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Musk Trolls Shorts as Tesla's Value Hits Record, Passes Ford (bloomberg.com)
Tesla's Elon Musk poked fun at short sellers as his electric-car maker's stock surged to a record, vaulting its market value past century-old rival Ford. From a report on Bloomberg: "Stormy weather in Shortville..." the chief executive officer tweeted Monday, as Tesla shares climbed as much as 5.8 percent. The maker of Model S sedans and Model X crossovers saw its capitalization surge to about $48.2 billion, $3.1 billion more than Ford, the No. 2 automaker in the U.S. after General Motors Co. Tesla has long been a popular target by short sellers such as Jim Chanos, who famously bet early on energy company Enron's failure -- and was proved right. Short interest in Tesla has risen to 29 percent of its free float from a 52-week low of 20 percent in mid-October, according to Markit data. Tesla's move past Ford came one day after Musk's company reported worldwide shipments of 25,000 cars and SUVs in the first quarter, exceeding analysts' estimates. While Ford delivered about nine times as many vehicles in just the U.S. last month, its sales missed projections and the shares fell.
The maker of Model S sedans and Model X crossovers saw its capitalization surge to about $48.2 billion, $3.1 billion more than Ford, the No. 2 automaker in the U.S. after General Motors Co.
I'm sorry but as much as I respect Elon Musk and Tesla that is absolutely absurd. Tesla having a market cap bigger than Ford makes no rational sense even with the most optimistic possible growth expectations for Tesla. The company has never made a sustained profit, it's revenues are a fraction of Ford, and it has no reasonable prospect of the sort of exceptional margins or market control that could possibly justify such a valuation. Yes some of their products are awesome but that doesn't justify a dotcom era valuation. There might be a short squeeze but the shorts are right. Telsla is hugely over valued.
The only upside to Telsa being over valued is that it gives them a lot of breathing room to build the company which is good for the future of EVs.
We'll see..
I'm sorry but as much as I respect Elon Musk and Tesla that is absolutely absurd. Tesla having a market cap bigger than Ford makes no rational sense even with the most optimistic possible growth expectations for Tesla. The company has never made a sustained profit, it's revenues are a fraction of Ford, and it has no reasonable prospect of the sort of exceptional margins or market control that could possibly justify such a valuation. Yes some of their products are awesome but that doesn't justify a dotcom era valuation. There might be a short squeeze but the shorts are right. Telsla is hugely over valued.
Did you just take your old post about how Google was overvalued and strike out the word "Google" and "Brin & Page" to substitute "Tesla" and "Musk"??
I doubt "troll shorts" will ever become a popular fashion item.
Tesla stock is WAAAY over-valued.
There's no way Tesla are selling as much as Ford. Tesla's entire sales history doesn't come even close to only one year of just F150 sales.
Especially when you recently sold major stakes to the Chinese for operating funding. TSLA is a very dangerous stock to trade. You'd be wise to stay out of the casino.
High valuation aside, it's important to remember that Tesla isn't just trying to displace GM. They're trying to displace GE.
They're not the same.
Musk taunted the short-sellers. He didn't "troll" them.
I'm sorry but as much as I respect Elon Musk and Tesla that is absolutely absurd. Tesla having a market cap bigger than Ford makes no rational sense even with the most optimistic possible growth expectations for Tesla.
I've been following Tesla in the news and here on Slashdot for a couple of years now, and I've seen one common thread:
Every time someone says Tesla is a bad investment(*), the stock jumps up almost immediately. It's almost as if the news media wants to periodically manipulate the stock for some benefit or another.
(*) By derating from "hold" to "sell", setting a lower price point, writing a "doom and gloom" article ("just look at this chart!!!"), and by telling everyone how Elon Musk isn't all that great.
When Apple announces a car, Tesla's going to crash like Blackberry.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
Startups valued more than established companies.
20 years ago, some silly people thought that Amazon would be worth more than Sears.
They were off by a factor of 300.
