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Businesses Transportation

Tesla Becomes Most Valuable Automaker in Latest Stock Rally (reuters.com) 118

Tesla on Wednesday became the highest-valued automaker as its shares surged to record highs and the electric carmaker's market capitalization overtook that of former front runner Toyota Motors. From a report: Tesla shares gained 5% in early morning trade to a record of $1,133, boosting the company's market cap to $209.47 billion - roughly $6 billion more than Toyota is currently valued by investors. Tesla is now worth more than triple the combined value of U.S. automakers General Motors Co and Ford Motor Co. The shares' meteoric rise, up more than 163% since the start of 2020, highlight growing confidence among investors about the future of electric vehicles and Tesla's shift from a niche carmaker into a global leader in cleaner cars. After several years of losses, Tesla has delivered three straight profitable quarters since the third quarter of 2019 and surprised investors with solid first-quarter deliveries despite the virus outbreak.
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Tesla Becomes Most Valuable Automaker in Latest Stock Rally

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  • by dhaen ( 892570 ) on Wednesday July 01, 2020 @02:52PM (#60251278)
    Come out from your hiding place
    • by ranton ( 36917 ) on Wednesday July 01, 2020 @03:02PM (#60251312)

      Whare are the naysayers now? Come out from your hiding place

      Nothing has really changed from a naysayer's perspective. Tesla still doesn't run a profit each year and still has a small fraction of the sales of companies like Ford. Short sellers have certainly lost money, but as Buffet says: "The market can remain irrational longer than you can remain solvent."

      The naysayers may still be wrong in the long run, but their comments regarding Tesla stock price being pure speculation couldn't really be argued by anyone. Tesla investors could end up be correct but none of Tesla's actual performance has changed the fact its stock price is primarily speculation.

      • > its stock price is primarily speculation
        LOL. https://en.wikipedia.org/wiki/... [wikipedia.org]

        • by N1AK ( 864906 )
          I don't think it's a bad term to use. Tesla's fundamentals, revenue / losses etc, don't explain the share price so investors are speculating on the firms potential being realised. I'll admit I'm not a Tesla fan but that doesn't mean I want them to fail, however going from where they are to a company big enough to justify a stock valuation, based on actual returns not potential, higher than any other car company on the planet is a truly gigantic transition.
          • ALL stock = speculation. that's the whole point.

            • by Pascoea ( 968200 )

              that's the whole point.

              Wait until you hear about dividends! Of course when a stock is purchased, the intent is to sell it back in the future, hopefully at a profit. But in the mean time, one reason for holding a stock is to receive the quarterly dividends. So the speculation aspect isn't the "whole point", it's only a part of it.

              • That means you speculate a stock will provide dividends of course.

                • by Pascoea ( 968200 )
                  Well, sure, you can twist words around to equate "speculate" to "assume" or "hope" but based on your link, that's not the definition. In your link, the word "dividend" only appears once: "...in an attempt to profit from short term fluctuations in the market value of a tradable financial instrument—rather than attempting to profit from the underlying financial attributes embodied in the instrument such as value addition, return on investment, or dividends."
            • But some stocks are more speculative than others. The Coca-Cola company has been around selling their product for decades, and their products/revenue/earnings have a long, sustained history. Yes, everybody on Earth could stop drinking Coke tomorrow, but most likely the company will still make their X billions of dollars next year, and the next, year, etc.

              Tesla has no such history. They are a money-losing startup. They may go on to sell as many cars every year as Ford and others... or they may have hit

        • > its stock price is primarily speculation LOL. https://en.wikipedia.org/wiki/... [wikipedia.org]

          No, it's entirely speculation. People expect that they will some day sell a lot of vehicles and make a profit doing it. Since they are currently doing neither of those things, the insanely high stock price is speculation that they some day will.

      • by hey! ( 33014 )

        Of course it's speculation, but that doesn't make it unjustifiable.

        It's a classic growth stock scenario. Amazon spent years relentlessly plowing its revenues into becoming unassailably bigger, and investors understood that was the risky game the company was playing.

