Invest in Tesla?

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matjen
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Re: Invest in Tesla?

Post by matjen »

Comparing Amazon to Tesla and Bezos to Musk is absurd. Plain and simple. When Musk shows he can run a large company and make consistent profits year over year without borrowing money/tapping capital markets then talk to me. Bezos isn't making a ton of profit because he pours his cash flow back into the business. They have been cash flow positive. Musk lights others' money on fire. Have not been cash flow positive. Bulls have certainly been correct during the hype phase of the Tesla story but that phase has been over for the last year plus. Stock is in a range and will stay there or eventually crash IMO. The odds of this being a $600 or $1000 stock in the next few years is incredibly small. Look at how successful Cisco has been since the dot com era and look at its stock for instance.

From Josh Wolfe (well known VC that specializes in forward thinking tech space).

Bezos raised $54M in IPO valuing Amazon @ $438M
It never raised equity from investors EVER again*
mkt cap: $827B

Musk raises ~ 1B+/year
Has burned thru $10B
mkt cap: $52B

(*AMZN SBC diluted shareholders ~10% w/shares going from 453M to 493M and stock VALUE up 10x)
Last edited by matjen on Thu Jul 19, 2018 10:14 am, edited 2 times in total.
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Pajamas
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Re: Invest in Tesla?

Post by Pajamas »

matjen wrote: Thu Jul 19, 2018 9:49 am Comparing Amazon to Tesla and Bezos to Musk is absurd.
My position has been that Elon Musk is not someone it would be smart to bet against but some of his recent behavior has changed my mind. He is unpredictable but sometimes it results in poor outcomes that are both predictable and avoidable. I no longer trust his judgment and wouldn't bet on him either way now.

Contrast that with Jeff Bezos. He takes calculated risks that sometimes don't work out but which are never foolish.
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Nate79
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Re: Invest in Tesla?

Post by Nate79 »

I think it important to understand the humongous scale it takes to manufacture 10m cars. Look at the scale of GM, who had sales of about 10m cars WW. That is 192k per week manufactured in 35 countries. Almost 400 facilities WW. Its hugely capex intensive especially for the R&D needed to be constantly introducing new or updated models. You are updating models every 3 or so years with major updates every 7 years roughly. A huge dealer network to sell and service cars WW.
Mjar
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Re: Invest in Tesla?

Post by Mjar »

MotoTrojan wrote: Wed Jul 18, 2018 3:02 pm
Mjar wrote: Wed Jul 18, 2018 2:52 pm
MotoTrojan wrote: Wed Mar 28, 2018 10:23 am Still has a market cap well over Ford (was double before recent drop). Ford had $7.6B in earnings with $12B in cash reserves. Tesla had $2B loss and will need to raise more capital soon.

If you believe they won't go bankrupt, you may be better off investing in their bonds. Current yield is over 7%.

Looks like "shortville" may have been right after all: https://twitter.com/elonmusk/status/848 ... 01?lang=en
wasn't Amazon hemorrhaging cash for a while in the early years while they were hyper focused on the customer and low prices to undercut? I don't have position in Tesla nor will I but just being devils advocate
How early you talking? Late 90’s they had a market cap under $1B (it peaked almost at TSLA levels back then though). Even so, that doesn’t prove this is a smart pick; more analogous to gambling with that logic.
I agree, my implication was to look at all aspects of what you know about before buying, on the surface it looks like a bad buy but you believe in them then you go for it. I don't think its a smart buy at this price. I was looked at Tesla when they were at 47 and didn't have the funds to buy it then, shoulda woulda coulda.
Jeff Albertson
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Re: Invest in Tesla?

Post by Jeff Albertson »

WSJ (Dan Neil) has glowing review of the 450 hp performance version of the Model 3. The article is unlocked, at least I didn't need a password.
"First Test Drive of the Tesla Model 3 Performance: A Thrilling, Modern Marvel"
https://www.wsj.com/articles/first-ever ... 1532022533
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HomerJ
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Re: Invest in Tesla?

Post by HomerJ »

4nursebee wrote: Thu Jul 19, 2018 9:06 amTesla seems like the kind of company that is growing new market, new product, with increasing sales. 2018 stands a chance to have 100% sales growth. Isn't that the kind of company to invest in? Growth that exceeds the market averages?
The share price ALREADY reflects that.

Tesla is ALREADY priced like it sells 10% of the world's cars. People do indeed think that will happen, it actually could happen, but that doesn't mean the stock price is going to go through the roof. Because the price ALREADY did go through the roof from people like you assuming it will be as successful as Ford or GM.
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mouses
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Re: Invest in Tesla?

Post by mouses »

I'm just an observer of Tesla, but Musk seems to be coming apart at the seams, which to me says the company is in trouble and he can't cope with it. When the ship is taking on water you want a cool headed captain.
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4nursebee
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Re: Invest in Tesla?

Post by 4nursebee »

HomerJ wrote: Thu Jul 19, 2018 11:02 pm
4nursebee wrote: Thu Jul 19, 2018 9:06 amTesla seems like the kind of company that is growing new market, new product, with increasing sales. 2018 stands a chance to have 100% sales growth. Isn't that the kind of company to invest in? Growth that exceeds the market averages?
The share price ALREADY reflects that.

