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Musk Trolls Shorts as Tesla's Value Hits Record, Passes Ford (bloomberg.com)

Posted by msmash on from the stormy-weather dept.

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.

34 of 251 comments (clear)

  1. Absurd by sjbe · · Score: 4, Insightful

    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.

    1. Re:Absurd by ChrisMaple · · Score: 3, Insightful

      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.

      --
      Contribute to civilization: ari.aynrand.org/donate
    2. Re:Absurd by pastafazou · · Score: 2
      2016 sales numbers:
      • Ford Motor Company Total Sales 2016: 2,614,697 units sold
      • Ford Lincoln line: 111,724 units sold.
      • Ford F150: 382,561 units sold.
      • All Ford F Series: 820,799 units sold.
      • Ford Mustang: 105,932 units sold.
      • Tesla, all models: 76,230 units sold.

      So there's something definitely wrong with Tesla's valuation.

    3. Re:Absurd by blackomegax · · Score: 3, Funny

      Tesla sells supercars and luxury SUVs that are futuristic EV's that *work* and look good. Tesla IS the future of cars. Ford sells shitboxes that break down all the time and still burn gas. I know which i'd buy.

    4. Re:Absurd by TWX · · Score: 5, Insightful

      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. Also, Tesla is more than just cars, the formal merger with SolarCity solidifies their presence in the market for home solar, home battery storage, and commercial power storage, and their existing plans for battery production might also benefit them well as a wholesaler of batteries to their competitors or to others with electric power ideas.

      I wouldn't be surprised if Tesla also benefits from bleed-over from Musk's other headline-grabbing company, SpaceX. Successes with his companies, especially on viably bringing engineering projects to market as functional products probably bolsters all of them. Right now both companies appear to be making good engineering decisions, and if they continue to do so then they could end up being major disruptions to both markets.

      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. To my eye, Tesla's cars look less like they're trying to be different as electrics than Toyota's or GM's, and this works a lot better than weird body shapes and bolt-on different color panels around the windows and beltline.

      --
      Do not look into laser with remaining eye.
    5. Re:Absurd by Anonymous Coward · · Score: 5, Informative

      Minor accounting error there. You're comparing market valuation and company assets. That ignores company debts. Ford has a whopping $150 billion debt. (Rough numbers; about $100 billion long-term and $50B short-term. Latter obviously varies). No wonder its market cap is "only" $45 billion. The total Ford company is worth about 200 billion. Tesla is valued at about a quarter of that, but since they're almost free of debt (~$7B) that translates almost entirely into market cap.

    6. Re:Absurd by gman003 · · Score: 5, Insightful

      Tesla might not be able to reach Ford's current sales volume in the foreseeable future, but perhaps Ford's stock is sliding because investors expect its sales volume to shrink considerably? Ford doesn't have a BEV program, doesn't have a good AI program, and isn't even making cars that sell well internationally. They've bet fairly big on SUVs, crossovers and pickups, which are currently selling like hotcakes in the US, but not hugely well anywhere else. If the rest of the world passes heavy fuel-efficiency regulations, that would basically limit Ford to just domestic sales - and while it's unlikely Trump is going to tax CO2, the next administration certainly could, and California is trying to even now.

      Tesla is also in position to win even if they lose. BEVs are looking like they'll be a pretty big market, and Tesla built a big-ass battery factory. Even if nobody buys a Model 3, whatever car they buy instead will probably have Tesla batteries inside it. Their ramp-up on batteries seems to be going smoother than their ramp-up of full cars.

    7. Re:Absurd by Luthair · · Score: 3, Interesting

      Tesla produced ~80,000 cars last year, Ford produced 6.7-million. From a purely numbers perspective its pretty much inconceivable that Tesla will approach Ford for decades, obviously Ford also has a correspondingly larger number of assets and there is considerably more risk in Tesla's future than Fords.

    8. Re:Absurd by xfizik · · Score: 2

      Business is not about manufacturing something, it's about selling something. You can (hypothetically) make the best car in the world and make no profit, while Google will make tens of billions in advertisement. Internet companies that manufacture nothing sell advertising, user data, and other services that may or may not have a physical form. As long as they sell something people are willing to buy, they are viable.

    9. Re:Absurd by OverlordQ · · Score: 5, Interesting

      What? Their P/E ratio was -53 for 2016. And it's -103 so far this year. They DEEEEEEEEEEP, in the fucking hole.

      --
      Your hair look like poop, Bob! - Wanker.
    10. Re:Absurd by OrangeTide · · Score: 2

      But can Ford grow any more? What potential does it really have? Speculation is a big part of what drives a stock price. A scenario where Tesla takes market share from Ford is plausible. But one where Ford grows 10x in size is not plausible.

      --
      “Common sense is not so common.” — Voltaire
    11. Re:Absurd by PCM2 · · Score: 5, Informative

      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?

      Except of the three, Ford didn't really need to be bailed out. It only asked to be included in the bailout because if it wasn't, it would be the only automaker of the big three that wasn't getting massive government subsidies, thereby forcing it to compete in an unfair market.

      --
      Breakfast served all day!
    12. Re:Absurd by phantomfive · · Score: 2

      That's kind of similar to the argument that Dell should be worth more than Apple, because they ship more PCs. If you're going to look at a 'purely numbers perspective' you need to take into consideration the profit margin, which you didn't.

      --
      "First they came for the slanderers and i said nothing."
    13. Re:Absurd by ShanghaiBill · · Score: 3, Insightful

      The same can be said for any automotive manufacturer.

      Ford has patents, but not many that matter. Tesla has crucial patents in self-driving tech, navigation, electric engines, and battery tech. Those are the future of cars. Anyone who wants to play will have to knock on Elon's door.

