That's a lot of temptation to fulfill someone's own prophesy. I hope Elon takes his security as seriously as he does batteries and rocket nozzles. If he left the helm the intellectual and visionary capital of Tesla might not change much, but the social and financial capital would drop fast and far. I kind of hope he watches too many Bond movies and decides to seal himself in a hidden lair and run things from there.
But Apple is still Apple after Jobs. Hopefully the same is true for Tesla and Musk, and we don't find that out for decades.
The company is very successful, but does it innovate in the same way? Under Jobs, the introduction of the iPod, iPhone, and iPad were all groundbreaking compared to industry norms at the time, not to mention the focus on usability. I'm genuinely curious which innovations compare since those days.
Agree. In my mind the company is a dead man walking despite its revenue and profits. It's no longer the innovation leader and by 2040 will be viewed as Xerox came to be, barring some very unforeseen development.
I don't know what's more amazing about this comment, the ignorance from not understanding their core competitiveness or the arrogance to predict something with regard to the tech industry in the year 2040.
Yeah, although that's one hell of a caveat that was laid down, "barring some unseen development". Isn't that exactly what we are talking about in how Apple has been able to keep releasing "unseen developments"?
Who is and how do you define that? I'd say in some very important spaces they're leaders, such as performance per watt in the mobile CPU space.
> by 2040 will be viewed as Xerox came to be
If you mean PARC's transition from an innovator to the one trick pony Xerox of today I'd say the difference is Apple keeps delivering high quality products and services in an expansive set of markets - some in so much demand you can't even buy today if you have the money.
Those products are rarely if ever the first to market, but always highly competent and aspirational to own. Their consistency in achieving this approximately a decade after Job's death should be a good indicator that they have a robust research, design and marketing process that will keep them moving.
I'm sure detractors would put their money on marketing being the primary driver, while happily ignoring Apple's achievements in engineering market-leading SOC's.
What's your definition of "true innovation"? No, Apple did not invent an ARM ISA CPU, but the they also pushed the hell out of all available technology in their design and implementation. The amount of innovation in that far surpasses pretty much anyone else in the mobile space. You should really read into what they've been doing with their in-house SoC team since the A7.
Ryzen 4000 is competitive at 7nm, given how huge the R&D budget was and how long the development time was, if the M1 wasn't as good as it was it would have been a let down
Weren't AirPods the devices which set the trend of having a charging case. Like I don't think they were the longest lasting wireless earphones but they were one of the sleekest designs. And the charging case just helped them achieve that. Now ever wireless earbuds come with a charging case.
I think the early innovation of the iPod, iPhone, and iPad were a happy confluence of technology reaching a maturation point. We were in a place where batteries were good enough, low power chips were good enough, and everything else could be miniaturized enough to make a compelling and competitive product. I don’t think we’re to another inflection point like that yet. They also weren’t first in a lot of these pursuits, they just did it the best and delivered the best experience.
Today, Apple still delivers the best-in-class experience with their devices. They make measured improvement. AR isn’t to the point where glasses are viable. Foldable displays aren’t to the point where they’re viable in the mass market. When they are, Apple will make a big leap forward and “innovate” again. In the mean time, their innovation is simply to continue delivering the most polished experience possible in the marketplace and they continue doing that.
The Apple Watch now generates more revenue than the entire Swiss watch industry combined. Apple is the largest watchmaker in the world both by revenue and by units sold.
The price of a Swiss watch means nothing if they don't sell them in quantity. If you build an app that costs $500k to only one user that is still less income than if you sell the app at $5 with 1 million users. That's how it is relevant.
Yeah, that's true, but the swiss watch industry still sold 20 million + watches last year. So I still can't see how this applies.
It would also probably be fair to say that the swiss watch industry was decimated as carrying a phone became ubiquitous.
I think the comparison is relatively apt though. People have one left wrist, and even though the apple watch and a classic watch are different categories. You don't often see people wearing both. So there is competition there for a limited number of wrist slots.
And apple is selling more units than team swiss watch.
Now, if you wanted to have a conversation about total wrist market share, I'd still guess the swiss watch industry is winning. You don't have to buy a new mechanical watch every other year so units moved isn't as apt a comparison.
The swiss watch industry is also a small part of the total watch industry. Japanese watches sell way more than swiss watches as well. Think casio gshock (just the gshock is about 10mm/year), citizen echo drives (Citizen sells 200mm watches/ year), They are also usually the movement supplier for the junk fashion brands.
If you wanted to count apples share of the watch industry, not just the swiss watch industry) it would be less than one percent.
It's making a new market and gaining some ground but it's not the 'watch industry killer' that people like to make it out to be.
No one has been able to beat the success of the iPhone or iPad ever since. If you’re using those two products as the standard, nothing else will compare, not in a long time.
For all the hype around Tesla, their revenues for all of 2020 are less than Apple made selling earbuds and watches. These new products launched after Jobs. Add Apple Silicon to the list of things they're doing, I think they're fine on the innovation front.
I wonder how his will is structured. He's currently unmarried with a number of minor children, but he has a controlling (majority?) share in SpaceX... so who gets those votes in the interim until they come of age?
Maybe he has some arrangement where the shares are held in trust, and voting power lies with some trusted lieutenant like Gwynne Shotwell?
I'd hope so — central control over the SpaceX vision has been absolutely critical over the past decade, and needs to stay that way until Starships are landing on Mars, if his vision of Mars settlement has any hope of happening.
I can't help but have zero sympathy for short sellers, and others to try to game the market. It doesn't seem like anything positive comes from shorting a stock other than someone getting rich.
I don't know much about economics. Is short selling "gaming the market"? Doesn't it help to counterbalance bubbles? I'm speculating wildly here; hopefully someone can educate me.
