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Comment by jennyyang | Hacker News Reader

Revenues down Year over Year, and yet their stock price is 8x. Profiability increased, but its market cap is larger than Toyota which has over 10x the revenues. This stock is truly one for /r/wallstreetbets.

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You realize their factory was shut down for much of this period, right? Comparing YOY quarterly figures here is very disingenuous.

Only 2 months out of the year

About half of the quarter under discussion.

Their stock price rose 8x. There's nothing in these numbers that justifies this type of meteoric rise exception pure, unadulterated speculation. They wouldn't have even been profitable if they couldn't sell their regulatory credits. How is that justifiable for an 8x YoY increase?

The potential upside for Tesla is huge. If they can become the Apple of electric cars and if electric cars become standard, they could be worth trillions. The reason their valuation was not in the trillions is because there is a risk that they will go bankrupt, that other companies will take the lead in EVs, or that EVs will not be where the market is headed in the foreseeable future. The reason for the jump in valuation is that those risks are being steadily reduced. EV competition is scarce, Tesla's cash reserves and consistent free cash flow hugely reduce the risk of bankruptcy, and the market is continuing to demonstrate that it wants electric cars (at least Tesla electric cars, that is), even during a pandemic. There is certainly an element of speculation and retail investor FOMO, but if Tesla's institutional investors didn't think this valuation could be justified at all they probably would have sold by now. Time will tell how reasonable the valuation really is, but betting against Tesla has not worked out very well so far.

> "they could be worth trillions"

Trillions? 50x the size of Ford? Bigger than, essentially, the current combined value of every car company in the world at the moment?

How?

Ford has $150 billion in debt. 50x the size of Ford would be an enterprise value of $7.5 trillion, even if Ford's share price was $0.

But why would they become the Apple of electric cars? Why do you think they have better chances than anyone else? The market, to me, seems to show that most people still buy non-electric cars. Once that flips, any other much bigger car manufacturer could start producing more electric cars. There doesn't seem to be any rocket science to it.

Back in the 90s I bought a Rio PMP300. Before anyone knew what MP3s were, it was the first mp3 player out there. That didn't help them when people did care about mp3 players - bigger players just came and ate the cake. I'm not sure what makes Tesla a different story. Seems like it was supposed to be "Autopilot", but we all know how good that's going.

I do think Tesla is way over valued at the moment. How could they be worth more than the market cap of all the vehicle companies combined? There isn’t going to be largely more numbers of vehicles bought each year.

As to why Tesla could be the winner? One reason is that all the other automakers are failing to produce mass market EVs that anyone wants to buy.

My wife & I are considering our next vehicle our last non-electric one.

We consider every vehicle brand a joke aside from Tesla.

There are many reasons why Tesla is not optimal. If you get into an accident, your car will be in the shop for months. Literally months. I have a Tesla with a minor trim at the bottom of the car got damaged. It took 3 months, and they had to take apart the entire car. Literally even the back seats were taken apart just to change the trim on the bottom. It cost over $10,000.

Tesla's quality has dropped so much that JD Power's latest survey ranked it near the bottom in terms of quality. Everyone that has a Tesla says that they are fun to drive (they are) but they feel cheaply made.

The European car manufacturers are coming out with electric cars and I think they're ability to create a luxurious feel will make a big dent to Tesla's sales. Case in point, the Porsche Taycan looks amazing and will be a competitor to the Model S.

I thought the JD rankings are known to be fraud with issues, pay to play, favoritism (especially American brands) and so on.

Nobody in my circle of aged 25-35 North American friends talk about buying a Tesla because it is only an electric car. It is the whole package that gets people to buy it. Not only does it look good, it feels smooth while driving, it actually feels like it is a modern vehicle, the software updates and "autopilot".

Every known vehicle manufacture outside of trucks & SUVs have no brand value to "millennials". I don't know anyone I communicate with who is excited to buy a ford, toyota, and or even a porsche car.

stock price is always speculation, it just depends if its short term or long term.

Before that 8X rise, though, stock price was basically unchanged since 2014. While revenue in that period has grown 10X.

So you could make a reasonable argument that the huge stock price appreciation in the last 12 months was in fact a re-pricing to reflect that the stock market now believes Tesla has a decent shot at becoming one of the world's leading tech companies.

It doesn't reflect that something magical has happened in the last two years; something good has happened in the last 6 years and the stock market at large has only recently realized this.

They now have two factories...

and yet their costs never went up after adding a second factory

And yet their stock price went up 8x, with factories shut down. That's not a valid question, though?

[flagged]

Sure, stock prices are forward looking. However, nothing what you wrote is new information. All this was priced in BEFORE Tesla's stock price quadrupled again.

But now they have a factory in China, the one in Germany is going ahead quickly, and they just announced the one in Texas.

Before they promised very rapid growth, now they're actually doing it.

Future-looking means considering both upside and downside. A company like VW and GM is all downside. Back when TSLA stock was at $200, TSLA had a lot of perceived downside as well. The "word on the street" was...

- That Tesla would be going bankrupt any day now. That they were insolvent. That they were "structurally unprofitable".

- That Elon was personally broke and was about to get margin called on his lavish lifestyle and multiple mansions.

- That no one would buy a Model 3 without the tax credits.

- That the factory in China was just a mudfield and a marketing campaign.

Today TSLA has now cleared hurdles for becoming ~0.8% of the S&P500, which opens up ETF demand for an estimated 25 million shares, and is uniquely showing growth in the most challenging auto market in history.

The price was artificially low due to abuse from short sellers who have finally given up over the last few months. You can see based on the chart of short interest vs. stock price. Now it may have swung in the opposite direction, the stock seems to be crashing up due to gamma squeeze. But in my opinion if you are a long term investor (5-10) years the stock is still undervalued.

Please don't post duplicate comments to HN. It strictly lowers the signal/noise ratio.

If you want to refer to what you posted elsewhere, a link is fine (https://news.ycombinator.com/item?id=23825207), maybe with a description of what you're linking to.

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