Year-over-year revenue flat, year-over-year GAAP income down 25% on 20k more units delivered. Hard to understand...
Read the numbers on page 21-22 first, of course.
After the big FB rally, the report was mostly underwhelming.
Entirely different expectations on the shoulders of FB vs Tesla at this juncture of their operational histories.
This is just my opinion:
The way people were valuing Tesla is a massively valuable stock with a high potential of blowing up.
From the looks of things, Tesla has crossed into prolonged profitability. It's not a huge increase in revenue, but it is a big decrease in the chance of bankruptcy. Additionally, because Tesla can self fund and doesn't have to rely on the markets to raise money, they don't have to care very much about short sellers driving the price down.
The bull case (robo-taxis, etc.) is still there, but the chance of Tesla going bankrupt is much lower than 1 year ago, so the stock has shot up.
How? They lost $800 million in 2019.
> Additionally, because Tesla can self fund and doesn't have to rely on the markets to raise money, they don't have to care very much about short sellers driving the price down.
They still have increasing bills and huge liabilities. Acting like they have no risks if they don't raise money is crazy.
You're not wrong.
Of course the counterpoint is that they were profitable both the 3rd and 4th quarter.
> They still have increasing bills and huge liabilities.
That is true. However, some of their debt will convert into equity as long as the stock price remains where it is.
More broadly, I'm not trying to convince anyone that Tesla is some sort of value stock. It's not.
It's absurdly volatile. There's also a good chance that they won't win the race to level 5 autonomy.
All I'm saying is: enough people believe in the upside and think the downside has been diminished sufficiently to drive up the price to where it is.
Maybe they're wrong. Maybe they're right. I certainly don't know.
Less so than last year. Why do we believe this is sustainable over a full year?
> More broadly, I'm not trying to convince anyone that Tesla is some sort of value stock. It's not.
There seem to be people who do, and I want to insure that they don't lose their whole retirement savings chasing that.
Heck, Fiat has to hand over almost $2B to Tesla just to be permitted to sell cars in Europe because they have little to no low or zero emissions vehicles to sell.
As an investor desperate for returns, do you invest in the past or the future?
Do you have data for this?
Tesla had, essentially zero growth in the US in 2019, which is where it sells half of its cars. There are many companies that had higher growth than that, including Volvo, which grew 10% in the US. LandRover sold 125k units in the US in 2019, which is far more than the Model S + X (its competitors).
So, I'm not sure where you get the idea that everyone else is shrinking while Tesla is growing. Some companies might be, but some are growing faster than Tesla. These are not mysteries; there is data out there.
Its a drop in the bucket compared to the rest of the industry, so I wouldn't expect it to be possible to tease out the impact on other manufacturers in a reliable way.
Unlike the US, those subsides will be around for a while. China also gave Tesla very favorable loan terms for the China Gigafactory.
Why? That doesn't seem like a stable investment thesis.
> China also gave Tesla very favorable loan terms for the China Gigafactory.
And if Tesla doesn't meet a number of targets the Chinese government takes complete ownership of the factory. They didn't give the good financing terms out of goodwill. Tesla entered an incredibly risky proposition with its Chinese factory.
If one disagrees with the market, short TSLA. Hasn’t worked out that well for those starting with relatively large amounts of capital, but maybe shorts are still right! Vote with your dollars.
Totally unrelated markets, it's no different than the crypto coin markets. Even the volatility is similar.
Besides that, Tesla has a rockstar CEO. He can achieve things that conventional companies can't even dream of. If he needs money he can do a publicity stunt and collect the money. It's a cult and the members believe in the cause and the members are quite affluent.
Stocks are valued at the long term discounted value of their future cash flows. Are the markets always accurate and rational? No, but that's how they are intended to be valued.
If that's true then no one would ever invest in stocks.
Because investing is entirely about determining future value?
What you are saying is circular reasoning, you essentially say that company performance matter because many people think that is should matter. There's no causality relationship here, essentially people think that matters because other people thing that matters.
Did they get a bunch of great deals on land/machinery/etc?
Or did they not build all the things they intended at the time they gave that guidance?