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WSJ: Tesla Update - "Fantasies about the future..."

4K views 37 replies 14 participants last post by  Greg Burr 
#1 ·
The Wall Street Journal
October 23, 2020

Tesla earned 50 cents a share over the past four quarters, so shares trade at more than 800 times trailing earnings. Its market value approaches $400 billion, or roughly five times the combined value of Ford and General Motors.

What’s more, those profits are heavily flattered by sales of regulatory credits to help rivals meet emissions mandates. Tesla has booked $1.3 billion in such sales over the past four quarters, which carry a 100% profit margin. Total net income over that period is just $556 million. That profit source might not be available in the years to come as more electric competition from legacy auto makers comes online.

To have a chance at justifying its valuation, Tesla will need to dominate the auto industry. However, Tesla said achieving its full-year goal of 500,000 global vehicle deliveries has become more difficult, despite its record results. While the company didn’t walk back that goal altogether, it said “further improvements in logistics and delivery efficiency at higher volume levels” are needed to achieve it. By way of reference, GM sold about 660,000 cars in the U.S. in the third quarter alone.

Meanwhile, updates on several of Mr. Musk’s past proclamations about new products were either absent or vague. Tesla didn’t provide a production timeline for its semi truck or second-generation Roadster sports car, products it unveiled in 2017. Mr. Musk said the pickup truck, which Tesla showed off last fall, might be available by the end of next year “if all goes well.” There was also no update on Mr. Musk’s April 2019 declaration that Tesla could have one million fully self-driving “robotaxis” on the road by the end of this year.

Fantasies about the future can be far more pleasing than the brutal, competitive nature of the day-to day auto business. For Tesla shareholders, confusing dreams with reality is still likely to prove expensive, eventually.








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#9 ·
You are on this site because you have an interest in the automobile industry.

QUICK: Give me one stunning announcement you remember CEO Musk introducing at Tesla's hugely promoted, next big thing, "Battery Day" a month ago.

(I draw a blank...something about batteries will be better years from now.)



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the "tabless" design IS A STEP FORWARD and one of those "why has nobody done that before" type of things like NIKE AIR
at an engineering level it is progress and CAN lead to WAY cheaper finished packs over the "pouch" designs that need a LOT more pack structure to maintain reliability over the long term
the "tabless" gets cell type to the performance of pouch type and a cell is self contained and very effective at delivering the heat out the ends of the cell into the conductors
but it is NOT the "end all be all" that kicks Tesla into "domination" position
 
#3 ·
LOL, people have been doubting Tesla for a while. Eventually they'll get it right.

If I was an automotive or technology major about to graduate, I'd 100% get in with Tesla. Yea, they're making money on credits but they're also spending a ton building around the world like no other car maker. They're building another huge HQ and plant in Texas and the gigafactory in Germany is taking shape. They're the only ones still expanding it feels like.
 
#5 · (Edited)
Exactly...I don't understand why so many "experts" can't figure this out...they're still in an expansion phase, factories/new product R&D cost $$$ which in turn comes from their revenue which in turn affects their bottom line. Once the factories are completed, those expenses fall off the balance sheet.
 
#4 ·
“To have a chance at justifying its valuation, Tesla will need to dominate the auto industry.”

Does anyone on GMI really believe Tesla will “dominate” the industry in say 5 years? I sure don’t, not with everything going on at VW, GM, etc. Could be wrong, we’ll find out.
 
#10 ·
Tesla is still growing and refining its processes. Yes, today they are reliant on the credits, but they've been steadily improving their operations and improving their financial results along with it. As they get less benefit from their credits I expect they will offset with actual profits from their operations. Risky? Yes. Could they fail? Yes. Is the company way overvalued? Yes. But they also have a strong shot at making it.

Another doom and gloom article cheering on the collapse of an exciting American company. Maybe they'd prefer a nice Chinese electric vehicle. Probably sour that they didn't buy Tesla stock several years ago.
 
#26 ·
That's the thing...I don't think Tesla sees themselves as a luxury make...their goal is something for everyone from entry level all the way up to super exotic. I think that's the draw that has Wall St so enamored with Tesla, the potential to own the entire market...not saying it will happen but there's a possibility that it could.
 
#32 ·
A couple of points-
1. Tesla stated they still would eeked out a profit without the credits. They would have invested less.

2. GM is spending billions to mold Cadillac in the mold of...............................Tesla.

3. In 2021 a slew of new EVs, mostly in premium sector will hit the market. It will be the first true test for Tesla.

4. Slim minority of Tesla buyers are Teslavangelists, the majority of buyers ( my friends included) just like how the car feels, drives and tech. And could care less on who Elon Musk is.
 
#38 · (Edited)
A lot of foreign money is being parked in big brand names like Tesla. I do not know whether they are viable long-term. Will they only reach to the early adopters with money? I can't say and I have my own problems to think about. What I do know is that there have been stocks that have soared to unsustainable levels and then were forgotten.In the 60's is mail order catalogs, Polaroid, and my favorite case of Tampax, among others.

As for me, I do not want to be tied down to electric only, and do not like the quality control issues that Tesla has, and I am wary of overly charismatic CEO's, this one in particular, even though I like what SpaceX is doing.
 
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