I'm not trying to defend anything... But why is changing a stance on something 'clear evidence of manipulation'? Is there evidence he traded doge before/after those tweets and the SNL appearance?
I think it's because no other properties of it have changed in the meantime, so one might think it's either arbitrary and irrational or manipulation and rational.
Because he’s making his stance public with the knowledge and expectation that his followers will act on it and, in acting on it, will change the price.
He bought $20M in Tesla stock that went up 8x (or something) and that 420$ thing (not a joke, that was a very serious thing) so it actually made him a lot of money.
"Much" may even be an understatement here; according to the WSJ article,
> sales of regulatory credits to other auto makers to help them meet emissions mandates, which carry a 100% profit margin, reached $518 million. That accounts for nearly 100% of Tesla’s $533 million in pretax income
it sounds like "almost all" would be a reasonable description.
Tesla had a 24% gross margin in Q1. They made a massive amount of money selling cars. They also had a massive amount of R&D and capital expenditures. The emissions credits required R&D and capital expenditures in prior years so you can't say that the R&D and capital expenditures should only be charged against vehicle sales and not emissions credits.
Tesla's Q1 also included a massive number of transient expenses (like Musk's stock options) that were significantly larger than transient income like emission credits.
They also spent $1,491 million on R&D. "Much" is more correct than "almost all", which implies that profit is just the leftovers once expenses are subtracted.
Profit and expenses are choices; the fact that a firm puts all its revenue into SSG&A and R&D does not mean that they can't be profitable. If Tesla's revenue decreased by $533 million, they would probably still target $300-400 million in profit by adjusting their spending. They would do that because even at a lower revenue it still benefits them to report profit, and that benefit is still there even if they spend less on other things.
If a $533 million decrease would not lead to $0 profit, then it doesn't make sense to say that their profit comes from credits. It only makes sense to say that 7% of their revenue comes from credits, and that a significant (but not all, and probably less than half) part of their profit comes from credits.
If we accept that emission credits are intrinsically valuable (i.e. have some utility in the form of helping to reduce the adverse effects of Global Warming), I do not see why that is an issue. You can think of a portion of each credit as part of the utility of one actual Tesla car sold.
Only an issue if you're an investor. The expectation is eventually that revenue stream will dry up. The question is if Tesla will be able to build it's other revenue streams up to replace it.
It's also somewhat volatile, as there aren't guaranteed purchasers for the credits. Recently, one of the biggest purchasers from Tesla (Stellantis) announced that it would stop buying credits entirely.
Yes one of the other companies would could have sold credits, is now no longer in the market making there be less credits on the market. Crazy how that works.
You either believe its priced in and don't care, or you believe its not priced in and shouldn't be holding it for that reason. If you're not thinking at the level of second order changes in a company's trajectory you're not really an investor so much as a gambler or someone looking to park their money out of cash.
100% agree, just explaining why it matters for some people. Personally, I think TSLA is overpriced (not because of this though) so I'm not buying, but I won't be mad if proven wrong.
People telling me not to invest in Tesla have been telling me 'credits will go away next year' since 2015. Yes, eventually it goes away, but anybody that actually reads the sheet knows that Tesla doesn't depend on these credits.
As an long term investor I don't care about profits each quarter for a company like Tesla.
Fiat-Chrysler was in the past a large purchaser of Tesla CO2 credits. I haven't followed the news, so I don't know if that is still the case. CO2 credits are a thing in Europe, though.
It's worth a review if you think the emission credits point is a substantial criticism of their business model. Also, bear in mind that they are a growth company, and are building two major factories concurrently (Austin, Berlin). If they didn't have emission credits as part of the revenue blend, they might slow down the growth a bit as a result. The point being that taking away emission credits would not necessarily mean they would elect to be not profitable.
To me this reads like minus credits and bitcoin, they'd have to scale down R&D in order to break event which would probably push back FSD and delivering on all of their pre-ordered promises again? Which I would assume increases the risk of people canceling and registering as negative revenue? How "normal" is their cost of revenue and sales/admin/overhead in the car industry?
Unless I'm reading that graphic incorrectly, isn't it only a $24m delta? i.e. credits + bitcoin profits are only $24m greater than their operating profit?
On the scale of Tesla, that feels like a tiny amount - for which they'd dip into their war-chest and not slow anything down at all?
seems a little goofy to put credits at the top and not in order of size like the rest of the chart, but that's my only criticism. It does a good job illustrating that the fact that profit ~= credits is largely coincidental
Crypto is wild wild west even a small speculation can send prices up like 10-20% in a day. There is little to no government oversight, if you have a hint or some insider knowledge there is lot of money to be made. Other thing you can do is whenever crypto is down just put few dollars across all options you have and eventually one of these coins will skyrocket and you diversify again.
Funny thing lot of S&P 500 companies if they do like 5-10% more revenue Wall Street hold a parade for that stock, while in crypto it can happen in matter of hour.
It also seems unlikely the environment had anything at all to do with their bitcoin flip flop. The environmental concerns existed and were very well discussed and publicized before Tesla decided to accept bitcoin. It was the “good” reason for their decision but not the real reason.
But doesn't his tweet also implicitly say they're HODLing for the long term? He said they won't sell any BTC until there's less energy consumption... does that mean they wait until the miners are 100% on renewable energy (instead of the ~75% renewable today)?
People say with the recent unemployment payments that's there's no incentive to "work" anymore. But in my personal life I'm seeing more and more people quit their jobs to do things like live off Bitcoin fluctuation trading, living off stock market returns, renting out their properties. etc.
There seems to be almost no incentive to preform actual labor when just sitting back and watching Coinbase 24/7 is objectively more profitable.
> Time is more valuable than money and taxes should reflect that.
I understand the sentiment, but it literally isnt true. If it were, then noone would accept a job since they'd rather have the time instead. At the very least, there is more nuance to be observed here.
Seconded. If I could keep my career security (I will still be employed here 10 years from now unless black swan) and healthcare (no spouse) while cutting pay and hours in half I would take it in a HEARTBEAT. No one is offering that.
Many of the overhead costs scale as a function of headcount irrespective of how many hours each employee works. For example, let's say you work in a regulated industry where each employee needs to follow a certain training every year. Having twice as many employees each working 20 hrs will double the training costs. Management overhead will also go up since there will be more one-on-ones etc.
There are some issues that I think would make this difficult to do:
- Two employees at 50% salary and time are not equivalent to a single employee at 100% of salary. They're strictly worse if always run in series, all else being equal. Alice starts project X on Monday and Tuesday, and hands it off to Bob on Wednesday because it's urgent. There's some inefficiency there. Good management could help avoid it, but would be hard-pressed to prevent it in all cases. At best, it's one more thing to worry about.
- There are benefits outside of your salary that are more difficult to cut in half. Health plans, headcount taxes, etc.
Ok, I see. I guess if company feels that the talent is very valuable to them, it's possible to negotiate special terms like this, but I guess in general companies are not then interested in part-time roles yeah.
Long story short: As the startup I'm working at doesn't have enough money to raise my hourly price, I'm now proposing to cut my hours in half, but keep the pay. So I'm working half the time, but keep the pay. It's summer now, so I'm happy to spend more time with friends and family.
And while we're talking about working less, another thing that's interesting I think is "4-day work weeks". There are remote companies who work 32h per week. I even made a list of the ones I know, but I'm sure there are more: https://remotehunt.com/remote-companies-with-4-day-work-week...
Aside from fixed costs and aspects like coordination efficiency, companies have to raise pay more than linearly to get people into high hours jobs. Those disproportionate gains should be given back at cut hours, but too many employees would claim this is unfair.
