Apple tried to buy Tesla for more than it’s currently worth in 2013, report says
electrek.co
electrek.co
Because according to the comment above debt is 11B, and I happen to know that they have ~2B cash on hand, so roughly speaking enterprise value should be 9B larger than market cap right now, and it should have been less than 600M above market cap back then (their old debt value also listed in a comment above).
Rather, market capitalisation reflects investor’s assessment of the enterprise value.
Whether rational or not, this already takes cash and debt positions into account.
The 2013 calc is:
$240/sh * 118mm shares = $28.4B market cap, less $746mm cash, plus $576mm debt = $28.2B TEV
The 2019 calc is:
$204/share * 173mm shares = $35.3B market cap, less $2.2B cash, plus $11.2B debt = $44.3B TEV
For those mentioning subtracting the debt, that's incorrect. A company is capitalized with equity and debt. To buy the whole company, you have to buy both. But when you buy the equity, you get the cash, so you subtract that out, since buying cash isn't relevant. You then have to add the debt, because you have to pay off all the debt to own the company outright.
https://twitter.com/elonmusk/status/895834554245709824?lang=...
and I recall some of his figures about initial tesla production being outrageous. Like body gaps of 40mm being deemed the target. Figures like that made me wonder if anyone had proof-read it because a 4cm gap in a car is enough to fit your hand through
e: in hindsight your comment about 40mm gaps, as an example, does some particularly crazy and I'm surprised it didn't stand out to me.
I'm still amazed that this hasn't happened yet.
Apple truly would expand their footprint into the daily life of hundreds of millions of people.
This is one of the Apple "secret sauces". Want Gorilla Glass? You get me the latest gen exclusively and I help you build your factory.
Tesla cars are first revision technology, which means almost starting from scratch anyway.
Two companies that live on reputation instead of quality would tarnish both.
That said, if Elon Musk had taken over apple from within (like steve jobs did via next) apple might have gotten more interesting.
Elon Musk is certainly innovative, but he's certainly not a saver. He seems to like to take resources to grow as quickly as possible instead of growing at a controlled, steady pace like larger companies do. Basically, he's more "go big or get more funding" than "slow and steady wins the race".
Jobs was pretty good at design and hyping up modest improvements. Elon just wants to wow everyone.
On the other hand, automobile is quite far from Apple core business. I know that there is not much growth remaining in Apple key markets but still if I were a shareholder, I'm not sure I would be comfortable with Apple making such a move.
I guess we are entering a new golden age for conglomerates.
Nevertheless, Apple knowledge goes a lot further than supply chain optimization. They are actually quite good at manufacturing (both manual assembly and robotics).
They know how to design products optimized for large volume production. They know how to work effectively with third parties. They know how to do quality control which is extremely important for a system integrator. Apple is not a pure software company: they already have a manufacturing culture in place inside the company.
What they don't have is domain specific knowledge so if they really wanted to enter the transport market, I guess buying Tesla could make sense.
Amazon is the best example of this, and I don't see why the likes of Apple won't follow suit.
Apple seems to be aggressively hiring from top institutes for their self-driving team. So, they might just have decided to go about the whole thing by developing a 1st party product instead.
It's supply chain + manufacturing + software + batteries + sensor tech + gps. All things Apple has spent billions developing internally.
And how many Tesla owners also own an iPhone. I bet it's something like 80%_
Selling laptops and phones mostly segueing into digital services.
> Tesla isn't.
Sadly, it very much is.
Tesla potential customers are not buying a Tesla in place of another batteries + sensor tech + gps. They are first and foremost buying a car.
Also, Tesla already makes and sells pretty great cars. Customers are happy. The cars are incredibly safe. What do they need now that they've successfully built the parts of the business that are outside of Apple's core competencies?
I feel like this is a poor comparison. When companies attempt to make luxury experiences affordable to the masses (yes, still more expensive, but at least within reach), the whole is greater than the sum of its parts.
Of course Tesla customers aren't going out buying cars instead of batteries. But what drives people to want to purchase Teslas? They don't just want cars, they want luxury cars, they want electric cars, they want sleek and modern cars.
The question is how does one build a car, make it out of the best parts so that the customer has the best experience, how does one build it inexpensively but still safely, securely, and maintaining the luxury quality.
If any old car would do, they wouldn't get a Tesla, they'd get a Honda Civic. That's not Tesla's target market.
How does that help either of them?
The only real attraction to a Tesla car is the deluxe nature of their marketing. Other companies are producing cheaper hybrids and fully electric cars, but Tesla isn't targeting the same market: they're going for the upper segment who're looking for a touch of elegance, sleekness, and premium quality — and therefore are willing to pay more.
And the fact that Foxconn and other suppliers actually do most of the grunt work there.
And there's the other end: retail. A $1K gadget you can stick in your pocket is a not a $70 thing that has all sorts of other impacts and externalities.
Think about it - if you were considering buying the firm, what odds would you put on your first board meeting after being all about whatever the hell Musk got up to last week?
Just speculating, of course.
Jobs/Apple overhyped (and sometimes still do) features of their products, but never to the point of making promises they couldn't keep, IMO.
Prices kept increasing, features were overhyped, and the Mac ended up being better in most ways.
Also, in the context of the current discussion, the Steve that Tim Cook worked with was not young, reckless Steve, but an older and somewhat more mellow and responsible Steve.
