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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
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StealthP3D
Well-Known Member
Skillful lawyering is always useful but lobbying doesn't have much place in the legal system (and it shouldn't have any).
One fact of the history of anti-trust law in the US that I find comforting with regard to Tesla: It has never been used to successfully break up a company that was NOT using it's monopoly power to stifle competition. Heck, Microsoft had totally anti-competitive behavior and they barely did more than slap their wrist.
Tesla's mission statement WELCOMES competition. It's just that the competition can't keep up with Tesla's fast pace of innovation. This is what is bringing ever better EV's to the market with prices that are always decreasing (and margins that are increasing). This is what anti-trust law wants to encourage (benefit to the consumer).
Knightshade
Well-Known Member
Tesla won't sell 20 million cars with a 40k ASP.
Tesla won't even sell 10 million before the 25k model is out.
Remember Elons driving goal at this point, to further the mission, is to constantly reduce the price of their products.
On your car math- that 200bn is gross margin, not net....so the 30x of that number for market cap doesn't really work either.
Q3 2020 has 2.1 billion in gross automotive profit (with a margin higher than in your example BTW), but only 331 million net profit.
Here- again- we can cite Elon focusing on the mission- having said he intends to KEEP net profit low.
If we applied that ~6.3:1 difference to your 200bn number (even accepting 40k ASP) we'd be down to just about about 31.5 billion.
Times 30 doesn't even get us to -1- trillion let alone 6.
Pretend energy is just as big as auto as you suggest is possible and you're almost at 2T total.
I clipped out the rest of your energy math because you somehow had Teslas share of energy as being worth significantly more than all energy companies in the world combined are right now- which seems weird.
I agree autonomy is an unknown wildcard- which is why a lot of folks simply leave it out of the math- there's situations it can MASSIVELY spike the value of the company- situations where it makes little difference- and situations where it significantly hurts the company. Too unknown still where that ends up.
Agreed, it shouldn't have any place. However, lobbying changes the laws that the court enforce.
Nolimits
Member
SpaceX's Starlink satellite internet service is priced at $99 per month, according to e-mail
I wonder if this would affect TSLA prices at all.
Will tesla integrate space x starlink service at a discount for tesla owners at all?
I wonder if this would affect TSLA prices at all.
Will tesla integrate space x starlink service at a discount for tesla owners at all?
Knightshade
Well-Known Member
Integrate it into what?
The antenna equipment is too large and unaerodynamic for any current vehicles- and Elon when directly asked said it didn't make much sense for automobiles.
Might make some sense on Semi, but that's about it.
StealthP3D
Well-Known Member
Huh? No comprendo.
I think we agree. If you don't have monopoly power, you don't have anti-trust concerns.
If you do have monopoly power, nothing can be done as long as it cannot be shown that you have abused that power to prevent others from competing.
Tesla's business plan is to out innovate their competitors. The minute they are not doing that, I don't want to own them anyway.
I agree with the general sentiment here. Forget about numbers for a second and lets just realize the fact that in 20 years the world would look unimaginably different because of removal anything and everything based on fossil fuels. For the longest time, energy, auto and insurance have been fragmented which makes it hard to believe that there could be one entity that would take up 30-40% market share and 80% of profits due to vertical integration. How do you value something like that? Forget robo taxis. How do you value the AI being developed at Tesla which finally allows computers to control and move physical stuff in our world.
We are entering such unchartered territory that I would advise the members to just throw out their preconceived notions out of the window and just enjoy the ride.
HODL!!
Again, all the above is true
BUT, and its a big BUT you cannot compare the market cap of Tesla Energy with other energy companies in the same way that you cannot compare the market cap of Tesla automotive with GM or Toyota. And in the same way you cannot compare the market cap of Facebook with the New York Times.
Software changes everything. Couple that with the world's cheapest, most efficient batteries and 10,000s of the world's best engineers and it becomes difficult to replicate.
I have a family member who is an engineer at General Electric. When I talk Tesla with her, she doesnt even believe me. At General Electric, they can't even work out how to power their wind turbines when there is no wind. Right now, they need a mainline electricity connection in the middle of the ocean. I told her should have an integrated solar panel and battery when there is no wind to keep the turbine running and then do some simple software engineering to prioritise one energy over the other depending on the weather. She said that was impossible, they cannot innovate in real time and cant do anything with software internally, they buy it all in. Same difference between Tesla and the automakers
Speaking of starlink I wonder how Elon will structure it to provide early access to retail Tesla investors. One route could be an acquisition by Tesla followed by a spin-off with shares of the new company being distributed tax free to Tesla investors. I wouldn't mind something like that with starlink and boring company, but I could be in the minority opinion with that.
jhm
Well-Known Member
Camping out at $420! Grab a ukulele and bongos. This is awesome! We can do this forever to the end of time. Anyone have a bag of Cheetos?
It would be part of a DSP, Directed Share Program, but I don't think I have ever heard of a DSP as big as what would be needed for giving TSLA shareholders access to the Starlink IPO.