No, it's not about the risk per se. As you point out, investing in a company involves risk, however, there is prospect for generating value that corresponds to said risk.
Shorting (exactly as with gambling) creates risk with the hope of gaining money, without any corresponding value being created. Not only that, shorting exposes three parties to the risk of a stock or asset (the shorter, the original owner, and the new owner). When engaging in regular stock buying and selling, there is exactly a single owner at a given point in time, and the risk is transferred accordingly with only one party being exposed to it at a time. Why is the former dangerous? Because it can easily trigger chaos in the economy when many people are exposed to the risk of an asset, when none of them truly own it (not dissimilar to what happened in 2008, selling debt for debt triggers this sort of chaos as well).
Not to mention that shorters profit off the misery of others (exactly the same as interest bearing loans, another parasitic and immoral practice). Shorters wish for the collapse of the stock price. This is unnatural and destructive.
> I can't help but have zero sympathy for short sellers, and others to try to game the market. It doesn't seem like anything positive comes from shorting a stock other than someone getting rich.
Short sellers probide a valuable service to all investors, can you elaborate as to why you think they "game the system"?
It’s good when shorts find fraud (Nikola, Luckin Coffee) and then expose that fraud - it’s bad when there isn’t fraud and shorts push negative stories to try and manipulate the public market to save their position (or when the short position is actually being pushed by competitors failing to compete).
I think in the Tesla case people were annoyed at the latter, lots of stuff about Tesla’s success being impossible, model3 will never ship, etc. etc. - all of it total bullshit.
>
It’s good when shorts find fraud (Nikola, Luckin Coffee) and then expose that fraud - it’s bad when there isn’t fraud and shorts push negative stories to try and manipulate the public market to save their position (or when the short position is actually being pushed by competitors failing to compete).
The same can be said about longs. Longs are bad when their holders try to manipulate the public market to save their position, by cheerleading the company's performance.
Im really not an expert in this area. So please tell me how I'm wrong.
Shorting a company means you'll benefit from value of the company going down.
In normal circumstances, I can understand that it can have a positive effect on the market as some sort of scrutiny over the companies.
But in a post-truth world, it means some people have the power to short the stock, and then actively try to undermine it by running fake news; effectively becoming a barrier for the companies to create more value, which is in everyone's interest (employees, shareholders, investors, etc) except for those who short.
Longing a company means that you'll benefit from value of the company going up. In a post-truth world, this results in over-investment in poorly ran companies that have good investor PR, but aren't actually solid businesses, compared to their peers.
This results in an unoptimal distribution of resources, except for the people who took a long position, and then cashed out at the top.
Nothing stops a company from creating value just because people are shorting its stock. Musk's complaints about shorters aren't because shorters are bad for Tesla- it's because they are bad for him, as he dips heavily into debt (backed by the value of TSLA shares), to finance his lifestyle.
Short sellers have been instrumental in identifying frauds for decades. Without good short seller research, investing in countries like China would be even more impossible than it is today. Short sellers tend to be the good guys, not the bad guys.
Sure, if that short seller research isn't fraudulent itself. For example, there was a video floating around "proving" that Tesla was storing massive numbers of vehicles in desert parking lots that were on the books as sold. I feel that the "good" short sellers like Hindenburg Research tend to be more the exception than the rule.
More even so, longs always are going to have greater financial incentive and financial power to publish fraudulent news and research. No one should publish fraudulent research in an attempt to affect a stock, but if we were to invest our resources, we should be more focussed on the long side than the short side.
That's like saying people who engage in whaling are doing it to feed their families. It's hard to believe that there isn't a moral avenue to expose fraud other than resorting to an immoral activity (shorting).
No, its like saying that people engaging in fishing are preventing overpopulation of certain species of fish, which is true of well regulated fishing industries. Short sellers act the same way, to fix over-exuberance in the market. Looking at the market today, we could really use more short sellers to correct the exuberance.
> Price discovery happens just fine in markets that don’t have short selling.
No, it doesn't. Real estate is a great example of a market where you can't short sell, and is also a great example of a market with absolutely horrible price discovery.
Of course you can short sell real estate. There is a famous motion picture about a group of people who did exactly that during the global financial crisis.
You don’t even need access to credit default swaps. REITs are publicly traded and can be shorted as easily as any stock.
If you are talking about price discovery of individual properties—-that stems more from the fact that property is generally illiquid and not fungible. Not from the fact that I can’t take a directional bet on the value of your specific house.
I have plenty of issues with short selling, but my way of understanding of why it’s a welcome part of the market is that being able to short sell incentivizes people to find bubbles, half truths, or flat out scams. Once a short seller has found such an opportunity, they’re incentivized to tell the world about it (as they want to maintain the position for a short time as possible). Although many honest people will lose money in such a case, we are better off than when that lie can grow for more time and blow up more spectacularly.
It's a useful counterweight to bubbles: people who buy a stock have a vested interest in lying about or subconsciously ignoring bearish signals about it, which can cause irrational fervor for it to go on much longer.
One side of the trade hopes to get rich selling the stock, the other hopes to get rich buying it. This year, it was in fact the buy side which got rich, but there's no inherent moral superiority of one side over the other (Have you ever considered that the market participant which by definition sold more Tesla stock than any other, overall, is… Tesla?)
I really don't understand the moral outrage directed at people shorting a stock. Personally, I reserve my opprobrium for stuff like getting people to pre-pay thousands of dollars for features that keep getting pushed back year after year, or shipping software in a twilight zone of autonomy that works fine 99.9% of the time and accelerates into a wall at 90mph the rest of the time.
And "gaming the market"? As in announcing an inexistent bid to take the company public?
