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re: Investing In Tesla
Posted on 4/27/17 at 1:01 pm to Novae
Posted on 4/27/17 at 1:01 pm to Novae
forget the software aspect of it. Tesla outsold every single brand in the $100k+ segment last year, what makes you think they wont do the same in lower end segments? That's a serious question, the model 3 has 600,000 pre-orders no bottom of the barrel car from mercedes,bmw,toyota,nissan, etc has ever had that type of demand. The demand was so rich that these people paid $1000 24-30 months in advance of delivery to secure a spot, big auto could only dream of that type of hype.
When you factor in tesla margins from direct sales vs the margins of big auto which rely on servicing cars and less on the actual sale of cars, you have to wonder why tesla is being grouped in with ford and gm when its shown significantly higher margins and elon musk has bonus clauses in his contract that include 30% gross margins, so he's going to do all he can to get them there.
I think when you look at tesla and see the cars + the supercharger network + tesla energy + self driving platform + tesla hardware as a service in a few years + any other brilliant thing musk has in store, the concept of getting all that for a mere $50B just bc profits dont exist now seems like the steal of steals to me. From a risk/reward standpoint you're talking possibly 50-75% downside and potentially 1000s of percent of upside and in the end thats what investing is, trying to maximize upside.
Is it the safest investment? No it isn't but Musk has done nothing to this point to make me doubt him, so Im willing to risk substantial money on Tesla not just surviving but completely dominating a decade down the line even though the profits aren't there today, the demand certainly is.
When you factor in tesla margins from direct sales vs the margins of big auto which rely on servicing cars and less on the actual sale of cars, you have to wonder why tesla is being grouped in with ford and gm when its shown significantly higher margins and elon musk has bonus clauses in his contract that include 30% gross margins, so he's going to do all he can to get them there.
I think when you look at tesla and see the cars + the supercharger network + tesla energy + self driving platform + tesla hardware as a service in a few years + any other brilliant thing musk has in store, the concept of getting all that for a mere $50B just bc profits dont exist now seems like the steal of steals to me. From a risk/reward standpoint you're talking possibly 50-75% downside and potentially 1000s of percent of upside and in the end thats what investing is, trying to maximize upside.
Is it the safest investment? No it isn't but Musk has done nothing to this point to make me doubt him, so Im willing to risk substantial money on Tesla not just surviving but completely dominating a decade down the line even though the profits aren't there today, the demand certainly is.
2
Posted on 4/27/17 at 2:10 pm to dabigfella
Good info dabigfella. I bought almost 30k worth today based on this thread. Plan to add to it every other week.
Posted on 4/27/17 at 3:32 pm to dabigfella
The lower end segment is a completely different ballgame than the $100k market. Most of the early buyers have great credit (if they didn't just write a check) and have another vehicle in the garage in case the Tesla needs works or they have to drive farther than the range allows. I would argue that the demand for the Model 3 is somewhat of a bubble as well. A $1000 refundable deposit on a vehicle that is so hot that it will probably command a premium on the secondary market is an appealing place to park $1000 risk free. Plus, if you own the stock you are plugging some free marketing as well.
The margins will be nowhere near their current levels on a volume vehicle. Add in the extra servicing, merchandising, and general support necessary to facilitate the additional millions of Teslas on the road and you're cutting in to those margins awful quickly. He may have a margin bonus built in to his compensation, but that doesn't mean anything in the overall scheme of what he will do to make Tesla successful, or just stay afloat.
Investing is not about trying to maximize upside; otherwise you would be on the Penny Stock thread. Investing is about weighing risk and return and accommodating your risk threshold. Sometimes great investing is minimizing your downside. Everybody's willing to be risky in this current environment. There were only a handful willing in 2008.
Look, I love Elon Musk. I've liked and followed him through the PayPal/Thiel days then went all in on him with SpaceX. I love the idea of Tesla, and SolarCity for that matter. I just think a good idea coupled with his charisma and past successes is leading everyone to the conclusion that this will be the next "it" company. The automobile business is a capital intensive business. Many have had a very good idea and failed. Elon has gotten further than most, but I still think that Tesla will fall short of its ambitions and its current valuation.
The margins will be nowhere near their current levels on a volume vehicle. Add in the extra servicing, merchandising, and general support necessary to facilitate the additional millions of Teslas on the road and you're cutting in to those margins awful quickly. He may have a margin bonus built in to his compensation, but that doesn't mean anything in the overall scheme of what he will do to make Tesla successful, or just stay afloat.
Investing is not about trying to maximize upside; otherwise you would be on the Penny Stock thread. Investing is about weighing risk and return and accommodating your risk threshold. Sometimes great investing is minimizing your downside. Everybody's willing to be risky in this current environment. There were only a handful willing in 2008.
Look, I love Elon Musk. I've liked and followed him through the PayPal/Thiel days then went all in on him with SpaceX. I love the idea of Tesla, and SolarCity for that matter. I just think a good idea coupled with his charisma and past successes is leading everyone to the conclusion that this will be the next "it" company. The automobile business is a capital intensive business. Many have had a very good idea and failed. Elon has gotten further than most, but I still think that Tesla will fall short of its ambitions and its current valuation.
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