This kind of flexibility is one of the advantages of consulting/freelancing. Obviously the career security aspect is different, but in a hot hiring market there isn't a shortage of opportunities. I know several people who, as they got to more senior levels, decided to work 50% of the time for roughly 60% of their previous salary.
Neither of those things have units on them, so that's obviously not the comparison they were trying to draw. The way I see the comment, labor is more valuable to society than putting up capital is, so the government should incentivize labor by raising the capital gains tax.
People would take time over a job if Maslows hierachy of needs are taken care of by some grant like Universal Basic Income.
I would conjecture people don't always work for rational reasons -> Billionaires going to the office must piss off everyone like dude, you've won the game, go buy an island or something. So work is a useful habit. Useful in that it's a source of revenue for the government. Which is good and I agree with. But that makes unemployment a wholly irrational thing. Can our economic models even include unemployment as a variable? Surely government must hear those unemployment stats like a cat scratching a board.
Should people have to lie, cheat, beg so that they can become tax paying citizens?
Or imagine the extreme, where capital gains was taxed 100%. No one would invest, we would all be essentially hunter gatherers. There would be no capital appreciation allowed so you would not be able to invest in anything in hopes of making a profit.
Looking at extremes is a useful mechanism to understanding the underlying factors affecting something.
If you accept the fact that 100% capital gains tax would result in no investment and a 0% capital gains tax would mean a lot of investment, surely there is a link between cap gains and someone's willingness to investment. Especially considering that capital holders tend to be sophisticated and highly sensitive to incentives.
So increasing the capital gains tax would lead to less investment.
I agree that it is helpful but I also think it is more nuanced than that. What if there is a Goldilocks phenomenon? Someone with knowldege on the "life on Earth goldilocks with the Sun" could share their thoughts on such a comparison :)
Capital gains tax is rarely if ever a major consideration in investment decisions. The vast majority of professional investors are interested in cash flows, not capital gains. It is just the speculators that live and die by capital gains, and they treat our markets like a casino. Disincentivizing their behavior would be a good thing.
This kind of thought exercise is frequently misleading, though, because it relies on the assumptions that (1) effects are essentially linear and (2) that if something is provably bad at the extreme, it's bad at virtually any amount. If someone makes $10M capital gains through investment and "only" gets to take home $9M because of the 10% tax rate, they've still made nine million dollars. As long as that's objectively a good rate of return, there's little to no disincentive. The effects of a 10% tax vs. a 100% tax are obviously not linear.
Funding doesn't work like that. It's not "we have to settle for 9% return instead of 10%". Everything is done at the margin.
So if someone prices out a project where they can expect 10% return but now you tell them they are only going to get 9%, then the risk may not be worth it.
You may not think like this, but I guarantee you the people in charge of allocating capital do think this way.
I disagree, looking at the extremes is often used as a scare tactic against certain changes. We can also say that if we tax work 100% nobody would work.
The point of the OP was that work is generally more valuable to society than capital gains, but is taxed higher so there is a mismatch between the worth and how we tax it. Saying if we tax capital gains 100% nobody invests, does not add anything to the discussion as the same argument applies to work.
> The point of the OP was that work is generally more valuable to society than capital gains
Is it though? Capital build a better future. It's more forward thinking than just working.
For instance, I want my children to forgo working and build capital for their future by getting an education. The foregone income would pay back more in the long run.
The problem is that there isn't enough investment despite the corporations having huge piles of cash. The billions in stock buy backs in the US are a testament to this. Your argument is valid in a world where savings are scarce but we have a global savings glut.
> The problem is that there isn't enough investment despite the corporations having huge piles of cash. The billions in stock buy backs in the US are a testament to this
Which is it? Are corporations sitting on huge piles of cash or are they using the cash for stock buy backs?
US has relatively low savings that has gone down from about 10% in the 70s to a low of ~3% in mid 2000s to ~7% today (ignoring 2020 which shot up savings to 30+%). Compare that to China which has much higher growth which regularly saves ~36%
All you're saying presupposes that "privatised capital" is the only possible way to organize an economy. In that sense it's justifying a system by arguing inside the system.
At least, this should be how it's done in a low interest rate environment when investors are already desperate to invest in whatever they can get an above-inflation return on.
It's why we try to incentivize long term investment, because without such an incentive, consumption now is better than consumption 5-10 years from now. We saw this happen before "long term" carve outs began proliferating in various states' tax codes.
Only when you look at it from the business owner perspective, who can simply buy more labor (time) to make more money.
For individuals, the only thing we have in this world is time, and it's finite. When it's all gone, it's all over for us. That means time is the most valuable thing possible to individuals.
If and when we choose we can sell some of that time for money. But money in not what we want, and it doesn't give us direct value. Time is what we all want, because sooner or later it runs out.
> For individuals, the only thing we have in this world is time, and it's finite. When it's all gone, it's all over for us. That means time is the most valuable thing possible to individuals.
But this is a difference in degree, not kind. When the average individual buys something online, some individuals may choose to pay a little more for expedited shipping. It's the same principle. More abstractly, if I were to pose an individual looking to purchase Nike shoes 2 options: $100 to get the shoes today, or $1 to get the same shoes a year from now, the majority of individuals would choose the former, rather than the latter. Again, that's because of the time-value of money.
Now, you're correct that not everybody has the means to be able to buy time like this, but one can't conclude from this reality that time is "more valuable than" money.
> Time is what we all want, because sooner or later it runs out.
Yes, this is correct, and it reinforces the argument that time and money are just two currencies that are interchangeable. Money is just a proxy for value, and time is undeniably valuable. Not everybody has enough money to buy 70+ years of "free time", which is why the median person typically trades labor instead of money for future "free time" (retirement). In most countries that offer social security, that's the underlying mechanism: convert mass labor into money (taxes/contribution) which can then be converted into long term investment (sovereign wealth funds, SS trust funds), which is then converted to equally distributed "future free time" for everyone involved.
While it’s true that our time is finite, many people don’t have any clear idea how they want to spend their time. This is particularly true when retired. Often, people end up spending time playing games or surfing the Internet or whatever just because they don’t have any other plans.
So the value of time very much depends on your stage in life and your finances and your goals. Spending your time working or doing things yourself can be a good trade if you have the time and need the money.
Those things are perfectly legitimate usages of time. The whole point of time having value outside of money is that we should have to power to spend our time on things that don't produce money.
Individuals can definitely buy time. Hire a house cleaning service, landscape company, grocery delivery service, nanny, etc. Those are all ways to buy time that frees up the individual to do other things.
Traditional thinking says if you earn more per hour than you're paying for stuff like that then it's a net win, but again that is a business idea (opportunity cost) and doesn't work for individuals. If it were true, everyone earning more than minimum wage should be paying someone to do every single thing in their entire life... but that doesn't work because you can't just earn more money when you're on salary, and you don't have infinite hours to work endlessly more.
This analysis totally ignores a whole bunch of factors, including that you can’t pay someone else minimum wage for a bunch of things, and that “hiring someone to do X” has a huge transaction cost associated with it. Not just the hiring part, but the coordination, etc.
The “can’t work more hours” piece actually works towards your argument for finite time: why would you want to spend any of your outside-of-salary time doing stuff you don’t want to do that could pay someone less to do?