        I think the case for Tesla's stock value -- which is admittedly a *speculative* case -- has some things in common with Amazon and some things different. Nobody thinks Tesla is going to become the *dominant* automaker, but it has enjoyed strong

        • by ranton ( 36917 )

          It's a classic growth stock scenario. Amazon spent years relentlessly plowing its revenues into becoming unassailably bigger, and investors understood that was the risky game the company was playing.

          Yes it is very much like Amazon, but the difference is it took far longer for Amazon's stock to begin skyrocketing. In 2006/7 their market cap was about $15 billion. That was with a little over $10 billion in revenue and an actual net profit already. Their stock began to grow significantly at around 2010 and really shot up starting in 2017. They had shown significant financial success over a long period of time before their stock took off.

          If Amazon was like Tesla, it would have already had a $200 billion ma

        • Comment removed based on user account deletion
          • by Junta ( 36770 )

            Also that Amazon competitors were hopelessly behind and lacked the logistics to compete. Meanwhile Tesla is going into a crowded market full of companies that have better logistics than they do and many have offerings either on the market or coming soon that stand with Tesla's "almost there" autonomous driving.

            If Tesla has some advantage, it's the ambition for broader than automotive. The general aggressive futurism may have them really get into some unexpected market. Their automotive bet has been the most

            • Meanwhile Tesla is going into a crowded market full of companies that have better logistics than they do and many have offerings either on the market or coming soon that stand with Tesla's "almost there" autonomous driving.

              Actually making electric cars isn't as easy as most people seem to think and too many people focus on the autonomous driving bit because it's the cool stuff that makes news headlines (for both good and bad events).

              Modern electric cars have a lot more technology than before and Toyota, Hon

              • by DeBaas ( 470886 )

                Add to that the fact that Tesla sells directly to buyers (again, similar to Apple) so prices are not artificially inflated by middlemen, i.e. dealerships.

                True, Apple doesn't need middlemen for that.

                • by Junta ( 36770 )

                  Also, Tesla. Nice hypothetical but Tesla is more expensive than others. There may be less theoretical overhead but somehow they are more expensive.

                  I have ridden in a Tesla and while their entry model is more featured than another companies entry model, it is more expensive than the comparable premium model.

              • by Junta ( 36770 )

                they don't seem to want to throw away.

                I mean, many of those have released vehicles that can charge and have range on par with Tesla at about the same price point. They are more proven to keep up with being able to design and manufacture electric cars than they have proven equal nearness to autonomous driving. Just because they decline to shutter the currently more affordable, largely more practical, and wildly more popular ICE portion of their business right now is not proof that they can't do electric vehicles. Ford had 10X the revenue of Tesl

              • Comment removed based on user account deletion
        • by AmiMoJo ( 196126 )

          The problem with Tesla is that it's a house of cards waiting to come crashing down.

          Take Full Self Driving. Tesla have been selling it for 4 years now and it's still nowhere near ready for delivery to customers. At some point all those pre-orders, between $5000 and $8000 each, become liabilities.

          They promised investors their robotaxi service would launch this year and when it doesn't they are going to need a damn good excuse. If it looks like there was never any real chance of that happening it becomes fraud

        • Nobody thinks Tesla is going to become the *dominant* automaker

          I think Tesla are the dominate EV automaker. Tesla is now constructing more gigafactories around the world; China, Germany and US so will be able to build more EVs in the next 18 months. Production capacity is ramping up fast.

          The traditional automakers are in trouble and their car markets are in decline. For example, Tesla has depressed the US luxury car market for the German car manufacturers with Tesla selling more cars than them. Also Norway will ban the sale of new traditional ICE cars in 2025 which is

      • by cusco ( 717999 )

        You do realized that the entire world stock market is nothing but speculation now, and has been since the 1990s, right? Any sort of rational valuation of stock went up in smoke during the Dot Bomb and has never returned.

        • by ranton ( 36917 )

          You do realized that the entire world stock market is nothing but speculation now, and has been since the 1990s, right? Any sort of rational valuation of stock went up in smoke during the Dot Bomb and has never returned.

          This is not true. If you look at historical market valuation indicators such as P/E ratio or Q ratio, the stock market is clearly overvalued for the past decade (for the past three decades actually minus a couple years during the Great Recession). This is in most cases not speculation, however, it is the result of money policy and other factors which make high risk stocks far more attractive than traditionally low risk investment vehicles. If you look back 30+ years, prime interest rates would hover around

        • and has been since the 1990s

          False. It's been so since the first company sold stocks on a promise that it may deliver profits.

