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Comment by DennisP | Hacker News Reader

I'm not gonna say TSLA isn't overpriced but number of cars isn't a great metric. Let's look at some financials:

Tesla: mcap $388B, debt $9B, op income $12B, free cash flow $9B

GM: mcap $49B, debt $110B, op income $10B, free cash flow $1B

Ford: mcap $48B, debt $139B, op income $11B, free cash flow $3B

Tesla makes more money than Ford or GM, while having much less debt. The fact that they sell fewer cars means their margins are higher, and they have more room to grow. Maybe they shouldn't be worth eight times more than Ford or GM, but they should definitely be worth more.

And if you believe that the industry is going electric, then Tesla is already there, while legacy auto has a lot of work to do, and Tesla's low debt load makes them better positioned to do lots of R&D.

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What should worry GM investors even more is that GM has made EV goals over the past 7 years that they have failed to meet by a long shot. AND today they are still claiming that they will sell more EVs than Tesla in 2025 AND all of their profit comes from ICE cars/trucks today.

It is totally valid to criticize musk for not delivering a full self driving car on when he said he would, but that hasn't put the profitability of the company at risk. If GM cannot deliver a volume Car at a profit in a world where ICE is illegal what is going to happen?

And Tesla is still growing at amazing rates. So by now I would say it under-prized.

yeah, and then there is a "little" asset like Superchargers network which makes Tesla ownership, at least in US, much more attractive.

Edit. I'm not implying that Tesla is fairly priced, underpriced or overpriced. But this whole situation reminds me a time when I invested in Tesla IPO after reading lots of "Don't DO IT!" articles in media.

Debt in itself doesn't matter when you value a company. What you want to look at is shareholder equity, which is assets net of liabilities. When you look at that indicator, Tesla comes behind GM and Ford.

Tesla: $31.0 bn

GM: $65.3 bn

Ford: $42.1 bn

You can quibble with the real value of GM and Ford's assets. If I built a factory for a billion dollars that makes horse buggies, is it actually worth a billion dollars if I was forced to liquidate it?

That's a good way to look at it, sure. But it includes the value of fixed assets like factories. Debt compared to income is still a valuable indicator, since it's income that makes the debt payments, and also pays for things like R&D.

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