Tesla is ALREADY priced like it sells 10% of the world's cars. People do indeed think that will happen, it actually could happen, but that doesn't mean the stock price is going to go through the roof. Because the price ALREADY did go through the roof from people like you assuming it will be as successful as Ford or GM.
Can you justify this mathematically? That they are already priced as if they sell 10%?
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motorcyclesarecool
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Re: Invest in Tesla?

Post by motorcyclesarecool »

4nursebee wrote: Fri Jul 20, 2018 3:25 am
HomerJ wrote: Thu Jul 19, 2018 11:02 pm
4nursebee wrote: Thu Jul 19, 2018 9:06 amTesla seems like the kind of company that is growing new market, new product, with increasing sales. 2018 stands a chance to have 100% sales growth. Isn't that the kind of company to invest in? Growth that exceeds the market averages?
The share price ALREADY reflects that.

Tesla is ALREADY priced like it sells 10% of the world's cars. People do indeed think that will happen, it actually could happen, but that doesn't mean the stock price is going to go through the roof. Because the price ALREADY did go through the roof from people like you assuming it will be as successful as Ford or GM.
Can you justify this mathematically? That they are already priced as if they sell 10%?
With far fewer assets, sales, and profits, they have a higher market cap than Ford? We’re talking about an abysmal ratio to its book value. (F = 1.185 Price / Book ratio. TSLA = 12.22!) If Tesla had the worldwide physical and intellectual assets of Ford (smaller than VW, Toyota) it would be worth $260 per share at most.

The math:
$43.117B F market cap / 169,794,000 TSLA shares outstanding = $253.94

Also, having driven the Model S, there is lots of IT driven sizzle, but the car is massively over engineered. Experts agree: https://www.investors.com/news/technolo ... r-autopsy/
Interesting drivetrain and user experience, but TSLA has struggled mightily with things that are childs play to a real auto manufacturer such as closures and framing (massive internal framing; it is hard to step out of the Model S.) That they initially tried to overcome a brake fade issue on the Model 3 with a software update speaks volumes about the things they still need to learn about cars before they can be in a position to disrupt.
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Re: Invest in Tesla?

Post by Cycle »

I don't get mixed up in this kind of nonsense. Nobody has a clue what the stock is going to do. I'd recommend just buying some TSM or VTIAX.
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azanon
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Re: Invest in Tesla?

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<deleted comment due to my mistake>
Last edited by azanon on Fri Jul 20, 2018 11:11 am, edited 1 time in total.
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munemaker
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Re: Invest in Tesla?

Post by munemaker »

BradJ wrote: Wed Mar 28, 2018 10:14 am Is it a good time to buy Tesla?
You would be well advised to invest in a broad market mutual fund such as the S&P 500 or the total market fund. Buying any individual stock is risky, but this one is highly speculative.
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matjen
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Re: Invest in Tesla?

Post by matjen »

Jeff Albertson wrote: Thu Jul 19, 2018 4:21 pm WSJ (Dan Neil) has glowing review of the 450 hp performance version of the Model 3. The article is unlocked, at least I didn't need a password.
"First Test Drive of the Tesla Model 3 Performance: A Thrilling, Modern Marvel"
https://www.wsj.com/articles/first-ever ... 1532022533
That car is near 80k! Won't move the needle or, if it does, will just cannibalize Model S sales. A loaded BMW M3 is low 70s. The most M cars BMW has ever sold in a year is a few thousand I think. Having said that, the short case isn't really too much about the car. Especially the car for its first week of ownership.
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roflwaffle
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Re: Invest in Tesla?

Post by roflwaffle »

matjen wrote: Fri Jul 20, 2018 9:03 am
Jeff Albertson wrote: Thu Jul 19, 2018 4:21 pm WSJ (Dan Neil) has glowing review of the 450 hp performance version of the Model 3. The article is unlocked, at least I didn't need a password.
"First Test Drive of the Tesla Model 3 Performance: A Thrilling, Modern Marvel"
https://www.wsj.com/articles/first-ever ... 1532022533
That car is near 80k! Won't move the needle or, if it does, will just cannibalize Model S sales. A loaded BMW M3 is low 70s. The most M cars BMW has ever sold in a year is a few thousand I think. Having said that, the short case isn't really too much about the car. Especially the car for its first week of ownership.
The Performance 3 starts at $64,000. It can get near $80k, but only because of EAP and FSD, which BMW doesn't offer. :sharebeer

https://3.tesla.com/model3/design#battery
roflwaffle
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Re: Invest in Tesla?

Post by roflwaffle »

BradJ wrote: Wed Mar 28, 2018 10:14 am Is it a good time to buy Tesla?
Only if you want to bet on the future of the company. To be fair, the same applies to putting money into any specific company.

If you want to invest, put your money into an index fund, or set of index funds. :beer
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HomerJ
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Re: Invest in Tesla?

Post by HomerJ »

4nursebee wrote: Fri Jul 20, 2018 3:25 am
HomerJ wrote: Thu Jul 19, 2018 11:02 pm
4nursebee wrote: Thu Jul 19, 2018 9:06 amTesla seems like the kind of company that is growing new market, new product, with increasing sales. 2018 stands a chance to have 100% sales growth. Isn't that the kind of company to invest in? Growth that exceeds the market averages?
The share price ALREADY reflects that.

Tesla is ALREADY priced like it sells 10% of the world's cars. People do indeed think that will happen, it actually could happen, but that doesn't mean the stock price is going to go through the roof. Because the price ALREADY did go through the roof from people like you assuming it will be as successful as Ford or GM.
Can you justify this mathematically? That they are already priced as if they sell 10%?
I would suggest your numbers from earlier in the thread are way off since car companies that DO have 10% (Ford and GM) are priced far lower than your calculations assumed they would be.