This perspective is strongly endorsed by Pikkety's work, which shows that returns on capital outperform returns on labor. Further, there is a trend for higher levels of capital to not just produce proportionately higher returns, but also higher percentage returns. E.g. Harvard's endowment fund earns a higher percentage return than the smaller endowment funds of other universities. This disparity may be because higher amounts of capital allow owners to not only employ more skilled financial resources, but also to cherry-pick investments and negotiate superior returns to an extent that is not possible for owners with less capital. The disparity in returns on capital vs labor result in a concentration of capital in fewer hands (inequality) and this is linked to reduced overall productivity. Piketty proposes a tax on capital (not just on a capital gain, but on the balance) to reverse this. This is undermined by the fact that it is regarded as an impossibility (politically), kind of like proposing that we all just learn to levitate to do away with polluting aircraft.
Would be nice to have enough money to invest enough to make a nice living wage off of the market right now. Most people don't have that $$. Early adopters are WAY ahead of everyone else in this regard. Luckily I got in early.
It doesn't have to be this way! You're on HN, a lot of us are actually doing what we enjoy, or at least are pursuing that goal.
I recognize that's the result of a whole heap of privilege, but I don't have to work and still do because it fulfills my desire to build things and... well honestly, make money.
Absolutely not in any single way is it more fun. I miss programming, I miss team members, I miss gut-wrenching production issue debugging.
Sometimes the stress and anxiety of crypto is physically debilitating.
But you're wrong that it's something you have to put effort into. The absolute BEST decisions i've made in crypto were inaction. The biggest regrets I have were all caving to anxiety.
You’re not risking your principal but you can be risking your life. Who ever died trading on the market? My wife had a friend who died last year from COVID at 33. His last tweet was about how his dick manager at T-Mobile was forcing them to come into work despite the global pandemic. A life wasted in the name of selling cellphone plans. T-Mobile stock hit an all time high today tho.
I would hazard a guess that the downvotes are because if your going to include second order effect deaths like that then a lot of people have no doubt died from trading stocks as well. There was an article here on HN recently about one such tragedy. Some kid killed himself because he thought he owed a bunch of money from trading options or something (I think it was Robinhoods UI but don’t quote me on that) when I’m fact he didn’t owe the money.
I think suicide is a mental health issue more than an occupational hazard. Re: the downvotes, they’ve been going up and down. +2 to -2 to +2 to -1 again. I just said something people have feelings about, that’s all.
It is insane to compare a single self-inflicted death based upon misunderstanding to hundreds of thousands of deaths resulting from the corporate norms.
Central banks printed billions to "save" the stockmarket. Leading to gigantic hidden inflation.
Poor are poor. Middle class are screwed (money on bank account basically has negative interest due to inflation). So you can be a pseudo rich by just holding stock/bitcoin/peoperty - since they increase in value purely due to money print.
If you are a middle class person the central bank basically screws you to save the stock market.
Unpopular opinion but the central banks are the main source of inflation.
Now the economy is completely unglued from any fundamentals.
> Unpopular opinion but the central banks are the main source of inflation.
I mean, that seems obvious, there can't really be inflation if the money supply doesn't increase, can there?
If the money supply stays fixed, then some people will save/hoard money. Some people will also be more able than others to acquiring money (possibly because they already owned assets/rental property), maybe they were born rich. The amount of money that is circulating will automatically decrease. That tends to produce deflation.
The problem is that if you have deflation in your economy, it also increases the incentive for people to save/hoard money even more. Why would you spend your money today when it will be worth more later? You have a feedback loop where the amount of money circulating just keeps decreasing, and so prices automatically have to go down.
> I mean, that seems obvious, there can't really be inflation if the money supply doesn't increase, can there?
Depending on your definition, sure there can be. Private lending is the primary driver of inflation. Most wealth is on paper anyway, so long as people don't try to get actual cash, then an economy can experience significant inflation with a fixed supply of money.
You don't even need lending to drive inflation without a money supply increase. There are lots of bitcoin millionaires out there who can't actually liquidate their holdings for cash, but could, in theory, actually buy other physical goods with it at roughly face value.
Central banks don't have a monopoly on inflation, despite everyone's apparent belief that they do. They are a major influencer, yes, but at USD-scale, they don't have all that much control. You can see this in how the Fed almost always misses their inflation targets.
The Fed's primary concern with interest rates is the US Government going, essentially, bankrupt. The stock market is much further down the list.
4% * $50 trillion = $2 trillion in just interest per year. The US Government will be at roughly that debt level perhaps within a mere 12 years at this point (assuming one normal recession in that time).
So as you can see, the US Government can afford no meaningful climb in the average interest rate it's paying on its swelling debt. Normally as a massive borrower gets more shaky in its finances, the rate it would expect to pay would climb at an accelerating pace with its fiscal implosion. To avoid that fate, the Fed has to step in and become the primary buyer of the garbage US Government debt (which will be endlessly recycled as they will never pay any of it down now). The financing problem with the US Government is so enormous at this point that there are no other nations or private pools of capital large enough to keep up with it on a consistent annual basis, currency debasement - eating the value of anything held in dollars, including most US assets - is all that is left to fully fund the government (and the entitlement costs will only keep spiraling higher this decade and next).
The stock market is a laughably trivial concern next to that problem. Which is also why one of Biden's immediate priorities is raising taxes (if they don't, the Democrats know it'll put the welfare state & entitlement programs they've put so much effort into building over many decades into jeopardy sooner (collapsing demographics may take care of that regardless)).
>Central banks printed billions to "save" the stockmarket.
I agree with most points but that wasn't the main motivation. It was to keep the economy going in terms of people spending money when much real production was stopped due to covid. Now covid is mostly over, at least in the west, and spending is rising leading to inflation, bank printing will probably stop and the stockmarket fall. Which is not necessarily a bad thing.
This is the result of decades of policy favoring capital over labor. Tax rates on capital gains are lower than taxes on income earned through labor. The Supreme Court tells us that corporations are people too. Congress passes tax reform with permanent tax cuts for corporations but individual tax cuts that expire. Corporations run multi million dollar ad campaigns lauding “essential workers” as “heroes” yet they continue to pay a minimum wage that verges on poverty wages. Capital owners multiply their wealth every time a disaster hits while labor is still reeling from the last one.
What message is labor supposed to take from all of this? We are not valued at all, so why even bother? If society is set up to be a system where we all just trade paper and bits back and forth, then why do any productive work at all if you’re going to end up getting shit on?
Imagine filing a tax report where all your housing, food, car and clothing expenses are listed as operating expenses and are thus not taxed. In addition to that, most of your income went to an Irish subsidiary and your total taxable income this year is $150, taxes at 20% because "I identify as a C-corp".
I'm literally in the process of registering an LLC for myself to do consulting work, because our laws have been set up in such a way that it's more beneficial to treat myself as a corporation rather than a human being.
Similarly, in my professional life I'm seeing more people working on silly apps that run a filter over a selfie than people working on e.g. medical image processing or you know, stuff that is actually useful. I see businesses who write a CRUD website/app to connect contractors (read: employers) to businesses. And they are hugely successful.
I don't know but something seems wrong in the way work is incentivized. Is the market broken?
It's kind of subjective to say this is better. If 100 million people had a bunch of cool image filter apps on their phone but no access to medical care the outcome is pretty clearly not better.
Perhaps it's more reasonable to say that providing a small amount of value to a larger amount of people is more profitable.
Luckily this isn’t a binary choice, the more profitable cool image filter app takes nothing away from healthcare.
The world is full of people who simply aren’t capable of providing “value” at scale. Odds are that society gets better outcomes when the few who can do so pursue things like silly image filter apps (and sometimes actually useful things too) over nursing careers.
This may be true today, but it is a lot easier to build a silly image filter app now than it was 10 years ago. If the incentives remain skewed in favor of "highly distributed but small value" contributions to society while the difficulty of making such contributions also decreases we may, in fact, see a shortage of nurses.
