Tesla’s dropping share price takes valuation below ExxonMobil’s(ft.com)
ft.com
Tesla’s dropping share price takes valuation below ExxonMobil’s
https://www.ft.com/content/0f051e02-da07-4d7f-a2fc-0a62b96cc790
16 comments
In theory, Tesla’s stock is valued so high because of expectations of future earnings. It is however hard to say exactly how much is actual expectations versus “hype” and momentum. We are in a exceptional period of time in regards to how some stocks are valued which I think will be studied in textbooks of the future.
Ford and GM are behemoths which realistically don’t have much room to grow their market share/revenues very much. A win for them is not being eaten alive by competitors.
That being said, Tesla’s valuation (especially at its peak) was so high they basically are/were valued at at level where the “expectations” of the market is that they’d be the only vehicle manufacturer left on earth who will nearly capture the entire market. I think most will agree that is pretty far fetched and a lot has to do with hype/inflation/momentum/FOMO (it always goes up!).
Ford and GM are behemoths which realistically don’t have much room to grow their market share/revenues very much. A win for them is not being eaten alive by competitors.
That being said, Tesla’s valuation (especially at its peak) was so high they basically are/were valued at at level where the “expectations” of the market is that they’d be the only vehicle manufacturer left on earth who will nearly capture the entire market. I think most will agree that is pretty far fetched and a lot has to do with hype/inflation/momentum/FOMO (it always goes up!).
> they’d be the only vehicle manufacturer left on earth who will nearly capture the entire market
TSLA definitely has meme stock energy, but its current valuation is not quite that high.
If Tesla's revenue grows 6x at the same margins, P/E falls to 7. Under the unrealistic claim that prices don't fall, that's only 8m cars/year, and also only modest energy sales. 6x growth is not that far away, sans hitting a demand wall. They are aiming for 20m cars/year long term, which is harder but also allows room for the profit per car to halve.
I would expect investors to also believe in at least either the long-term prospects of FSD or Tesla's energy business. FSD could clearly double-or-more long-term profitability, were it working well enough, and the energy market is huge.
Note that you would presumably lose regulatory credits in the long term, but Q3 2022 credits were already down to ~1.3% of revenue, so not that significant.
TSLA definitely has meme stock energy, but its current valuation is not quite that high.
If Tesla's revenue grows 6x at the same margins, P/E falls to 7. Under the unrealistic claim that prices don't fall, that's only 8m cars/year, and also only modest energy sales. 6x growth is not that far away, sans hitting a demand wall. They are aiming for 20m cars/year long term, which is harder but also allows room for the profit per car to halve.
I would expect investors to also believe in at least either the long-term prospects of FSD or Tesla's energy business. FSD could clearly double-or-more long-term profitability, were it working well enough, and the energy market is huge.
Note that you would presumably lose regulatory credits in the long term, but Q3 2022 credits were already down to ~1.3% of revenue, so not that significant.
Their profit margin is also a huge factor.
> Nikkei Asia’s analysis shows Tesla made $9,570 per vehicle during Q3, enough to make Tesla more profitable per vehicle than any other manufacturer on the planet. However, the report states this is unconfirmed. Toyota made only around $1,200 per vehicle.
Basically investors see Tesla as the future Apple of cars.
> Nikkei Asia’s analysis shows Tesla made $9,570 per vehicle during Q3, enough to make Tesla more profitable per vehicle than any other manufacturer on the planet. However, the report states this is unconfirmed. Toyota made only around $1,200 per vehicle.
Basically investors see Tesla as the future Apple of cars.
What is their moat though? Apple has a bunch of moats:
1) Brand cachet
2) Supply chain prowess
3) Software lock-in (it’s a pain just to switch away yourself)
4) Social lock-in (it’s a pain to switch away from what your family and friends are on)
I’m not arguing in favor of these btw.
Cars don’t have 3 or 4. Musk is rapidly destroying 1.
Can Tesla really beat Toyota at supply chain? Color me extremely skeptical.
So that leaves what, FSD? I mean, I guess maybe Tesla will both get to actual safe, reliable self-driving first in a way that people choose Tesla over other cars, and they’ll somehow maintain that position even when Waymo or others start licensing their tech to everyone. But there’s no evidence for that. The evidence seems to point to FSD being a dangerous fraud that’s stuck on a dead end road with little ability to make a u-turn. Just like their so-called Full Self Driving performs in real life :)
1) Brand cachet
2) Supply chain prowess
3) Software lock-in (it’s a pain just to switch away yourself)
4) Social lock-in (it’s a pain to switch away from what your family and friends are on)
I’m not arguing in favor of these btw.