      • ... its stock price is primarily speculation.

        Every stock price is primarily speculation. Either you speculatively expect the company's current performance to continue into the future, or you speculatively expect that it will get better, or that it will get worse. Everyone who trades the stock makes some sort of speculative bet based on one of these expectations, and the trading price of the stock is the result of the sum of all the expectations of all the traders. That's not just a story of how Tesla stock works. That's just how stock works. Again, if

        • by ranton ( 36917 )

          Every stock price is primarily speculation.

          No, growth stocks are generally primarily speculation. Value stocks rarely are. There is always some level of speculation because you are always betting on the future viability of any security position you hold, but not all stocks are primarily speculation.

          Again, if you think you're clever and feel sure that the sum of the world's traders got this one stock's price wrong, you're free to wade in with your money.

          This is mostly semantics, but I'd argue the sum of the world's traders do not set Tesla's stock price. The sum of traders who are considering buying or selling Tesla stock determine the price, which is only a small subset of the world's traders. About 30%

      • by rtb61 ( 674572 )

        They also do not have the economic dead weight of a fossil fuel production line, that is their problem. What they want to do is create new electric car companies, then the parent company, packages off the fossil fuel factories to dump on pension funds after paying the pension fund managers a buying commission in an offshore tax haven. They are really struggling to dump those fossil fuel production lines, they are a real dead weight in future capital worth, a whole lot of junk that will cost more to get rid

    • Naysayer here. This makes absolutely zero sense. Tesla has yet to turn a profit, is out-sold by others in terms of the number of electric vehicles sold, and to date hasn't sold as many cars as Ford sold F series trucks just last year. This is market insanity, chasing to drive up the stock to sell to the next round of fools...
      • Naysayer here. This makes absolutely zero sense. Tesla has yet to turn a profit, is out-sold by others in terms of the number of electric vehicles sold,

        You should have titled yourself "Ignorant naysayer here".
        "Tesla has yet to turn a profit,"
        "Tesla reported first-quarter results on Wednesday, including a $16 million profit." [cnbc.com]
        "is out-sold by others in terms of the number of electric vehicles sold,"
        "Tesla topped the world as the best-selling electric vehicle brand in 2019," [chinadaily.com.cn]

        • So a $16 million profit in Q1 of this year - and that's cause to be the most valuable car company in the world? Toyota made around $600 million [global.toyota] in that same quarter - about 40 times Tesla. And Tesla still hasn't had a profitable year - they've had a few good quarters off-and-on, but never pulled it together for a year. Absolute insanity to value it as high as it is.
          • When talking about a company being valuable or not, don't just look at the numbers, look at what's happening .

            AFAIK Tesla has paid off their debts, built their factories and are continuing on course with future plans for more vehicles.

            Are Toyota's profits growing or declining? What are Toyota's plans for electric vehicles? Will Toyota still be worth something in three years? Five years? A decade?

            If I had any cash to buy shares, I sure as hell wouldn't keep my money into car manufacturers that don't have sol

            • Tesla still has over $11 billion [yahoo.com] in long-term debt, and around $3.5 billion in short-term debt (not including accounts payable). It's debts are more than 1000 times greater than its profit. ($16 billion compared to $16 million). It has never had a profitable year - and only a handful of profitable quarters spread out over the last 10 years. A valuation of $224 billion is simply insane.
          • Tesla could have been steadily profitable for many years, if they had been content to keep building the S. They would have become, and still be, a profitable niche auto maker. But they were not content to do that - the pushed ahead with building the X, then the huge push to make the 3, and now on to make the Y, the cybertruck, the semi.

            They could become profitable tomorrow, if they stopped this relentless R&D, stopped pushing boundaries and focused on this month's profit figures. But if they did that, t

            • Except RnD is a fundamental aspect of the automobile industry. You need to either keep making new cars or update the old ones to hold consumer interest. Otherwise sales decline (minus a few exceptions). The Model S and X are well over 7-8 years old with still no update in sight. This has reflected in continually declining sales in almost every market. The Model 3 is still newish while the Y is new, so ergo they're going to sell more of those.
      • Tesla stock price might crash again and rise again. I am a big fan of Tesla, and truth be told, I don't have any convincing argument to show this is a fair valuation.

