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by CHY872
1470 days ago
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Apple are down 26% ytd. It wouldn’t be unheard of in this market. What should hopefully be clear is that stocks such as Tesla are not particularly correlated to the fundamentals of the company, there are whole-economy effects driving price rises and drops. What I see in Tesla:
- extremely profitable car manufacturing. industry beating profits per car driven by cheaper BOM than legacy manufacturers, in large part due to innovation. margin of 30.5%.
- Manufacturing limited - huge wait list despite accelerating production (Q1 2022 best quarter ever, 68% increase yoy).
- huge investments in manufacturing across the supply chain starting to pay off.
- for the first time, manufacturing investments that can rival premium legacies. With the factories in Berlin and Texas coming online, it’s believable that Tesla has capacity to produce in excess of a manufacturer like BMW.
- very high purchaser satisfaction (the product is good).
- large overall profit - already beating most in the industry. |
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We'll see how Telsa's finances go once competition heats up. A major source of profit for them is selling emissions credits to other companies. Which a) undercuts Tesla's claims to eco-goodness, and b) will surely decline as others EV sales pick up. We'll also see how much that profit is affected by recalls and lawsuits.
In many cases, high customer satisfaction is indicative of a good future, but I'm not sure that's the case here. One, their satisfaction is in the same range as a lot of car companies, including BMW and Honda [1], so it's not a competitive advantage. And two, their current user base is a technophile, early-adopter niche. It's not clear that Tesla can cross Moore's Chasm and serve a mass audience that doesn't care who Musk is.
I look forward to seeing how it turns out. But given the way Musk is flaming out in his attempts to buy Twitter, his success is clearly not guaranteed. And that's before we account for him being distracted by trying to run 3 big companies at once.
[1] https://www.theacsi.org/news-and-resources/press-releases/20...