Both likely will not continue to grow at the same pace with the dropping availability of capital to consumers.
IMO a fair prices for Tesla is still going to be at Toyota's market cap or lower
Last fiscal year Toyota made $17 billion profit, which was less than $19 billion profit 6 years ago.
Profit growth rate is the crucial part of the info you skipped.
To simplify: market cap is ${CurrentProfit} * ${P/E}.
P/E is a reflection of profit (earnings) growth rate.
Since becoming profitable, Tesla has been growing profits at 50%+. They are the fastest growing large company in the stock market.
That growth is going to continue due to ramp of Giga Berlin, Giga Texas, introduction of cybertruck, Inflation Reduction Act which will turbocharge EV demand in US.
Toyota is not growing earnings at all.
Things are likely to go even worse in the near future. The EV market share is skyrocketing (25% in Europe, 30% in china) but Toyota has only 1 EV currently that isn't selling well.
It's rumored that they are scraping their old EV plans (make EVs based on current platform that was designed for easy manufacturability of both EVs and ICE cars in the same factory) and considering developing a new platform.
Platform that won't be available until 2026.
EV market share is likely to grow 50% YoY and during that time Toyota won't have EVs to sell. That won't end well.
Tesla is severely undervalued based on their forward P/E ratio, which is lower than for companies with much lower growth rate.
GP said gross profit, you're talking about net.
> Toyota is not growing earnings at all.
Toyota has still grown net profit: 2020 -> $18.7b ; 2021 -> $21b ; 2022 -> $25.4b
> Tesla is severely undervalued based on their forward P/E ratio
You should refrain from making individual stock picks, and buy ETF/index instead, when you're unable to distinguish the difference between gross and net profit.
https://www.investopedia.com/ask/answers/101314/what-are-dif...
"You might want to be friends with me, I'll become President of the United States one day. Up until then you can call me Future President Jack."
It maybe less speculative of a statement than all the above assumptions
Tesla's last 4 quarterly net income figures were 2.2B, 3.3B, 2.2B, 3.2B. That's what you're going to assume 50% from? Good luck.
Could just be my brain being weird. Or could be the fact that there are Teslas freakin' everywhere in most of the (non-aggressively-red-to-the-point-of-drinking-gasoline) USA now.
Charging at a gen2 supercharger (not even gen3, which are available in the viscinity of where i live as well) goes at a rate between 300-510 miles of charge per hour (depending on the current battery charge) for me.
Charging at my apartment building garage is slow (given it only uses a regular 110v outlet, the same one you would use to charge your phone), but i just leave it overnight, so the speed doesn't matter much in that scenario.
The charger at work is somewhere in-between, but i can easily get about 70-100 miles of charge per hour.
And the costs make it very worth it for me. At the supercharger, my last fill up cost me $16 (i typically drive the car down to 15-20% charge, and then fill it up to 80-90%), and it went up to $20 about twice in my 3 years of ownership (when i was very close to empty). At the apt building and at work, it is free. Meanwhile, even pre-covid (aka before 2019, because that's when I switched cars), my Camry would routinely take about $40-50 to fill up (and I would try to get it filled once I have about 20% of the tank left).
As for superchargers being busy, I guess there might be some specific one that is busy at a specific time of the day? Because I have about 4 different supercharger locations within 7 miles of where I am, and that's not counting non-Tesla-branded chargers. For context, I am in Seattle area, and as I am looking out of my window overlooking Mercer St, at any given point in time, I can see at least 2-3 Teslas (not even counting other EVs), which tells me that a lot of people find EVs to be very viable in this area.
3 years ago, there was only 1 supercharger location within that same distance. Every other grocery store and a large public location where people park (like IKEA or a movie theater) has charging spots.
My musings aside, overall I agree with you. However, charging infrastructure these days is more viable already than what most people assume. Not everywhere yet, of course, but it is getting there.
Total profit matters more than margins, unless you have reason to believe the margins will hold true at any level.
Yes, battery and solar panels are a good additional business. But are they going to make strides better than companies who solely focus on those? Both of those are still high R&D efforts.
The more electric vehicles become commodity the less advantage they have. Tesla started with virtually no competition. Now Toyota and almost every other car manufacturer is a direct competitor.
It seems that Tesla increasingly provides vertically integrated mediocrity.
No they are not lol. Maybe in 2 specific cities you mean?
Honda's Asimo demo was also like 15 years ago. Their proof of advanced robotics is really old, yet the Tesla Bot can't do anything like the 2008 era demos.
> AI, vertically integrated
This is true for most of the traditional auto companies, but they keep their self-driving divisions at arm's length and are more conservative with deployment into consumer vehicles. Tesla is starting to learn why. Just because it's a majority stake in a separate company doesn't mean it isn't vertically integrated.
> solar panel, vertically integrated [with car/AI]
Consumer: Why would I care that my solar panel and home battery are from the same provider as my EV and SDC? This is more like bundling than vertical integration, and it's not a bundling story that makes much sense to me as a consumer.
Biz: There is a solar+charge infra+EV van/truck play but Ford will win. Ford has a more compelling story here, because their Transit vans are best-in-class, the EV F-150 actually exists (and cybertruck will be an F-150 consumer competitor not a F-150 commercial competitor) and Ford has the SMB sales penetration and general knowledge. I don't see Tesla understanding this market before it's too late.
> battery, vertically integrated
This is the competitive advantage, but it's eroding quickly. The clock is ticking.
And let's not even talk about things like build quality or similar things.
It really doesn't matter. The value of a battery business, the value of a solar panel business - are tiny compared to Tesla's current valuation.
The world's #4 battery maker is Panasonic, and their entire business is only worth $20B. The world's #2 battery maker is LG Chem and their entire business is only worth $36B. And both Panasonic and LG Chem do a whole heck of a lot more than make batteries.
The second-biggest solar company in the world, Canadian Solar, has $3.2B in revenue and a market cap of $1.6B.
So if we staple these together:
- Valuing Tesla like Toyota gets us $20B.
- Adding in the world's #2 battery maker plus the entire rest of their chemical business get us $36B.
- Adding in the worlds #2 solar company gets us $1.6B.
That's $57.6B market cap vs Tesla's $500B. So another 90% downside to fair valuation assuming they're able to become as big in batteries as LG Chem and as big in solar as Canadian Solar.
"Vibes" don't make a $500B valuation target in 4% interest rate market. Sorry.
Tesla last year net profit: $5.5b; last quarter net profit: $3.3b.
Toyota last year net profit: $25b; last quarter net profit: $3.1b.
Toyota market cap: $200b
If you value Tesla based on annual profits, entirely ignoring realized and unrealized growth, They'd still have 23% valuation, $46b.
If you value Tesla based on quarterly profits, ignoring unrealized growth trajectory, they'd have similar valuation, $200b.
I think future growth in Tesla involves significant margin contraction as they move down market, and as more entrenched players enter the EV space we’ll see margins on existing revenue go down too. This is peak value for them based on first mover advantage alone and it won’t last.
So yeah bear case 90% overvalued and bull case 50% overvalued. And this is after a 62.5% drop from peak value.
I think you mean to say legacy automakers have been underpricing.
I haven't heard of a single legacy manufacturer selling their EVs for more than they cost to make (aside from vague predictions about future margin targets).
Before anyone says it: new Chinese EV makers are not "legacy."