Tesla's product line is narrow and aging rapidly.
They want to be valued as a ~~scifi~~ tech company.
Which is fair, given that the market (and by extension we) chose to brutally punish boring car companies that make reliable high volume cars.
I'm arguing that the fair value of boring companies making reliable things should be much higher. We don't do that, you have to promise hot air based growth to prevent your valuation from crashing.
The behavior we incentivize is the one we'll get.
In theory (occasionally in practice) when you purchase a stock you are purchasing a piece of the future cash flow of that company. For a company which operates in a known environment and we can roughly predict how their revenue will grow (i.e. boring companies), the correct fair value of the stock can be easily computed.
So, no, those predictable companies should not be valued much higher, they are already valued correctly because the are no big surprises in their future, the profits and revenue are predictable.
This logic breaks down with companies where the growth can't be predicted to any reasonable accuracy. So in those you're just buying the hype, which sometimes turns out to be real, sometimes not.
Unfortunately this also incentivizes some companies to pump themselves purely on hype so they never get valued on actual revenue and profit. Tesla is a prime example of this. If you value them as a car company we can easily compute a fair value, but that number is very low. So, instead, robots! AI! self-driving! Space! That keeps the fair value an unknown, so it can ride the wave of hype for a long time.
If the world's wealth was equally distributed, it would be pretty punishing for everyone who is commenting on this platform.
Very few people would choose the one where there's a slight chance they're in the wealth classes currently.
Not moving towards equality is just a selfish choicel.
It is. People are selfish.
Companies even more so.
[0] https://www.itamarnovick.com/intro-to-startup-anti-pattern-s...
But that would be a massacre of shareholder value. One more quarter of a ridonculous valuation is worth more than having a product that will keep Tesla viable as a car company. The idea that Grok could become a first tier AI product is more valuable than a mass market SUV, because that untested idea keeps the share price up.
Until it doesn't. If you can predict the day that happens, I want to subscribe to your newsletter.
No, they only believe that somebody else believes this shit. The entire valuation of Elon's companies is based on greater fool theory. But it notably is called greater fool, not infinite fool; we are going to run out of fools at some point...
I mean, they must have one and it must be at least minimally plausible - otherwise the regulatory authorities would have stepped in long before things got to this stage... right?
Push out competitors and get the market, bet the market is large enough.
Are you convinced enough that you are correct to short the stock though?
The total market cap of all the Chinese car companies combined is about 300B.
Tesla alone is worth ~5x that, because the market rewards this behavior of chasing new things.
If Tesla suddenly pivoted to 'caring about cars' and tried their best to produce low cost reliable EVs, the market is going to punish them by valuing them at less than 300B. That is, if they succeed at that. If they fail, which would be more plausible, they go bankrupt.
Why would they voluntarily do that?
We could do that by changing public opinion or regulating what public companies must do/report, but that seems somewhat unlikely. It's so much easier to claim that autonomous driving will be solved in six months :)
Why so long? Six months? According to God-King Trump who apparently knows everything better than anyone, we're already well past "AI" into Super-Intelligence. Just ask the Machine-God to bestow autonomous driving upon us and we're good to go, yeah? Time to bring on those flying cars in every garage we was all promised decades ago!
Opposite seasons, new wars, at least one new thing to be outraged about.
Last I checked they (still) never release their EV profit alone, always bundling the numbers with plug-in hybrids and high-margin battery sales to other companies. If BYD made money on EVs there'd be no need for shenanigans.
Why for US companies is it okay to be unprofitable while they grow, but for Chinese companies it is shenanigans?
Also, if they actually sell things such as high-margin batteries, is it even shenanigans? Using a profitable division to finance the growth of another division sounds like excellent business strategy to me. Better than promising bullshit FSD to artificially inflate the stock price.
>Why for US companies is it okay to be unprofitable while they grow, but for Chinese companies it is shenanigans
Predatory pricing is nothing new. Walmart did the same thing, but (of course) they raised prices as soon as the local competition was dead. China is merely doing the same, so their "winning" in the economic market is a temporary illusion.
"Turns out communists make great capitalists" is still true.
I got a new job once, the boss asked me what I thought after a few days. I told him I wouldn't be around for very long. "why?" It took me 2 hours to figure out you don't get it. "how?" Well, you have a coin operated coffee machine in the lunch room. It tells me everything I need to know. "But it's just 50 cents?" I laugh and point at him, EXACTLY! Now tell me how it tastes. "I don't know, I have my own machine upstairs" I dig in my pocket and pull out a shiny 50 cent coin. HERE! "what is that for?" I say, it's uhhh just 50 cents? "Why are you giving me 50 cents?", well technically you should explain to me why I would have to give you 50 cents but okay, you are selling a product in the lunch room, I suggest you go and test if it lives up to your standards. He actually walked off to the lunch room, I could see though the window that he put my 50 cents in the machine, then he waited... the cup filled up slowly... he took a sip then spit it into the sink. He came back but I was unable to continue the conversations, I couldn't stop laughing so he walked away. I wanted to say it tasted like: I need to get away from this place as fast as possible.
Market cap is not a useful comparison because it can (as here) be driven by hype.
A better comparison is revenue and profit, that tells us a lot more about the business each is operating.
[1] https://www.autotrader.co.uk/cars/used/citroen/grand-c4-pica...
The market hype is quite similar, so even if its a metaphoric commparison, it makes sense :-))
Visually yes, but technology still vastly mogs all but zeekr maybe.
But that doesn’t matter - most people seem to buy cars entirely by how it looks.
Tesla may be getting belted from pillar to post elsewhere in the world by the Chinese but they a) still have a near-monopoly in EVs in the US, and b) have a cost-competitive EV manufacturing operation in China from which they can supply other parts of the world.
That still doesn't help their image problem, which is still very real for many left-leaning affluent consumers around the world, but that's less of a problem for commercial vehicles.
It’s a shame, because even after all these years Teslas are still state of the art in quite a few aspects (their packaging and drivetrain efficiency, among others). But here in Oz where we have a smorgasbord of cheap and excellent Chinese EVs, there are better options unless you want FSD above all else.