Fyi, "buy side" has a specific meaning and it refers to investment funds, pension funds, family offices etc. By contrast, the "sell side" are brokers and investment banks.
> but there's no inherent moral superiority of one side over the other
Of course there is. Shorting is immoral, it's legalized gambling, and the shorters are hoping the worst for the economy so they can profit off of other people's misery. Regular stock purchasing (not options mind you) is buying into a company, after researching it and understanding its workings with the hope of gaining value.
Another important difference is that regular trading transfers risk from one party to another, the overall risk in the market stays the same. Shorting however, creates risk for the sake of gambling, and exposes at least 3 parties to the stock instead of one. This is dangerous and immoral. It's quite telling that shorting was banned during the 2008 crisis, however, people don't learn and they reallowed it.
The market can function perfectly well without short sellers, as it has for thousands of years before shorting was introduced. Shorting is in no way an essential part, and more accurately, it's immoral. Exposing several parties to the price of one asset is bizarre to say the least, and very dangerous. No wonder we keep having one economic crisis after the next.
I will cite this example in the future of the fact that the market can stay irrational longer than you can stay solvent. I find it incredibly fascinating that almost all the "smart money" has done hedges and shorted TSLA, while the flood of casual pandemic investors has bought into it.
TSLA as a stock is a fascinating example of how price discovery can fail in times of irrational exuberance and that, in the short-to-medium term, markets aren't efficient nor rational.
In 2014, I saw the opportunity to short a broader sector of the economy, we wrote up a white paper and identified market targets etc that would correlate with my observed trend. But I did not pull the trigger as I lacked the necessary knowledge to understand and time the trades.
My prediction came true. But sadly I was unable to capitalize on it.
The TSLA situation is similar. It's clear that the valuation has become disconnected from reality. But how do you time the inevitable collapse of the bubble? How do you model something as bizarre as this form of irrational exuberance?
Do you induce it through a Pershing Square/Bill Ackman style campaign? Do you fund research into the flaws of the product, highlight it, and hope to induce the correction? Or, do you use other signals to time the purchase and mechanics of your short?
In other words, what do you do when the world around you has gone insane?
As Buffett once said how markets behave like Cinderella at the ball. Everyone tries to stay until right before midnight, except you have no way of knowing when it's midnight.
The parent commenter's point is specifically asking how an investor (such as a hedge fund) should actually pursue the short so that it's successful. Most TSLA shorts are institutional; just starting a hedge fund is insufficient.
A Tesla collapse isn't inevitable. It could simply stay flat as the company grows, becoming more reasonably priced over that period. Sort of like what Microsoft did between 2001 and 2011.
Otherwise, Tesla will crash when the whole market crashes. If & when the whole market crashes, the Tesla crash will be a lot bigger than the rest of the market.
That was a pretty short crash though. Things did go down, but it wasn't for long enough that it might affect things like ability to get credit or business function.
If the market crashed for a prolonged period I would expect that to be more difficult to sneak through.
It was totally seen, Tesla's stock simply wasn't that irrational at the time. Tesla's Feb-March drop was almost twice as big as the rest of the stock market drop. Tesla's stock is up nearly 900% since that low point. I don't think there is any reason to doubt bryanlarsen's point.
I think batteries will be annihilated by fuel cells in the near future. So in all likelihood the current business of Tesla will be wiped out. Tesla could only survive if it completely reinvents itself.
It's the fundamentally superior technology. It's likely to be much cheaper than batteries in the long run, and I suspect will eventually equal batteries on efficiency too (fuel cells are technically batteries themselves). We can go into elaborate details on this, but that is the gist of it.
> I suspect will eventually equal batteries on efficiency too (fuel cells are technically batteries themselves).
Fuel cell vehicles also use batteries. The fuel cell charges the batteries, and the batteries power electric motors. So it's impossible for a fuel cell vehicle to be more efficient than a battery-electric vehicle.
Not to mention the massive losses generating the hydrogen, during electrolysis and compression.
Not necessarily. They can use capacitors instead. And the battery is only engaged when accelerating or braking. The car runs mostly on the fuel cell in steady state operation.
Those are just assumptions. There's no reason why you can't you reduce them to the point where they are non-factors. It's possible they go away completely, for instance if you use thermochemical production of hydrogen or store hydrogen in metal hydrides.
As I said previously, you don't need to perfectly match batteries on efficiency. If fuel cells get close to batteries, it's enough for them to succeed. The rest can be made up by a combination of lower upfront costs and light weighting.
AFAICT, there is no metric by which a green hydrogen powered fuel cell car is superior to a BEV. It's more expensive to buy, at best is 3X as expensive to fuel, is far more inconvenient to fill up (a grand total of 39 stations in the US), lower range (300 miles for current models), and is far less reliable (hydrogen embrittlement).
That's assuming it's powered by green hydrogen (aka, hydrogen created via electrolysis). Grey hydrogen cracked from natural gas is cheaper than green hydrogen, but if you're not going green, why would you get anything other than a gasoline car?
These are backwards looking arguments. I'm talking about a future where: fuel cell cars are far cheaper, hydrogen is approximately as cheap and efficient as electricity, there is a substantial hydrogen infrastructure in place, and range is 400 miles or more (this has already happened). BTW the last statement was always wrong as modern fuel cell vehicles are more reliable than battery powered ones.
It will be green hydrogen too. I don't think anyone is seriously proposing grey hydrogen as a fuel.
> hydrogen is approximately as cheap and efficient as electricity
This is physically impossible. Green hydrogen is created from electricity and water and is converted back to electricity and water in a fuel cell. These are both lossy processes.
No more so than a battery. A fuel cell is in fact a battery of sorts, and it's not out of the question that it approaches the efficiency of a conventional battery.
