YEET MAGAZINE  /  Business / Cars and Automobiles

By Daniel Kaplan | YEET MAGAZINE | Posted on September 17, 2021 at 7:32 am

Is Tesla Really Overrated?


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Morgan Stanley analysts on Tuesday warned that Tesla stock, at more than $ 1,000 a share, is vastly overvalued and on the verge of plunging, with too many investors ignoring the risks of running an auto company and instead treating Tesla like a high growth technology company.

Main facts

  • After hitting records of more than $ 900 per share in February, Tesla's stock plunged at the time of Covid-19 at the end of March, falling below the $ 400 per share mark.
  • But stocks have since seen a strong rebound: Tesla is up 130% from the low point of the market recession on March 23, and is now trading at over $ 1,000 a share.
  • In a note to customers on Tuesday, Morgan Stanley analyst Adam Jonas warned that while he understands "the appeal of Tesla's story" and its strong growth potential, it's still hard to see Tesla justify its high price over the next decade.
  • He gives the stock a price target of $ 650 and an "underweight" rating, warning investors are ignoring "a host of execution / market risks" facing the company.
  • Morgan Stanley said he predicted Tesla would produce 2 million cars a year over the next 10 years, but that its current share price implies much more production: “At $ 1,000, we think the stock is depreciating by approximately 4 million units ”by 2030.
  • The company's high valuation comes from “tech-oriented investors” who see Tesla's valuation as reasonable and “in discussions” between large-cap tech names like Amazon, Google or Apple.
  • But comparing Tesla to these tech giants is far from perfect, says Adam Jonas: She still faces a host of risks associated with running an auto business that the market seems to ignore.

Important quote

When comparing Tesla to big tech companies like Microsoft or Apple, "one should take into account (or ignore) the significant inherent differences in Tesla's business model and capital intensity," Morgan Stanley said in his memo. "It should also be taken into account that many of Tesla's business objectives face a degree of execution risk which may be significantly higher than that of most of the more proven / mature companies in this analysis."

What to watch out for

When Morgan Stanley first demoted Tesla to “underweight” on June 12, the company identified three main risks: short-term risks to demand and prices, longer-term risks to its business in China and the potential competition from other big tech companies. But investors have not reacted much to the degradation of the bank. Why ? According to Morgan Stanley analysts, "We think investors are a bit 'on hold', seeking to better understand the potential lasting impacts of Covid-19."

Key context

Tesla's shares hit new records in 2020, as did its market valuation. The company now boasts a market cap of $ 185 billion, up from just $ 75 billion at the end of last year, making it one of the most profitable auto companies in the world. In fact, it is worth more today than Ford, General Motors and Fiat Chrysler combined. Since April, founder and CEO Elon Musk has increased his net worth from $ 24 billion to just over $ 42 billion.

This year alone, BMW's market capitalization was $ 52 billion. They earned about $ 8 billion in profits out of their $ 112 billion in income. They sell 2.5 million vehicles each year.

Tesla's market cap has doubled in the past 12 months to $ 59 billion, more than BMW's . Tesla is posting losses of around $ 2 billion on revenue of around $ 10 billion. They will struggle to sell 150,000 cars in 2017. (ndt: they were eventually sold 103 184)

BMW's profits are almost as high as Tesla's loss-making revenue.

So why is Tesla's market cap higher than BMW's?

  • Tesla was one of the first to launch into luxury electric cars, and at a relatively affordable price.
  • But almost all automakers are considering producing electric cars on their lineup. Soon, Tesla will no longer have a head start.
  • Tesla will become a leader in the field of autonomous cars.
  • But they won't. They are literally years behind Google's Waymo .
  • Tesla has a powerful brand.
  • But this brand is not even comparable to brands like BMW , Honda , Toyota , all of which have established distribution networks around the world. The reality is that most people haven't even heard of Tesla.

Um, so why is Tesla's market cap higher than BMW's?

Tesla is headed by Elon Musk , a tech entrepreneur, and that counts for a lot. But the real reason is that Tesla is run like a startup and its value is the same as that of a startup . It's ridiculous because it's an automobile manufacturer ...

Comments

Why are Tesla cars so popular? are they so popular?

Kristian crick

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Branding & marketing expert at Ask KrisMay 31,2021

Original answer: Why are we making such a big deal out of Tesla? How are their cars different from regular cars?

Because Tesla doesn't sell cars. Tesla sells access to on-board software that drives the car, on the one hand, and batteries on the other. The “car” object is completely secondary in Tesla's strategy . This is why Tesla is totally disruptive and can imagine building a sports car, a semi-trailer truck, or an accessible car.. This is why Tesla is totally disruptive and can imagine building a sports car, a semi-trailer truck, or an accessible car.

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Is Tesla overvalued? is overvalued?

Pierre Mj

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SaaS programmer, Web App. Updated on september 16,2021

Tesla cannot be compared with other car manufacturers. The most common argument for saying Tesla is overvalued is comparing its results with those of other brands. is overvalued is to compare its results with those of other brands.

Except that this reasoning is fallacious for several reasons.

It is a fact, Tesla sells much less vehicles than brands like BMW, Renault, Ford etc ... sells much less vehicles than brands like BMW, Renault, Ford etc…

Tesla is not the only brand to make 160% electric vehicles. Today, almost all major manufacturers offer one or more hybrid and electric models.is not the only brand to make 160% electric vehicles. Today, almost all major manufacturers offer one or more hybrid and electric models.

