So I've got burned buying Tesla stock for $1,180. It was briefly down to $950 today.
When I bought the shares in early November, there was a lot of euphoria, with predicted near-term price targets of up to $1,500, but now suddenly, everybody says it's way overpriced, even at $1,000. And not only is Elongated Muskrat dumping ten percent of his shares, but institutional investors seem to be shunning Tesla as well.
Will my investment still appreciate, or am I screwed for good? Some analysts have now set price targets at less than half the stock's current value.
Naaah you think?
Even Elon himself has been telling everyone it's overpriced for years.
The share prices have been riding on a wave of hype for a long time now, now that they're actually selling enough cars to make money they don't need the money from share sales to keep running. I doubt they'll ever crash much lower barring any major catastrophe but I think it's fair to expect mostly stagnation around the current levels.
I don't understand, it sounds like you did more research than me but you somehow thought it was good to go in at a record high price 400 points above where it's plateaued for months?
Tesla isn't a real stock. It's an order of magnitude more valued than any other similar stock, it's way more volatile to boot, and it's often a proxy for investing in Elon directly. He held a fucking twitter poll on selling 10%, it's not safe.
So it could go either way! But it's not the early 2000's any more, if you're investing in Tesla long term then - more than usual - you must be willing to throw away that money. It's a complete gamble and you could ignore the news for a day and miss out on a great sell. Not that I know what I'm talking about, my portfolio's something like -50%.
If you wait long enough, you should eventually get an opportunity to cash out for a profit. Quite when that will be, nobody can say. But people are only going to buy more electric cars, so I'd assume you'll be doing all right within 5-10 years. Maybe even sooner!
If any share price is as good as the next, and if it's all just silly buggers anyway with Tesla, then what's to stop that stock from doubling yet again. The current price earnings ratio is about 100, which is daft in its own right, but you can't say that a PER of 200 would be fundamentally more daft. There are also rumours about a stock split, perhaps even this week, as Musk apparently has a big public announcement planned for December 9. Stock splits often lead to an increase in the mid-term, as liquidity suddenly increases.
I'll admit I took a gamble, and I know you should never allow yourself to be swept by euphoria, but it seemed like a good bet, in the literal sense of the expression.
I never got into crypto, because I figure even with a stock with a lofty valuation, you still have a physically existing company which has tangible assets, and which has a business strategy, and which will by and large have an idea how to make money in the near future and pay its shareholders. It can still falter and end up coming to nothing, but with Bitcoin etc, all you literally have is the hope that somehow for some reason, the price will just keep going up, frequent dramatic crashes notwithstanding.
What I underestimated with Tesla is that Elon Musk runs his company like a pound shop Donald Trump, and can move the company's share price seven percent in either direction with just one tweet. I read somewhere that he's a diagnosed sperg, which might explain why he often makes his announcements at somewhat odd points in time.
Isn't the whole market overvalued anyway? With all the silly money printing exercises, the low interest rates, wouldn't all that money just be used to inflate shares?
I'm not sure the dotcom bubble is a fair comparison, because it was marked by a market wide astounding naivety by institutional investors and retail investors alike that this wondrous new thing called the Internet would offer unlimited possibilities - and unlimited return on investment - as long as a company even remotely had anything to do with the online world.
Even with exuberant valuations as we are seeing them today, there is much more realism in the investing world nowadays. The problem isn't wide eyed investors with a scant grasp of the possibilities, it's that there is just too much cash and liquidity going around. And the more money is earned in the stock market, the bigger your problem gets of reinvesting profits for the same kind of return on investment. Which then again drives stock prices up.
To be fair, Microsoft were legitimately shit for most of those stagnant years. Things only picked up when they finally sacked Steve Ballmer and got a proper CEO in 2014. They didn't recover from the dot com crash, they recovered from being a bobbins company run by a deranged idiot. If anything, they were overvalued for most of those years.
For better and for worse, Tesla is a tech company that happens to sell cars rather than an automotive company. They're still pretty green when it comes to actually making cars, but they're a decade ahead of the rest of the industry in many key areas of technology.
The rest of the industry has been in crisis for most of this year because of chip shortages, but Tesla design most of their chips in-house rather than buying commodity parts and so have control over their supply chain. Tesla still struggle to put body panels on straight, but they own their battery factories and so don't have to get in bidding wars with everyone else for commodity batteries from LG Chem and Panasonic.
