - you just tell it to start driving to a dealership or an owner's home.

There'd be some additional logistics to figure out how to recharge the vehicle as necessary on route, but that's a very different problem, and probably also amenable to automation.

its the space to store the cars, as well as the logistics of shipping them out - 14,000 cars comes out (optimistically) about 650 autoracks (railcars) per day - each one of those autoracks is 145 feet long. The scale of what is being discussed is near impossible, as it would mean an plant several orders of magnitude larger then any other ever constructed.. and I'm just focusing on the output - the logistics for the inputs for manufacturing are just as daunting.

Well one thing Tesla has going for them is that they have way less parts per car when compared against traditional ICE based drive trains.

Total parts, perhaps, total assemblies - not really.

as well as the cars can drive themselves out of the factory

And one factory that's not gonna do too well when the Pacific plate decides it's had enough of SV's BS and shakes things up.

The biggest disruption is the quality of the electric drivetrain. We are quickly finding that a "mediocre" electric drivetrain feels better to the average driver than a very good gasoline drivetrain.

That isn't what people intuitively expect, but once that expectation changes, the market is going to see major disruption. Gasoline based powertrains will not be seen as the superior choice by most people 5 years from now.

> We are quickly finding that a "mediocre" electric drivetrain feels better to the average driver than a very good gasoline drivetrain.

At first glance, that seems like more of a reason for low-end electric cars to disrupt Tesla.

I'd fully expect that challenge to come from one of the established manufacturers.

We're still early-days yet on electric car technology - there are still many hurdles to overcome yet to make the technology practical for most drivers - so its really hard to say what the future will hold yet - I'm excited for the potential, but I'd like to think I see the realities of it.

I have no doubt that this is a factor is why Tesla is going somewhere - I don't know that this is enough to 'render all that came before obsolete'.

I'm hopeful yet though - I think a transition to electric power for cars would be wonderful - there are currently many drawbacks to electric power, mostly relating to batteries yet still to be overcome.

Yeah -- and you don't lose half your fuel economy by getting the one that goes 0-60 in 4 seconds.

Yes, but some of us motorheads like that vibration and noise of a gas engine :-)

> but are stagnant and waiting to be disrupted

The other car companies are rapidly developing their own electric cars. See the Chevy Bolt and Nissan Leaf for mid-level and entry-level examples. Who says they will not disrupt themselves? These are huge incumbents with large R&D budgets who always look for ways to one up the competition. There is a very limited window of opportunity from an outsider where the insider industry misses something obvious, but that isn't frequent.

In most cases, what is called disruption is either breaking laws or ignoring some fundamental problem the incumbents think too important to ignore. They test assumptions, and (rarely) prove them invalid, but the intent to disrupt alone shouldn't make for such enormous PIs.

It's not just about getting an electric car on the market. They are going to have to release models with 5 star safety ratings in all categories/sub-categories, and enable their cars to perform like drag race cars, and enable their cars to drive themselves, and probably buy batteries from Tesla. They cannot move as fast as Tesla has been moving. They will survive. But there will be another US 'auto maker' to compete with.

The Bolt has a 5 star safety rating and was 2017 car of the year.

It doesn't seem to be selling that great, which could be due to a great deal of factors, but the awards it has won makes me believe that the traditional car companies are going to be able to keep up with Tesla at least on technical merit.

The Bolt doesn't sell well because it looks like a turd. Tesla has figured out how to make a nice looking car within budget and...and drives itself.

the Bolt doesn't sell well because they're only making 30,000 of them this year and the only place where they sat on lots was in California where they are competing against a dozen California-only compliance cars that you can't get in any other state.

Here in Ontario they sold out completely in the first month they were here and there's a waiting list that won't get fulfilled until next year at the earliest.

I've driven one and it's great.

So let's say this is all true (and I have no reason to doubt it): is this an argument that Chevy is somehow outperforming Tesla? GM has a storied history of shooting themselves in the foot by doing dumb things like cramming lots full of cars where they aren't in demand. The Bolt may be great, but I believe Tesla will be more likely to avoid these kinds of pitfalls.

I never said anything about outperforming Tesla. I say it is a decent car and is selling reasonably well considering. And personally I'd buy it over a Model 3 because I don't like what I've seen of the M3 interior with its obsession with tablet interfaces, among other things. Also the M3 is going to end up coming in more expensive than the Bolt.

No argument here about GM shooting themselves in the foot. I'm a Volt owner and see it all the time. But it's a classic example of different divisions of a company fighting amongst themselves.