Telsa's current market cap is already larger than Ford, so the price ALREADY reflects them being bigger than Ford (10% of the market).

So if Tesla does get to 10%, that doesn't necessarily equal huge jump in Tesla stock. Because 10% is what people ALREADY expect.
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Re: Invest in Tesla?

Post by Jack FFR1846 »

Some quick research.....

Of the 1 Billion cars sold worldwide last year, Tesla produced 100k. Now, my silly graduate engineering and math classes must have failed me here because somehow, I can't figure out where that's 10% or has any hope of every being 10%.

Market cap, I'm finding:

10: FCA $36B
9: Nissan $41B
8: Ford $44B
7: Tesla $48B
6: GM $53B
5: Honda $61B
4: BMW $71B
3: Daimler $84B
2: VW $101B
1: Toyota $214B

All of these figures are worldwide and all of these companies sell worldwide.
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roflwaffle
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Re: Invest in Tesla?

Post by roflwaffle »

Jack FFR1846 wrote: Fri Jul 20, 2018 1:02 pm Some quick research.....

Of the 1 Billion cars sold worldwide last year, Tesla produced 100k. Now, my silly graduate engineering and math classes must have failed me here because somehow, I can't figure out where that's 10% or has any hope of every being 10%.

Market cap, I'm finding:

10: FCA $36B
9: Nissan $41B
8: Ford $44B
7: Tesla $48B
6: GM $53B
5: Honda $61B
4: BMW $71B
3: Daimler $84B
2: VW $101B
1: Toyota $214B

All of these figures are worldwide and all of these companies sell worldwide.
I don't think Tesla's current valuation is based off of selling 100k cars in 2017. My guess is it's related to Tesla growing from having essentially no revenue a decade ago, to what I'm guessing will be $20-$25 billion in revenue this year.

That growth, Tesla spanning several markets, and Tesla's end-to-end control of production, sales, and service are IMO why Tesla's ratio of capitalization to revenue ratio is about 8+ times that of other large manufacturers like FCA.

IMO It'll either drop as Tesla either increases revenue in line with that expectation of valuation, or drop as Tesla's shares lose value to reflect them missing revenue expectations, but either way it'll drop. Last year that ratio was about 25+ times that of other large manufacturers, and it's changed significantly since then because Tesla's increased revenue via ramping Model 3 production and the market has lowered the price of it's stock based on not ramping Model production as quickly as anticipated. :beer
Last edited by roflwaffle on Fri Jul 20, 2018 5:20 pm, edited 1 time in total.
JustinR
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Re: Invest in Tesla?

Post by JustinR »

Absolutely not.
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Re: Invest in Tesla?

Post by DesertDiva »

randomizer wrote: Wed Mar 28, 2018 10:21 am Yes. Via a total market index fund.
+1 ...and it's always a good time to invest in a 3-fund portfolio, Boglehead-style :idea:
motorcyclesarecool
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Re: Invest in Tesla?

Post by motorcyclesarecool »

https://www.wsj.com/articles/tesla-asks ... 1532301091

Things are about to get interesting. Even if there is a ch 11 or 7 filing in its future, Tesla has come too far to simply wither away. At a reasonable valuation, Ford would be a solid merger candidate, as it lacks a substantial EV program, but understands mass production and logistics. I suppose Panasonic would get the Gigafactory.

I’ll bet the Value premium will continue to persist after this.
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Re: Invest in Tesla?

Post by Jack FFR1846 »

https://techcrunch.com/2018/07/22/tesla ... itability/

Tesla is asking suppliers (including my company) to give them cash back to become profitable. Knowing from the regional sales people who deal with Tesla, they already squeeze every bit out of prices. Sounds like the buyers at Tesla went to the School of Oz for business. Suppliers who cave are likely on such slippery ground that they'll be out of business soon.....and potentially end of life products that Tesla needs. Or they get bought and the new company raises the prices (take it or leave it) to levels that meet profitability and margin requirements (what my company does).
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Re: Invest in Tesla?

Post by Top99% »

I wouldn't bet on our against Tesla or any other single stock. Been there done that prior to the tech bubble. I think their energy storage business actually might be more disruptive than their EV business. Also, if Tesla runs into financial trouble and their market cap crashes I think Apple would step in and buy them. But, I am not going to put my money where my mouth is on any of this.
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Re: Invest in Tesla?

Post by jimb_fromATL »

I did not find a link in this thread to this recent news article that might be of interest to some folks.
Opinion: Elon Musk is a total fraud

More reading:
Whistleblower
Tesla sues whistleblower
Tesla seeks to dismiss securities fraud lawsuit

I'd venture that now may not be the best possible time to buy either Tesla stock or a Tesla car.

Not sure who will suffer the biggest loss if Tesla folds their tents. The average individual investor might not lose as much on their stock as a Tesla owner might lose on their car's resale value. I don't think Pep Boys has a lot of after-market parts for Teslas, and I doubt that parts from a LEAF would be all that adaptable. A Tesla with a 0-60 time of 20 seconds and a range of maybe 30 miles would not be nearly as much fun to drive.

jimb
david1082b
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Re: Invest in Tesla?

