Tesla stock price is too high imo
And yet people still piled onto this stock. As if they knew something Musk didn't.
[1] https://twitter.com/elonmusk/status/1256239815256797184
[2] Hard to believe given actual revenues and projected revenue growth
Is Elon Musk really sending hidden messages using tweet times? Has he done it before?
Or just, you know, good old search engine optimization. I'd assume this is widely done in marketing/PR.
I have no basis for this suggestion, but I’ve actually been thinking lately that SoftBank and Musk coordinated the TSLA infinity squeeze that we’ve all been watching.
It’s a great way to make a massive investment in TSLA, at the price you were willing to pay anyway, while sending the stock through the roof so the company can take the needed liquidity from the market.
TSLA added one of SoftBank’s largest financiers to the board in late April.
Because there is no rational way that a company with $27bn revenue rises from ~$130bn to ~$450bn in market cap in three months. I've posted in another thread how VW builds 11 million cars each year, that's 1 out of 8 cars globally, at immense profit, and is valued at €80bn.
In any case, if the cause for the tweet was solely that the stock price was too high, well -- it was $700 back then, so I guess we'll see another split real soon now again.
https://mobile.reuters.com/article/amp/idUSTRE49R3I920081028
That's a good example, thank you for sharing it again!
I think we are seeing the beginning of hyperinflation.
> how automotive works
This is the crux of the matter here. Many believe that Tesla is a car company and should be treated as such. Investors (I do own Tesla but not a significant portion of my portfolio) such as myself view it as a growing energy company. The cars are just batteries with wheels. I'm looking at products like Autobidder [1] in assessing potential long-term growth. They can create software, unlike Duke Energy, AEP, Toyota, GM, etc. which means they can do things like deploy algorithms, solar roof panels, power walls, etc. to better allocate energy at better prices. Obviously that's speculation, but that's just what investing is.
I would also say I disagree that we are beginning to see hyperinflation. We're actually facing deflationary pressure due to demand for the dollar, but we do see run-ups in stock prices because investors are chasing yield, and without access to alternatives (for many like myself) like venture capital or investing in private companies (SpaceX) there isn't much left to do with your money except buy real estate and rent it out (risky and work) or just invest in equities.
I'd also add that although the US has been printing money, most other countries, especially western democracies, have faced serious problems as well and have also been printing money, and that interest on borrowed amounts isn't that much, though we should really be looking at more fiscally responsible behaviors. Good luck with that though. Democrats will spend money on social programs (even when it doesn't make sense) and Republicans will find ways to cut taxes and kick that can down the road too.
I think it would be fairer to characterize Tesla as a growning energy startup. I can see the potential, but potential has to be realized, and Tesla is not the only startup working with solar and batteries.
In any case, the $450bn valuation dwarfs not just every other car maker, but also every other energy company.
$450bn is the combined market value of Toyota, VW, and Exxon.
Tesla has the potential to create an actual subscription services that people would pay for. Autopilot is $8,000 right now, but activate it now for 72 hours for $50? Maybe $100? Now you might be eating into airlines as well. No other car company that has tried subscription services has been met with fanfare. Tesla is the only one who can get away with it.
Little things like that make me say that it's a trillion dollar company, easily, once they start realizing that potential. But that's investing. We use numbers, our own intuition, and then make decisions! :)
There does seem to be a certain type of investor who believes that the only important thing about a stock is hype, and not whether it, could say, even theoretically ever make enough income to justify its valuation. Of course, this can be true in the short term.
> Investors (I do own Tesla but not a significant portion of my portfolio) such as myself view it as a growing energy company.
That would surely imply a _lower_ valuation? You wouldn't expect lasting high margins in that business, whereas it is at least _possible_ (if not common) in the auto industry.
I think that's one difference here. I do expect lasting high margins (car sales and services). I mentioned this in another comment, but being able to sell passes for autopilot trips for $100 or something are going to be very lucrative.
Think about something like the Tesla supercharger network. Ok now that Tesla is also an energy supplier and uses software to find good rates, stores energy in batteries, etc, they'll better be able to get the best price on energy. You can sell excess energy back into the grid via Tesla software with your solar roof, for example, or charge your Tesla even cheaper than competitors might using a traditional energy grid.
