Comment by mattmaroon | Hacker News Reader

Comment by mattmaroon | Hacker News Reader

Parent Full thread

As someone who has come really close on several occasions to buying TSLA puts (the options version of shorting) I think I can answer: the shorts aren't haters.

The shorts don't want Tesla to fail. The shorts don't even think Tesla will fail.

The shorts just think the market cap of Tesla is insane. It's higher than much larger, profitable automakers who can provably make and sell cars at scale.

For Tesla to be worth its share price it has to grow by two orders of magnitude. I won't even say that that won't happen. It could. But it'll take years. And when it does the stock won't be worth more than it is now.

On top of that there are risk factors. What if energy density of batteries doesn't substantially improve and all electric vehicles continue to be unappealing to large chunks of the population due to range anxiety? What if all electric does win (it's going to eventually) but the other companies are able to compete well enough and Tesla just becomes another Ford?

Their share price is just out of control. The market can stay irrational longer than I can stay solvent, but I can totally see how someone with very deep pockets could find shorting Tesla a good bet even if they don't want it to (or even think it will) fail.

I've said similar things about Amazon, but I never had the balls to bet against Bezos and I'm glad I didn't. Even at 10x the earnings Amazon would still be a tenuous bet at its current market cap. I know the whole "ecommerce is a bear" and all that, but let's be real here; it isn't that much of a bear and Amazon is selling cheap Chinese shit. They're going to go the way that Ebay did.

With AI and cheap energy logistics is going to go to become irrelevant with respect to total cost and at that point what do I need Amazon for? I'll be able to ask my phone to re-up my staples and for everything else I'll purchase from the manufacturer directly. All the profit is going to go to attention and trust, which means profits are going to be centred in high value brands and influencers. If anything, I'd prefer the opposite of Amazon. Some online store that just sells the best two of _everything_ that's irrelevant (toothpaste, etc) so I don't have to think about it. Plus AWS is overblown. Sure it's got good financials, but over time, AWS is a commodity play and commodity plays lose margin over time. There is some lock-in, but it's hard to lower prices for newcomers without reducing prices for the locked-in.

But back to Tesla: You're right. It's not smart to bet against Musk. It will stay irrational for some time because great men like Musk will make the very most of their situation. Also, with this volatility I wouldn't go with puts. Leveraged shorts or selling calls sound like much smarter plays if you are going to bet against TSLA.

I think the problem is you’re severely underestimating the role of Amazon as a market maker / provider of liquidity. By buying in bulk, they underwrite the risk of not having enough direct-to-consumer customers and allow the manufacturer to produce more. Kind of like a bank, or a factor, only tremendously more influential in the process.

The manufacturer cannot easily sell to end users, as it requires fine tuned delivery platforms and most of all, discoverability. SEO alone is not enough for a manufacturer to get noticed, so Amazon will benefit from being the de facto “search” for products. Anecdotally I and most of my friends and family already do this. It’s rare that I have intention to purchase <sub big ticket item> and google it.

As for Tesla, yeah I think it’s time to bet against him. There were many many “great men” like Musk in the 80’s and 90’s that made 1 too many misssteps and ruined their companies. Elon is on a razor’s edge.

Fined tune delivery is on a steady march to commodization. AI and API standards are going to interface with flexible logistics chains made up of autonomous systems.

Now, you're 100% right about discoverability. But Amazon is misplaying here if that's the long game. They should be a quality filter, not a cheap marketplace of knock-off Harry Potter toys.

You're also right that Google isn't nailing it. Really, I would argue that tastemakers are still leading the way for physical goods; with rating systems coming in a distant second. Ultimately I think a web of trust is going to develop to solve many of these problems, but that is largely a task of user interface, since enumerating trust and context is too onerous to push on a user. Besides, making it explicit is provably gamed as much as possible, see LinkedIn's "skills" for example.

Or Google could get its act in gear and cut amazon out of it. Hard to tell what will happen.

Perhaps their initial reason in shorting the stock was not inherently evil. But at this point they risk losing billions of dollars so their only incentive is to ensure the company fails.

I actually don't find their share price to be out of control at all. They have assets other companies would only dream of at this point. The data alone on miles driven is extremely valuable in the race to self driving cars. Their supercharger network is extremely impressive and growing every day. Not only do they build the best electric car, but they've built out the infrastructure that many analysts seem to just discount. Not unlike what Amazon did (and is still doing).

I would consider data to be an argument in favor of the big three. Tesla only sells about 100000 cars a year. Ford's top-selling model, the F-series, is almost eight times that. I'm assuming you mean some data that Tesla is currently collecting that Ford cannot, but it would be a matter of not much money for them to do so. They can add whatever sensors they need in the next year's F150 and within a few months have more data than Tesla has collected in its entire existence.