Amazon's market cap: $430B
Sear's market cap: $1.2B
Tesla outpaced the projection by 800 units of e-cars, but the softening of Ford is more related to the softening of the used car market, and the increase in loans and leases beyond the 3 year mark to the 7-8 year mark. As a result, demand is low if you have to accept used cars, but since Tesla sells new cars, they don't have this inventory problem.
This added to people under 35 being unwilling to buy or lease cars that aren't e-cars, as they calmly and logically decide e-cars require half the cost in maintenance and between 1/10th to 1/20th the fuel cost (depends on your electricity source, if not using a Tesla solar roof and battery to charge it).
The market owes the fossil fuel dinosaurs nothing. Capitalism cares nothing for your failed fossil fuel religion.
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The bizarre thing is that Ford actually sells more e-cars than Tesla does, but Tesla doesn't have all the overhang from the fossil fuel dinosaurs to deal with.
A concern is that Hong Kong may have 7 percent Tesla penetration, but China has only 0.1 percent Tesla penetration, as you can buy a Chinese made e-car for $6000 equivalent there. The status symbol has a lower value.
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What is all of Ford's asembly lines? They are a mixture of humans and robots that build expensive heavey steel ICE vehicles. These lines are going to drop by more than 50% within 2 years. And the equiqpment, which most is dedicated to ICE production, will become WORTHLESS. .5M cars by end of 2018. In addition, they will be growing quite fast. And all of their equipment is geared for making EVs.
OTOH, Tesla should be over
I prefer the "u" in honour as it seems to be missing these days.
I have no interest in fellating him. He's done nothing which in any way impacts my life, nor is he ever likely to do so. Overhyped rich person vanity projects are of little interest to me.
I can't believe so few people (anyone else??) are bringing up just all of the other business Tesla can grow into even solely based on battery experience! Not to mention practical autonomous driving software that is actually deployed in the field in large numbers, and like you said simply good engineering.
To me the Tesla Model 3 is the best looking sedan I have seen in a long time, never mind being electric (to be fair I didn't really like how the other Tesla's looked nearly so much).
"There is more worth loving than we have strength to love." - Brian Jay Stanley
https://www.tesla.com/blog/all-our-patent-are-belong-you
That was from 1910 - 1920.
Acid injuries? I thought Toyota used NiMH.
Business is not about manufacturing something, it's about selling something.
Close. It's about selling something for more than it cost you to get it. Whether you make what you are selling or buy what you are selling can matter a lot but it is a second order consideration.
As long as they sell something people are willing to buy, they are viable.
No, as long as they sell something that people are willing to buy for more than it cost them to get/make it they are viable. They can sell at a loss for a while but not indefinitely. You can sell a lot of $2 bills for $1 and people will be willing to buy all you have but you won't be in business long doing it.
Did you just take your old post about how Google was overvalued and strike out the word "Google" and "Brin & Page" to substitute "Tesla" and "Musk"??
Not sure who you are talking about but no I didn't. Google has been over valued at times but they largely justified their valuation before they even went public. Tesla is a very different sort of company with a very different cost structure and their current stock price is hugely over inflated compared to any objectively measurable near term prospects for the company. And even if they do eventually grow into their stock price it will take them a long time to get there which makes it a terrible investment currently. Companies are worth the present value of future free cash flows. It's not even yet clear that Tesla will be able to make a profit much less kick off substantial free cash.
I genuinely hope Tesla does well. I'm just not going to buy their stock at its current price. The expected return on that bet is just too low right now.
You obviously have no concept of the present value of future revenue.
The value of a company isn't the present value of future revenue. It is the present value of future free cash flows. Profits matter, not revenue. You can generate tons of revenue selling $2 bills for $1 but you'll be out of business faster than you can say "chapter 7 bankruptcy". You might want to study up...
Do you even understand that Tesla is more than just cars?
Of course. Do you understand that they haven't yet turned a profit on any of it? Do you understand that if their auto business fails, Tesla likely goes bankrupt? I understand the company well and have actually done the research as opposed to just being a fanboi. It's a very interesting company with good prospects but that doesn't mean that it's a good investment at the current price.
Do you realize the sheer value of the patents and IP that they own, and the threat that this presents to the status quo?