Post by david1082b »

DanMahowny wrote: Mon Jul 23, 2018 8:10 am Tesla is insolvent. Tesla is nearly out of cash. Short the stock.
This is Bogleheads, shorting stock is not in the playbook.
jimb_fromATL wrote: Mon Jul 23, 2018 9:33 am I'd venture that now may not be the best possible time to buy either Tesla stock or a Tesla car.
This is Bogleheads, it is never the best possible time to buy an individual stock.

"Investing Advice Inspired by Jack Bogle" - does Jack Bogle ever say to short a stock or buy an individual stock?
autolycus
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Re: Invest in Tesla?

Post by autolycus »

That first column that jimb posted is a ridiculous hit piece that has little value. I tend to be a mild Musk supporter who agrees that he has some flaws that make it really hard to decide to bet on or against him. However, the underlying bias in the article that he has "yet to succeed at anything" is not true or fair. It's actually a pretty absurd column full of links to articles with massive confirmation bias and no context at all. Even as someone who thinks skepticism is a good default position when it comes to tech companies, including/especially those started and/or run by figures like Musk, I could easily destroy most of the points the columnist makes.
cj2018
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Re: Invest in Tesla?

Post by cj2018 »

BradJ wrote: Wed Mar 28, 2018 10:14 am Is it a good time to buy Tesla?
OP,

I think TSLA is a good buy if you plan to hold it for 5+ Year and treats it as a speculative bet that might 10x or bottom out. If the dollar amount would be a meaningful portion of your NW however, I’d advise against it.

Now, anyone who argues against TSLA’s valuation is probably a short seller of Wall Street pundit who dislikes Musk in my opinion lol.

TSLA is valued as a tech business, not car business. Any comps with a car business like Ford or GM or Toyota alike is simply absurd. Yes, they currently produce cars but their main business is renewable energy and total domination in AI- based means of transportation.

Again, please don’t insult Tesla by comparing it to traditional car business like Ford, it’s not apple to Apple comparison
cj2018
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Re: Invest in Tesla?

Post by cj2018 »

HomerJ wrote: Fri Jul 20, 2018 12:47 pm
4nursebee wrote: Fri Jul 20, 2018 3:25 am
HomerJ wrote: Thu Jul 19, 2018 11:02 pm
4nursebee wrote: Thu Jul 19, 2018 9:06 amTesla seems like the kind of company that is growing new market, new product, with increasing sales. 2018 stands a chance to have 100% sales growth. Isn't that the kind of company to invest in? Growth that exceeds the market averages?
The share price ALREADY reflects that.

Tesla is ALREADY priced like it sells 10% of the world's cars. People do indeed think that will happen, it actually could happen, but that doesn't mean the stock price is going to go through the roof. Because the price ALREADY did go through the roof from people like you assuming it will be as successful as Ford or GM.
Can you justify this mathematically? That they are already priced as if they sell 10%?
I would suggest your numbers from earlier in the thread are way off since car companies that DO have 10% (Ford and GM) are priced far lower than your calculations assumed they would be.

Telsa's current market cap is already larger than Ford, so the price ALREADY reflects them being bigger than Ford (10% of the market).

So if Tesla does get to 10%, that doesn't necessarily equal huge jump in Tesla stock. Because 10% is what people ALREADY expect.

Comparing TSLA to Ford is not how the business is valued currently. Ford is a traditional car business whereas TSLA is a moonshot tech/renewable energy business. Automobile happens to be vehicle of choice at the moment to implement the tech.

It’s similar to comparing Amazon with Walmart as a whole when Amazon is totoally not valued as a traditional retailer.

Now is there substantial risk with TSLA? Absolutely, that’s why it’s a moonshot tech business! But please don’t compare it to Ford its an insult to tech/AI business
jdb
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Re: Invest in Tesla?

Post by jdb »

Yes. I have been investing in tsla for six years, started at $60 per share. Every time I sell my position after doubling my money. Not high finance but has fully paid for in after tax LTCG the Model S for me, Model X for wife , best cars we have ever owned, and Model 3 for physician son and wife who agree with recent WSJ car review by Dan Neil. I love to invest contrarian. Love all the hate. Currently holding position with basis of $150 but decided to hold longer even though could double money. I hope the stock goes down much further and then will backup my pickup truck and load up on lots more. Good luck.
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matjen
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Re: Invest in Tesla?

Post by matjen »

Reuters-Cost to insure Tesla's debt rises on growing default fears

https://www.reuters.com/article/tesla-b ... ny+News%29
It cost $5.96 to insure $100 of Tesla’s debt, plus an upfront cost of around 18 percent, representing a total of 24.1 percent of the face value of the 2025 bond on Monday.

The CDS is saying that there are a lot of people betting this company is going out of business,” said Thomas Graff, head of fixed income at Brown Advisory.
For those crowing about their awesome Tesla stock performance, that is certainly true if you have owned it for 6 years and all the gains were made in the first year or two. If you haven't and truly believe it is a tech-laden future wonder company (Amazon, Apple, etc. rather than boring Toyota) well...here is $TSLA stock price performance versus Nasdaq: 1yr: -33%, 2yr: -22.7%, 3yr: -39%, 4yr: -50.2%. 5 year ownership breaks even with the much smoother returns of QQQ for instance.
Last edited by matjen on Tue Jul 24, 2018 7:26 am, edited 3 times in total.
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Re: Invest in Tesla?

Post by ReformedSpender »

Invest in Tesla? No. Trade/swing Tesla? Plausible.

