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Comment by gniv | Hacker News Reader

Amazon was kind of similar

Edit: Wow, so much hate for a one-line comment. I have five replies and three downvotes as of now.

I stand by my comment. I think Tesla is building long-term value (brand recognition, a reputation for innovation in an stodgy industry, technical know-how in multiple industries) that will allow them to be profitable. I know well how Amazon got here, but I don't care about the technicalities. It is the behemoth that it is because of the compounded value added over 14+ years. I see Tesla equally driven and able to take advantage of the things it puts in place now.

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Amazon has been cash flow positive since 2003. Amazon has a unique negative cash flow cycle where they collected revenue significantly prior to paying their accounts payable. As long as they are constantly growing, it is basically like running a business on a credit card.

Tesla is in a completely different situation. Cars require massive upfront investment before their revenue is realized, and given the results just posted, Tesla will most likely post a quarter with declining revenue.

People should stop comparing things to Amazon. Amazon was successful because it was unique.

Semantics, but “negative cash conversion cycle”, not “negative cash flow cycle”.

You are correct; I type without proofreading

Amazon made a profit in 2003 and literally every year after that.

Amazon can be forgiven for losing $1.6 Billion in the 2001 recession, but their pathway to profitability was rather short all else considered.

Amazon has famously low margins, but those low margins commanded a mighty profit for decades. They are not the company you want to compare against Tesla. Tesla's strategy is supposed to be luxury vehicles at high margins and relatively (relative to Ford / Toyota / its other competitors) low production.

In contrast: Amazon is low margins while out-producing its competition. A very, very bad comparison.

Cash Flow positive every year since 2003, not necessarily profitable. (Though the were profitable for some of those years, they weren’t necessarily).

Amazon was profitable for nearly all years after 2003.

2003: $35 Million profit

2004: $588 Million profit

2005: $359 Million

2006: $190 Million

2007: $476 Million

2008: $645 Million

2009: $902 Million

2010: $1,152 Million

2011: $631 Million

2012: $(39) Million <--- First loss

2013: $274 Million

2014: $(241) Million <--- 2nd loss

2015: $596 Million

2016: $2,371 Million

2017: $3,033 Million

2018: $10,073 Million

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Aside from 2012 and 2014, Amazon was both profitable AND cash flow positive. Amazon was Cash flow positive all 15 years in this time period as well. But I'm talking net profit / net loss here.

IMO: there's no valid comparison to Tesla here. Amazon is not the company you want to compare against Tesla's performance.

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Anyway, yes, Jeff Bezos sacrificing one year or two years of profits (over 15 years) for greater long-term growth could make sense. That doesn't actually mean its healthy for Tesla to consistently lose money for 10 years straight.

I guess my major point is that Amazon didn’t need to consistently find new capital in order to keep the business afloat. Musk does. That’s partyly the distinction between cash flow and profit

Not every loss making company is an Amazon in the making :)

Tesla is likely coming to the end of the period where they have a relatively unique portfolio of products. We're starting to see the traditional car makers come up with competitive vehicles.

Whilst Tesla may ride this out fine, it's likely to have an impact on things like margins, going forward.

Is there an electric car that is a true competitor to the Model S?

The Model S sales are down close to 70% YoY. That’s very obviously not the platform of the future

not sure I've seen a good analogue for the Model S (yet)

closest competitor for the Model X at the moment appears to be the Jaguar I-Pace.

For the model three there's things like the Hyundai Kona and Renault Zoe which are becoming competitive.

I don't think it's there yet, but if I was an investor looking at a 2-3 year timeline, you've got to expect increased competition as there's various models coming along from various companies. Not all of them will be successful, but it's a fair likeliness that some will be.

https://www.macrotrends.net/stocks/charts/AMZN/amazon/net-in...

https://www.macrotrends.net/stocks/charts/TSLA/tesla/net-inc...

Just compare...

Some slight differences :)

Amazon chooses to make little/no profit as a long-term business strategy to reinvest everything.

Tesla is forced to make little/no-profit as a short-term business obligation to their suppliers.

Amazon made their first quarterly profit 7 years after founding and their first annual profit 2 years later.

That's longer than average, but it's also a lot shorter than 16 years.

And they didn’t amass nearly as much debt to get there

Comparing pre-IPO Tesla to post-IPO Amazon is going to skew some things. I think it's better to compare post-IPO Amazon (1997) to post-IPO Tesla (2010).

This is not true at all.

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