        Having said that bear in mind: 1 Auto industry is undergoing a massive disruption, 100 year reign of the IC engine is coming to a close, in the BEV sphere, no one seems to be able to match Tesla in that technology. Look at how fast diesel electric locomotives (serial hybrid power train in today's terminology) replaced the steam locomotives be

        • by robbak ( 775424 )

          I love the way a battery and inverter can stabilize the grid with surprisingly little energy expenditure. Just provide current support on the rising edge of the waveform. Hold up the frequency, let the voltage sag a bit, and a 100 gigawatt grid can be kept going by a 100 megawatts of inverter and a few hundred megawatt-hours of storage.

        • 2. It is not just in auto sector. In the networked batteries to provide stability to the electric grid, Tesla has proven technology that is really mind boggling. The typical grid stabilization sensors and triggers and alerts run on something like a 15 second periods for billing/fees etc. Tesla battery can stabilize the entire grid in milli seconds, often before other equipment could detect the imbalance.

          How does it compare to other grid batteries? It's the highest power grid battery (100MW), versus 50MW f

        • Ah yes, the Tesla solar roof that keeps getting paraded out as the thing that will reverse the misfortunes of the storage/energy division. Totally still isn't just a super niche product in a crowded market, and the company is definitely not cancelling pre-orders due to regional service issues and product scaling. Honestly, when are we going to move past this whole "Tesla is more than a car company" thing? Anything outside of cars (no SpaceX does not count), Tesla struggles in. Cars are like the only profita
    • They are too busy losing millions of dollars every quarter.
    • by SEE ( 7681 )

      The fact that the stock market has gone insane proves nothing except that the stock market has gone insane.

      Tesla is still a marginally-profitable manufacturer dependent on tax credits in a capital-intensive industry. There's a reason Musk said it was overpriced when it was at $781.88/share two months ago. The current $1119.63/share, three times the six-months-ago price, is just plain stupid, and is going to cost a lot of people their shirts.

      • For Tesla, those tax credits did their job - got them up and running, allowed them to do the R&D to establish themselves - but now the company is selling cars without much of a subsidy.

        And they are marginally profitable only because of their relentless R&D. If they stopped that - if they focused on wringing the maximum profits out of what they already have, they would be very profitable.

        Maybe one day that is exactly what they will do - build and refine the S, 3, X, Y, Cybertruck and Semi and take in

    • Tesla sells cars that are allelectric and can out preform many cars in the illegal light to light street racing. Once Ford, GM and Fiat put 400hp electric motors on the front wheels of the cars they sell today as "Muscle Cars" it will be game over for a Tesla.

  • The shares' meteoric rise, up more than 163% since the start of 2020, highlight growing confidence

    Considering how volatile it has been, I don't see how that highlights confidence.
    It looks more like people have seen the latest rise, and now everybody is rushing to get in on the boom.

  • by AlanObject ( 3603453 ) on Wednesday July 01, 2020 @03:07PM (#60251336)

    I was assured so many times on /. and many other forums that Elon was a fraud, there is no way the company could scale, their quality was crap, they would be out of cash in a few months, every other automaker would eat their lunch once they decided to ... yadda yadda. Oh, yeah. They were going to kill thousands because they named it "Autopilot" so irresponsibly.

    Thanks to the COVID-19 market panic a month or two ago I made enough money on TSLA to buy the Model Y outright. I didn't and chose to finance instead because I didn't want to create a short-term capital gains event.

    In California it seems that the Model 3 has now outsold the Honda Civic. The Model Y is expected to outsell the Model 3 and now having one I can see why. Let that sink in next time someone sagely opines that Tesla is just an unproven flash-in-the-pan.

    The naysayers seem strangely quiet here these days.

    • by Guspaz ( 556486 )

      > The Model Y is expected to outsell the Model 3 and now having one I can see why.