IMO, Tesla's (overabundant) rise was based on mainly on speculation. The further the company progresses in its ability (or inability) to produce actual profit, more and more scrutiny will be put on the hard numbers.

Based on current valuations of virtually any other car manufacturer, I do not see the benefit outweighing the risk in this environment...

:beer
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Buysider
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Re: Invest in Tesla?

Post by Buysider »

Of the 1 Billion cars sold worldwide last year, Tesla produced 100k. Now, my silly graduate engineering and math classes must have failed me here because somehow, I can't figure out where that's 10% or has any hope of every being 10%.
Forgive my snark, but you may want to check your math classes. No way 1 billion cars were sold last year, the real number is well under 100 million. You're off by an order of magnitude.

In any event, if you looked at the market share of the Apple iPhone in 2007, it was about the same as Tesla'ss share of the car market today. 11 years later, Blackberry and Nokia are out of the business, and Apple is doing very well. Predicting the future is hard/impossible, just ask Steve Ballmer (CEO MSFT) on his thoughts of Apple disrupting the phone business.
Tanelorn
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Re: Invest in Tesla?

Post by Tanelorn »

They’ve got real near term financial problems and Musk seems to be falling apart mentally. All the major executives have left and the company is dysfunctional internally. Stay away or sell short, but I would not buy now. If they still exist in an attractive form as a company in two years, take another look. Sure you may miss out on some upside if they succeed, but you might also miss out on a big loss.
MotoTrojan
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Re: Invest in Tesla?

Post by MotoTrojan »

jimb_fromATL wrote: Mon Jul 23, 2018 9:33 am I did not find a link in this thread to this recent news article that might be of interest to some folks.
Opinion: Elon Musk is a total fraud

More reading:
Whistleblower
Tesla sues whistleblower
Tesla seeks to dismiss securities fraud lawsuit

I'd venture that now may not be the best possible time to buy either Tesla stock or a Tesla car.

Not sure who will suffer the biggest loss if Tesla folds their tents. The average individual investor might not lose as much on their stock as a Tesla owner might lose on their car's resale value. I don't think Pep Boys has a lot of after-market parts for Teslas, and I doubt that parts from a LEAF would be all that adaptable. A Tesla with a 0-60 time of 20 seconds and a range of maybe 30 miles would not be nearly as much fun to drive.

jimb
That article lost me when it referenced the government subsidies Musk’s companies have received. SpaceX receives billions of dollars for providing supply (and soon human) transportation to the ISS. They provide this at a vast discount compared to foreign and domestic alternatives. That is payment for a service, not a subsidy. It saves tax payers many more billions compared to NASA performing it.

He’s a brilliant visionary and he certainly has achieved a lot, but he’s not a great CEO at all.
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matjen
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Re: Invest in Tesla?

Post by matjen »

roflwaffle wrote: Fri Jul 20, 2018 11:55 am
The Performance 3 starts at $64,000. It can get near $80k, but only because of EAP and FSD, which BMW doesn't offer. :sharebeer

https://3.tesla.com/model3/design#battery
HAHAHA! Good point. Tesla offers that stuff but doesn't seem to deliver does it? At least not safely with the former and I don't think at all with the latter. Meanwhile a BMW M3 offers a heritage, a heads-ups display, a 319 mile range on a 5 minute fill up, and most importantly for these types of cars the ability to enjoy a track day. I am doubtful that a Telsa will do those things. I only bring that up because Musk compared the performance version to a BMW M3. A Tesla would be more enjoyable for tooling around a city and has its own charms if it is made well.

Meanwhile back to the health of the company. How is that service branch going? There is more to a viable mass market car manufacturer than how the car drives for a few days when brand new. Servicing these cars under warranty is going to cost a fortune.

Good news: Your Tesla Model 3 is finally ready. Bad news: It may take weeks to get it serviced
http://www.latimes.com/business/autos/l ... story.html#
Parts shortages, long repair delays and problems getting through on customer help lines have led to scenes of strife at Tesla’s service centers.

At the entrance to the company’s Dublin, Calif., center recently, an agitated Model X owner was trying to drop his SUV off for repair. A Tesla service agent said he couldn’t leave the car there because the facility was too busy. He could make an appointment to bring it in another time, maybe in a couple of weeks.

“But I don’t want to drive it!” said Kaushal Bhaskar, a software engineer from nearby San Ramon who complained he sometimes couldn’t get the passenger door to open, while other times the door would open up all by itself – including once on the Interstate at highway speeds. “This is a safety concern for me!”
Good thing this is just the LA Times and not really related to Tesla's target market. :P
A man is rich in proportion to the number of things he can afford to let alone.
harikaried
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Re: Invest in Tesla?

Post by harikaried »

DanMahowny wrote: Mon Jul 23, 2018 8:10 amNot sure when I'll cover my short positions. Maybe I'll ride it all the way to $0; but will probably cover before that. Still decisions to be made.
I guess you've done quite a bit of research to put several tens (hundreds?) of thousands of dollars on the line, so I'm wondering if I should get some "insurance" by shorting for various Tesla going to $0 and related scenarios. In particular, we have a few thousand dollars on the line right now with a couple Tesla reservations and a Model 3 order that has an estimated delivery window of September to November. Our reservation is from before the Model 3 announcement but not a line-waiter, so I'm guessing we would receive it in October.

