26-02-2017, 03:06 PM
Why Tesla's valuation "makes sense": http://seekingalpha.com/article/3994790-...g-currency
Market Cap of Tesla: $38.75B
Market Cap of Uber: $68B
Both companies do not make a profit since inception, but are perceived to be likely to disrupt the auto industry (~$2 trillion annual global sales).
Every fund raising (by issuing new stock) by Tesla is a reaffirmation of it's current market cap; book value per share after cash infusion increases after every capital raise, even after taking into account dilution.
[Image: XhfUzCr.png]
Moat of Tesla:
* Elon Musk (cult of personality around him, easier to push regulation, raise capital etc.)
* Tesla brand (cult following like Apple; 400,000 cash-backed pre-orders years before Model 3 official release)
* Gigafactory (vertical integration, billions of capex spent over several years, lowest cost to manufacture and largest battery density)
* Supercharger Network
Strength of Tesla:
* Disruption/optimization at every point of supply chain and business (direct to consumer sales, issue own car insurance, self-driving capabilities, viral marketing, desirable car design, financial engineering)
* Cross-selling Powerwall and Solar Panels with Tesla Cars using same retail store
* Leadership in Battery Technology and Self-Driving Technology, 2 inevitable industry trends
Risks
* Highly over-value by traditional valuation matrics (P/E, P/S, P/B etc)
* Still loss making (and high cash-burn rate; due to capex investment for production ramp)
* Regulatory challenges (Trump believes Climate Change is a Chinese hoax)
* Auto-industry highly competitive and capital intensive
Quote:Summary
* When the SolarCity acquisition was announced, even Tesla shareholders were slightly confused.
* After announcing his 'master plan', Tesla shareholders seem to have completely ignored some of the large underlying problems at SolarCity.
* While shorts see this as the nail in the coffin for Tesla, what Musk is doing may resemble a strategy used by master capital allocator, Henry Singleton.
* Why use dollars when you have your own form of overvalued currency?
Market Cap of Tesla: $38.75B
Market Cap of Uber: $68B
Both companies do not make a profit since inception, but are perceived to be likely to disrupt the auto industry (~$2 trillion annual global sales).
Every fund raising (by issuing new stock) by Tesla is a reaffirmation of it's current market cap; book value per share after cash infusion increases after every capital raise, even after taking into account dilution.
[Image: XhfUzCr.png]
Moat of Tesla:
* Elon Musk (cult of personality around him, easier to push regulation, raise capital etc.)
* Tesla brand (cult following like Apple; 400,000 cash-backed pre-orders years before Model 3 official release)
* Gigafactory (vertical integration, billions of capex spent over several years, lowest cost to manufacture and largest battery density)
* Supercharger Network
Strength of Tesla:
* Disruption/optimization at every point of supply chain and business (direct to consumer sales, issue own car insurance, self-driving capabilities, viral marketing, desirable car design, financial engineering)
* Cross-selling Powerwall and Solar Panels with Tesla Cars using same retail store
* Leadership in Battery Technology and Self-Driving Technology, 2 inevitable industry trends
Risks
* Highly over-value by traditional valuation matrics (P/E, P/S, P/B etc)
* Still loss making (and high cash-burn rate; due to capex investment for production ramp)
* Regulatory challenges (Trump believes Climate Change is a Chinese hoax)
* Auto-industry highly competitive and capital intensive