1. People with the talent to make high-value/low-scale products (e.g. medical imaging) are working on low-value/high-scale products (silly apps). This is similar to how our brightest minds are making people click ads.
2. Apple and the HN reality distortion field make everybody (even those without the skills) believe they can become rich by creating low-value/high-scale apps.
Making a silly app that runs a filter over a selfie is a short easy project for a medium experience dev. Making medical image processing requires way more skills and knowledge of various topics.
It has nothing to do with the market and everything to do with ease of creation.
If you can connect workers to employers in ways that wouldn't have been connected otherwise, you improve the conditions for the worker and the employer.
Don't underestimate the value and utility of CRUD apps.
Automation and economies of scale has made it much more efficient to produce necessities. Yet society has failed to convert that into allowing the low classes to have more free time. Everyone needs to do some useless job to survive even if there is nothing that needs to be done.
Many people are making tons of money in crypto but even more are losing out. But people only post online when they are winning. It's the same as Instagram - everyone seems to have incredibly interesting lives but really most of us work 9-5 and spend most of our free time watching Netflix or performing mundane tasks. Social media focuses and amplifies the good parts of other people's lives.
Loss porn gets boring after a while and it's more of a subculture than mainstream. It's more interesting to report on a janitor who became a billionaire trading Dogecoin on their daily commute than reporting on the same person blowing their meagre salary buying derivatives, which they didn't understand, on a sketchy exchange.
Almost all wage earning activities have had downward wage pressure on real wages for the last 5 decades. The only exception to this sees to be highly defensible businesses/monopolies and the talent pool these businesses draw from.
I wouldn't be surprised for more daytraders to emerge playing games like GME/TSLA/BTC. With infinite printed money there never needs to be a greater fool. Shorts who go bust get bailed out, banks who bet long can pump the stock on near negative interest, Individuals can drive momentum to the point that other players leverage the money spigot.
After all as long as the money doesn't get withdrawn it doesn't impact the real economy right?
Endless money printing distorts value in weird ways in my opinion.
But I think what you're seeing is lots of fomo and people who had savings because they were forced to save (couldn't spend it), they should be back to their jobs when the market inevitably crashes.
To make more money from investing than working you need a whole lot of savings. If by some miracle you can make 10% a year long term (and you haven't been poached by a hedge fund yet), and you need 100 k to live, that means you need to have more than a million in the bank ("more", because you want to compensate for inflation as well).
We seem near the top of an epic bull run. I'm not sure the ability for everyone to get rich by trading virtual things between each other will continue indefinitely.
the people that say shit like "unemployment payments encourage laziness" are talking about poor people, minorities and people of color.
The people you're referring to doing crypto trading are typically affluent already, or people in social structures and communities where they have places and people to fall back on.
What a sensationalist title. Technically correct, yes, but misleading in spirit. Most people will see the title and not read the rest of the article, which results in the sentiment: "the only reason why Tesla is still afloat is because of XYZ." Would you want to invest in a company like that?
And yet, as we all know, Tesla has been an amazing stock to buy over the last couple of years, and it was also so incredibly predictable [0][1]. If you haven't made money on Tesla, then it's because of titles like this. I would be furious with WJS and all other publications that have been talking shit about Tesla - they are doing you a disservice.
[0] This statement tends to get people riled up, but I noticed a pattern: people who agree are those who have driven a Tesla, and people who don't are those who haven't.
[1] The experience of driving a Tesla is unlike anything else in its price class. But that's subjective, so let me make another argument for why the stock should have been an obvious buy all these years: the brand value alone will continue to propel their sales for years to come. When someone says "I drive a BMW" and someone else says "I drive a Tesla," which one stands out more? People care about brands, as you can see in the rise of the Coca Cola stock in the last 30 years (btw, if you haven't checked out that graph, you really should). So if Coca Cola was a good buy and we celebrate Warren Buffett for recognizing that, on the brand thesis alone, Tesla should have been as well. But I guess you won't read that in the WSJ.
>What a sensationalist title. Technically correct, yes, but misleading in spirit. Most people will see the title and not read the rest of the article, which results in the sentiment: "the only reason why Tesla is still afloat is because of XYZ." Would you want to invest in a company like that?
I wouldn't invest in Tesla because it's valued at a price/market capitalization worth more than all other car companies combined. This is before we get into the crypto currency hijinks or Elon's market manipulating tweets.
The valuation is insane and not supported by the current or future business.
The party may or may not be over. We'll see. WSJ's sentiment on the company has been so negative for such a long time, that at some point between now and 100 years from now, they might finally be proven right. Once they finally get it, they will be looking back at 100s of billions worth of wrong financial advice that they've signaled with their negative titles.
The point I would drive home here is why trust a paper to give future guidance if their past guidance has been so spectacularly wrong? Again, the brand of the company alone was a strong signal that you never saw people write about.
Tesla isn't special. Tesla and all other growth companies benefited from the macro landscape of the 2010's. Zero interest rates drove capital out of (low) interest bearing treasuries and bonds and into tech. Look at foreign purchases of each over the last 10 years. I don't think we'll see this trend continue into the 2020's.
That's a fair argument. That said, I think it's still worth acknowledging that there are other macro forces out there, and the push for renewable energy is one of the stronger ones. Tesla managed to find itself at the intersection of at least those two strong tailwinds, and even if the zero interest tailwind goes away, the renewable energy one is only going to continue to gain momentum.
Your second argument, that Tesla is cooler than other car manufacturers, is even more subjective than your first. There can at least be some kind of metrics showing which car drives better.
I know what you mean, but there are ways to estimate the brand value. Eg: In 2020, Coca-Cola's brand was valued at 84 billion U.S. dollars. While I couldn't find any reliable values for Tesla, the same methodology should apply here as well. It just comes to show to what extent the market has a blind spot for what certainly is a huge asset.
> The experience of driving a Tesla is unlike anything else in its price class
True, it’s more akin to driving a prius than a comparably priced german car. Especially when looking at the higher end Tesla models.
> When someone says "I drive a BMW" and someone else says "I drive a Tesla," which one stands out more?
At least in Europe “I drive a Tesla” makes you sound like a taxi driver. It’s just not a cool brand anymore. (Maybe Cybertrucks and Roadsters will change this?)
> True, it’s more akin to driving a prius than a comparably priced german car. Especially when looking at the higher end Tesla models.
I don't know the performance of the Prius you have driven, but a Model 3 is not on the same league with any Prius I've driven, and will leave any similarly priced BMW in the dust, performance-wise.
Performance is good yeah, everything else is comparable to (and often worse than) the prius. From the exterior finish to the horrible plastics all over the interior. Teslas aren’t nice daily drivers.
I love the performance, but it’s hard to enjoy it very much as a weekend car when the batteries can only take a couple of hours of aggressive driving. I had a taycan turbo s for a few months too, it was a blast (much more fun than any Tesla) for a few weeks until I got sick of the consistently disappointing battery life.
You're not the target audience. My wife drives her Tesla to work every day and wouldn't change it for a 10x more expensive car. She also has the performance model, although she would never go above 60mph. She couldn't care less about the interior not meeting your standards, because the interior looks like a spaceship and as far as she's concerned, it's the coolest thing ever. I personally drive an ICE car, but I recognize that I am not the target audience and can tell that the Teslas are resonating with a huge segment of our population.
> She couldn't care less about the interior not meeting your standards, because the interior looks like a spaceship and as far as she's concerned, it's the coolest thing ever
The same could be said about any new car in this segment if you disregard the competition. The Mercedes E-class interior looks like a nice spaceship, Audi and BMW deliver slightly different takes on the same.
