A Positive Tesla Article on Seeking Alpha? (Hell has frozen over.)

[Rockster]

Summary

• Tesla [Model 3] reaches No. 4 best selling passenger car in the US and should pass Toyota Camry in Q4 to become the No. 1 selling passenger car in the US.
• Tesla has ~90% of the US EV market space.
• Tesla deliveries in Q3 are double the deliveries in Q2.
• Tesla sales are projected to grow from $4B last quarter to $6.78B this quarter. Net profit in Q3 is likely.
• Legacy auto companies may suffer an unexpectedly rapid collapse in sales. This collapse may already be underway.

Tesla Sales Soaring, Competition Failing - Tesla, Inc. (NASDAQ:TSLA) | Seeking Alpha

 

[Uncle Paul]

As a snowballl rolls down the hill it grows rapidly in speed and size.

We will not recognize the tipping point until we are past it. May already have arrived.

Name one other mass marketer that has a line of customers anxiously awaiting to purchase their production.

Maybe some high end exotics or some of the newest Porche, but nothing like Tesla.

 

[Rockster]

I especially like the author's reasoning about one EV sale consuming more than one ICE sale.

 

[Wooloomooloo]

Summary

• Tesla [Model 3] reaches No. 4 best selling passenger car in the US and should pass Toyota Camry in Q4 to become the No. 1 selling passenger car in the US.
• Tesla has ~90% of the US EV market space.
• Tesla deliveries in Q3 are double the deliveries in Q2.
• Tesla sales are projected to grow from $4B last quarter to $6.78B this quarter. Net profit in Q3 is likely.
• Legacy auto companies may suffer an unexpectedly rapid collapse in sales. This collapse may already be underway.

Tesla Sales Soaring, Competition Failing - Tesla, Inc. (NASDAQ:TSLA) | Seeking Alpha

He makes some very good points and there is some great analysis... it's a shame he writes like a 2-year old (or is that just how Seeking Alpha readers like to consume information?)

Anyway... here's something I spoke about in the Investor Round Table earlier this year:

But what's most important is the fact that when people decide their next car will be an EV, that choice can happen in an instant. Learning about EVs and actually purchasing one of them may take several years.

What this means is that ICE car sales collapse first, and then years later, EV sales will grow. For legacy auto companies this is a disaster. For start-up EV car companies, it's irrelevant.

Basically for traditional car companies to transition from ICE to EV, they have to both cannibalize their own sales AND defer the reward for doing so, which will put many of them at risk of failure.

if you haven't read the whole thing, I recommend you do.

 

[OilAndGas]

This isn’t going to be popular...

I’m a hedge fund manager and bought a Tesla. We’re heavily short on TSLA. Yes the cars sell like crazy, yes they’re awesome cars, yes Elon is one of the best engineers of our time, no they won’t go bankrupt.

That being said, TSLA stock is grossly overvalued (yawn). Let’s ignore the free cash flow hemmorhaging, everyone knows about this. What isn’t discussed as much is the revenue expansion to asset expansion ratio which is HORRIBLE. They are growing at a completely unsustainable rate. They’ve reached a point of major diseconomy of scale due to this ramp-up, and I can guarantee you at some point major asset liquidation will have to occur. Model 3 sales are roaring, and are they generating net income? No. That’s a problem. All new ventures past model 3 need to stop immediately or bankruptcy may become a reality.

 

[Unpilot]

As far as I can tell only your first sentence is correct.

 

[OilAndGas]

As far as I can tell only your first sentence is correct.

I’m always open to hear a different take on their valuation. After all I did buy a model S so I’m kind of a hipocrite..

 

[Unpilot]

I’m always open to hear a different take on their valuation. After all I did buy a model S so I’m kind of a hipocrite..

I think you have made another factual comment.

 

[OilAndGas]

I think you have made another factual comment.

The sky is blue. I’m on a roll. But really, aside from sales growth what impresses you? Many tech companies in 2000 failed who had enormous sales growth and offered products and services way ahead of their time. E.G. Webvan. Webvan roared in sales growth and was incredibly popular. It took 15 years before similar services came back successfully. But webvan’s incredible demand followed by huge sales still caused them to go under. They simple didn’t generate cash flow. Cash is king, it’s undeniable.

 

[hpartsch]

Pretty awesome article!

 

[Dr. J]

But really, aside from sales growth what impresses you?

Well, sure, aside from that. Let's see if they report a Q3 profit.

 

[brianman]

I’m always open to hear a different take on their valuation. After all I did buy a model S so I’m kind of a hipocrite..

Not really. Valuing a product and valuing the producer of it are different things.

 

[OilAndGas]

Not really. Valuing a product and valuing the producer of it are different things.

I don’t disagree with that, but any company should objectively be able to have a reasonable fair valuation determined at any given time provided information on their 10-K is accurate (e.g accounting manipulators make this very difficult).

I get paying a premium for a company like Tesla run by a guy like Musk but at what point do you draw the line on how much to pay for it? I always make the analogy to finding a shirt in a store you absolutely love and need to have. Would you buy for $10? Of course. $50? Probably. $200? Now it’s overboard but maybe. $1,000? No chance. So there’s always a fair price, a premium price, and a price that’s insane. The stock market is even worse because people go in expecting to make money, and humans are greedy by nature, and this leads to price bubbles when too many buyers flock in expecting some other sucker to pay more later.