What are the chances that we will not receive our Model 3 in three months, and we would be out the few thousands of dollars? Based on that, and assuming there would be a drop in the stock price, we could short the stock to recover some of our money.

Similarly, what's the chances that we pay for the rest of our Model 3 order but somehow fail to receive the vehicle and title? I suppose this would only happen if we electronically transferred money instead of bringing a cashier's check to complete the transaction, so perhaps we can just easily avoid that if it really is a concern.

So then considering situations where we successfully purchase the Model 3, there could be various "failure" scenarios. Maybe Tesla won't have a supercharger network maintained anymore, but there are alternatives and someone might take over the existing supercharger infrastructure, so this doesn't seem problematic. Potentially there would be no more software updates, so we would be out of getting new features, but this doesn't seem any worse than existing vehicles that don't get updates that continue to function fine. I guess the worst case is not being able to get hardware / parts replacements for not-so-minor-but-not-totaled incidents, so I guess that might lead to higher repair costs and could be mitigated with a lower auto deductible. So I guess once we have the vehicle, if Tesla is not able to service, it would be an inconvenience or somewhat covered by auto insurance, so there wouldn't be a separate need to get additional "insurance" in shorting the stock.

Are there other scenarios where we should consider shorting the stock -- more as an insurance policy than to make or lose money as we just invest the Bogleheads way.
Theoretical
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Re: Invest in Tesla?

Post by Theoretical »

Naked shorts are extremely dangerous, especially on a stock as volatile as Tesla. Better would be buying puts on the stock in bear territory. Yes, you’ll lose the volatility risk premium but you’re not risking unlimited losses.

Or just eat the reservation cost and walk away. The sunk cost fallacy is a real killer.
Jack FFR1846
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Re: Invest in Tesla?

Post by Jack FFR1846 »

harikaried wrote: Wed Jul 25, 2018 1:22 pm I guess the worst case is not being able to get hardware / parts replacements for not-so-minor-but-not-totaled incidents, so I guess that might lead to higher repair costs and could be mitigated with a lower auto deductible.
I'd suggest watching some youtube videos by Rich Repairs (formerly Car Guru). Collision parts are not the only issue with a Tesla, should they cease to exist. Currently, if Tesla deems your car to be unsupported, you cannot buy any parts. Need a control arm from a small incident with a curb? Nope. Need a new door handle (which on the S is needed every 6 months), nope. As some background, Rich Repairs buys salvage Teslas and rebuilds them here in Massachusetts. Our salvage title process is run by the Massachusetts State Police and is extremely difficult to get through. I know because the same process is used to title a kit car, which I have done. In any case, he funds a lot of his work by selling parts because other owners who have had incidents which Tesla deems to make the car unsupported have them hanging, unable to buy any parts.
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Valuethinker
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Re: Invest in Tesla?

Post by Valuethinker »

Theoretical wrote: Thu Jul 26, 2018 1:27 am Naked shorts are extremely dangerous, especially on a stock as volatile as Tesla. Better would be buying puts on the stock in bear territory. Yes, you’ll lose the volatility risk premium but you’re not risking unlimited losses.

Or just eat the reservation cost and walk away. The sunk cost fallacy is a real killer.
This is a key point.

With the Tesla share price, you can see the short squeezes - the stock just jumps up. Tesla is the most shorted large stock, I believe. Any good news, and the Rout of the Shorts starts.
carguyny
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Re: Invest in Tesla?

Post by carguyny »

Tesla is the most difficult of all stocks to trade in my opinion. I've done it a couple of times but the market sentiment is more difficult to read than any other stock. Most people that love their Tesla buy the stock, Musk has a huge position. Other insiders have a very large position then you have index funds. Last I calculated, which was years ago the net liquid active long interest was around 10%. Trade at your own risk.

I'm an active trader and professional investor and for me it's one of the last names I look at. I went short Facebook, Netflix and long Alphabet into earnings this Quarter - the FANG stocks are much easier to read...
Tanelorn
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Re: Invest in Tesla?

Post by Tanelorn »

carguyny wrote: Thu Jul 26, 2018 7:19 am Tesla is the most difficult of all stocks to trade in my opinion. I've done it a couple of times but the market sentiment is more difficult to read than any other stock. Most people that love their Tesla buy the stock, Musk has a huge position. Other insiders have a very large position then you have index funds. Last I calculated, which was years ago the net liquid active long interest was around 10%. Trade at your own risk.

I'm an active trader and professional investor and for me it's one of the last names I look at. I went short Facebook, Netflix and long Alphabet into earnings this Quarter - the FANG stocks are much easier to read...
Congrats on your FB short this morning.
alfaspider
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Re: Invest in Tesla?

Post by alfaspider »

cj2018 wrote: Mon Jul 23, 2018 1:57 pm

TSLA is valued as a tech business, not car business. Any comps with a car business like Ford or GM or Toyota alike is simply absurd. Yes, they currently produce cars but their main business is renewable energy and total domination in AI- based means of transportation.

Again, please don’t insult Tesla by comparing it to traditional car business like Ford, it’s not apple to Apple comparison
Is it so absurd? At the end of the day one has to ask where any putative profits may come from. As far as we can tell, it's going to be cars and perhaps to a lesser extent home batteries and the like. But their battery tech isn't all that unique, and they haven't done all that much with the solar city acquisition. What they are mostly selling are slick futuristic cars. So then, how is it different from Ford or GM other than specializing in EVs? This is simply a new product sold within an established business. That's very different from, say Amazon, which was originally an online bookseller but obviously had a much different business model than Barnes and Noble because the online nature allowed it to sell just about anything and also expand into non-retail services. It's not clear what Tesla can do that GM can't. Perhaps Musk is hiding an ace up his sleeve and there's some new direction the business is going in, but until we see that ace I simply don't see the justification for valuing Tesla as anything other than a car company.
ThriftyPhD
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Re: Invest in Tesla?

