$1000 invested in AMZN IPO worth $2 million today

If you had a $1000 to invest, put half in AOL and half in AMZN you are a millionaire today. People said similar stuff about AMZN. Borders is making a profit and AMZN isn’t, Bezos can’t be trusted, Yada, yada, yada. Also there were numerous posts about GOOG IPO pricing being way to high. Ditto FB. Yes there’s plenty of risk but there’s potential for life changing returns to.

My conclusion on TSLA is that electric cars plus self driving vehicles being the future is priced in.

How big is your short position in TSLA? If you don’t have one GTFO.

Except Amazon was making a gross profit all the way through. They just reinvested it all in growth and thus showed no Net profit.

But the model was pretty much always profitable and thus they could, as a Board just decide to de-emphasize growth at any point on their journey and coast along as a Profitable successful company.

Tesla is not like Amazon in that way. They ran at massive losses and needed Investor money or they would shut down. They almost did in 2017 when investor capital got scared for a while. And even now only show a profit due to Gov't credits and not sales or margins. So a change in gov't policy would make them again unprofitable.


So Amazon's pitch to its investors was 'we have PROVEN we can sell X goods profitably now, and as we sell more and more goods the profits just improve as margins improve with scale' which lead to Investors blowing up their stock seeing that path, while still a gamble made sense.

Tesla's pitch to Investors is 'we are not, nor have we ever been Profitable. But we BELIEVE that is one day possible and we can grow into our stock value with Convergence being achieved. 4 Grand slam homeruns in 4 different business vertices. You just need to believe these far off Homeruns will eventually come and keep the stock high until they do'.


it is EXACLTY why Elon and Tesla had to introduce the dancing AI robot as their NEXT big win...



It a promise to Investors that if they just hang in there and also bet on this Grand Slam coming in (AI dominated by Tesla) then the stock will catch up to its value you are buying it at now.

And i am not a Tesla hater, not even a little bit.

You can find me in the BFI thread arguing against the haters.

I am a Tesla realist. I give Elon tons of credit for being a visionary.

But acknowledging that does not mean I have to deny the facts and reality of what I say above.

Tesla is a massive speculation play based on it not only being profitable but winning in multiple sectors at the same time for the Earnings to ever catch up to the P/E it now enjoys.

Even if they become the biggest Auto manufacturer in the World (not just EV but all autos) there valuation today has to collapse. They need this to be a grand slam plus a lot more.

They also need a grand slam in Solar and Battery tech and Self driving cars. All of them by the analysis I have seen.

I don't own Tesla nor do I short it. I usually stay away from Meme like stocks as I want more than 'faith' to underlie my purchases.

And I have friends who have made tons of money buying Tesla on faith so I recognize it can be a good path and bet. Just like buying art can be.

Elon has everything he needs to move forward now and buying yesterday's **** would be just dumb.

Please explain this.

Also, what does a likely drop in p/e for tesla have to do with what the company is worth right now?

Yeah, that's how pyramid scheme/bubble/penny stocks trade.

The goal is to get as much volume behind your initial position as possible. The reason it began to drop after Elon's snl debacle is for the simple reason that all avenues of advertisment were topped out at that point and the ones first in identified it as a good time to sell their positions leaving their customers holding the bag (you). I mean, you just had Elon ****ing must on snl telling you to buy dogecoin. That's as good as it's going to get.

The peak time to sell is when the max amount of participants are involved and the subsequent participants appear futile.

He just continues to come up with great ideas. The haters must be so furious.

This site is an outlet for QP to unwind a little. Ok I am cool with that.

Deleted. Cause I'm drunk or stupid.

I wonder what the mascot will be?

that is what many said about AOL buying that dumb, old media company Time Warner.

Why spend AOL's precious and rapidly growing bubble stock that was literally blown up on the HOPE that one day they would have real earnings and real profit to fill up that bubble ...why spend that stock air on ACTUAL earnings and actual profits?

Turns out that gamble paid off massively for them. Or better yet, that taking of SOME chips off the table and hedging their downside while still maintaining upside was very smart.

And hey I am not saying it is wrong to stay all in on the massive gamble if that is the risk profile of the gamblers. An all or none play can certainly pay off more on the upside but it can also literally be 'none' on the other side of that coin.

Buying those very real assets would mean downside would still be huge, while upside was reduced but also still huge.

And again I am not saying it is wrong to take the huge gamble and not convert current bubble air into real assets and real value. I am just saying that not doing so is taking a massive gamble that has massive downside risk.

OK you want me to proceed and explain based on us agreeing to a future where Tesla is only a winner in Auto's only and all the other Convergence lines fail to be contributors to forward earnings and growth. Sure, I can do that.