Tesla has made their patents open to their competition and the value of their IP is no more (less actually) than that owned by a lot of other car companies. I assure you that Toyota, GM, Ford and the rest are loaded to the gills with patents including a substantial number relating to electric vehicles.
Smart people understand it may be worth a small premium now to ensure that years from now you will not be kicking yourself in the ass wishing you'd gotten in from now even if the price was a little steep.
That's the same story you hear every time you have a bunch of people trying to justify an over inflated stock price. It never lasts. Tesla sooner or later will have a stock price that more closely matches the real prospects of the company. Saying a stock is over priced is not the same thing as saying it is a bad company. There is a strong chance that Tesla will turn into a profitable and large enterprise. That doesn't mean that the current asking price is a sensible one given the risk involved.
Ford has patents, but not many that matter.
Hah! And next you are going to tell me that you've actually looked when I know you haven't.
Tesla has crucial patents in self-driving tech, navigation, electric engines, and battery tech.
Which they've made available to everyone. Here's a little clue for you. Ford has crucial patents as well and a lot more of them than Tesla.
Tesla is growing rapidly and has a price/sales of 6.98. That may be risky, but it's not out of line for a fast growing company.
Price to sales of 7 is out of line for almost any company. Tesla is a very interesting company with reasonable prospects of success but that doesn't make it a good investment at the current price. Especially given that Tesla is in a relatively low margin business with high capital costs. The most profitable car companies have net margins of around 8-10%, and most are less than that. There is no objective reason to believe Tesla is going to be able to command meaningfully higher margins than any existing car company. Therefore to justify their current valuation the company is going to have to sell something like two orders of magnitude more vehicles than they do today.
But what about their batteries? Or Solar Roofs? Same problems. Both are businesses with high capital costs and modest margins. Doesn't mean they won't be successful but it does mean they will have to move a lot of product (profitably) to justify a huge market cap. Tesla is a risky investment. Buying now means buying at a high price and hoping that others will drive it higher. Might work but odds are better for the short seller than the long right now.
Um, like, you mean like the same Ford that took a cozy hayride to Washington a few years back, with Chrysler and GM, to, like, ask the government for taxpayer money to pay for their mistakes, because they all were "too big to fail" . . . ? You mean, like, that Ford?
Ford didn't take any bail out money. They had by chance taken out some very substantial loans shortly before the crash. They literally used the Ford Oval as collateral but as a result they didn't need to take a penny of tax payer money.
Tesla doesn't need to overtake Ford in sales . . . they just need to wait for Ford to bankrupt themselves again.
Since Ford has never been bankrupt you could be waiting a very long time for that.
And maybe . . . just maybe . . . the folks paying taxes won't be willing to pick up the tab this time around.
Maybe but the tax payers would be stupid not to. If GM failed the effects wouldn't be limited to just GM. The supply chain for all the car companies is interconnected and the supply base is much larger than GM itself. Supplier to GM also supply Ford and Toyota and the rest. GM going under would take a good chunk of the supply chain with them and then other car companies would follow. The CEO of Toyota even said outright that Toyota didn't want GM to fail because it would hurt them badly. GM failing would have been catastrophic for the US economy.
Actually it's is quite conceivable they will overtake Ford on *just* volume of cars by the mid-2020's.
Hah! That's a good one, tell me another. You are forgetting about the law of large numbers as well as a bunch of other constraints. Going from 0 to 100K vehicles is WAY easier than going from 100K to 6 million vehicles. And right now Tesla can cherry pick vehicle categories to go after. It gets harder the broader your product portfolio gets. The capital investments get larger too so if Tesla isn't making a profit it's going to get harder and harder to get financing as they grow. There also are infrastructure limitations, quality issues, and of course Tesla's competitors aren't going to sit still. GM beat Tesla to market with the Chevy Bolt by a year and it's a solid vehicle that is selling well.
If all goes according to plan, Tesla will produce 1 million cars per year by 2020.