Post by ThriftyPhD »

Jack FFR1846 wrote: Fri Jul 20, 2018 1:02 pm Some quick research.....

Of the 1 Billion cars sold worldwide last year, Tesla produced 100k. Now, my silly graduate engineering and math classes must have failed me here because somehow, I can't figure out where that's 10% or has any hope of every being 10%.

Market cap, I'm finding:

10: FCA $36B
9: Nissan $41B
8: Ford $44B
7: Tesla $48B
6: GM $53B
5: Honda $61B
4: BMW $71B
3: Daimler $84B
2: VW $101B
1: Toyota $214B

All of these figures are worldwide and all of these companies sell worldwide.
It's a common thing that's brought up with Tesla, but I think it shows a misunderstanding of how stock is priced.

If a company is stable, and you expect it to neither grow nor shrink forever, you can use the earnings from this year, multiply by 10x to get a stock price to represent a P/E of 10. But companies aren't stable long term, they grow and shrink.

You're assuming that the price of all non Tesla car companies is priced to their current earnings assuming stable production forever. But if an investor thinks electric vehicles are the future, they price in each car company's electric strategy. So to some agree, TSLA stock is inflated and the other car companies deflated, assuming an EV future. Companies with no EV future are further devalued.
10: FCA $36B No EV strategy
9: Nissan $41B Leaf. Meh.
8: Ford $44B Leaving the car market, betting it all on big trucks
7: Tesla $48B EV market leader
6: GM $53B Bolt, but slow ramp and lack of interest.
5: Honda $61B Clarity has 89 mile rang. Toy car.
4: BMW $71B i3 115 mile range, ICE engine maintenance, looks like children's toy
3: Daimler $84B electric smart car. 51 miles. yikes.
2: VW $101B They will probably hide an ICE in the car and attempt to fool emission tests. :D
1: Toyota $214B Betting the farm on hydrogen fuel cell. Yikes.
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matjen
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Re: Invest in Tesla?

Post by matjen »

ThriftyPhD wrote: Thu Jul 26, 2018 7:30 pm
10: FCA $36B No EV strategy
9: Nissan $41B Leaf. Meh.
8: Ford $44B Leaving the car market, betting it all on big trucks
7: Tesla $48B EV market leader
6: GM $53B Bolt, but slow ramp and lack of interest.
5: Honda $61B Clarity has 89 mile rang. Toy car.
4: BMW $71B i3 115 mile range, ICE engine maintenance, looks like children's toy
3: Daimler $84B electric smart car. 51 miles. yikes.
2: VW $101B They will probably hide an ICE in the car and attempt to fool emission tests. :D
1: Toyota $214B Betting the farm on hydrogen fuel cell. Yikes.

Nice trick. Talking about EV future in price multiples but then listing just the current offerings of enormous, experienced manufacturers who have offerings coming within months. I do appreciate the humor though. :beer Meanwhile, Steve Eisman of Big Short fame is short Tesla for many of the same reasons listed on multiple threads. No execution, management leaving the company in droves, and no real leadership in areas like autonomous driving.

Big Short’s Eisman Is Shorting Tesla for ‘Execution Problems’
“Elon Musk is a very, very smart man but there are a lot of smart people in this world and you’ve got to execute. He’s got execution problems,” Eisman said in an interview with Bloomberg Television. “He’s nowhere in autonomous driving, as far as I can tell, and big competition is coming in his space next year.”
https://www.bloomberg.com/news/articles ... n-problems

Video at 2:55
https://www.bloomberg.com/news/videos/2 ... esla-video
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4nursebee
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Re: Invest in Tesla?

Post by 4nursebee »

Eisman sayeth:

making investment decisions by looking solely at the fundamentals of individual companies is no longer a viable investment philosophy.
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ThriftyPhD
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Re: Invest in Tesla?

Post by ThriftyPhD »

Feel free to short the stock if you think EV won't take off.

The enormous, experienced manufacturers you mention are not experienced EV manufacturers and don't seem to have any real plans for going into this space. I know, I know, they had some concept cars and say they will have dozens coming within months (where months is 36+ months). You complain about Tesla not having the base version model 3 today, but you'll credit FCA for coming 'soon' because of a concept car. Shorters gotta complain about the stock they're shorting :)

The reason Tesla price is high is because the people buying it think that EV is the future, and that Tesla is a market leader for that EV future. GM has tried and failed to go EV multiple times. Are they big? Sure. Do they 1) think EV is the future and 2) have the expertise and capacity to maintain their size in that EV future? Also, don't forget they've gone bankrupt in the last decade. Even now, their Bolt is the neglected child of their car lineup. What are the plans for the tens of thousands of workers who know how to work on engines? Moving them all to manufacturing batteries will be very tricky, and may not work. Others, like FCA, don't even think EV has any future and are completely ignoring it. Toyota is ignoring BEV and going for Fuel Cell. Some (myself including) think fuel cells are dead end for cars.