      Could you elaborate as to why? I don't think Tesla has done a good job differentiating them, and even having watched a few videos about the Model Y, the impression that I got was "it's a 10% large rand 10% more expensive Model 3". Basically, it's not clear to me why both models exist (as opposed to just one of them).

      • Re: (Score:3, Informative)

        by Anubis IV ( 1279820 )

        I don't think Tesla has done a good job differentiating them, and even having watched a few videos about the Model Y, the impression that I got was "it's a 10% large rand 10% more expensive Model 3". Basically, it's not clear to me why both models exist (as opposed to just one of them).

        Having never looked into them before, it only took me a few minutes to easily understand their differences, chief among them being that one is a sedan and the other is a crossover (i.e. mini SUV). They're two entirely different classes of vehicles, with all of the expected benefits and drawbacks to each class. The Model 3 has a sedan's typical two rows of seats, more limited cargo space, better performance, and a cheaper price tag. The Model Y has the usual three rows of seats, substantially better cargo sp

      • Also worth noting, the visual differences are more apparent when you see them to scale, because when all you have is a solo product shot, they admittedly do look quite alike. The image at the top of this reddit thread does a good job at making it visibly obvious how they are different: https://www.reddit.com/r/tesla... [reddit.com]

      • Basically, it's not clear to me why both models exist (as opposed to just one of them).

        It's a good question. Musk has gone on record [businessinsider.com] predicting the Y will outsell the 3, X, and S combined.

        Price-wise it is between the S and the 3, with the long-range option I ordered coming in about $53,000. What you get over the Model 3 is:

        1) Much more cubic space in the back with nice fold-down seats. You could actually sleep back there.
        2) Motorized rear hatch.
        3) More room everywhere -- not that the Model 3 is cramped.
        4) More ground clearance.
        5) Trailer hitch ($1K option).
        6) Cool class roof.

        And

    • That you bought a car from them proves nothing. They sell a decent amount of vehicles, nothing spectacular, but they don't make any money.
      Businesses that don't make any money buy have extremely high valuation aren't a one-off thing. We've seen that happen before.
      • but they don't make any money

        They have posted a profit the past 4 quarters running. If you window your view of the company from Jan to Dec 2019 sure you may see a slight annual loss. If you look from Apr 2019 to Mar 2020 you will see a continuous profit every quarter of the year.

        Your post is only right on a technicality that "don't make money" is usually a phrase tied to year end net profit for the financial year. But it's demonstrably false if you look at quarterly reports.

    • Hopefully you got one of those cars which won't be needing lots of service - it is possible, I've heard from people who drove their Tesla 100K+ miles with not a single service visit. Unfortunately Tesla service has not kept up since Model 3 and it's getting worse in their focus on profitability. They recently ranked last in quality survey by JD Power too:
      https://www.nbcnews.com/busine... [nbcnews.com]
      Some problems with how the survey counts "learning curve" related complaints of users same as real issues, sure, though st

    • by AmiMoJo ( 196126 )

      Did you pay for Full Self Driving? Did they give you a date for when it would be delivered and did you believe them?

      Musk is a fraud. He keeps lying about things. Doesn't mean the cars aren't great anyway but he still habitually lies about stuff.

      • No. I opted out of the full self driving which is a $7000 option. You can add it later if you want because it is just a software download. (Price has gone up though.) All the hardware needed is in the base model, as is the Autopilot.

        I really can't judge if the full self driving package is "real" or not. The car has a "preview" mode where you can see on the screen what the full-self-driving package would see if it were installed and running. It is amazingly good at picking out some classes of obj

  • by Ecuador ( 740021 ) on Wednesday July 01, 2020 @03:14PM (#60251360) Homepage

    I really like Tesla and what it stands for (even though Musk should definitely stay off Twitter), but stock prices such as this are really crazy and could be dangerous. I mean, I know it is not about fundamentals for "tech" companies, but if they continue to do well, the stock will continue to inflate, until investors e.g. realize the perceived value is greater than say the GDP of large countries and try to cash out, causing others to do the same etc. The stock rise & fall would have no bearing to the actual company.
    At least I hope the Tesla shorters have had some nice losses though. I am not a fan of shorting. Not nearly as bad as other things like HFT, but still...