It's not clear to me that Tesla is in the lead on driverless cars, or that driverless cars will initially be all electric. The economic benefit of being electric might outweigh the fact that it will spend a quarter of its time charging, or it may not. If we move to an Uber Style On Demand model of car usage rather than ownership I am not sure.

And I'm still not saying that Tesla won't succeed, or even that they will not at some point be the most profitable automaker. But their share price is so inflated that you have to believe they will do it very quickly to pay it. There's a very strong chance that the market as a whole is going to outperform TSLA even if they succeed for the next 5-10 years first

True, but it is not only the data. Even if it was why aren't the big 3 doing this already? Tesla is a technology company more-so than a car company. They employ the engineers focusing on machine learning and gathering the right data to support that. This would be a brand new area for Ford, Chevy, etc... I'm guessing. Not that they couldn't ramp up, but I don't think it would be as easy as you seem to suggest.

Walmart had the funds to overcome and mimic what Amazon was doing early on as well and they didn't. Why not? Some companies are set in their ways and have trouble seeing the future...or at least be willing to sacrifice short term revenue goals for long term gain (often times big profitable companies act this way).

TBH, I own a Tesla. I agree they are likely not the leader in the best technology for driverless cars, they are definitely the leader in affordable driverless cars. The interesting thing is autopilot gets better and better on streets you drive over and over again. Tesla's have ruined my experience for driving any other car. I'm sure someone else will make some great electric cars in the future as well, but right now there is nothing that compares to it overall.

Edit: To add one other point on my initial paragraph (and coincides with my last). Tesla not only gathers the data but has the autopilot features to be able to test changes to the algorithms in place and improve them over time. Even if the big 3 started collecting this data they are far behind in the ability to even simulate much less enable it for real feedback on the roads.

"True, but it is not only the data. Even if it was why aren't the big 3 doing this already? Tesla is a technology company more-so than a car company. They employ the engineers focusing on machine learning and gathering the right data to support that. This would be a brand new area for Ford, Chevy, etc... I'm guessing. Not that they couldn't ramp up, but I don't think it would be as easy as you seem to suggest."

They are. GM is investing billions into self-driving cars and electric vehicles. Every other major car manufacturer has similar initiatives.

If you're wondering why they don't gather teh big datas like Tesla, perhaps it's worth considering that the benefit of this is more of an internet meme than an actual, useful idea. Pretty much everyone serious in the field is using LIDAR, not trying to make up for it with petabytes of bad bumper video.

I don't think the automakers are set in their ways. Chevy acquired Cruise for a billion dollars. Waymo has partnered with Fiat Chrysler. Ford's committed $4 billion over the next few years.

Maybe Tesla's ahead of some of them. (I'm not sure they're ahead of Waymo.) But they've still not learned how to make an affordable car at scale. They're having a hard time getting to a $35k car, and estimates put the lowest Model 3 at $41k to produce. Average American car price, including trucks, is below $34k, and those are being sold at a profit.

And again, all of this is not to say that Tesla won't succeed. They probably will. What they've done is impressive. I just think there's a very good chance that they're on a long, difficult, slow ramp up to being a major car company, in which case their current share price will have been a bad investment.

Edit: also, I left out another huge risk factor: Their CEO. They have a visionary leader who is clearly overextended and shows signs of fraying to the point where he's possibly breaking laws over Twitter.

You bring a good point, they are not only a car maker, they are also the distributor and the gas stations and they are the best in electric vehicle in all 3 categories. They are also starting to become the best in solar electricity and thus may also produce the "fuel" of their cars.

That's not only being the GM of electric vehicle, they are much bigger than that.

I'm pretty sure they are overvalued right now because what they do is for the greater good, but they are also much bigger than what shorter want us to believe.

Short sellers don't need the company to fail to make money. I would guess that most tesla short sellers don't think that tesla is going to fail.

Short sellers thesis is that the company is overvalued and that the market will come to see this and correct itself.

If they are wrong they will lose money. If they are right they will make money. There's no reason to ascribe to them malice.

Most CEOs ignore short sellers and get on with their job of running their company.

What data does Tesla actually collect? They are very vague on this point, but people act as if a Tesla driving around is collecting the same quality of data as a Google self driving car. On this point I am highly skeptical.

> What if energy density of batteries doesn't substantially improve and all electric vehicles continue to be unappealing to large chunks of the population due to range anxiety?

Why are people still saying this? Is 300 miles then 200+ mph recharge rates not enough for 90%+ of people 100% of the time, and the other 10% of people most of the time?

The problem is most people have one car. 90% of the time isn't enough.

And for someone who doesn't live in one of the densest cities, it's nowhere near 90% of the time.

Tesla can drive more than most people can. People needs breaks and cars can charge when people do too. Therefore Tesla owners don't seem to have any issues with range in US. They just need dense enough grid of superchargers.

And most people's one car wasn't $50K+ new.

Reply on news.ycombinator.com