Originally Posted by
mispoken
As a personal preference, I don’t use accountants to guide my investing.
As for burning through cash; if that’s a concern at this phase in their growth, consider they expect to be FCF positive for all of 2020. Think about how quickly they came from their nearly fatal balance sheet to where they are now. They’re just getting started.
As for the reason for the cash burn; look at where that cash is going....the development of the S, X, 3, Y and Cybertruck? Battery development? Built out of
factories (both for autos and batteries)? Build out of supercharger network? Build out of mobile
support fleet? Self driving software? Software beyond self driving? Build out of salesforce?
They’re investing, it’s not as if Elon is just taking this cash and buying pot :-)
We are in a new era of companies; I’m not sure if I’ve said it yet (haha) but traditional metrics used by academia and talking heads are utterly useless.
Look at the gross margins of these SaaS companies. Who's had those types of margins
in the past? Nobody.
Look at how easy it is to scale now - compared to the past. Takes very little capital and very few boots on the ground. Was it like that in the past where everything was physical?
Look at subscriptions? That revenue and whatever you retain largely goes right to the bottom line. And it is repeatable.
With Tesla, what is the #1 car company, the #1 power company and tons of subscription possibilities (self driving taxi fleet, software updates, etc....) worth? Much more than looking at historical data ratios. It will take a lot to get there, but I can see that path.
What is Fiat-Chrysler spending their FCF on? Advertising? Auto manufactures as they exist are dead.
Keep the thoughts rolling! Lots of good things to reflect on in this thread. Ultimately we all want the same thing: $$$$$$$$ :-)
You can say traditional metrics are out of the window, but at the end of the day the basic principle of investing remains forever. When placing their capital with a company, an investor is buying a piece of a company and the goal is to get a return on their investment.
Right now when you buy a piece of Tesla'a business without growth you will get your money back in 358 years based on current earning(FCAU 8.3 yrs for comparison). Moreover, the intrinsic value of a stock is it's future free cash flows discounted to the present value. Right now Tesla is priced as if 90% of the world's cars will be Tesla and then some to achieve the required cashflow. Will Tesla out innovate every car company in the world for the next 10 years and have monopoly status in the auto industry? All self driving cars will be Tesla? Everyone's home will be powered by Tesla? All cars will have Tesla battery technology? There are some pretty bold bets given the current price
I'm not saying Tesla won't be a successful company. I think it will be. Do I think 10 years from now Telsa investors will make any money if they buy today and hold? Absolutely not. Right now successful investing in TSLA is based on the greater fool theory. Eventually the price will become so absurd there won't be any fools left to trade to. On that day, I wouldn't want to be stuck holding the bag
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