Let's see them get to 100,000 cars per year before we worry about them getting to 1 million in just three more years. Elon Musk is renowned for overly optimistic time lines. Never mind that there is no objective reason to believe they will sell 900,000 Model 3's per year. That would make it the best selling car of all time. You are talking Ford F150 numbers. Also did you forget that Tesla does not have their next vehicle all ready to go so the Model Y (reputedly their next project) isn't going to be on the market until around 2020 or so at the earliest.
Note that they have over 400,000 reservations for the model 3. That is unprecedented in modern automotive history so it is likely that the demand for the Model 3 is present in the market.
Yes, and what it your point? The question is what is the ongoing demand for their vehicles. They sell 400K of them up front and that's interesting but what is steady state because that is the number that matters. The F150 alone is on pace to sell over 800K units just this year. I think you have a confused sense of how far Tesla has yet to go to catch companies like Ford. I'm sure the Model 3 will sell well but to get to a million cars per year Tesla will need the Model 3 to be one of if not the best selling car in the world. More likely they'll need the Model Y (bad name BTW - the snark writes itself) to be a break out hit as well.
There is a Market for 100 million cars per year world-wide. By the end of the next year Tesla will be the only car manufacturer capable of producing 500K - 1 million electric cars per year
It's adorable that you think the other car companies won't ramp up their production of electric vehicles or that they won't make the investments. Even if Tesla's wildest projections become true and they are selling 1M vehicles per year by 2020, the big car companies have plenty of time to make the investments and start building electric and hybrid cars. That simply means Tesla has captured ~1% of the market. It's going to take Tesla another 15-20 years to really capture serious market share even under the best case scenario which almost certainly won't happen.
No, it's pretty standard for a tech company. Car companies aren't just automobile makers anymore.
Car companies haven't been "just automobile makers" for decades but that is the core of their business and anchors how they are valued.
Software/hardware is becoming the key differentiator in that market place as there's nothing else remaining to differentiate product on.
That's just not even close to true. Cars are differentiated on styling, features, quality, performance, brand, and a number of other factors.
Stock market valuations of 40x or 50x revenue are based on future value not present value.
All stock market valuations are based off future value, not present value. The problem is that Tesla's market cap has become detached from any realistic projection of future cash flows. Doesn't mean it isn't a good company or that they won't do well. It just means that buying their stock at the current price in a secondary market is unlikely to yield a significantly positive return in the long run.
The value of a company is often based on perceived potential. Right now, Tesla has demonstrated viable products in an up and coming market that's perceived as being on the cusp of exploding in growth.
No, Tesla's stock price is high for reasons unrelated to any objective evidence about their likely growth prospects. The price is higher than would be justified even under the most optimistic of possible expectations about Tesla's growth. People are buying the stock because the company and CEO is popular, not because the price is reasonable in relation to the expected return on that price. Tesla's stock price is currently akin to that of a dotcom era internet stock.
Ideally all of the automakers would bring electrics to market with conventional styling; I really don't care for how most special-just-to-be-special bodywork is styled for electrics.
They will. Just give them a bit of time. Right now they are actually making the weird styling because the people buying them are (often) trying to stand out and make a statement. They want eco-credibility. This will go away as the vehicles go mainstream.
... and yet here you are, reading the article and taking time to comment on it. That rather suggests that you've taken an interest, even if it's a negative one.
Yeah, maybe people should have to pass an entrance exam before they're allowed to read stories about Lord Musk of Tesla.
To have a right to do a thing is not at all the same as to be right in doing it
I have no interest in fellating him. He's done nothing which in any way impacts my life, nor is he ever likely to do so.
Reducing launch payload costs by an order of magnitude isn't relevant to you? Smash all your communications equipment, luddite.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Tesla and Ford have been rivals for a century?
Calvin:Do you believe in the devil? Hobbes:I'm not sure man needs the help.
History has shown otherwise. The GM EV1 debuted more than 20 years ago. Until I literally see conventional looking electric cars I will not believe it.