It should also be pointed out that the lower weight of a fuel cell powertrain allows you to use less energy during operation. So even if fuel cells don't fully match the efficiency of conventional batteries, they can still use less energy on a final basis.
On the other hand, the Nexo is storing a much larger amount of energy. At 6.3 kg of hydrogen and at 33.3 kWh of usable energy per kg, that's 209.8 kWh. The Y only stores 75 kWh in comparison.
Fuel cells are around 60% efficient today. The system efficiency is probably around 55%. This is a number that will increase as fuel cells get more efficient. I believe the gap will eventually close altogether, or at least shrink greatly.
I think your focus is a bit narrow here, and physical impossibility is a really strong statement.
Advances in photocatalytic water splitting could easily make this a reality.
That said I’m under the impression that progress in battery tech is a lot more active right now, and it’s not really clear that finding an efficient and economical photocatalytic material is very realistic
Sure, I agree with you, it seems unlikely that fuel cell tech will overtake advances in batteries in the near future, and that compressed hydrogen doesn’t seem likely to become competitive.
My point is that there are many other hydrogen generation and storage technologies at various degrees of maturity and viability, and it doesn’t seem productive to write off a potential economical fuel cell system as a physical impossibility.
I do think there are many challenging engineering problems along that path, and I’m not convinced it’s tractable at all, much less likely to outpace advances in battery systems.
> I do think there are many challenging engineering problems along that path, and I’m not convinced it’s tractable at all, much less likely to outpace advances in battery systems.
I disagree on that last part. Fuel cell is moving at warp speed right now, and batteries are losing ground at a rapid rate. We're seeing fuel cells move into everything from e-bikes to aircraft. If there's any kind of disruptive event here, it will be fuel cells replacing batteries at a much faster rate than expected.
Not necessarily. You can store it in metal hydrides. It's also a small amount of energy comparatively, so it's not a big loss. Finally, you can recover a lot of the energy back.
This is called selection bias. You are cherry picking Amazon in the present and going back in time to a past where there were many more e-commerce contenders.
I'm sure you have heard about the dot-com bubble. Do you know what all those companies were doing? E-commerce. In some alternative universe Amazon is Pets.com
Sometimes the whole world goes insane, but sometimes I find it was just me.
Perhaps they know something we don’t.
I mean, if internal combustion engines are RAPIDLY outlawed faster than the other manufacturers are able to complete, and those companies go out of business, and Tesla buys them... then Tesla would prove to be massively undervalued. As more and more people put their money on that, it becomes less of an insane possibility and more of a certainty.
I mean, why doesn’t Tesla buy the 2nd, 3rd, 4th, and 5th largest US manufacturers?
I just don't see this happening. Big Auto has waaaaay too much clout with Congress to allow them to be legislated into oblivion. Maybe I don't have the right kind of vision which is why I don't play these games.
Would it be undervalued though? If all other car manufacturers went bankrupt today, would $700 be undervalued for Tesla?
As far as I can tell we passed that point long ago. Tesla is now valued as if it's going to also take Uber and the taxi market, as well as the trucking industry... In its entirety.
The problem with Tesla is that the opportunity for FSD is insane. Either the market is mispricing the risk or the shorts are, but the asymmetric upside if Tesla succeeds makes it a risky short. Asymmetric downside.
At battery day Elon said if they achieve FSD, their competitors will too in a couple years, and it isn't very valuable as a result. Now they said it all rides on batteries/energy storage and that's really their competitive advantage, a $218 million startup and another small one they bought with stock is now supposed to almost entirely undergird their $668 billion marketcap.
The personality cult around Musk boggles the mind. He's a very advanced form of charlatan.
"Full self drive" is an obvious lie (and dangerously negligent at that) but Musk continues to not only promise it but literally sell it, and get away with it.
I think one day the chronic lying will catch up with him - but at this rate, it won't be soon.
I think Hertz illustrates your point better. They are a poorly managed company with mountains of debt. Their business model imploded short term with the pandemic, but they were on shaky long term footing without the pandemic. There is no hope of this company becoming successful in the near term. With all of this information publicly available, retail investors on /r/wsb decided it would be funny to pump the stock and try to flip it for short term gains, and a whole bunch of people who saw Hertz tending on the Robinhood app bought in. The demand was so big that Hertz, a bankrupt company that was about to be carved up and sold off to creditors, issued stock that sold like hotcakes. It's utterly bizarre.
How does the growth of TSLA compare to AMZN? For years, AMZN did not make profits as it built out and expanded. Were there people trying to short AMZN and predict it's doom? Nothing is new in the world, so are there other similar things in history to compare these decision indicators?
You can't really compare the P/S ratios between different industries. A lower margin business like retailing should have a lower P/S ratio than a higher margin business like retailing. OTOH, a crazy high margin business like AWS should have a higher P/S than a manufacturer...
I will go the other way around and say that doom and gloom about Tesla's future has been prominent in news coverage in spite of Tesla's solid position.
I will assume that short sellers not only lost the aforementioned amounts but also the amounts they used to promote their failing positions especially since those positions already were showing weaknesses.
I recommend selling options a month out, way out of the money, in either direction. This way it doesn’t really matter. February 19th $1000 calls are selling for $18 a share today. That’s easy money.
Until Elon Musk tweets that he's thinking of taking X public through an ESG SPAC and rolling out an update that will have idle Tesla vehicles mine Bitcoin.
He does this during market hours and the stock doubles within two sessions.
He, of course, faces zero consequences for this, even if it turns out to be 100% fraudulent.
Thanks I will! :) you can always delta hedge. This isn’t a money making strategy I’d recommend to anyone who doesn’t know what they’re doing and has a very high personal risk tolerance tbh.