If we assume Tesla is outcompeted in all of its areas outside basic Auto, which means for instance Google's Waymo delivers the Autonomous driving tech and dominates that market, StoreDot delivers a battery tech that dominates the market and all the other businesses within Tesla outside basic auto's are shut down or don't contribute in any positive way to forward earnings, then we have a more direct apples to apples comparison between Tesla and Volkswagen and GM and the other Auto companies that will become the basis of their valuations.

Currently Tesla's valuation is based on all the unknowns and perceived potential of all the business units (speculative) but as 'just' an auto manufacturer they would be compared to other 'just' auto manufacturers.


So Tesla the auto manufacture has a P/E of 213.

Toyota has a P/E of 9
GM has a P/E of 7.07
Volkswagen a P/E of 8

So using the last complete year of car sales 2020:


Tesla 2020 Sales


OK. so on an apples to apples comparison of auto's only Tesla currently has a small market share. So you can reply 'ya but Tesla is solely in EV's and Ev's are gobbling up market share against the tradition Auto's, right?

So shouldn't Tesla still enjoy the much higher P/E, which is a prediction of which company is enjoying the higher growth as compared to the peers they compete with?

That answer is NO.

So again even in the best case scenario where we say Tesla remains the premium brand in EV's you still have those other huge Manufacturers continuing to flood the zone and soak up demand, from consumers who do not care about Brand and just care about price, etc. That is not going to change and in fact those other manufacturers are just at the beginnings of it. You will see hundreds more EV's come out from them to compete with Tesla.

So being a premium Brand is still good for Tesla but unless they are massively outselling and out growing the others in EV market share as it grows (and they are not currently and the future will be worse) there P/E ratio has to collapse to one more comparable to their peers.

Right now the reason Tesla enjoys such a high P/E is due to all the 'unknowns' of all its combined business lines and the speculation and belief that MULTIPLE grand slam homeruns, due to Convergence will make Tesla grow into it valuation.

Cathy Wood (Fund manager and Tesla booster) justifies it by saying this ...

So you can see, in the above, her prediction is based on MULTIPLE grand slam wins. A grand slam win in the Dancing Robot segment above along with many other.

So do you see why, even Cathy Wood, Tesla's biggest booster would not suggest Tesla would keep its monstrous P/E in relation to other automakers if all the 'Convergence' plays failed to deliver and Tesla only continued in its core current business of Auto sales?

OK you don't know what P/E means, I take it.

Lets say you have control of a 20 year old Public company that makes traditional auto parts for the automotive sector.

That company would typically have a P/E of around 8-10. Meaning they take its current earnings but give them FORWARD value of 8 or 10 years because based on its history a buyer should be comfortable they would get that much out at a minimum and then their upside is the future growth.

Lets use Linamar Corp with a PE Ratio:8.910 as our example.

If Linamar comes out and says we are not just a traditional auto parts manufacturer but we are also developing in house business lines that will see us dominate the AI sector of manufacturing and we have multiple other business lines that will CONVERGE to make us worth much more...

And if the Investors BELIEVE them that P/E can go from 8.9x to 20x to 100x or maybe even 200x (like Tesla).

At it current 8.9x P/E the company is worth $4.5B.

At a P/E of 20 it is worth $10B

At a P/E of 100x it is worth $50B

At Tesla P/E of 200 it is worth $100B


What does Linamar have to do DIFFERENT to go from being worth $4.5B to suddenly being worth $100B?

Just make a bunch of FUTURE based promises on Technology and wins THEY HAVE NOT delivered yet and get the buyers of their stock to believe and bet on them delivering.

That is it. I don't say that speciously or to minimalize but that is LITERARLY it.

The Investors would either BELIEVE Linamar and blow up the stock bubble with air in the HOPE of future realizations of that CONVERGANCE of wins (multiple grand slam homeruns) or they would choose not gamble so much on the win and ONLY value the on what they actually are delivering TODAY.

Tesla is ONLY delivering today on Auto's and if you only value them on autosales of 500k a year and growing you can see above how the other Auto's P/E's are valued in that arena ONLY.

Thanks for the detailed response.

Can tesla, ten years from now have a p/e of 30 with a market cap of a trillion dollars and if so what do yo think the company would like?

It hard to speak to the future as we are then trying to speak to how much growth happens but lets look at your question as of today and what earnings at a 30 P/E would be needed to justify a Trillion dollar Market Cap.


---------

$1,000,000,000,000 market cap.

P/E of 30 = Earnings = $333,333,000,000

So a company would need $333 Billion in Earnings to have the 30 P/E and Trillion dollar Market Cap.



Base on the chart above Tesla today at a 30 P/E would need all of the Earnings of the Top 8 corporate earners World wide up to and including China Construction Bank.