    • Re: (Score:2, Troll)

      by jellomizer ( 103300 )

      True,
      I don't feel the current stock prices are a good sign of Tesla Success or Failure.

      It isn't nearly producing as much as other car companies. While the Model Y came out on time. There is little to say if this was a fluke, or will the next model the Cyber Truck will be made to meet demand on time, or will we be waiting until 2024 for that to get out.

      Now Tesla has a lot of things going for it. They are more than an Electric Car, But an Electric Car with the most advanced Consumer Ready Self driving. Also

  • by 140Mandak262Jamuna ( 970587 ) on Wednesday July 01, 2020 @03:31PM (#60251434) Journal
    The market seems to be betting there will be at least 1$ profit (not per share, just total of 1$ profit for the whole company for this quarter). It is almost certain there will be net profit in the four trailing quarters. But, if it is also having a net profit this quarter, this stock might get included in SP500 index. That will result in lots of index funds pegged to SP500, many actively managed funds compared with SP500 will buy this stock. So they are betting its going into SP500.

    Shorts seems to have thrown in the towel and moved on. Total shares shorted is 14.8 million according to the latest report fromhttps://twitter.com/ihors3/sta... [slashdot.org]"> Ihor of S3 Partners, . This is significant because the Tesla has sold convertible bonds. These bond holders are guaranteed some 15 million shares at an average price of 330$. (or 330$ cash if the stock falls below that price point). Its a no loss strategy for them to sell the stock at 700 or 800$ now, by shorting, pay short fees till bond maturity date, and close the position with the guaranteed shares from Tesla. (Tesla can pay cash instead of shares, but the effect is the same). So the only people shorting the shares seem to be the conv bond holders, locking in profits rather than betting against the company.

    But Tesla fans are still very obsessed with shorts, and shorts being squeezed, gleefully imagining the pain and torment the shorts must be suffering.

    The shorts definitely suffered a lot, 14 billion this year alone, on top of 8 billion lost in 2016, 17, 18 and 19. They probably lost another 4 billion before 2016, Bringing their total loss to around 26 billion. But the data shows most likely they have all closed their positions and moved on.

    • by robbak ( 775424 )

      One reason for there not being that many shorts left is that the brief drop on the Coronavirus news allowed many of them to close their positions without huge losses. With the writing on the wall, they haven't jumped back in.

  • This is a general question, not directed specifically at Tesla. How long before we run out of the minerals necessary to create all these batteries? Unlike glass or aluminum, once a battery is used up that's it. You can't recycle it to get anything back from it (not including lead-acid batteries).

    From my understanding, the stuff put into these batteries is only found in a few places and in limited quantities.

    How long until these deposits run out?

    • by psergiu ( 67614 )

      Not quite true.
      Tesla's batteries are almost completely recyclable.

    • Regarding Tesla and cobalt supplies, see this article:

      https://www.forbes.com/sites/k... [forbes.com]

    • by cusco ( 717999 )

      Lithium is common, found even in seawater, but is generally very diffusely distributed. 70% of the world's extractible lithium is in the Uyuni Salt Flats of Bolivia, currently not being mined because of the previous government's insistence that Bolivia's natural resources be used for the benefit of Bolivians. Now that the US has managed to carry out a coup in the country mining is expected to start in the next year or so..

      Cobalt is currently used in fairly small amounts in the batteries, which is expensiv

    • by Hank21 ( 6290732 )
      A lot longer than fossil fuels will be viably harvested. And unlike fossil fuels, batteries can be recycled for their core components - it's just not currently cost effective to do so. Just as shale oil was not cost effective to harvest, until it was.
  • This statement is as true as the "evidence" in this trial: https://youtu.be/kn200lvmTZc [youtu.be]

  • Since when did market capitalization become synonymous to value?

  • Which means they dont have billions of off book pension liabilities like the Big 3. When you consider off book liabilities Tesla has the strongest balance sheet hence its stock being the most valuable makes sense

  • They are comparing Tesla's global operations to Toyota's US operations.

    TESLA IS NOWHERE NEAR CLOSE TO OVERTAKING TOYOTA!

    Stop spreading this lie!
    • Aaand, I looks like I messed up a decimal place last time I did the math from yen to dollars.

      Doing the math again, it seems I was wrong.

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