I think Tesla are undoubtedly somewhat overvalued at the moment, but they have a number of key advantages in areas that didn't used to matter but are now fundamental. Tesla can become a serious volume manufacturer through iterative changes to their processes, but the legacy manufacturers need a radical culture change to adapt to the near future of all-electric vehicles. None of the legacy manufacturers could turn a profit on making the Model 3, but Tesla can make 30% profit because they control their own supply of the expensive bits.
Hyundai and Kia are in good shape because of the depth of their supply chain, but the rest of the industry is fighting for survival whether they realise it or not. The UK will ban new petrol cars in 2030, the rest of Europe isn't far behind and China is way ahead of us; the legacy manufacturers just aren't acting with the urgency required. They're Kodak in the late 90s - they're making tons of money right now, but they need to totally reinvent their business just to survive.
The only serious threat to Tesla are BYD, who are really their Chinese counterpart. BYD understand on a fundamental level that the future of the motor industry is all about batteries, chips and software.
>>9028 Right now a big chunk of Teslas profits come from emission trading schemes in the EU and other countries, i.e. all the other manufacturers are paying tesla hundreds of millions a year to lump the emissions of the petrol and diesel cars they sell in with Tesla to save them from fines. Right now this is Teslas strongest card but it's also a massive liability because as other manufacturers start selling more electric cars, then Tesla has to grab a bigger and bigger market share just to maintain the same revenue.
I guess Tesla will always draw on and profit from its reputation as a pioneer of the EV mass market. That will always be part of their brand identity. Even if their debut Tesla Roadster in 2008 was just a heavily reworked Lotus Elise, it was light years ahead of anything which established big-name automakers had in their portfolio at the time. Musk's stroke of genius was to package EV technology into a sleek, desirable sporty road car for everyday use, at a time when most other EVs were clunky, impractical and power hungry.
That said, being a market pioneer is no guarantee that you will always dominate that market. Tesla may have had the advantage of being a small, agile newcomer as a car manufacturer which was not hampered by rigid, slow moving corporate structures like the big traditional automakers, but competition never sleeps, and those big names are now really catching up.
There is still a good deal of brand loyalty among car buyers. And with a relatively brief corporate history, once all the early adopters and brand switchers have bought their Tesla, the question is going to be if somebody who has always driven a VW Golf with a combustion engine will switch to Tesla, if VW are offering a very similar car, but with Volkswagen's long history as a brand with predictable product and service quality to back up an extensive buying decision like that of getting a new car.
A lot of them are in desperate trouble, because they don't have the supply chains or the engineering agility. An EV might look like a petrol car, but it's a totally different thing to build, requiring different competencies and resources. A couple of examples:
Honda have one pure electric car in their range. It looks great, but it costs £29,000, has a real range of about 105 miles and doesn't support rapid charging. Honda know how to build a good car, but they can't get their hands on nearly enough batteries. Even if they made a 100% commitment to electric today, it'd take them 5-8 years to get the deals done to secure a proper battery supply. Tesla have been in joint ventures with Panasonic and LG Chem for over a decade, guaranteeing them a supply of precisely the type of batteries they need.
A Tesla Model 3 has five electronics modules. A Volkswagen ID.3 has 58. Tesla designed the entire electronics system from the ground up, with a number of bespoke chips; Volkswagen used off-the-shelf modules from ICE cars and third-party suppliers. Tesla owners get far more sophisticated features, Tesla dealerships can fix electronics faults in a matter of minutes by just swapping out a module and Tesla save hours on the production line because of the vastly simplified wiring.
There's a lot wrong with Tesla, but most of the major motor manufacturers are in deep shit because they've left it too late. The Chinese manufacturers are way ahead of them in value and scale, while Tesla are way ahead of them in terms of technology. Ten years is not a long time in the motor industry, but it's an eternity in the tech industry.
We've sort of been here before. Back in the 1970s, Japanese manufacturers wreaked total havoc on Western car makers. Japan figured out how to make affordable, efficient cars just in time for the 1973 oil crisis. The Big Three American manufacturers saw their market share collapse because nobody wanted huge V8-powered barges and still hadn't figured out how to make good small cars by the second oil crisis of 1979. Chrysler and GM weren't killed off, but they've never recovered their 1960s levels of market share and profitability despite vast government bailouts and relentless protectionism.