But they've made a good product.

Plenty of Bolt's for sale at a local Oregon dealer: http://www.carrchevrolet.com

I'm not sure what makes it worth 2x a Honda Civic.

The fact that you'll never buy gas again is one. The better drive is another -- quieter, better acceleration, smoother. There's actually no comparison on the numbers until you go way up in the Civic line to one of their sports car types. Also better onboard tech -- last I looked Honda wasn't even offering Android auto. The system in the Bolt is in my opinion quite good.

The Bolt's body styling makes it look like a cheap hatch, which is unfortunate. The insides of the thing are actually really good. I'd recommend taking one for a drive just for fun. GM can't seem to get its act together on styling, but apart from fairly uncomfortable seats, I actually prefer the Bolt's interior to my Volt.

Anyways, here's some numbers. The Civic even in its "Sport hatch" configuration isn't even close:

Acceleration times & torque: 2017 Honda Civic Sport 1.5T Hatchback C 0-60 mph 7.0 | Quarter mile 15.2 Power: 180 hp @ 6000 rpm Torque: 162 lb-ft @ 1700 rpm

2017 Chevrolet Bolt 0-60 mph 6.4 | Quarter mile 15.0 Power: 200 HP @ all RPMs Torque: 266 lb/ft @ all RPMS

Every electric car has tremendous markup because batteries are still very expensive for the volume they put in the car.

It is also worth considering these batteries have a fixed lifetime. Any electric car is going to need new batteries in 10 years - batteries that originally represented about half the ticket price of the car. You basically assume the cost of batteries will drop tremendously in the next decade or else not only are you paying a lot for the car up front, you are also paying the price of a new entry level car every decade just to replace the batteries.

GM has put an incredible amount of engineering into the degradation issue and there are 2011 Volts still on the road with a few hundred thousand miles on them that have had no degradation issue.

Proper temperature control and discharge and recharge management is part of it. Air cooling like Nissan and a few others have done just doesn't cut it in most climates, which is why they've had to replace many customer's batteries.

Pffft...

You want a 5-star crash rating and GM ask which platform do you want it based on. Designing a good EV is a lot easier for companies that already design competitive cars.

You're right, they may survive. Surviving isn't gonna please the people who invested in them.

It is about serving the car for ten years... with spare parts and with a network of those who can fix those failing parts.

It is also about state and national regulators.

> > but are stagnant and waiting to be disrupted

> The other car companies are rapidly developing their own electric cars. See the Chevy Bolt and Nissan Leaf for mid-level and entry-level examples. Who says they will not disrupt themselves? ... There is a very limited window of opportunity from an outsider where the insider industry misses something obvious, but that isn't frequent.

So the outsider's survival is uncertain. Maybe the right move, then, is to figure out which one of the incumbents will remain standing after all of the foreseeable disruption? Which ones are the least encumbered by their legacy systems and relationships? Which ones are sincere about pursuing the electric/autonomous future?

  huge incumbents with large R&D budgets who always look for ways to one up the competition

One up the competition? These car companies introduce new plastics or fender flares and call it "All-new". That's how they compete, body styling and incremental change. Every single incumbent car company is incredibly slow moving and reluctant to create change, because each one of the low-motivation engineers in the chain of command is reluctant to work. "One up the competition", seriously...

because each one of the low-motivation engineers in the chain of command is reluctant to work

Possibly the laziest analysis I've ever seen

1. It is a fundamental human trait to not expend energy when it is not required, and that includes engineering effort.

2. Engineering effort is not required for Ford to continue to be able to pay their engineers a living wage, as they could live off of their current product line for the next decade.

Combine 1 and 2 and surprise, you have lazy engineers.

Name a product that came about by means other than "body styling and incremental change".

Even Tesla's first car, the Tesla Roadster, is a slightly remodelled Lotus Elise.

Apple's first iPhone is only a slightly rethought version of products that had existed for years.

Slightly remodelled, as in slightly remodelled the entire controls and drivetrain and engine.

Slightly remodelled, as in slightly remodelled the entire controls and drivetrain and engine.

That's what the typical Bay Area programmer thinks of as a "trivial" change.

> Even Tesla's first car, the Tesla Roadster, is a slightly remodelled Lotus Elise.

From the outside, yes, you are correct.

But under the hood...you couldn't possibly be more wrong. It is definitely more than just "body styling and incremental change".

I mean to say:

It's still a car. An electric car, to be sure, and there have been quite a few of those for quite a long time. Electric drive systems are extraordinarily common.

