@kathygriffin On principle or from an investment standpoint?
The former is always understandable. But never make investment decisions based on emotion. Unless the business case has radically changed in the past couple months, it's an emotional decision.
I choose the opposite path. The company's fundamentals remain incredibly strong. Hence I'm focused on decreasing Elon's power via shareholder resolutions.
@Timmy @kathygriffin I'd start with this thread.
https://fosstodon.org/@nafnlaus/109354768737444130
But there's so much more than this - this could be a multi-hour conversation.
Attached: 1 image @[email protected] @[email protected] Okay... let's go into all the things that's wrong with this statement. Starting with: 1) You don't have to "propose wagers". That's what the market is for. You can short Tesla. That's how you "wager" on it going down. You can short the stock directly, buy PUTs. or sell CALLs. 2) Tesla reports quarterly. Here's the quarters thus far. *Good luck* getting a "50% year-over-year drop". Tesla will be growing nearly 50% YoY.
@Timmy Okay, a few basics.
1) #MarketCap is not "what a company is worth". Market cap is what the fraction of the company *owned by stockholders* is worth. Stockholders are near dead-last on the pecking order of corporate assets. Things like debt are near the top. Old-school #automakers
are loaded up in debt and other obligations, and those creditors own most of those companies - thus leaving less available for stockholders.
The question to ask yourself first off is thus...
@Timmy ... not "Why is #Tesla as valuable as it is?", but "Why are other automakers, which are producing huge numbers of extremely valuable objects, not valued more than they are?" And that's a large part of it. Tesla by contrast is nearly debt and obligation free; stockholders own essentially the whole company.
2) Valuations are not a trophy for past achievements. Past achievements matter for basically nothing whatsoever in stock valuations. And the present very little.
@Timmy The valuation of a company is the net present value of the future net income (profits) of the company, evaluated as a #MonteCarlo simulation to discount for risk and varying scenarios.
3) It is not randos on the internet who drive the price of such a large company. They *can't* - it's simply too big. It's institutionals, doing the above sort of calculations. Cold, by-the-numbers investors. Retirement funds, hedge funds, sovereign wealth funds, etc etc.
@Timmy They're the ones who own most of #Tesla, and they're the ones who drive the price. Some base it on analyst estimates, others on their own internal experts.
4) Analysts do not simply take Tesla's forecasts at face value. Their forecasts are *way* more pessimistic than Tesla's, and IMHO, insanely pessimistic. And always have been, which is why Tesla keeps making these easy beats in the long term.
@Timmy 5) "The number of offerings" is an entirely irrelevant metric. And not simply because most people start out by choosing "Tesla or non-Tesla?" and then if the answer is "non-Tesla", picking a model among the rest. Rather, there are two key numbers of relevance:
A) Volumes
and
B) Margins.
And quite simply, #Tesla *crushes* on these fronts, Has been crushing, continues to crush, and by all reasonable measures for the forseeable future, will continue to crush (you can't grow faster than..
@Timmy Nobody is going to value these companies much for their *internal combustion vehicles*, because valuations are the net present value of *future revenues*.
You either grow margins and volumes on ***EVs***, or you die. It's that simple. & others keep failing to do so in comparison, despite years and years of trying. It's not that they're not improving - they absolutely are. It's just that Tesla is improving faster, which puts pressure on the market on the capabilities-vs-price point axis.
@Timmy Thus pushing their margin gains back down. Some day they might accelerate faster than Tesla in reducing COGS, this most crucial of metrics - but there have been no signs of that yet.
6) Let's detour for a second to the sideshow that is credits. While Tesla has many markets, the US is the largest. And thusfar, the US has been paying taxpayers $7500 each to NOT buy a Tesla. That changes 1 January. And indeed, it may well reerse. There's rather strict requirements on the new credit...
@Timmy ... under the #InflationReductionAct, but #Tesla has suggested that they'll be able to meet them. It's questionable whether their competitors will meet the full - or even half - credit. So the US looks to be poised to be shifting at least net $7,5k to Tesla's favour, possibly at as much as $15k.
And that's just part of the act, because there's a ton of others incentives in there, including HUGE incentives for domestic #battery manufacturing. Which nobody even compares to #Tesla on.
@Timmy In recent quarters #Tesla's two new factories - #GigaBerlin and #GigaAustin - have been holding back their margins. Because new factories always do - you have to amortize a lot of cost with low production. But as production scales, new factories turn from margin sinks to margin boosts. And this is happening with two factories simultaneously.
It's not all roses - Tesla's third major market is #China, and their economy is cratering right now. I expect more price stimulus there...
@Timmy ... to match, but thankfully #GigaShanghai has extremely low COGS, and after the recent upgrade they should have fallen even more .
7) I could talk a LOT more about the automotive side, but I'd rather detour. Because analyst valuations for #Tesla are based almost entirely on the automotive side and value everything else #Tesla Energy, #FSD, #Optimus, etc at nearly nothing by comparison.
I'm neither a #FSD optimist nor an optimist about #Optimus. Likewise, while I think the solar...
@Timmy ... roof has great potential on new construction, I question its viability on retrofits, and the long scaleup opens up the path to competitors.
But what I think the market HEAVILY undervalues is #GridScaleStorage.
Right now, there is a quiet revolution going on in electricity grids: large battery facilities are killing the traditional grid services market, with far better economics - limited only by the extremely tight supply of grid-scale #batteries.
@Timmy But right now such grid-scale battery systems cost ~3-4x what the cells themselves cost. As produtions scale up and the ratio of energy-to-power rises, these will converge toward cell costs. Yet cells are in turn en route to halving in cost over the next few years. So there is going to be huge drop in product prices, which will open up the market exponentially - pairing w/the continued rise of wind & #solar.
Grid-scale storage will take a large minority of global electricity spending.
@Timmy Which is a MASSIVE market, and Tesla is positioning itself to be one of the largest players in it. Their grid-scale storage products have been growing faster than automotive, but they're finishing up their first Megapack factory right now, which will 10x their capacity, and simultaneously those first steps toward converging product costs with cell costs.
It's a MASSIVE market that's valued at almost nothing.
@nafnlaus won’t raw material supply become hugely challenging if we are to support such an explosive growth in the industry?
I’m also a lot more pessimistic about Tesla’s ability to scale up vehicle production, and whether there will be a global economy that supports high-dollar electric vehicles in 3 years time
@TheExecutiveEditor My primary concerns with Tesla relate to how it go to where it is.
Tesla didn't reach its position due to Elon micromanaging and engineering everything. It's a company of over 100k people. But Elon positioned it in a way that attracted ideologues, so Tesla got its pick of the best and was able to motivate them to work hard and innovate "for the mission".
And my concern now is that his former ability to *attract* such people will now more *repel* them.
@TheExecutiveEditor This wouldn't happen overnight. But over the course of years it would slowly rot the company from within. That's why, while I'm very positive on Tesla's status and future, I think it's important to decreasingly separate #ElonMusk from being the public face of #Tesla. #CTO is fine. But it's damaging to be seen as "The #Elon Company" when he's acting this way in public.
It's why I'm involved in #ShareholderActivism
@TheExecutiveEditor This year, I've submitted a resolution to force the #Tesla board to draft and maintain a #KeyPersonRisk strategy to prepare for the possibility of his departure. Which isn't a very radical or confrontational approach to take - I could have gone directly for removing him - but I think strikes a balance. Hopefully #ElonMusk will back off and stop undercutting the company like he's been doing recently.
I will however help others submit other resolutions, of any variety.
Kathy Griffin
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timmy
TheExecutiveEditor
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