Tesla Gigafactories, News and Conversation

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https://schiffgold.com/peters-podcast/peter-schiff-its-the-biggest-bubble-ever/

Peter noted two stocks in particular that exemplify the surging stock market – Apple and Tesla. Apple is the most valuable company in the world based on market cap. Meanwhile, Tesla is the most valuable car company. Its market cap exceeds Toyota, Honda, Nissan, Daimler, BMW, GM and Ford combined. Peter said he doesn’t think anybody buying Tesla stock is really concerned about whether the company’s sales warrant that kind of stock valuation.

I don’t think anybody who’s buying Tesla stock even thinks about that, even cares about that. I mean, I don’t even know if they care that its an auto company. As far as I’m concerned, Tesla’s just a symbol. It’s just four letters. That’s all it is. It’s just numbers and letters. The letters are the symbol and the number is the price, and it’s a game and everybody keeps buying. And no one really cares about the underlying company or whether or not it can possibly be this profitable.”

This is indicative of the entire stock market right now. It’s not about actual companies or the economy. It’s being driven by Federal Reserve stimulus.

Look, this is the biggest bubble that we’ve ever seen. We have the most reckless Federal Reserve that there’s ever been. And so, you get stuff like that.”

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If you want to speak about bubbles in the electric car manufacturers world, this just came in:

https://www.thedrive.com/news/36338/ev-truck-startup-nikola-accused-of-intricate-fraud-by-financial-research-firm

 

Quote

Electric truck startup Nikola Corporation made huge waves in June when it went public with a $26.3 billion market valuation, and then again earlier this week when General Motors announced both a major investment and a powertrain partnership with the nascent company. But at least some of that hype came crashing down Thursday, when a report by financial firm Hindenburg Research claimed Nikola and its founder committed numerous acts of fraud in order to propel the company's value to more than $20 billion.

 

Of course the report was written by a short seller, so take it as you like. The point here is that there is a company with no revenue, but worth $26B. And people pile on Tesla, who has >$25B revenue, profitable, with enough cash to pay all debts and with a huge forward potential.

The comparison with Apple is interesting because smartphones were "the next big thing" 15 years ago.

Which are the "next big thing"?

  • Electric cars
  • Energy storage
  • Advanced robotics
  • Autonomous driving
  • AI
  • Asteroid mining (far out in time)

If you look at the list, Tesla is involved in 3 of them. And Musk himself is in all of them except advanced robotics, at least for the moment. So of course investors will pile up on Tesla, Nikola, and others.

These are the next Amazon, Apple, Google, Microsoft, Facebook. Traditional companies do not offer such potential for valuation. If your portfolio has high risk, you have to bet on companies doing the next big thing.

 

The days of Warren Buffet investing in Coca Cola and sitting on it for 20 years are gone. Young investors want money fast, they are willing to take the risk. Traditional companies cannot offer that! That's why Mercedes or Ford are not attractive to investors. They are undervalued in the stock market and Tesla is overvalued, but things will remain the same. Tesla will continue to value up, because young investors will not put money on Mercedes!

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Young investors are inexperienced, have no point of reference, and are fueling the bubble. They actually think Bitcoin is a store of value (one guy said, it represents the energy used to make it - yeah and can you get that energy back out?). 

 

Tesla unloaded 5 billion in stock to put it in the bank. The main reason is because it is not making cash selling cars, but from selling stocks. 

 

Suppose Tesla stock were to double , it would be worth more than the entire automobile industry! That means the expectation is that 50% or more of the car market will be taken up by Tesla. Really? You think that is going to happen?

 

So then the question is, is Tesla overpriced, or the rest of the automobile market underpriced?

 

This is just a bubble driven by the Federal Reserve stimulus.

 

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17 minutes ago, wien4ever said:

Suppose Tesla stock were to double , it would be worth more than the entire automobile industry!

 

It did split recently so on the way.

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5 hours ago, MikeMelga said:

The point here is that there is a company with no revenue

 

I think of it as an R&D lab, not a 'company' per se.

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1 hour ago, wien4ever said:

Tesla unloaded 5 billion in stock to put it in the bank. The main reason is because it is not making cash selling cars, but from selling stocks. 

They are the only auto company who can do that, so it would be stupid not to.

 

1 hour ago, wien4ever said:

Suppose Tesla stock were to double , it would be worth more than the entire automobile industry! That means the expectation is that 50% or more of the car market will be taken up by Tesla. Really? You think that is going to happen?

You keep comparing it with other car companies and that is just old fashioned view.

Their energy business will eventually be bigger than the car business. When they achieve autonomous driving, they have a good chance to be the first to make a business out of it.

They will start making a huge amount of money on services and selling data. No other car company can do that right now.

 

And they have the same ratio of market value vs revenue as Google and others in the tech industry. Are you telling me Google is highly overvalued?

 

1 hour ago, wien4ever said:

 

So then the question is, is Tesla overpriced, or the rest of the automobile market underpriced?

Tesla is as overpriced as the rest of FAANG. Traditional automotive market is underpriced.

Example? Check the revenue of Mercedes vs their market cap. Around $58B market cap, $190B revenue! By typical evaluation of a price of a company, their market cap is way, way lower than it should be.

Why? Because they present no opportunity for growth.

 

 

 

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16 minutes ago, catjones said:

 

I think of it as an R&D lab, not a 'company' per se.

That's not what they claim and they even claim they have tens of thousands of orders.

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On 9/11/2020, 8:30:05, MikeMelga said:

That's not what they claim and they even claim they have tens of thousands of orders.

 

I don't think GM bought their order book.

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18 hours ago, catjones said:

 

I don't think GM bought their order book.

Some people are saying that it's a publicity stunt from GM, to make it look as they are electrifying, to please stakeholders.

Weirdest part is that Nikola is supposed to use GM batteries, not the other way around!

 

If the batteries are from GM, what the fuck is Nikola bringing in?

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Haha, this is getting interesting. This is the official response from Nikola:

https://nikolamotor.com/press_releases/nikola-sets-the-record-straight-on-false-and-misleading-short-seller-report-96

 

Here is an interesting part:

Quote

Hindenburg seeks to portray Nikola as misrepresenting the capabilities of the Nikola One prototype in a 2017 video produced by a third party, as “simply filmed rolling down a big hill.” Nikola never stated its truck was driving under its own propulsion in the video, although the truck was designed to do just that (as described in previous point). The truck was showcased and filmed by a third party for a commercial. Nikola described this third-party video on the Company’s social media as “In Motion.” It was never described as “under its own propulsion” or “powertrain driven.”

I can´t believe they recognize this shit with a straight face! Starts to look like plain fraud.

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The best analogy would be Theranos.

 

 

Independent of it is a scam or not, it seems overvalued and the bet in hydrogen will not be price competitive with batteries, so half their business plan is garbage.

 

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"Tesla Model 3 & Wuling Mini EV Shine In Growing Chinese EV Market"

 

Quote

The overall Chinese auto market remained in positive numbers last month, +6% year over year (YoY), with plugins faring even better, growing 30% YoY last month to 100,000 units, a new year best. Fully electric vehicles (BEVs) grew slightly faster (+31%) than plugin hybrids (+27%), allowing pure electrics to have 81% of plugin sales last month, slightly above of this year’s average of 79%.

Top-20-Electric-Vehicles-in-China-August

 

https://cleantechnica.com/2020/09/19/tesla-model-3-wuling-mini-ev-shines-in-growing-market/

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