What is true enough is that Tesla had the advantage of being able to engineer an EV almost from the ground up, and pretty much build the entire company around that premise. Traditional automakers, on the other hand, have massively complex supply chains, for a massively complex product. I've worked on my own combustion cars for more than half of my life, and I'm good at fixing anything VW in particular cranked out until about the early 2000s. But with more modern cars, I'd be entirely out of my depth changing anything more than the wheels or a control arm or tie rod.
Car design and engineering has traditionally always been incremental. Which, again, led to conventional cars becoming ever more complex. But Tesla have just said, right, here's a modified Lotus bodyshell, we're going to stick batteries and an electric motor in it, and Bob's your nan.
As you said, the key to Tesla's success and profitability is high vertical integration and product simplicity, while at the same time still delivering a product that appears to potential customers as sleek, desirable and packed with features. Tesla probably shook up the car industry more than the Oil Crisis in that respect, turning the entire supply chain and production side of their business model on its head.
It still doesn't mean it's guaranteed that veteran VW Golf owners will switch to Tesla in droves and not consider buying an ID.3 instead. Product quality (and the perception of it) is different things to different people.
>It still doesn't mean it's guaranteed that veteran VW Golf owners will switch to Tesla in droves and not consider buying an ID.3 instead.
The problem for the likes of VW will be margins. The traditional auto makers are very good at shaving fractions of a penny from the zillions of parts in a complicated ICE car, but those skills count for much less when literally half the price of an EV is the battery.
Whether or not we see loads of VWs on the roads is almost immaterial to VAG's share price - the question is how much value they can capture. Unless people are willing to pay a very hefty premium for that badge or VAG can completely pivot their supply chain, VW will end up making very thin profits by essentially rebadging Chinese-made EV platforms.
Tesla can make Apple-like profit margins, the Chinese manufacturers can offer Chinese value for money, which doesn't leave a lot of room in the middle.
Hydrogen was never all that promising, but the oil companies got behind it because it'd give them something to sell. In theory you can produce zero-carbon hydrogen through splitting water, but it's far easier to extract it from natural gas.
Toyota will sell you a hydrogen-powered car right now, but it's not a particularly attractive option. The base model costs £50k, most of the boot is taken up by the hydrogen tank, hydrogen is more expensive than petrol and there are a lot more fast-chargers than hydrogen fuel stations. Unless there's a massive breakthrough in hydrogen production, it's basically the worst of all worlds.
>>9036 And hydrogen is a shit fuel, it's not dense, so you need a lot of tank volume at pressures that are high enough to be really tricky engineering - heavy and expensive, even compared to batteries. It also embrittles metals it touches, which is inconvenient -even heavier and more expensive. You can store it in liquid form, which is even heavier and more expensive and your tank boils dry in a week or so.
It may, some day, be possible to sore it adsorbed onto a matrix of something and pull it off when you need it, but not (usefully) yet.
Sensible people glom the hydrogen onto some carbon, when it becomes manageable, dense, easy to store, easy to burn, an interchangeable with other hydrocarbons.
Hydrogen marginally makes sense if you're NASA launching cost-no-object shuttles or the most performant deep space missions, but it's so annoying that, despite the lesser performance, far more rockets use methane or almost-diesel as fuels.
Anyone evangelising hydrogen is either shilling for big oil or just ill informed.
I always admired BMW's attempts to develop a mass compatible hydrogen combustion engine. The project has since been discontinued, but for a while, it looked like hydrogen combustion was a feasible alternative to petrol or diesel.
They did run into many problems, e.g. they had to redesign the air intake and injection system, and another problem was that hydrogen is much more flammable than petrol, but at the same time, igniting hydrogen displaces less volume, i.e. like-for-like in terms of thermal units, your bang from hydrogen is smaller than that from standard petrol. They were able to solve that problem with variable valve timing, but also, the piston rings had to be designed to fit more tightly, because H2 molecules are much smaller than the constituents of petrol, so the hydrogen tended to escape past the pistons into the crankcase, where it would accumulate and could then blow up the entire engine.
Also, there were environmental concerns, because in order to produce enough molecular hydrogen, you have to expend many times more energy than the energy content of your hydrogen. Switching to H2 as a main energy carrier for future cars would therefore not have solved our energy crisis, especially considering that in many parts of the world, the electricity that is needed to separate hydrogen from water through electrolysis is often still derived from burning fossil fuels.