I’ve driven a Tesla and found it completely confounding why people like them. It was a terrible experience. The build quality was worse than cars half the price and the driving experience was terrible.
I want electric vehicles to become mainstream and think Tesla is an important driver to that goal. I also have no direct position in their share price.
But to suggest that the cars themselves are transformative experiences is just wrong.
I've put 65,000 miles on a Model 3. Before this car, I drove a BMW 328i for 20 years. I loved the BMW dearly.
The Model 3 is better in every way. Crisper handling, punchier acceleration, and quiet. The electric part is wondrous: No gas stations. Electricity costs me 1/3 what the same miles on gas would cost.
Maintenance? Literally 2 sets of tires.
The battery? I bought the extended range with 310 miles. Tesla upgraded me, free over the air, to 325 miles after about a year of owning the car. 65,000 miles in and it still holds a charge good for 305 miles.
This an interesting view point and have to admit I've been in the situation where I thought everyone else in the room had lost their mind. Turns out they where on LSD and I was not.
I have ridden all models of the Tesla, including the original roadster, and I believe Tesla should not be worth even a fraction of what any other car maker is worth.
If you have evidence of improper accounting or reporting, short the stock and publish the evidence. Otherwise, all US-based companies operate under the same laws and can take advantage of the same rules.
Shorting is based on fundamentals, but Tesla has not traded on fundamentals in years. Tesla stock is proof that the market can remain irrational for a very long time.
As for the evidence, simply read Tesla's SEC filings. The financial parts, not the marketing fluff.
Thanks, I didn't know that. For 2019, GM had R&D costs of $6.8B. They sold 2,887,888 cars in the US and 7,710,000 worldwide. Per car, that would be either $2,355 or $882 depending on whether the R&D number is a worldwide roll up (I'd think yes?).
Either way, adding the $6.8B to their gross margin number for 2019 would have increased automotive gross margins from about 10% to about 15%. Tesla's 2019 automotive gross margin was 21%. MRQ was 24%.
Your figures are correct, sorry, I did a quick back of the envelope and as you suspected compared worldwide R&D with US sales.
Yeah, I'm not claiming Tesla has bad margins, just that the figures on the balance sheet aren't apples to apples. 10% vs 21% compared to 15% vs 21% makes a huge difference. It's a 40% gap instead of a 110% gap.
Note that Tesla doesn't just exclude R&D from gross margins, they also exclude unit marketing costs as well. (Tesla doesn't spend money on ads, but they spend $50-100 million annually on marketing.) Additionally, a number of QC-related costs (like taking back lemon cars, or paying for repairs before cars are accepted by customers) are excluded from the calculation of automotive sales revenues.
But that's not all: Tesla adds regulatory credit sales to their "automotive" gross margin figures.
Yes, that's right, Tesla's "automotive" gross margin isn't just vehicle sales like it is for other car manufacturers. For example, look at Q2 2020 filings. The clean-car credits that they sell to other manufacturers are treated as automotive revenue, and that accounting chicanery is entirely what lets Tesla claim a 20+% gross margin on their vehicles. (The clean-car credits are also what lets Tesla claim to be profitable, though it has yet to make a profit actually selling cars.)
Without treating the sale of clean-car credits as automotive revenue, Tesla's gross margins are at best in line with industry gross margins (and fall below industry margins once you apply automotive GAAP to standardize the financials).
So you're arguing that Tesla should apply R&D costs to vehicles but not count credits directly resulting from the sale of a vehicle?
The sale of a vehicle results in a credit that can then also be sold, so why can't that profit be tied to the vehicle?
On the flip side, the company can spend lots on R&D that never makes it way into a vehicle. Why should that then count against the profit from selling a vehicle?
Unlike parent, I agree credits should be included in gross margin, whether positive or negative. Companies in Europe facing significant CO2 fines should have that reflected in their reported margins.
I don't understand your R&D point though. It's perfectly logical either way to include or exclude it. There's nothing wrong with how Tesla does it, and there's nothing wrong with how the rest of the auto industry does it. It just means you can't blindly compare the figures.
To me, short sellers are like undertakers. No body wants to be one when they grow up.
That said, were I in your shoes, I'd spend a lot of time studying the theses of the shorts that have both profited and been buried by TSLA over the last 5 years. Tesla was savaged by them and endured one highlighted, publicized flaw after another. They are even well known and called into Tesla's quarterly calls, looking for responses they could use against the stock. If you're a player you might be able to get them on the phone and ask what did and didn't work.
I've been long TSLA for 8 years. I can't tell you how many times I've said to my wife, 'we really should sell some now'. I said it at $100, $250, $500, and now $700. We still haven't sold.
It's not rational, but even irrational behavior can have an explanation. 2020 was a hopeless year. Tesla, and it's older brother SpaceX, both engender hope and point to a better future. Maybe people need to buy in as a way to get through this time.
For goodness sake, take some damn profit! Sell 15%, 30%, or 50% -- whatever you want. It will be good for you and you will feel better after you do it :) It's good mental training to be able to sell a piece of your holdings.
You will still have skin in the game. You can still still keep tabs on new developments. But you will also have a more balanced portfolio.
I will cite this example in the future as 'a dumb headline' - we can't know the net positions of short sellers, some are required to disclose their shorts, but not vice versa.
Yes short sells lost. Short sellers lost? Probably. But an unknown amount.
May it be that TSLA won't crash spectacularly, but fizzle slowly until it matches the Tesla's performance better? Especially if Tesla improves its performance gradually, too. Now that it's got into S&P500, it has some amount of stock bought by conservative institutional investors, which are unlikely to do a sudden massive dump, to my mind.