What is it about the Tesla that resonates with her? The feel of a fully electric car? If so, can we expect to see Tesla decimated by German EVs coming out in the next couple of years? VWAG is clearly capable of pushing out a very polished product, and Mercedes is getting there too.
It's important to state which part of Europe you're referring to, because sentiments can be quite different from one country to another. I have family in two European countries, one Western and one Eastern, and in both of those societies Teslas are even more prestigious than in the US because the charger infrastructure is not quite as developed - which means that if you have a Tesla, you likely also have an ICE car for longer trips. As you know, having two cars in Europe is quite unusual, so saying I drive a Tesla carries even more significance than in the US.
In Western Europe (at least Spain, France, Germany, UK, Netherlands, Czechia and even Hungary) Teslas are taxis.
In Eastern Europe they are still significantly less cool than similarly priced ICE cars (at least among the segment of people who can actually afford to buy these cars). Teslas aren’t cheap cars, with the same money you could buy a status symbol used Mercedes G- or S-class that looks far more expensive than it actually is.
The design of the Model 3 doesn’t really make for much of a status symbol, the more expensive Teslas have either been driven for hundreds of thousands of kilometers or are priced almost in line with a decent S-class.
The headline is not only wrong but it is intentionally misleading.
I don’t understand the games people play when certain financial numbers line up and they want to “give credit” for all the profit to one thing or another. It’s not reality, and it’s not how a company is run.
Tesla is trying to grow as quickly as possible, and will deploy as much capital to that end that they can do so reasonably efficiently.
They sold about $10 billion of product with a gross margin over 20%. That’s $2 billion of gross profit that can fund their growth. They also had ~$500 million of credits due to making all those cars, so it’s $2.5 billion in gross profit from selling cars that funds their future growth. Additionally they apparently reported another ~$100 million of capital gains from Bitcoin. That’s an additional 4%.
The Bitcoin did not drive their profit. The credits did not drive their profit. What drives profit — when selling a product with 20-25% gross margin - is how much you are spending on future growth. And they are growing at 50% YoY which is nothing short of incredible at their scale.
The same people shitting on Tesla now were shitting on Amazon 10 years ago (and we know how that turned out). It's the exact same situation, only Elon Musk is more active/controversial on Twitter than Bezos ever was.
It's not the same situation at all. The car industry is a known quantity in terms of sales potential, margins, costs and possible overall scale.
Tesla will never exceed today's version of Toyota or VW in terms of size. There's your cap. And that's all before the market is entirely flooded with EV competition.
AWS is a better profit machine than anything Tesla will ever produce. Tesla will never own half the automobile market, nor will they ever have AWS operating income margins (Tesla's operating income margins are typically 5-10% in a good quarter, and that's normal for the auto industry; which is half to 1/4 that of AWS). That's the reason Tesla will never have an Amazon-like result. It wasn't retail that made Amazon worth so much.
There's nothing special about electric cars, there's no magic that will expand the car market by ten fold just because they're EVs; there's no super margin jump that makes electric cars two or three times as profitable compared to selling a $45,000 BMW or Mercedes.
AWS can generate $20 to $30 billion in operating income on $100b-$120b in sales. It's very likely to get there at this point. There is almost no scenario where Tesla makes that much money selling expensive electric vehicles (and solar panels are a horrific business for generating profit, as is the battery industry). Tesla needs tens of billions of dollars in annual profit to float its market cap (and that's just to support where it's already at).
I was defending Tesla when a zillion people on HN were saying they could never mass produce the Model 3. I was right. I was defending Tesla when a zillion people on HN were claiming it was going to go bankrupt. I was right. Before that I was defending the Model S in its early days. I was right. And I'm right about this too, and it's very obvious Tesla's just going to end up as another automobile company (best case scenario). There's nothing special about being the next Mercedes, it isn't worth $500-$900 billion to be that.
> There's nothing special about electric cars, there's no magic that will expand the car market by ten fold just because they're EVs;
If Tesla achieves FSD (big if) first, that is indeed some magic that will expand the car market by (not tenfold, but significantly) just because they're Teslas.
FSD semis is precisely some
magic that will increase that market several times. (The fact that they have not actually shipped their human-driven semi yet notwithstanding.)
How would self driving make the car market 10 times larger? The only real point of self driving for local trips is to radically DEcrease the number of cars by efficient and convenient pooling.
> It's not the same situation at all. The car industry is a known quantity in terms of sales potential, margins, costs and possible overall scale.
It's only true if probability of autonomous taxi fleet is zero. I'm not saying it's 100%, or even high. But even if it's 1%, then your statement is already incorrect.
Current non-Tesla car makers are massively undervalued because:
- they have a massive amount of debt
- (many of them but not all) have a poor gross margin
- EVs are an existential threat that will likely destroy a couple of them, we just don't know which ones yet.
Any car maker that gets past all three points above AND has a VW or Toyota like market share AND has a substantial growth rate in its profit margin will likely have a trillion dollar market cap as long as we are still in a cheap capital market.
That's a lot of if's for anybody, including Tesla. And Tesla with a market cap of $1T in a decade is basically just keeping up with inflation, so not a great investment even if there weren't any risks.
Transportation and energy are both trillion dollar markets. They can support trillion dollar market caps.
But trillion dollar caps require Apple levels of profit risk, not car manufacturer levels of risk.
Surely you want to say that people think they are worth X given their large revenues, but in reality they are worth less than X because they also have huge debt and poor margins?
I agree with your sentiment (and your logic for that matter), but I want to just point out that there is a (distant, admittedly) possibility that they come up with something very new and clever, like self-driving micro cars as a service or something, that can create an entirely new industry.
I mean look at Apple in 2006, or 2008 for that matter. Nobody could have foreseen that they would create a completely new category that would have basically half of the rich world spending 1000 bucks every 2 years on a pocket computer.
Clearly Elon Musk is no Steve Jobs or Tim Cook, and Tesla is no Apple, but it's not impossible.
Yes, but Tesla’s market cap already assumes all those things happened...it’s worth 1/4 of Apple already, but hasn’t actually done those Apple-type things!
Sure, my point is more that Tesla could in theory live up to their astronomical valuation. They merely have to pull off an iPhone and create a new industry…
VW simply doesn't include a lot of the things Tesla would be doing themselves. Like service, power production, higher vertical integration, sales and so on. And that is excluding the possibility that Tesla could have a continues improvement on margin.
Not to mention Tesla is established in multiple ohter fast growing industry, solar, stationary home storage and grid storage.
Not to mention Tesla is making itself into a first rate battery companies that have lot of opportunity for other uses.
Not to mention the ongoing race for slef-driving (whatever many on HN think of their strategy)
Not to mention that all Musk companies have been growing pretty consistently and Elon always has a 'next big thing'. Look at SpaceX with Starlink and Starship. He has been talking about an electric plane for 10+ years and eventually that will be a natural extension of what Tesla does, batteries, electric engines (not to mention the connection to SpaceX).
Yeah, and then if you under reserve on warranty costs and stuff repairs into "goodwill" under Services/Other, people who don't know better will go on the internet and talk about how it's fine for the company to not have an overall profit because your margin is 20% even though you spend a good amount fixing cars you already sold because quality control is poor.
And to answer the other responder's response about Amazon - Amazon raised money twice, totaling $108M. Tesla is still raising money $20B later, they are funding their efforts primarily off investors not their own operations.
Makes you wonder if it was all a pump and dump scheme to start accepting Bitcoin in the first place. Nothing changed between then and now in regards to energy use of Bitcoin. Completely legal tho, so maybe it's Elon's way of rubbing it in the SEC's face.
I don't think so. Had Tesla sold more than 10% of their Bitcoin then sure, but as it stands right now they're still quite exposed to the currency and this new announcement by Musk, and his pivot to Dogecoin for SpaceX is much more likely to be a net-negative for their Bitcoin holdings.
I did some Googling and I can't find whether or not Tesla holds any Dogecoin. I don't think so? All I can find is that Elon personally bought some Dogecoin for his child.
I'm curious — for startups that are funded, what do you do with your cash? Say, if you got $100k in pre-seed. Do you create a bank for your startup (e.g. First Republic) and put it in a cash account?
Do you put it in something like a managed or robotrader account? ...do you put it in bitcoin or crypto?
Tesla is only a car company the way Google is an email or search provider, imo.
Their long bet on cryptocurrencies is smart given instead of shedding electrical load into the ground, Tesla can probably recoup the electricity to power micro mining. There is so much fashionable hating on Musk, and that he manages to survive it means those people don't see what he does.
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[ 79.3 ms ] story [ 4791 ms ] thread[0] some businesses have started accepting Doge, many new FOMO participants among other things
https://www.cnbc.com/2020/07/23/teslas-sale-of-environmental...
> sales of regulatory credits to other auto makers to help them meet emissions mandates, which carry a 100% profit margin, reached $518 million. That accounts for nearly 100% of Tesla’s $533 million in pretax income
it sounds like "almost all" would be a reasonable description.
Profit and expenses are choices; the fact that a firm puts all its revenue into SSG&A and R&D does not mean that they can't be profitable. If Tesla's revenue decreased by $533 million, they would probably still target $300-400 million in profit by adjusting their spending. They would do that because even at a lower revenue it still benefits them to report profit, and that benefit is still there even if they spend less on other things.
If a $533 million decrease would not lead to $0 profit, then it doesn't make sense to say that their profit comes from credits. It only makes sense to say that 7% of their revenue comes from credits, and that a significant (but not all, and probably less than half) part of their profit comes from credits.
As an long term investor I don't care about profits each quarter for a company like Tesla.
Other countries round the world are designing different CO2 reduction strategies, often without the ability to trade credits.
https://pbs.twimg.com/media/E0ES_LuX0AED-eo?format=png&name=...
It's worth a review if you think the emission credits point is a substantial criticism of their business model. Also, bear in mind that they are a growth company, and are building two major factories concurrently (Austin, Berlin). If they didn't have emission credits as part of the revenue blend, they might slow down the growth a bit as a result. The point being that taking away emission credits would not necessarily mean they would elect to be not profitable.
but nothing absurd. Note that trying to compare 2020 data will obviously be extremely wonky.
On the scale of Tesla, that feels like a tiny amount - for which they'd dip into their war-chest and not slow anything down at all?
https://twitter.com/elonmusk/status/1392602041025843203
Presumably they're donating all their profits from their BTC purchase to carbon offsets? Otherwise it's all worthless posturing.
There seems to be almost no incentive to preform actual labor when just sitting back and watching Coinbase 24/7 is objectively more profitable.
Labor should be tax free or low and capital gain should be taxed high. Time is more valuable than money and taxes should reflect that.
I understand the sentiment, but it literally isnt true. If it were, then noone would accept a job since they'd rather have the time instead. At the very least, there is more nuance to be observed here.
The person you're responding to wants 100% of their current healthcare plan but only half the salary/expected hours, for example.
I'm actually planning to cut my time in half, but keep the same pay. My story was discussed here on HN yesterday/today: https://news.ycombinator.com/item?id=27133376
Long story short: As the startup I'm working at doesn't have enough money to raise my hourly price, I'm now proposing to cut my hours in half, but keep the pay. So I'm working half the time, but keep the pay. It's summer now, so I'm happy to spend more time with friends and family.
And while we're talking about working less, another thing that's interesting I think is "4-day work weeks". There are remote companies who work 32h per week. I even made a list of the ones I know, but I'm sure there are more: https://remotehunt.com/remote-companies-with-4-day-work-week...
I wrote about this a while back: https://www.growwiser.com/2011/11/27/less-work-for-less-pay-...
Be warned though, you won't make the same batshit insane US salary here.
So, if we value air more than food, should we stop eating so we can breathe more?
I would conjecture people don't always work for rational reasons -> Billionaires going to the office must piss off everyone like dude, you've won the game, go buy an island or something. So work is a useful habit. Useful in that it's a source of revenue for the government. Which is good and I agree with. But that makes unemployment a wholly irrational thing. Can our economic models even include unemployment as a variable? Surely government must hear those unemployment stats like a cat scratching a board.
Should people have to lie, cheat, beg so that they can become tax paying citizens?
Or imagine the extreme, where capital gains was taxed 100%. No one would invest, we would all be essentially hunter gatherers. There would be no capital appreciation allowed so you would not be able to invest in anything in hopes of making a profit.
Capital is how you build a better future
This will likely never happen unless we have a true existential/societal collapse so why entertain this thought?
If you accept the fact that 100% capital gains tax would result in no investment and a 0% capital gains tax would mean a lot of investment, surely there is a link between cap gains and someone's willingness to investment. Especially considering that capital holders tend to be sophisticated and highly sensitive to incentives.
So increasing the capital gains tax would lead to less investment.
So if someone prices out a project where they can expect 10% return but now you tell them they are only going to get 9%, then the risk may not be worth it.
You may not think like this, but I guarantee you the people in charge of allocating capital do think this way.
The point of the OP was that work is generally more valuable to society than capital gains, but is taxed higher so there is a mismatch between the worth and how we tax it. Saying if we tax capital gains 100% nobody invests, does not add anything to the discussion as the same argument applies to work.
Is it though? Capital build a better future. It's more forward thinking than just working.
For instance, I want my children to forgo working and build capital for their future by getting an education. The foregone income would pay back more in the long run.
Which is it? Are corporations sitting on huge piles of cash or are they using the cash for stock buy backs?
US has relatively low savings that has gone down from about 10% in the 70s to a low of ~3% in mid 2000s to ~7% today (ignoring 2020 which shot up savings to 30+%). Compare that to China which has much higher growth which regularly saves ~36%
https://tradingeconomics.com/united-states/personal-savings
https://tradingeconomics.com/china/personal-savings
This is one of those "does not compute" statements that's sort of like dividing by zero. Money buys time, and time has value (https://www.investopedia.com/terms/t/timevalueofmoney.asp), which is measured in money.
It's why we try to incentivize long term investment, because without such an incentive, consumption now is better than consumption 5-10 years from now. We saw this happen before "long term" carve outs began proliferating in various states' tax codes.
Only when you look at it from the business owner perspective, who can simply buy more labor (time) to make more money.
For individuals, the only thing we have in this world is time, and it's finite. When it's all gone, it's all over for us. That means time is the most valuable thing possible to individuals.
If and when we choose we can sell some of that time for money. But money in not what we want, and it doesn't give us direct value. Time is what we all want, because sooner or later it runs out.
But this is a difference in degree, not kind. When the average individual buys something online, some individuals may choose to pay a little more for expedited shipping. It's the same principle. More abstractly, if I were to pose an individual looking to purchase Nike shoes 2 options: $100 to get the shoes today, or $1 to get the same shoes a year from now, the majority of individuals would choose the former, rather than the latter. Again, that's because of the time-value of money.
Now, you're correct that not everybody has the means to be able to buy time like this, but one can't conclude from this reality that time is "more valuable than" money.
> Time is what we all want, because sooner or later it runs out.