Yet Tesla has a much higher valuation. has a much higher valuation.

The reason for this valuation is that Tesla is not an industrial business model like most manufacturers but a scalable digital business model. is not an industrial business model like most manufacturers but a scalable digital business model.

To put it simply, in an industrial model, the value of your business depends on the number of vehicles you manufacture and sell each year.

In the case of a scalable company, the main value of your company is not created by your production capacity but by your users.

In other words, much of Tesla's value is created by Tesla users who, while driving, generate navigation data. which, while driving, generate navigation data.

The principle of "machine learning" is based on data collection. The more data you have, the more you improve the algorithm (and therefore the range of vehicles for example).

Tesla has a subsidiary called DeepScale, which works precisely in "Deep Learning", "Machine Learning" and "BigData". has a subsidiary named DeepScale, which work precisely in the "Deep Learning", "Machine Learning" and "Big Data."

This is why we cannot compare Tesla with BMW or Ford but rather with Uber, which collects and uses the data provided by all its drivers and deliverers. with BMW or Ford, but rather with Uber, which collects and uses the data provided by all its drivers and deliverers.

The firm Tesla does not take the value only when it sells a vehicle but also each time a user of Tesla is a journey. is an estimated.

In the short term, Tesla is gradually lowering its prices to make its vehicles more affordable and thus to increase its number of active users. gradually lowering its prices to make its vehicles more affordable and thus to increase the number of active users.

In the long term, improving the range of Tesla vehicles will probably (it is hypothetical) allow the creation of an on-demand vehicle service (a bit like Uber except that there will be no driver). For example, you could pay a monthly subscription and whenever you need to move around you could open an app, select an end point and a departure point, and then a Tesla will pick you up and transport you. will pick you up and transport you.

A model like this would herald the end of the industrial model of car production as we know it today.

In a few decades, the value of a vehicle brand will no longer depend at all on the number of vehicles sold but on the uptime of its vehicles. Most brands currently manufacture vehicles intended to spend most of their existence in a parking space. With this new model, the world would need significantly fewer vehicles (since one vehicle could serve multiple people per day) and significantly reduce vehicle idle time.

Tesla is simply shifting the automotive market from an industrial model to a digital model. is simply shifting the automotive market from an industrial model to a digital model.

Now, maybe Tesla comes too early and is going to crash and its price is going to crumble. But its potential is real, it is undeniable.comes too soon and will crash and its price will collapse. But its potential is real, it is undeniable.

One thing is certain, if my reasoning is correct, you should not invest in parking lots ...

You can read my other answers here and join my Telegram channel to deepen the topics I discuss on YEET MAGAZINE : Pierre Mj

To learn more about the subject : Tesla

Should Make Better Use of Data Collected From Its Fleet Of Vehicles | Forbes France

Understanding the difference between an industrial model and a scalable digital model : Pierre Mj's response to What is the most important notion to keep in mind when setting up a Start-up?

Tesla

Motors (company)

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If you could give yourself 3 tips right before you start a business, what would they be?

Vincent Maurin

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Curious Entrepreneur | Growth Engineer at Panja.ioseptember 16,2021

I will respond by quoting Hugo Blum, founder of a young Montpellier startup (JYMIZ) that I recently interviewed.

Advice related to the recruitment of a partner

“Already the first thing to do is work on yourself. If you stay alone, the project will not have the same ambition, you have to know what ambition you want to give to your project. From there it's networking, meetings, events […] ” Read more>

Advice on how to compare your offer with the market

“Doing market research is good, but it does not mean confronting the field. We decided to go and confront the market. And to face the field with few financial resources, you have to know how to be smart and find things that will cost as little money as possible and that will allow us to move forward. […] ” Read more>

How do you get started quickly?

“When we started the current version it was just a Facebook page. We had met a coach who was keen to follow us in the adventure. We published each time the sports sessions he wanted to do in outdoor places (in the form of a Facebook event). […] ” Read more>

> Read the full interview with Hugo Blum <

If you are interested in content on these topics, you can follow me on YEET MAGAZINE ! (Marketing, Entrepreneurship, Cryptocurrency, E-commerce ...)

Vincent.

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Why did the glass of the Tesla Cybertruck prototype break during its presentation? Did Cybertruck break during its presentation?

Sami Moudakkir

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... Translator · september 16,2021

Ibrahim Khan

Tesla owner

This response may not be an accurate translation of Ibrahim Khan

in YEET MAGAZINE  in English  :Why did the Tesla Cybertruck's window break?

The Cybertruck window shattered for several reasons. First of all, Franz threw the ball too hard. He was very confident and it actually broke. Elon looked very pissed off at him. Second, the tests performed on the glass before surely weakened it, causing it to glow on stage. Finally, Franz may have dislodged the glass just before, when he knocked with a sledgehammer on the Cybertruck door. It could be one of these reasons, or a combination of them.

However, as Elon pointed out, the metal ball did not pass through the glass. She only broke it. If the ball had been thrown at an F160, the glass would have instantly shattered, and it would have passed through, risking injury to a person inside. But the most embarrassing moment was when Elon confidently asked Franz to throw it again, this time on the back window, and it also broke. It was a big disappointment and Elon had to stand in front of a damaged pickup until the end of the presentation.

The glass breaks: