[prolly97]

When I followed TeslaQ, the valuation was around 60b. Today Tesla has 39b in accumulated retained earning (pr latest 10k, not q).

If the thesis was that Tesla would be unable to create a system that would churn out cars that could be sold at scale with an economic surplus, then we have to reject it.

[bryanlarsen]

And Elon has also acknowledged that they came within a hair of going bankrupt during that model 3 production ramp up. Tesla was either going to go bankrupt or become quite valuable, and their proper valuation would have been based on the unknowable odds of the two scenarios. Maybe it wa a 1% chance of going bankrupt, maybe it was 99%.

[rich_sasha]

I mean. Sure. Value is ultimately what someone will pay for something, and the name of the game is to buy low and sell high. People who bought TSLA made money.

The point is, it's completely irrational - like winning lottery 3x in a row. Tesla's PE ratio, depending on how you look at it, something like 200-350. That means that if nothing changes, the expected return of earnings on your investment is 0.3-0.5%. You'll struggle to find a riskless fixed income instrument paying this little.

Ok, so clearly that's not why people buy this. They hope the earnings will increase, and/or the value of the stock. Seeing as you can lock in 4.5% riskless yield for 10 years, you'd hope for at least this much from a stock - realistically much more. Let's call it 7% - still low methinks but so be it. That's 14-25x more than it earns now.

You could say you don't care about earnings - just about price increase. Sure. But even to maintain the meagre PE ratio, earnings would have to double over 10 years. But realistically - this PE seems crazy for anything other than a crazy-high-growth stock. Which maybe Tesla is now but can't be forever. If it crawls down to a meagre 50x PE in 10 years time, to make your 7% return, earnings would still need to increase 8-14x in that time.

Maybe they can do it. They now sell, apparently, about 2% of all cars. No idea if total car production is stable; if it stays the same, and their margins stay the same, Tesla would need to increase their market share 8-14x too, to 16-28%. Maybe they can improve their margins and sell fewer cars, yet make more money - but typically increasing market share comes with lower profit margins as you lower the price to sell more stuff.

This is a veery bullish scenario. This is something an investment analyst for any other stock would need to sweat blood to argue. Yet this is what youre committing to when buying Tesla today.

Of course none of it really matters at the end of the day. Prices can levitate forever given enough believers. Wars can apparently be declared won with tweets with nothing to back them up - repeatedly. But if you think reality will come at some point, this is what is needed for Tesla to make sense as an investment.

[ggreer]

Tesla's valuation is high because investors expect them to sell goods & services other than cars, such as autonomous vehicle rides and humanoid robots for domestic & industrial use.

Who knows if they'll be able to pull it off, but an analysis that treats Tesla as a car company misses why investors have priced so much growth into the company.

[rich_sasha]

It remains the case even then that they have to create an insane amount of value, not merely to grow but to catch up to their current valuation.

But hey Pokémon cards and meme coins and NFTs don't generate any revenue and yet you can make money buying and selling. Up to a point typically.