Yes, this is correct, and it reinforces the argument that time and money are just two currencies that are interchangeable. Money is just a proxy for value, and time is undeniably valuable. Not everybody has enough money to buy 70+ years of "free time", which is why the median person typically trades labor instead of money for future "free time" (retirement). In most countries that offer social security, that's the underlying mechanism: convert mass labor into money (taxes/contribution) which can then be converted into long term investment (sovereign wealth funds, SS trust funds), which is then converted to equally distributed "future free time" for everyone involved.
So the value of time very much depends on your stage in life and your finances and your goals. Spending your time working or doing things yourself can be a good trade if you have the time and need the money.
The “can’t work more hours” piece actually works towards your argument for finite time: why would you want to spend any of your outside-of-salary time doing stuff you don’t want to do that could pay someone less to do?
I recognize that's the result of a whole heap of privilege, but I don't have to work and still do because it fulfills my desire to build things and... well honestly, make money.
Trading is also a job you have to put effort in and one that does not appeal to me at all. I'd rather be programming.
Sometimes the stress and anxiety of crypto is physically debilitating.
But you're wrong that it's something you have to put effort into. The absolute BEST decisions i've made in crypto were inaction. The biggest regrets I have were all caving to anxiety.
The two are orthogonal rather than opposed categories.
You need a decent amount of capital to pull off the trading and renting. Unemployment isn't pocket change to those people, but it is not a lot.
Poor are poor. Middle class are screwed (money on bank account basically has negative interest due to inflation). So you can be a pseudo rich by just holding stock/bitcoin/peoperty - since they increase in value purely due to money print.
If you are a middle class person the central bank basically screws you to save the stock market.
Unpopular opinion but the central banks are the main source of inflation.
Now the economy is completely unglued from any fundamentals.
I mean, that seems obvious, there can't really be inflation if the money supply doesn't increase, can there?
If the money supply stays fixed, then some people will save/hoard money. Some people will also be more able than others to acquiring money (possibly because they already owned assets/rental property), maybe they were born rich. The amount of money that is circulating will automatically decrease. That tends to produce deflation.
The problem is that if you have deflation in your economy, it also increases the incentive for people to save/hoard money even more. Why would you spend your money today when it will be worth more later? You have a feedback loop where the amount of money circulating just keeps decreasing, and so prices automatically have to go down.
Depending on your definition, sure there can be. Private lending is the primary driver of inflation. Most wealth is on paper anyway, so long as people don't try to get actual cash, then an economy can experience significant inflation with a fixed supply of money.
You don't even need lending to drive inflation without a money supply increase. There are lots of bitcoin millionaires out there who can't actually liquidate their holdings for cash, but could, in theory, actually buy other physical goods with it at roughly face value.
Central banks don't have a monopoly on inflation, despite everyone's apparent belief that they do. They are a major influencer, yes, but at USD-scale, they don't have all that much control. You can see this in how the Fed almost always misses their inflation targets.
4% * $50 trillion = $2 trillion in just interest per year. The US Government will be at roughly that debt level perhaps within a mere 12 years at this point (assuming one normal recession in that time).
So as you can see, the US Government can afford no meaningful climb in the average interest rate it's paying on its swelling debt. Normally as a massive borrower gets more shaky in its finances, the rate it would expect to pay would climb at an accelerating pace with its fiscal implosion. To avoid that fate, the Fed has to step in and become the primary buyer of the garbage US Government debt (which will be endlessly recycled as they will never pay any of it down now). The financing problem with the US Government is so enormous at this point that there are no other nations or private pools of capital large enough to keep up with it on a consistent annual basis, currency debasement - eating the value of anything held in dollars, including most US assets - is all that is left to fully fund the government (and the entitlement costs will only keep spiraling higher this decade and next).
The stock market is a laughably trivial concern next to that problem. Which is also why one of Biden's immediate priorities is raising taxes (if they don't, the Democrats know it'll put the welfare state & entitlement programs they've put so much effort into building over many decades into jeopardy sooner (collapsing demographics may take care of that regardless)).
I agree with most points but that wasn't the main motivation. It was to keep the economy going in terms of people spending money when much real production was stopped due to covid. Now covid is mostly over, at least in the west, and spending is rising leading to inflation, bank printing will probably stop and the stockmarket fall. Which is not necessarily a bad thing.
What message is labor supposed to take from all of this? We are not valued at all, so why even bother? If society is set up to be a system where we all just trade paper and bits back and forth, then why do any productive work at all if you’re going to end up getting shit on?
I don't know but something seems wrong in the way work is incentivized. Is the market broken?
Like why this photo filter app boy/girl is super rich + has a lot of free time, and my friend nurse has very little money and works all the time?
They rather have negative effects I would say: like a bad impact on teenager's self esteem or something like that.
But yeah, it's our society and it's values :)
Perhaps it's more reasonable to say that providing a small amount of value to a larger amount of people is more profitable.
The world is full of people who simply aren’t capable of providing “value” at scale. Odds are that society gets better outcomes when the few who can do so pursue things like silly image filter apps (and sometimes actually useful things too) over nursing careers.
In a way, scaling/globalism seems to be working against us.
Let’s also not forget the possibility of highly valuable and highly scalable pursuits.
1. People with the talent to make high-value/low-scale products (e.g. medical imaging) are working on low-value/high-scale products (silly apps). This is similar to how our brightest minds are making people click ads.
2. Apple and the HN reality distortion field make everybody (even those without the skills) believe they can become rich by creating low-value/high-scale apps.
It has nothing to do with the market and everything to do with ease of creation.
Don't underestimate the value and utility of CRUD apps.
Automation and economies of scale has made it much more efficient to produce necessities. Yet society has failed to convert that into allowing the low classes to have more free time. Everyone needs to do some useless job to survive even if there is nothing that needs to be done.
And lots of suicidal kind of messages when the whole market crashes. So I'd say losses are as vocal as wins depending on which forums you go to.
I wouldn't be surprised for more daytraders to emerge playing games like GME/TSLA/BTC. With infinite printed money there never needs to be a greater fool. Shorts who go bust get bailed out, banks who bet long can pump the stock on near negative interest, Individuals can drive momentum to the point that other players leverage the money spigot.
After all as long as the money doesn't get withdrawn it doesn't impact the real economy right?
But I think what you're seeing is lots of fomo and people who had savings because they were forced to save (couldn't spend it), they should be back to their jobs when the market inevitably crashes.
Is it? I find that highly improbable.
the people that say shit like "unemployment payments encourage laziness" are talking about poor people, minorities and people of color.
The people you're referring to doing crypto trading are typically affluent already, or people in social structures and communities where they have places and people to fall back on.
And yet, as we all know, Tesla has been an amazing stock to buy over the last couple of years, and it was also so incredibly predictable [0][1]. If you haven't made money on Tesla, then it's because of titles like this. I would be furious with WJS and all other publications that have been talking shit about Tesla - they are doing you a disservice.
[0] This statement tends to get people riled up, but I noticed a pattern: people who agree are those who have driven a Tesla, and people who don't are those who haven't.
[1] The experience of driving a Tesla is unlike anything else in its price class. But that's subjective, so let me make another argument for why the stock should have been an obvious buy all these years: the brand value alone will continue to propel their sales for years to come. When someone says "I drive a BMW" and someone else says "I drive a Tesla," which one stands out more? People care about brands, as you can see in the rise of the Coca Cola stock in the last 30 years (btw, if you haven't checked out that graph, you really should). So if Coca Cola was a good buy and we celebrate Warren Buffett for recognizing that, on the brand thesis alone, Tesla should have been as well. But I guess you won't read that in the WSJ.