I love HN. It’s probably my favourite news source. And usually I enjoy the comments just as much as the actual articles.
But I’m honestly wondering if the comments are generated by some version of GPT.
- quote comment
- interesting comment
—- contrary point to interesting comment
—— second level contrary point to contrary point
——- N contrary point
- citation point
- downvoted nonsense
- empathic point
- cynical point
—- anti-cynical point
——- anti-anti-cynical point
- useless but none the less necessary bookend quote comment
HN jumped the shark (to be too much like reddit) around the holidays of 2020. In a few months I'll have to start looking for the next good discussion place.
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[ 3.0 ms ] story [ 231 ms ] threadBut Apple is still Apple after Jobs. Hopefully the same is true for Tesla and Musk, and we don't find that out for decades.
The company is very successful, but does it innovate in the same way? Under Jobs, the introduction of the iPod, iPhone, and iPad were all groundbreaking compared to industry norms at the time, not to mention the focus on usability. I'm genuinely curious which innovations compare since those days.
I don't know what's more amazing about this comment, the ignorance from not understanding their core competitiveness or the arrogance to predict something with regard to the tech industry in the year 2040.
Who is and how do you define that? I'd say in some very important spaces they're leaders, such as performance per watt in the mobile CPU space.
> by 2040 will be viewed as Xerox came to be
If you mean PARC's transition from an innovator to the one trick pony Xerox of today I'd say the difference is Apple keeps delivering high quality products and services in an expansive set of markets - some in so much demand you can't even buy today if you have the money.
Those products are rarely if ever the first to market, but always highly competent and aspirational to own. Their consistency in achieving this approximately a decade after Job's death should be a good indicator that they have a robust research, design and marketing process that will keep them moving.
I'm sure detractors would put their money on marketing being the primary driver, while happily ignoring Apple's achievements in engineering market-leading SOC's.
The M1
https://en.wikipedia.org/wiki/ARM_architecture#Advanced_RISC...
Today, Apple still delivers the best-in-class experience with their devices. They make measured improvement. AR isn’t to the point where glasses are viable. Foldable displays aren’t to the point where they’re viable in the mass market. When they are, Apple will make a big leap forward and “innovate” again. In the mean time, their innovation is simply to continue delivering the most polished experience possible in the marketplace and they continue doing that.
Smartphones and tablets existed, but consumers didn't buy them in today's numbers until Apple/Android came along.
So I'm not sure how this is relevant.
It would also probably be fair to say that the swiss watch industry was decimated as carrying a phone became ubiquitous.
I think the comparison is relatively apt though. People have one left wrist, and even though the apple watch and a classic watch are different categories. You don't often see people wearing both. So there is competition there for a limited number of wrist slots.
And apple is selling more units than team swiss watch.
Now, if you wanted to have a conversation about total wrist market share, I'd still guess the swiss watch industry is winning. You don't have to buy a new mechanical watch every other year so units moved isn't as apt a comparison.
If you wanted to count apples share of the watch industry, not just the swiss watch industry) it would be less than one percent.
It's making a new market and gaining some ground but it's not the 'watch industry killer' that people like to make it out to be.
Maybe he has some arrangement where the shares are held in trust, and voting power lies with some trusted lieutenant like Gwynne Shotwell?
I'd hope so — central control over the SpaceX vision has been absolutely critical over the past decade, and needs to stay that way until Starships are landing on Mars, if his vision of Mars settlement has any hope of happening.
Afaik spouses come first, then children, then parents, then siblings, on and out.
Shorting (exactly as with gambling) creates risk with the hope of gaining money, without any corresponding value being created. Not only that, shorting exposes three parties to the risk of a stock or asset (the shorter, the original owner, and the new owner). When engaging in regular stock buying and selling, there is exactly a single owner at a given point in time, and the risk is transferred accordingly with only one party being exposed to it at a time. Why is the former dangerous? Because it can easily trigger chaos in the economy when many people are exposed to the risk of an asset, when none of them truly own it (not dissimilar to what happened in 2008, selling debt for debt triggers this sort of chaos as well).
Not to mention that shorters profit off the misery of others (exactly the same as interest bearing loans, another parasitic and immoral practice). Shorters wish for the collapse of the stock price. This is unnatural and destructive.
This is a good article I came across that discusses some problems with shorting: https://practicalislamicfinance.com/2020/02/17/short-selling...
Short sellers probide a valuable service to all investors, can you elaborate as to why you think they "game the system"?
I think in the Tesla case people were annoyed at the latter, lots of stuff about Tesla’s success being impossible, model3 will never ship, etc. etc. - all of it total bullshit.
The same can be said about longs. Longs are bad when their holders try to manipulate the public market to save their position, by cheerleading the company's performance.
Shorting a company means you'll benefit from value of the company going down. In normal circumstances, I can understand that it can have a positive effect on the market as some sort of scrutiny over the companies.
But in a post-truth world, it means some people have the power to short the stock, and then actively try to undermine it by running fake news; effectively becoming a barrier for the companies to create more value, which is in everyone's interest (employees, shareholders, investors, etc) except for those who short.
This results in an unoptimal distribution of resources, except for the people who took a long position, and then cashed out at the top.
Nothing stops a company from creating value just because people are shorting its stock. Musk's complaints about shorters aren't because shorters are bad for Tesla- it's because they are bad for him, as he dips heavily into debt (backed by the value of TSLA shares), to finance his lifestyle.
I've never seen this thought put in this way, I'm glad you said it, thank you.
The laws of supply and demand don’t require short selling to reach equilibrium.
No, it doesn't. Real estate is a great example of a market where you can't short sell, and is also a great example of a market with absolutely horrible price discovery.