So again, fine if you want to gamble that Tesla will grow into that (Grand slam homerun on top of Grand slam home run, on top of Grand slam homerun), as we all know that the bigger the payout and win comes with the bigger the bet but what people should realize is that at a certain point this bet becomes like picking the World Series Winner before the season beginnings along with whom they will be playing in that game.

You would get a huge payout if you are correct but you are making it very difficult for yourself to actually be correct and win.

By when to get down to a P/E of 30? I was referring to ten years from now? Toyota brought in 20 Billion last year.

I know. I am just saying I am not in a position to predict the growth of society as a whole and especially any one company 10 or 20 years ago.


Instead if you had asked me 10 years ago (2011) when Tesla had a P/E of around 6x if it might grow into a P/E of 30x by 2021 that would have been a good run to consider if achieved.

Generally speaking the earlier a company is in its curve the more you can bet on future growth multiples. It is easier to keep doubling starting at $1 then $1B dollars for obvious reasons.

Instead as you see in the graph below even when Tesla P/E hit 1000x you had the Tesla boosters saying that was nothing, and it was undervalued (see Cathy Wood).



Again fine if others want to put their money down on that type of gamble but it is just not my jam.

I don't want to waste any of your time since I'm aware that you're having multiple conversations and trying to quantify tesla is a waste of time and we really don't disagree all tha much.

I definitely wouldn't buy tesla at this price but I also wouldn't buy much of anything at the moment. I would say that I disagree insofar that tesla is similar to a bubble or that it's been memed to the moon and isn't worth anything close to what it's currently priced at with what they are working with. Financially limited rental businesses aren't hoarding 100k toyotas and such.

They can achieve a p/e of under 30 in ten years with a higher stock price than today by just staying in line with what they look to accomplish, imo.

I think some of Musk's visions are exciting, but a lot of his personal commentary and the business practices he encourages leave a lot to be desired - at least for me. I would find it hard to be a fan. Reaching further out into the solar system is a grand vision, but I'd prefer it done without breaking worker backs or idolizing jerks.

As for Tesla, as a company it has managed to become a desirable and recognized household brand name in the automotive world in absolute record time. This is difficult enough in minimal markets like those for hypercars and supercars, to do it in other segments like Tesla has done is unheard of.

I'm no expert on financial analysis, but Tesla has crossed one "impossible" off the list already. Of course, the automotive world is a technological arms race that puts pretty much any other industry to shame, with competitors which have played this game for a century and left hundreds of companies and big brands dead and buried along the way. Still, against all odds it would seem the ball is in Tesla's court.

I just noticed i made a pretty big error here with one extra zero which is pretty significant, which you seemed to do better in you post.

The earnings for a P/E of 30 should be a modest $33,333,000,000.

And $33B means for Tesla 'Auto Sales only' its earnings would come in between China Construction corp and Alphabet (Google).

Obviously that is much better than what I put prior as Volkswagen is nearing $30B in profits.

But there is a reason Volkswagen has a P/E of 8 and not 30 and that is when you are already the biggest it is hard to say you will stay on such a massive growth curve that you deserve a P/E of 30 instead of 8.

I mean where would such growth come from for Volkswagen? Do we believe the market of buyers is growing enough and that Volkswagen alone (or mostly) will gain that new share or a super majority of it.

We can already see above that while Tesla might arguably remain the Premium brand in EV's they are losing over all Market Share to other EV manufacturers who will introduce hundreds more EV's in the coming years.

Hard to see Tesla switch and become the brand that is soaking up all EV demand (purchases) again at multiples higher than all competitors or as likely would be needed more than all the others combined.

Musk just announced he will cash in his tsla stock to stop world hunger if the u.n. can show receipts. This guy is THE best con man in history

He's calling them to task for the bullshit headlines, and it's nice that someone will.

The guy from the UN is just caught in the middle.

Next up: Homelessness and where the billions of dollars we spend on that actually go.

Here let me provide the details for you.

And Musk saying that actually makes sense as the claim made by the UN guy is absolutely foolish regardless of what you think of Musk.

If I were in Musk shoes I would issue the same challenge but make it bet, so if/when I put up the $6B if World Hunger was still a thing after the UN would have to return to me my money.


In fact after the UN fails to show any receipts on this Elon should give the Money to the UN anyway announcing he looks forward to seeing the UN deploy it and ending World Hunger.

He's obv bluffing bc the u.n. won't show how useless they are. I look forward to his robo taxis in 2020

I don't hate musk, I respect his ability to rise to the top with the largest gift the world has ever seen

The main problem being that the "UN guy" made no such claim, it was a sensationalist headline.

His words were something to the effect that so-so much of those-and-those's fortunes could help alleviate world hunger.

*edit* Like Inso0 already pointed out.