I wouldn't invest in Tesla because it's valued at a price/market capitalization worth more than all other car companies combined. This is before we get into the crypto currency hijinks or Elon's market manipulating tweets.
The valuation is insane and not supported by the current or future business.
The point I would drive home here is why trust a paper to give future guidance if their past guidance has been so spectacularly wrong? Again, the brand of the company alone was a strong signal that you never saw people write about.
True, it’s more akin to driving a prius than a comparably priced german car. Especially when looking at the higher end Tesla models.
> When someone says "I drive a BMW" and someone else says "I drive a Tesla," which one stands out more?
At least in Europe “I drive a Tesla” makes you sound like a taxi driver. It’s just not a cool brand anymore. (Maybe Cybertrucks and Roadsters will change this?)
I don't know the performance of the Prius you have driven, but a Model 3 is not on the same league with any Prius I've driven, and will leave any similarly priced BMW in the dust, performance-wise.
I love the performance, but it’s hard to enjoy it very much as a weekend car when the batteries can only take a couple of hours of aggressive driving. I had a taycan turbo s for a few months too, it was a blast (much more fun than any Tesla) for a few weeks until I got sick of the consistently disappointing battery life.
The same could be said about any new car in this segment if you disregard the competition. The Mercedes E-class interior looks like a nice spaceship, Audi and BMW deliver slightly different takes on the same.
What is it about the Tesla that resonates with her? The feel of a fully electric car? If so, can we expect to see Tesla decimated by German EVs coming out in the next couple of years? VWAG is clearly capable of pushing out a very polished product, and Mercedes is getting there too.
New e-class https://www.thecarexpert.co.uk/wp-content/uploads/2016/12/Me...
Tesla model 3 https://i.insider.com/5a86ea3ad0307219008b46c1?width=1136&fo...
I think it’s really hard to argue in favor of the Tesla no matter your tastes. Well, unless you are a vegan.
In Eastern Europe they are still significantly less cool than similarly priced ICE cars (at least among the segment of people who can actually afford to buy these cars). Teslas aren’t cheap cars, with the same money you could buy a status symbol used Mercedes G- or S-class that looks far more expensive than it actually is.
The design of the Model 3 doesn’t really make for much of a status symbol, the more expensive Teslas have either been driven for hundreds of thousands of kilometers or are priced almost in line with a decent S-class.
I don’t understand the games people play when certain financial numbers line up and they want to “give credit” for all the profit to one thing or another. It’s not reality, and it’s not how a company is run.
Tesla is trying to grow as quickly as possible, and will deploy as much capital to that end that they can do so reasonably efficiently.
They sold about $10 billion of product with a gross margin over 20%. That’s $2 billion of gross profit that can fund their growth. They also had ~$500 million of credits due to making all those cars, so it’s $2.5 billion in gross profit from selling cars that funds their future growth. Additionally they apparently reported another ~$100 million of capital gains from Bitcoin. That’s an additional 4%.
The Bitcoin did not drive their profit. The credits did not drive their profit. What drives profit — when selling a product with 20-25% gross margin - is how much you are spending on future growth. And they are growing at 50% YoY which is nothing short of incredible at their scale.
Tesla will never exceed today's version of Toyota or VW in terms of size. There's your cap. And that's all before the market is entirely flooded with EV competition.
AWS is a better profit machine than anything Tesla will ever produce. Tesla will never own half the automobile market, nor will they ever have AWS operating income margins (Tesla's operating income margins are typically 5-10% in a good quarter, and that's normal for the auto industry; which is half to 1/4 that of AWS). That's the reason Tesla will never have an Amazon-like result. It wasn't retail that made Amazon worth so much.
There's nothing special about electric cars, there's no magic that will expand the car market by ten fold just because they're EVs; there's no super margin jump that makes electric cars two or three times as profitable compared to selling a $45,000 BMW or Mercedes.
AWS can generate $20 to $30 billion in operating income on $100b-$120b in sales. It's very likely to get there at this point. There is almost no scenario where Tesla makes that much money selling expensive electric vehicles (and solar panels are a horrific business for generating profit, as is the battery industry). Tesla needs tens of billions of dollars in annual profit to float its market cap (and that's just to support where it's already at).
I was defending Tesla when a zillion people on HN were saying they could never mass produce the Model 3. I was right. I was defending Tesla when a zillion people on HN were claiming it was going to go bankrupt. I was right. Before that I was defending the Model S in its early days. I was right. And I'm right about this too, and it's very obvious Tesla's just going to end up as another automobile company (best case scenario). There's nothing special about being the next Mercedes, it isn't worth $500-$900 billion to be that.
If Tesla achieves FSD (big if) first, that is indeed some magic that will expand the car market by (not tenfold, but significantly) just because they're Teslas.
FSD semis is precisely some magic that will increase that market several times. (The fact that they have not actually shipped their human-driven semi yet notwithstanding.)
It's only true if probability of autonomous taxi fleet is zero. I'm not saying it's 100%, or even high. But even if it's 1%, then your statement is already incorrect.
Just like Amazon will never exceed the cap of Barnes & Noble?
- they have a massive amount of debt
- (many of them but not all) have a poor gross margin
- EVs are an existential threat that will likely destroy a couple of them, we just don't know which ones yet.
Any car maker that gets past all three points above AND has a VW or Toyota like market share AND has a substantial growth rate in its profit margin will likely have a trillion dollar market cap as long as we are still in a cheap capital market.
That's a lot of if's for anybody, including Tesla. And Tesla with a market cap of $1T in a decade is basically just keeping up with inflation, so not a great investment even if there weren't any risks.
Transportation and energy are both trillion dollar markets. They can support trillion dollar market caps.
But trillion dollar caps require Apple levels of profit risk, not car manufacturer levels of risk.
If so, that means they are OVERvalued.
I mean look at Apple in 2006, or 2008 for that matter. Nobody could have foreseen that they would create a completely new category that would have basically half of the rich world spending 1000 bucks every 2 years on a pocket computer.
Clearly Elon Musk is no Steve Jobs or Tim Cook, and Tesla is no Apple, but it's not impossible.
VW simply doesn't include a lot of the things Tesla would be doing themselves. Like service, power production, higher vertical integration, sales and so on. And that is excluding the possibility that Tesla could have a continues improvement on margin.
Not to mention Tesla is established in multiple ohter fast growing industry, solar, stationary home storage and grid storage.
Not to mention Tesla is making itself into a first rate battery companies that have lot of opportunity for other uses.
Not to mention the ongoing race for slef-driving (whatever many on HN think of their strategy)
Not to mention that all Musk companies have been growing pretty consistently and Elon always has a 'next big thing'. Look at SpaceX with Starlink and Starship. He has been talking about an electric plane for 10+ years and eventually that will be a natural extension of what Tesla does, batteries, electric engines (not to mention the connection to SpaceX).
And to answer the other responder's response about Amazon - Amazon raised money twice, totaling $108M. Tesla is still raising money $20B later, they are funding their efforts primarily off investors not their own operations.
[1]https://cbeci.org/
Bitcoin mining CO2 output is larger than American Airlines or 8.9 million cars: https://fortune.com/2021/05/13/musk-bitcoin-mining-bad-plane...
I did some Googling and I can't find whether or not Tesla holds any Dogecoin. I don't think so? All I can find is that Elon personally bought some Dogecoin for his child.
Do you put it in something like a managed or robotrader account? ...do you put it in bitcoin or crypto?
Their long bet on cryptocurrencies is smart given instead of shedding electrical load into the ground, Tesla can probably recoup the electricity to power micro mining. There is so much fashionable hating on Musk, and that he manages to survive it means those people don't see what he does.