These are just possibilities, but I see the end result being an extremely profitable business with great margins. My only area of concern right now is that their auto service is abysmal. They charge a premium price for a car, but boy it's nowhere near the service you get with Mercedes or BMW. Lots of "well that's in-spec" types of comments from service teams. Lack of loaner cars at times, just all around not great service (though there are exceptions) that I've seen first-hand and anecdotally. Even the r/Tesla subreddit will tell you it's bad.
Okay, so assuming the grid will support this, one would expect other energy companies to buy solar power, from any domestic solar panels (this already happens in some markets). So why would one buy Tesla panels, which were tied to one buyer, who could use that tie-in to get lower prices (if that were legal; electricity markets are heavily regulated in most countries and I suspect this sort of tie-in would ultimately not be legal).
I can see two scenarios here (assuming a developed grid allowing this sort of feed-in). (a) Tesla panel owners can sell to any energy company, like anyone else. Tesla can thus sell their panels for the same as anyone else (ie, pretty low margins),but they have no advantage as an energy purchaser. (b) Tesla panels are tied to Tesla as an energy purchaser, whereas generic panel owners can sell to anyone. Tesla gets cheaper power, but their panels are now an inferior product and they must sell them at negative margins to get them on roofs.
Any cleverness about domestic grid pricing will likely have to be enabled by national grid controllers, and accessible to all energy companies. While I do think it will come, I would doubt that there's room for anyone to have a monopoly in most markets, and I think it may actually be a hard sell to consumers, because traditionally consumers _hate_ variable pricing, even if it's ultimately to their benefit, for psychological reasons.
RE the supercharger network, I suspect that this is at best a short-term advantage. It's already a tiny part of the high-speed charger infrastructure in many countries. It probably is a clear advantage for now in the US, but that shouldn't be expected to be a long-lasting situation.
Using something like Powerwall means you can still have lower rates with variable pricing. When most are connected to the traditional energy grid running their AC units during the peak hours and getting charged peak rates, you can draw from Powerwall where you've stored energy either over time or potentially over night when rates are cheaper. Automatically. You can also eventually probably see real-time electric rates. With software, Telsa could potentially bid on electricity and find reduced rates for you. There's a lot of possibilities here.
Idk what the future will hold, but do I want to bet on Duke Energy and BMW or do I want to bet on Tesla? I'm probably betting on Tesla based on what I've seen as part of my portfolio.
I would think that Tesla's best avenue for lasting high margins would actually be the cars; other companies have managed that before, especially in the luxury/semi-luxury market (BMW's margins are decent, say). But they'd really need to capture the whole high end market, if not more high end market than actually exists, to justify their prices.
> But they'd really need to capture the whole high end market, if not more high end market than actually exists, to justify their prices.
Why? They can probably effectively sell Tesla Model 3 style sedans at BMW or better margins around $35,000. I don't think they need to capture the high-end market anymore than Apple does. Sure, insert famous person here uses an iPhone, but so do I and so does my grandma.
Because the people who 'understand how automotive works' have done such a fantastic job in the last 10 years. We should clearly listen to these people. Get your investment advice from Bob Lutz.
And btw, just because you have different opinion, calling everybody else essentially 'stupid' is not really a great argument.
Based on Elon own predictions he expects a 40-50% growth rate with more then industry leading margins. If you believe that is true, and Elon does, the value of the stock should clearly be higher. And this has been his line on growth for years now.
Elon makes really little sense with these, its as if tweets don't represent a well considered opinion with context.
I'm not arguing that Elon predictions are wrong or not, but based on his own prediction the stock is not actually overvalued.
It was about the stock split.
Which isn’t to say Tesla couldn’t eventually be worth whatever the market says (Tesla has managed to dodge some major problems like cheap oil, end of EV credits, a federal govt opposed to climate action, and COVID-19 and keep expanding... so the market is probably pricing in what that says about Tesla’s odds that they’re able to overcome such hurdles), but it probably is an accurate evaluation of what Musk thought at the time. Personally, I don’t invest in individual stocks as it’s too much of a gamble and it also can lead to extra paperwork or compromise of my professional standing. I suppose the market is seeing Tesla as an example of real growth in an overall market of decline in new automobile purchases, so maybe that’s it. The reach for yield. Still, seems crazy.