Musk on the other hand will talk about cars one day, then solar energy the next, then the Hyerloop, then landing on Mars and making toy flamethrowers. The fit could not be more wrong.
Apple's acquired properties are quietly extinguished and replaced with Apple branding. Musk wouldn't have the temperament to play second fiddle to anybody else.
Beats as a brand is still around and producing new products.
It's quite common that the founders have special shares and only common stock is put up on the market at IPO time. (And early stage investors usually got preferred stock, but they usually exit at IPO time.)
Just because a few players are able to buy Tesla entirely, it does not mean that shorting a position is necessarily bad.
heck, that alone would be reason enough for me.
In fact, most corporations tend to spend cash for acquiring irresponsibily. At the beginning of any MBA class discussing mergers and acquisitions, they’ll cite the fact that the majority of these fail to produce the intended value.
Both brands have a reputation for design and customer satisfaction, and customers with a certain insensitivity to price.
Jaguar are reinventing themselves as a BEV company with the i-Pace. (Other car manufacturers like BMW and Audi are shoe-horning electric motors into their existing platforms, not redesigning from scratch).
Tesla suffers from Musk's lack of focus. There are well past the time someone who is not a product person provide some structure to operate within.
(It's odd that Elon presumably sees the benefit of Gwynne at SpaceX yet doesn't replicate the formula at Tesla.)
We obviously don’t know everything behind this, but Tesla’s in perpetual turmoil internally and externally. They’ve done incredible things and at the same time put that in jeopardy. Elon has huge upside but can be his own worst enemy at times (get the fuck off of twitter)
Example: -Stock manipulation would now be manipulation of Apple stock. -Autopilot related deaths and quality issues now create lawsuits against Apple's bank account and reputation.
If they have to keep raising cash just to keep themselves afloat, there’s never going to be any return for shareholders. It will all get eaten by debt and dilution.
That’s probably a big reason for the existence of the Apple Watch and HealthKit.
Those darn Tesla speculators were driving TSLA into unpurchaseable levels which in the long run may end up killing Tesla. Irony.
Whatever the case, TSLA stock defies all reason and epitomizes "the market can remain irrational longer than you can remain solvent."
And why is this market presumed to be entirely new? Many of the auto manufacturing talents of old are still just as important in a new EV paradigm. Cars might not need combustion engines, but it’s not like the don’t need wiper blades, or seats, or paint, or branding, or a commitment to reliable manufacturing.
Apple makes digitally enabled products that makes sense financially and is compatible with the brand. That's it. Everything is a digitally enabled product nowadays.
So the question is not what Apple is selling now, but what is compatible with their brand. They have the warchest to enter any market they wish.
Your Phone isn't really a phone anymore. When was the last time you actually make or receive a call on it? Vs doing something else, Gaming, Content Consumption, Taking Photos etc. Despite using the name Smartphone, your iPhone is more like a Pocket Computer, or what Apple envision Newton in the 90s. A pocket computer that can also make a call when it needs to.
It is the same with Cars, AV ( autonomous vehicle ) will be nothing but a massive Computer with Batteries running on Wheels. Having said that, I think we now know Full AV isn't coming any time soon, at least not in the next 3 - 4 years. But there will be lots of R&D between now and then. Apple had lots of pieces of iPhone tech even before they started, and they still need 4 years to make it work. The Apple Car, or Project Titan will likely take a lot more time .
Just today I started calling them "phones", quotes included.
The majority of comments made pooh-poohing the iPhone were made at public events, and intended to assuage the customers, carriers and partners present that those events. It's not reflective of what they actually believed.
In books like "Losing the Signal" (about Blackberry), journalists followed up with Blackberry execs and discovered that BB considered the iPhone a gamechanger, even if they doubted that the AT&T 3G network could handle millions of data-hungry iPhones. And in the early days, that was true. The first 3 generations of iPhones had significant complaints about dropped calls.
I want them to make computers.
It is an iron fist wrapped in a velvet glove. Never forget how much control is being lost by generations of people now, courtesy of the user-experience candy hit ..
User owns their computer, and user owns their data: this is not so great, all things considered, if we look at Apple and their compatriots from an angle.
There is still an effort to make open, honest computing platforms. At the moment, immense numbers of eyeballs are focused on their pocket-glass mirror. Honestly, there is something here which must be deconstructed, and it could happen with a new OS/platform ideology where Apple making cars would be an extremely poor future.
E-bikes are unbelievably fun ways to get around.
likewise, one could say that california has a need for SUVs, while everyone only drive them under 30mph in a perfectly paved roads under perfect dry weather, alone 90% of the time, and with a single kid the other 10.
At this point I think the america Lives on pickup truck production is just a fashion indicator that some car manufacturers love to disseminate to help their stock over japanese makers who are not heavy on pickups.
Emissions are also different for trucks, they would not make it as a viable product outside the U.S. due to the purchase and gas price incentives.
The VW Camper Van became a thing as adding seats to the van was a way of evading The Chicken Tax. That bit was a happy accident. You could blame the Germans for America's planet sized carbon footprint, had there not been the Chicken Tax then Americans might be driving cars more aero and fuel saving than these tank sized things. Incidentally some US pickup trucks are Sherman tank sized, albeit not as tall and not as well armed.