Cars don’t have 3 or 4. Musk is rapidly destroying 1.
Can Tesla really beat Toyota at supply chain? Color me extremely skeptical.
So that leaves what, FSD? I mean, I guess maybe Tesla will both get to actual safe, reliable self-driving first in a way that people choose Tesla over other cars, and they’ll somehow maintain that position even when Waymo or others start licensing their tech to everyone. But there’s no evidence for that. The evidence seems to point to FSD being a dangerous fraud that’s stuck on a dead end road with little ability to make a u-turn. Just like their so-called Full Self Driving performs in real life :)
10k is still half of recently re-IPOd Porsche profit per car though. That probably doesn't explain the majority of their valuation. Especially given that Porsche are similarly priced [0] and don't have revenue from CO2 certificate sales which are 20% of Tesla profits [1].
https://fred-lavery.porschedealer.com/how-much-does-a-porsch... [0] https://carboncredits.com/tesla-regulatory-carbon-credit-sal... [1]
https://fred-lavery.porschedealer.com/how-much-does-a-porsch... [0] https://carboncredits.com/tesla-regulatory-carbon-credit-sal... [1]
Porsche revenue increased by 15% compared to last year, Tesla's 55%. It's not even close.
More so, I think Porsche intends to keep marketing themselves as a luxury brand, while Tesla aims to produce cheaper cars in the future, so the TAM is much larger.
More so, I think Porsche intends to keep marketing themselves as a luxury brand, while Tesla aims to produce cheaper cars in the future, so the TAM is much larger.
Debt is a big big factor too. F has 100 billion+ in debt. GM too. Tesla has near zero debt.
Every single bubble and corresponding stock market crash, shows markets are inefficient and market participants can't correctly judge companies valuations.
https://www.investopedia.com/terms/i/inefficientmarket.asp#:....
https://www.investopedia.com/terms/i/inefficientmarket.asp#:....
Tesla’s absurd value as a memestock is propped up entirely by Elon’s reputation. Short of Elon going into some kind of rehab facility where he gets serious psychotherapy, dropping all of his commitments other than Tesla, and never tweeting again, I would expect Tesla will in the near future be valued at something approaching its actual value, which means a much reduced share price even compared with the close today.
Tesla valuation is a based on growing quickly, while having good margin and good profit. And that they will continue to grow pretty quickly for a the next few years at least.
> valued at something approaching its actual value
And you know what that is? I hope you are a billionaire. Please tell us what it is and how you calculated that.
> valued at something approaching its actual value
And you know what that is? I hope you are a billionaire. Please tell us what it is and how you calculated that.
> And you know what that is? I hope you are a billionaire. Please tell us what it is and how you calculated that.
Please review the HN guidelines on snarky low effort comments.
If you value billionaires and their assessment of reasonably calculated P/E you might want to consider Buffets assessment to close almost the entire BYD position at a P/E of 50.
Please review the HN guidelines on snarky low effort comments.
If you value billionaires and their assessment of reasonably calculated P/E you might want to consider Buffets assessment to close almost the entire BYD position at a P/E of 50.
BYD and Tesla are not same company.
And Tesla despite its growth numbers:
> P/E ratio as of December 2022 (TTM): 38.2
Also analysis on P/E is very flawed in general and even more so with growing companies.
And Tesla despite its growth numbers:
> P/E ratio as of December 2022 (TTM): 38.2
Also analysis on P/E is very flawed in general and even more so with growing companies.
> And you know what that is? I hope you are a billionaire.
Implying that your opinions are only valid if you're a billionaire, and that all billionaires have valid opinions?
Implying that your opinions are only valid if you're a billionaire, and that all billionaires have valid opinions?
A car company that sells low-quality cars that are dangerous is worth less than an oil giant that provides the energy the global economy is powered by? The more you learn...
paywall-free link: https://12ft.io/proxy?&q=https%3A%2F%2Fwww.ft.com%2Fcontent%...
Contrast that to other car makers like Ford with a P/E ratio of 5 or GM with P/E of 6
Or contrast that with tech stocks like Google with a P/E of 18 or Apple with a P/E of 21.
Exxon’s P/E ratio is 8.71
Why is Tesla stock valued so highly, with a P/E ratio an order of magnitude higher than other car companies and twice that of Apple?