Plenty of horse carriage manufacturers that were bigger than Ford before the Model T. It didn't mean they knew how to make a car, or that they thought cars would replace horse carriages. If you thought horses were the future, you would have stuck with the horse companies.
walkerbait
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Re: Invest in Tesla?

Post by walkerbait »

This has probably been discussed before, and is nothing more than a guess on my part, but I think Tesla will have a real problem with margins on the $35k Model 3. I am guessing they are making money with their current production models, but I wonder what their cost structure is like as the options fade and the average selling price drops.

It would seem as if the vast majority of their pent up demand is waiting for the cheaper models (evidenced by rapidly shortening wait times for those willing to buy a current production model). With their cash flow situation, I can't help but wonder if they're stuck between moving to the cheaper models (and little or no operating margin) vs trying to hold out and continue to produce the current models (less demand but an operating margin).

They may have been counting on efficiencies at scale for 1-2 years from now that haven't yet materialized by the time they get to the $35k version. Again, just a guess.
oragne lovre
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Re: Invest in Tesla?

Post by oragne lovre »

alfaspider wrote: Thu Jul 26, 2018 8:03 am
cj2018 wrote: Mon Jul 23, 2018 1:57 pm

TSLA is valued as a tech business, not car business. Any comps with a car business like Ford or GM or Toyota alike is simply absurd. Yes, they currently produce cars but their main business is renewable energy and total domination in AI- based means of transportation.

Again, please don’t insult Tesla by comparing it to traditional car business like Ford, it’s not apple to Apple comparison
Is it so absurd? At the end of the day one has to ask where any putative profits may come from. As far as we can tell, it's going to be cars and perhaps to a lesser extent home batteries and the like. But their battery tech isn't all that unique, and they haven't done all that much with the solar city acquisition. What they are mostly selling are slick futuristic cars. So then, how is it different from Ford or GM other than specializing in EVs? This is simply a new product sold within an established business. That's very different from, say Amazon, which was originally an online bookseller but obviously had a much different business model than Barnes and Noble because the online nature allowed it to sell just about anything and also expand into non-retail services. It's not clear what Tesla can do that GM can't. Perhaps Musk is hiding an ace up his sleeve and there's some new direction the business is going in, but until we see that ace I simply don't see the justification for valuing Tesla as anything other than a car company.
As you pointed out, Amazon was initially an online bookseller and few people then could have imagined what Amazon would have expanded into other services as it does today. If you look at Tesla history, it initially starts out as a company for niche market of performance car, the Roadster. It has, however, expanded into battery manufacturing along with Panasonic, into power-storage business, into solar energy. Its CEO also has his hands on Space X that helped launch his original Roadster car into the orbit, on Boring company that has won Chicago bid to build a tunnel to alleviate traffic congestion surrounding Chicago O'Hare. Those are just some examples what Tesla CEO can do that GM cannot. Tesla, well connected to other sister companies, is not just in car business. Investors, who may be right or wrong, see it as a tech company.
The finest, albeit the most difficult, of all human achievements is being reasonable.
alfaspider
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Re: Invest in Tesla?

Post by alfaspider »

oragne lovre wrote: Fri Jul 27, 2018 9:56 pm
alfaspider wrote: Thu Jul 26, 2018 8:03 am
cj2018 wrote: Mon Jul 23, 2018 1:57 pm

TSLA is valued as a tech business, not car business. Any comps with a car business like Ford or GM or Toyota alike is simply absurd. Yes, they currently produce cars but their main business is renewable energy and total domination in AI- based means of transportation.

Again, please don’t insult Tesla by comparing it to traditional car business like Ford, it’s not apple to Apple comparison
Is it so absurd? At the end of the day one has to ask where any putative profits may come from. As far as we can tell, it's going to be cars and perhaps to a lesser extent home batteries and the like. But their battery tech isn't all that unique, and they haven't done all that much with the solar city acquisition. What they are mostly selling are slick futuristic cars. So then, how is it different from Ford or GM other than specializing in EVs? This is simply a new product sold within an established business. That's very different from, say Amazon, which was originally an online bookseller but obviously had a much different business model than Barnes and Noble because the online nature allowed it to sell just about anything and also expand into non-retail services. It's not clear what Tesla can do that GM can't. Perhaps Musk is hiding an ace up his sleeve and there's some new direction the business is going in, but until we see that ace I simply don't see the justification for valuing Tesla as anything other than a car company.
As you pointed out, Amazon was initially an online bookseller and few people then could have imagined what Amazon would have expanded into other services as it does today. If you look at Tesla history, it initially starts out as a company for niche market of performance car, the Roadster. It has, however, expanded into battery manufacturing along with Panasonic, into power-storage business, into solar energy. Its CEO also has his hands on Space X that helped launch his original Roadster car into the orbit, on Boring company that has won Chicago bid to build a tunnel to alleviate traffic congestion surrounding Chicago O'Hare. Those are just some examples what Tesla CEO can do that GM cannot. Tesla, well connected to other sister companies, is not just in car business. Investors, who may be right or wrong, see it as a tech company.
Right, but spaceX and the boring company are different companies even if Musk is behind them. Tesla does not participate in the upside from those activities. Tesla started out as a company with one model, but that generally how car companies start out.
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4nursebee
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Re: Invest in Tesla?

Post by 4nursebee »

Someone on a Tesla related forum posted this video of cars en transit. I sure don't see any fit/finish issues...and the cars look great!
https://www.youtube.com/watch?v=IFX3PCYlJJM
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