You don’t even need access to credit default swaps. REITs are publicly traded and can be shorted as easily as any stock.
If you are talking about price discovery of individual properties—-that stems more from the fact that property is generally illiquid and not fungible. Not from the fact that I can’t take a directional bet on the value of your specific house.
I really don't understand the moral outrage directed at people shorting a stock. Personally, I reserve my opprobrium for stuff like getting people to pre-pay thousands of dollars for features that keep getting pushed back year after year, or shipping software in a twilight zone of autonomy that works fine 99.9% of the time and accelerates into a wall at 90mph the rest of the time.
And "gaming the market"? As in announcing an inexistent bid to take the company public?
But YMMV.
Of course there is. Shorting is immoral, it's legalized gambling, and the shorters are hoping the worst for the economy so they can profit off of other people's misery. Regular stock purchasing (not options mind you) is buying into a company, after researching it and understanding its workings with the hope of gaining value.
Another important difference is that regular trading transfers risk from one party to another, the overall risk in the market stays the same. Shorting however, creates risk for the sake of gambling, and exposes at least 3 parties to the stock instead of one. This is dangerous and immoral. It's quite telling that shorting was banned during the 2008 crisis, however, people don't learn and they reallowed it.
TSLA as a stock is a fascinating example of how price discovery can fail in times of irrational exuberance and that, in the short-to-medium term, markets aren't efficient nor rational.
In 2014, I saw the opportunity to short a broader sector of the economy, we wrote up a white paper and identified market targets etc that would correlate with my observed trend. But I did not pull the trigger as I lacked the necessary knowledge to understand and time the trades.
My prediction came true. But sadly I was unable to capitalize on it.
The TSLA situation is similar. It's clear that the valuation has become disconnected from reality. But how do you time the inevitable collapse of the bubble? How do you model something as bizarre as this form of irrational exuberance?
Do you induce it through a Pershing Square/Bill Ackman style campaign? Do you fund research into the flaws of the product, highlight it, and hope to induce the correction? Or, do you use other signals to time the purchase and mechanics of your short?
In other words, what do you do when the world around you has gone insane?
Bet on winners
Stop out quickly
Otherwise, Tesla will crash when the whole market crashes. If & when the whole market crashes, the Tesla crash will be a lot bigger than the rest of the market.
I mean the market as a whole did crash back when covid started, and this behavior was not really seen.
If the market crashed for a prolonged period I would expect that to be more difficult to sneak through.
Fuel cell vehicles also use batteries. The fuel cell charges the batteries, and the batteries power electric motors. So it's impossible for a fuel cell vehicle to be more efficient than a battery-electric vehicle.
Not to mention the massive losses generating the hydrogen, during electrolysis and compression.
Those are just assumptions. There's no reason why you can't you reduce them to the point where they are non-factors. It's possible they go away completely, for instance if you use thermochemical production of hydrogen or store hydrogen in metal hydrides.
As I said previously, you don't need to perfectly match batteries on efficiency. If fuel cells get close to batteries, it's enough for them to succeed. The rest can be made up by a combination of lower upfront costs and light weighting.
AFAICT, there is no metric by which a green hydrogen powered fuel cell car is superior to a BEV. It's more expensive to buy, at best is 3X as expensive to fuel, is far more inconvenient to fill up (a grand total of 39 stations in the US), lower range (300 miles for current models), and is far less reliable (hydrogen embrittlement).
That's assuming it's powered by green hydrogen (aka, hydrogen created via electrolysis). Grey hydrogen cracked from natural gas is cheaper than green hydrogen, but if you're not going green, why would you get anything other than a gasoline car?
It will be green hydrogen too. I don't think anyone is seriously proposing grey hydrogen as a fuel.
This is physically impossible. Green hydrogen is created from electricity and water and is converted back to electricity and water in a fuel cell. These are both lossy processes.
It should also be pointed out that the lower weight of a fuel cell powertrain allows you to use less energy during operation. So even if fuel cells don't fully match the efficiency of conventional batteries, they can still use less energy on a final basis.
A Toyota Mirai weighs 1848kg. A Tesla Model 3 weighs 1612kg.
The Mirai is overbuilt for what it is. The Hyundai Nexo is 1814-1873 kg despite being an SUV. For reference, the Model Y is 2003 kg.
The motors in the Model 3 are 97% efficient. 90% for the entire system is not a dishonest number
Fuel cells are around 60% efficient today. The system efficiency is probably around 55%. This is a number that will increase as fuel cells get more efficient. I believe the gap will eventually close altogether, or at least shrink greatly.
Advances in photocatalytic water splitting could easily make this a reality.
That said I’m under the impression that progress in battery tech is a lot more active right now, and it’s not really clear that finding an efficient and economical photocatalytic material is very realistic
My point is that there are many other hydrogen generation and storage technologies at various degrees of maturity and viability, and it doesn’t seem productive to write off a potential economical fuel cell system as a physical impossibility.
I do think there are many challenging engineering problems along that path, and I’m not convinced it’s tractable at all, much less likely to outpace advances in battery systems.
I disagree on that last part. Fuel cell is moving at warp speed right now, and batteries are losing ground at a rapid rate. We're seeing fuel cells move into everything from e-bikes to aircraft. If there's any kind of disruptive event here, it will be fuel cells replacing batteries at a much faster rate than expected.
What you identify as irrational markets might actually be you simply being wrong.
I'm sure you have heard about the dot-com bubble. Do you know what all those companies were doing? E-commerce. In some alternative universe Amazon is Pets.com
Perhaps they know something we don’t.
I mean, if internal combustion engines are RAPIDLY outlawed faster than the other manufacturers are able to complete, and those companies go out of business, and Tesla buys them... then Tesla would prove to be massively undervalued. As more and more people put their money on that, it becomes less of an insane possibility and more of a certainty.