    14. Re:Absurd by JustNiz · · Score: 3, Interesting

      I saw a model X at my local coffee shop the other day, The owner had parked with both rear doors open, obviously attention whoring.
      Before I cast final judgement on the practicality of the wing doors I think I would have to live with them to experience the plusses and minusses. I could certainly see how a low garage like mine could block them, for example. I couldn;t see much advantage, especially as its the rear doors not front ones, so unless you have kids they won;t really get used much,

      To me, the styling of the car itself looked disjointed and awkward, especially as the front doors open conventionally. I think it clearly falls somewhere between ugly and bland, but lots of people were looking at it, so I'm almost certainly in the minority. In person its very reminiscent of an enlarged Nissan Leaf, or maybe one of those cars for disabled people in wheelchairs. It definately didn't look like it should cost anything like the $85k+ base price. The interior was also very soulless and surprisingly cheap-looking. Looking at the shut lines and other details, it was clear that the build quality was no better than the average 30k Hyundai or whatever. I think most people looking at it who didn't already know what it was, would almost cetainly guess it was a $30-35k car.

    15. Re:Absurd by Solandri · · Score: 2

      Ford. Price to Earnings ratio of 9.95, Earnings per share of 1.15. Revenue of $151.8 billion in 2016.

      Tesla. Price to Earnings ratio of -63.79 (they lost money). Earnings per share of -4.68 (Tesla lost 4x more per share than Ford made). Revenue of $7 billion in 2016.

      Basically, for Tesla to be priced where it is (assuming a "reasonable" P/E ratio of 10), you're betting that its earnings are going to reach $16 billion/yr. If you go by the average 5% profit margin for major automakers, this means you expect Tesla to become a $320 billion/yr revenue company. Or the third biggest company in the world after Walmart and China's national power company.

      Good luck with that bet. The Chevy Bolt has set a really high bar for the Tesla Model 3 to meet. If you're one of those people expecting the Model 3 to give you Model S quality and features at a Bolt price, you're going to be in for a major disappointment.

    16. Re:Absurd by misexistentialist · · Score: 2

      Almost all of the debt is from customer financing, and is therefore basically an asset, though maybe you can question the quality

  2. I remember when you posted that about Google by XXongo · · Score: 4, Interesting

    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"??

    1. Re:I remember when you posted that about Google by 93+Escort+Wagon · · Score: 3, Informative

      If you "remember" it, why not link to it?

      For every Google that came out of the first bubble, there were 1000 Kozmo.com's...

      --
      #DeleteChrome
    2. Re:I remember when you posted that about Google by XXongo · · Score: 4, Informative

      If you "remember" it, why not link to it?

      http://www.lightreading.com/ethernet-ip/google-is-overvalued/a/d-id/622304
      http://captaincapitalism.blogspot.com/2005/12/google-is-overvalued-period.html
      http://forums.seochat.com/search-engine-optimization-28/google-stock-overvalued-14884.html
      https://www.fool.com/investing/general/2005/11/23/buy-google-no-thanks.aspx
      https://www.fool.com/investing/value/2005/12/06/much-ado-about-google.aspx

    3. Re:I remember when you posted that about Google by thegarbz · · Score: 2

      The way I remember it for every 1000 Kozmo.com there was a Google.

  3. No, no, no... by __aaclcg7560 · · Score: 3, Funny

    I doubt "troll shorts" will ever become a popular fashion item.

  4. Not a car company by CapitalR · · Score: 2

    High valuation aside, it's important to remember that Tesla isn't just trying to displace GM. They're trying to displace GE.

    1. Re:Not a car company by randy+of+the+redwood · · Score: 2

      This is the key. Remember when Amazon stock was so overpriced they would have to sell every book ever printed twice to justify their stock valuation? They grew into that price when they started selling everything else under the sun. Their price went to new heights that also could not be justified based on that, and then they became the defacto cloud host. The current Tesla value has very little to do with its ability to sell a lot of cars. (I am not implying Tesla stock is a good buy or not, just that its valuation is not due to it selling more cars than Ford or GM).

      --
      The sun is the same in a relative way, but you are shorter of breath and one day closer to death
  5. Taunt by XXongo · · Score: 5, Insightful
    When did the word "taunt" mutate to the word "troll"?

    They're not the same.

    Musk taunted the short-sellers. He didn't "troll" them.

    1. Re: Taunt by Anonymous Coward · · Score: 2, Insightful

      No, you don't gotta. If you are trying to look cool, fine. But using proper language in an article is still acceptable. As a non millennial, you just sound uneducated. Cool, but uneducated.

    2. Re: Taunt by Type44Q · · Score: 2

      XXongo 2 hours ago When did the word "taunt" mutate to the word "troll"?

      When schools (with the help of TV) began cranking-out dipshits with exceedingly-limited vocabularies...

  6. Absolutely absurd by Okian+Warrior · · Score: 2

    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.

    1. Re:Absolutely absurd by shilly · · Score: 2

      You're spotting patterns that aren't there. You'd need to do some quant analysis to demonstrate this is real, but the likelihood is it's an artefact of human cognition.

  7. I can't wait... by jcr · · Score: 2

    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."
  8. Tesla open sourced all their patents by Brannon · · Score: 2

    https://www.tesla.com/blog/all-our-patent-are-belong-you

    1. Re:Tesla open sourced all their patents by drinkypoo · · Score: 2

      No, Tesla opened their EV patents. They didn't open their self-driving patents.

      --
      "You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
  9. Who are you talking about? by sjbe · · Score: 2

    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.

  10. Ford didn't take bail out money by sjbe · · Score: 2

    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.