It's not like Tesla came out with a radically new design for what car means and dropped an Alcubierre drive in the thing.

I don't think many of the major car companies are going to be disrupted too badly. They have massive scale compared to Tesla. Electric car technology is already mostly commoditized, and once these companies scale up production, they will manufacture huge numbers of electric cars.

Self-driving technology is going to become commoditized also -- it may be Google/Waymo/Apple who invent the technology, but the large established car companies are going to be the ones cranking out millions of self-driving cars.

The car companies that are going to be in trouble are the smaller ones who are still committed to old-school gasoline cars, such as Mazda and Subaru. They don't have the engineering resources to keep up with the others. Most of the other major companies know what is coming and are preparing to deal with it.

With the niche guys like Mazda I figure they could be able to work closely with bigger companies. Already it seems that car companies do this a fair bit. The new Fiat and Miata have basically the same innards for example.

I could imagine that in the future the big car companies aren't going to be that interested in making a small electric sportscar, but they could partner with Mazda to make a Miata electric.

Electric Miata? Would buy!

I don't know about that. Would it weigh 500 more pounds because of batteries? If so, it won't be anything like the current gas powered Miata.

True. The weight from the loss of the engine would not be equaled by the motors replacement ... but in general you are correct — the net weight would go up quite a bit.

Subaru has a market segment that needs the range of gasoline.

Subaru and Toyota also share manufacturing, as do Ford and Mazda.

> Those who keep repeating that Tesla stock is "overvalued" should understand that a stock's "value" is based on the current value of all future cash flows.

I'm pretty sure all the people saying it's overvalued understand precisely that.

"meaning he is one of the worst analysts and has been wrong all the time"

If that is the case, then his comments is actually consistently reliable - you can always take the opposite of what he says and pocket the money.

If TipRanks is accurate, how can this person be employed? Especially at a firm like GS.

Somebody whose predictions are 100% wrong all the time would be enormously valuable - you just bet on the opposite outcome of the prediction ;)

More seriously, the TipRanks performance timeline is only over 1 year. Perhaps GS is judging him on a much longer timeline.

Or that GS wants to move the stock in a certain direction. Perhaps they have a big short position and want to cover. They don't have to be right in the long term, just right enough to move the stock down 7% and make money.

Research and trading have strong information barriers, to avoid just the sort of thing you're suggesting. Banks enforce this very seriously. Search for "Global Analyst Research Settlement" if you want the history.

Sure.

Next you'll tell us that nobody does insider trading, because, to riff from Richard M Nixon: "we can do that ... but it would be wrong".

Isn't that stock manipulation?

You say that as if they would be punished for that. And its not like they do this all the time...

By the pigeonhole principle, someone has to be at the bottom.

Well yes, but one doesn't necessarily expect the same individual to stay on the bottom. Reason dictates that an analyst would either improve or exit the pool instead of continually failing (why would a firm hire a persistently wrong analyst?) So someone has to be at the bottom, true, but I think it's odd for someone to stay at the bottom.

That someone doesn't have to be at GS though.

How does the pidgeonhole principle apply to rankings?

I think he means the well-ordering principle

Most analyst's are little more than marketers.

Nobody gives good analysis for free.

Maybe they don't base their hiring on the employee's DCF to the firm.

Don't you think that GS could be artificially ensuring the stock drops so they can buy it lower??

I've never seen a GS dealing I didnt think shady shit was going on...

They farked FB, they farked greece, and the rest of the woorld in 2008-09, etc...

GS are not known for giving a shit about the financial well-being of anything other than their own...

</tinfoil>

That would be highly illegal stock manipulation and people would go to jail if they were caught doing that. Also Goldman Sachs, would lose their credibility and with it much of their business.

See: greece.

Just an aside, but why am I never hearing about RBC capital? 10 of the top 25 analysts (on TipRanks) come from there, with the second place (Oppenheimer) only coming in with 3. That's a mammoth gap!

The TipRanks performance timeline is only 1 year. There are some short-term arbitrage-like opportunities available at this scale, but most opportunities are longer term - when the market has mispriced fundamental long-term value. I wouldn't be surprised if next year RBC capital has no analyst in the top 25.

fwiw, Brad Katsuyama of Flash Boys fame worked at RBC (RBC capital is the IB part)

It'll be pretty incredible if Tesla gets close to $50B in rev in 2020. I'm a huge homer for Tesla and I'm thinking they'll be like $50B in 2020. Many people still won't be convinced of Tesla's place. But that's how things go.

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