I mean, why doesn’t Tesla buy the 2nd, 3rd, 4th, and 5th largest US manufacturers?
But how would that work? TSLA's valuation is entirely based on the collective 'we', not some secret only Tesla knows.
Titans have crumbled after bad acquisitions with rocky transitions (AOL/Time Warner being one major tech example)
Part of the auto market is outside the control of Congress.
As far as I can tell we passed that point long ago. Tesla is now valued as if it's going to also take Uber and the taxi market, as well as the trucking industry... In its entirety.
"Full self drive" is an obvious lie (and dangerously negligent at that) but Musk continues to not only promise it but literally sell it, and get away with it.
I think one day the chronic lying will catch up with him - but at this rate, it won't be soon.
https://www.bloomberg.com/opinion/articles/2020-06-12/if-you...
https://fortune.com/2020/06/17/hertz-stock-suspended-offerin...
AMZN's P/S is 4.75, it has climbed sharply, but it has usually hovered between 2 to 3.
https://www.macrotrends.net/stocks/charts/AMZN/amazon/price-...
TSLA's P/S is 25.09. The P/S ration has increased exponentially from a historic low (for the company) of 1.74 to the 25+ territory, https://www.macrotrends.net/stocks/charts/TSLA/tesla/price-s...
He does this during market hours and the stock doubles within two sessions.
He, of course, faces zero consequences for this, even if it turns out to be 100% fraudulent.
Enjoy your bankruptcy.
You are so utterly convinced you are right that you refuse to except there are things going on that are bigger than a simple market analysis.
Society is capable of willing into existence that which it believes needs to exist.
Try driving a Tesla once. Then tell me it shouldn't be worth more than all car companies on Earth combined.
I want electric vehicles to become mainstream and think Tesla is an important driver to that goal. I also have no direct position in their share price.
But to suggest that the cars themselves are transformative experiences is just wrong.
The Model 3 is better in every way. Crisper handling, punchier acceleration, and quiet. The electric part is wondrous: No gas stations. Electricity costs me 1/3 what the same miles on gas would cost.
Maintenance? Literally 2 sets of tires.
The battery? I bought the extended range with 310 miles. Tesla upgraded me, free over the air, to 325 miles after about a year of owning the car. 65,000 miles in and it still holds a charge good for 305 miles.
I find the car itself to be transformative.
As for the evidence, simply read Tesla's SEC filings. The financial parts, not the marketing fluff.
GM for example would add about $3k per car to gross margin if they did it the Tesla way.
There's nothing wrong or shady either way, but it does make comparison less straight forward.
Either way, adding the $6.8B to their gross margin number for 2019 would have increased automotive gross margins from about 10% to about 15%. Tesla's 2019 automotive gross margin was 21%. MRQ was 24%.
Yeah, I'm not claiming Tesla has bad margins, just that the figures on the balance sheet aren't apples to apples. 10% vs 21% compared to 15% vs 21% makes a huge difference. It's a 40% gap instead of a 110% gap.
But that's not all: Tesla adds regulatory credit sales to their "automotive" gross margin figures.
Yes, that's right, Tesla's "automotive" gross margin isn't just vehicle sales like it is for other car manufacturers. For example, look at Q2 2020 filings. The clean-car credits that they sell to other manufacturers are treated as automotive revenue, and that accounting chicanery is entirely what lets Tesla claim a 20+% gross margin on their vehicles. (The clean-car credits are also what lets Tesla claim to be profitable, though it has yet to make a profit actually selling cars.)
Without treating the sale of clean-car credits as automotive revenue, Tesla's gross margins are at best in line with industry gross margins (and fall below industry margins once you apply automotive GAAP to standardize the financials).
The sale of a vehicle results in a credit that can then also be sold, so why can't that profit be tied to the vehicle?
On the flip side, the company can spend lots on R&D that never makes it way into a vehicle. Why should that then count against the profit from selling a vehicle?
I don't understand your R&D point though. It's perfectly logical either way to include or exclude it. There's nothing wrong with how Tesla does it, and there's nothing wrong with how the rest of the auto industry does it. It just means you can't blindly compare the figures.
That said, were I in your shoes, I'd spend a lot of time studying the theses of the shorts that have both profited and been buried by TSLA over the last 5 years. Tesla was savaged by them and endured one highlighted, publicized flaw after another. They are even well known and called into Tesla's quarterly calls, looking for responses they could use against the stock. If you're a player you might be able to get them on the phone and ask what did and didn't work.
I've been long TSLA for 8 years. I can't tell you how many times I've said to my wife, 'we really should sell some now'. I said it at $100, $250, $500, and now $700. We still haven't sold.
It's not rational, but even irrational behavior can have an explanation. 2020 was a hopeless year. Tesla, and it's older brother SpaceX, both engender hope and point to a better future. Maybe people need to buy in as a way to get through this time.
You will still have skin in the game. You can still still keep tabs on new developments. But you will also have a more balanced portfolio.
Yes short sells lost. Short sellers lost? Probably. But an unknown amount.
But I’m honestly wondering if the comments are generated by some version of GPT.
- quote comment - interesting comment —- contrary point to interesting comment —— second level contrary point to contrary point ——- N contrary point - citation point - downvoted nonsense - empathic point - cynical point —- anti-cynical point ——- anti-anti-cynical point - useless but none the less necessary bookend quote comment
Everything makes sense if you have enough information. If something doesn't make sense that means you don't have enough information.
dotcom bubble valuations ca. 2000 were "right"?
Your claim seems obviously wrong except in the tautological sense that the "right" valuation is whatever the market says it is.