I refer you to the Tesla Model S. It's a very conventional looking car. Also the Chevy Bolt is doesn't stand out in a crowd among conventional hatchbacks. The Chevy Spark EV, Honda Fit EV, Ford Focus EV, Toyota RAV 4 EV, Fiat 500e, and several more all look near-as-makes-no-difference identical to their gas powered siblings.
That's not necessarily true. Company valuations are not directly related to profits.
Company valuations are ALWAYS tied to expected profits in the long run. Occasionally they get detached from reality for a brief time in secondary markets (irrational exuberance) but sooner or later they always come back to earth. A company with no plausible path to profitability will sooner or later go bankrupt because the financing will dry up. Tesla's valuation currently is irrational but the prospects of the company to generate future profits are plausibly good so there is a reasonable explanation for why it is valued like it is for now. Tesla's valuation will not remain stratospheric forever.
Some never make a dollar in profit. Amazon worked at at loss for how many years?
You're confusing profits today with expected profits in the future. Valuations are based on EXPECTED profits - specifically the present value of all future free cash flows. If you don't know what every word in that sentence means go study. A company might not be profitable today but it can still be valued because there is an expectation that it will make a profit in the future and because it has some assets which can be sold. Amazon always had a plausible path to profitability so investors were willing to be patient. Even today Amazon shows less profits than they could because they heavily reinvest in the company rather than paying out to shareholders.
Remove the hype and Tesla would probably be considered one of the worst run businesses in history.
Not remotely. Breaking into auto manufacturing requires huge up front capital investments and that's what Tesla has been making. The fact that they haven't yet turned a profit isn't surprising. Sustainable profits in auto manufacturing require scale which Tesla hasn't achieved yet or a willingness to remain a niche luxury car maker. It's why you don't see new car companies very often. It costs too much to get into the game and it's hard to keep making the investments to stay in the game if you are small. Tesla has been very well run which is why they are still alive. History is littered with the carcasses of new car companies that failed. Tesla has done better than any new car company in many decades.
My interest goes no further than wishing my technology news site would focus on actual technology news, rather than endless Musk fellation sessions. This story has *nothing* to do with technology.
Tesla also doesn't have all the pensions hanging over it's head.
-- I have a private email server in my basement.
How much has tesla's supply chain on common with the other auto manuifacturer's.
Tesla is more vertically integrated than most. I've seen reports that they are around 80% vertically integrated. Problem is that ANY parts you have to get from outside suppliers can shut you down. I run a small manufacturing company that makes a tiny wire harness for some GM cars. It's not even a part that is critical to normal operation of the vehicle (hooks up a camera) but if we went bankrupt we conceivably could shut down one of GMs assembly lines. (the parts we supply have 14 week lead times due to some stupid design decisions by GM so they literally couldn't get them in a hurry) Most people don't realize just how fragile some of these supply chains really are.
So the short version is that every auto maker shares the same supply base to a significant degree. There are roughly 6 workers in the supply base for every one at the automakers and that doesn't count the companies that don't supply parts. So if GM went under they would take a LOT of suppliers with them. If the suppliers go under so will a number of other auto OEMs. If GM went under I'd expect both Ford and FCA to have a very hard time staying out of bankruptcy court. Probably several others as well.
Interestingly, GM used to be very vertically integrated and it was what made them the behemoth they are today. There can be a lot of value in being vertically integrated if you do it well and at sufficient scale. They seem to have forgotten that lesson. Of the big auto makers VW is probably the most vertically integrated with the Japanese makers just a bit behind. It's not that vertical integration is some cure-all magic formula for success but I think a lot of companies forgot about the big picture over time.
I would expect its much less than the others since the tech is all different.
The power train tech is different but the chassis, body, interior, wheels, etc are all very conventional and not much different at all from their competitors. They smartly produce as much as they can in house but there is not much unique outside of how they propel the vehicle and the software to run everything. There are some things they simply cannot do in house. Honestly if Tesla didn't vertically integrate I don't think they would have a prayer of surviving. They would be beholden to a bunch of auto suppliers who are (revenue wise) much larger than Tesla is and Tesla doesn't do enough volume to really control them. GM can get away with less vertical integration because they are big enough to crush suppliers who don't dance to their tune.