Big Picture thinking about $2T or $40T valuations, the US economy, emergent pitchforks, cries of “monopoly!” and market share -
First, and to an extent this concept has been pursued up-thread just a bit, even with a booming US - and global - economy and a concomitant buoyant equities market, $40T confined to one corporation by 2030-35 or so is, to me, almost* market-unachievable. The reason is that would require so much investment capital being diverted away from the rest of the world’s markets toward TSLA that just by itself, that capital flow would be tantamount to the Fed not just taking away the punchbowl, but locking it in the top cupboard of the butler’s pantry AND shutting the lights off in the ballroom.
Second, the “asterisked “almost*”: the one macroeconomic situation wherein this could be tenable is were a consistent policy of Quantitative Easing to continue for so many years that the M1-M5 spigot simply is directed right to TSLA. So to speak. Now, that by itself does not necessarily portend doom either for the economy or for whatever sectors are outside a Tesla/SpaceX umbrella. Well-functioning sectors like transportation, energy production and distribution, telecommunications, AI in all its various permutations, insurance and so forth should also instill good performance by other sectors. We would be back to GM CEO’s 1953 misquote “What’s good for GM is good for the country”...except this time, it would be true.
Now, about monopoly and market share. Yes they are different and No it doesn’t matter. Probably. I can see it more likely than not that the pressure put on politicos to treat a highly dominant market share as if it were, indeed, monopolistic - with all the governmental break-up insistence that that would entail.
So - what? Well, of the two big breakups that have occurred in the last 110 years, one was within our lifetimes. ATT was broken up into eight Baby Bells in 1984. Did this breakup engender the revolution in telecommunications, or did that revolution beget the re-integration of the old ATT? An interesting, but off-topic discussion. Regardless, as of 2019 we’re back to status quo ante breakup. What is important is that a shareholder of old ATT who held on to his thus-endowed Baby Bell shares has done gloriously well and, I believe, far better than had MaBell not been broken up in 1984.
The second, and earlier, major corporate dissolution occurred in 1911, when Standard Oil was split up into Standard Oil of KY, CA, NY, NJ, IN, OH and The Ohio Oil Co, plus 27 other firms. As with ATT, the minority shareholder has done very, very, very well over the subsequent 11 decades; maybe some day I’ll find a reference as to how well but I think just looking at the market caps of the extant current survivors (again, lots of re-merging subsequently): Chevron, ExxonMobil, Marathon and BP* gives a very good first approximation (*BP is a tad harder as one would have to back out its Amoco and Sohio portions to approximate a valuation).
So back to TSLA: Were a $40T or so market cap to come into the offing, thus engendering a breakup, I would fear not for my or your investment portfolio. They would do very, very well....and quite likely, better than they would without such a dissolution.
First, and to an extent this concept has been pursued up-thread just a bit, even with a booming US - and global - economy and a concomitant buoyant equities market, $40T confined to one corporation by 2030-35 or so is, to me, almost* market-unachievable. The reason is that would require so much investment capital being diverted away from the rest of the world’s markets toward TSLA that just by itself, that capital flow would be tantamount to the Fed not just taking away the punchbowl, but locking it in the top cupboard of the butler’s pantry AND shutting the lights off in the ballroom.
Second, the “asterisked “almost*”: the one macroeconomic situation wherein this could be tenable is were a consistent policy of Quantitative Easing to continue for so many years that the M1-M5 spigot simply is directed right to TSLA. So to speak. Now, that by itself does not necessarily portend doom either for the economy or for whatever sectors are outside a Tesla/SpaceX umbrella. Well-functioning sectors like transportation, energy production and distribution, telecommunications, AI in all its various permutations, insurance and so forth should also instill good performance by other sectors. We would be back to GM CEO’s 1953 misquote “What’s good for GM is good for the country”...except this time, it would be true.
Now, about monopoly and market share. Yes they are different and No it doesn’t matter. Probably. I can see it more likely than not that the pressure put on politicos to treat a highly dominant market share as if it were, indeed, monopolistic - with all the governmental break-up insistence that that would entail.
So - what? Well, of the two big breakups that have occurred in the last 110 years, one was within our lifetimes. ATT was broken up into eight Baby Bells in 1984. Did this breakup engender the revolution in telecommunications, or did that revolution beget the re-integration of the old ATT? An interesting, but off-topic discussion. Regardless, as of 2019 we’re back to status quo ante breakup. What is important is that a shareholder of old ATT who held on to his thus-endowed Baby Bell shares has done gloriously well and, I believe, far better than had MaBell not been broken up in 1984.
The second, and earlier, major corporate dissolution occurred in 1911, when Standard Oil was split up into Standard Oil of KY, CA, NY, NJ, IN, OH and The Ohio Oil Co, plus 27 other firms. As with ATT, the minority shareholder has done very, very, very well over the subsequent 11 decades; maybe some day I’ll find a reference as to how well but I think just looking at the market caps of the extant current survivors (again, lots of re-merging subsequently): Chevron, ExxonMobil, Marathon and BP* gives a very good first approximation (*BP is a tad harder as one would have to back out its Amoco and Sohio portions to approximate a valuation).
So back to TSLA: Were a $40T or so market cap to come into the offing, thus engendering a breakup, I would fear not for my or your investment portfolio. They would do very, very well....and quite likely, better than they would without such a dissolution.
S&P inclusion will be like the Spanish Inquisition - it will happen when nobody expects it.
All this talk of a market cap of 10 or 20 trillion cracks me up(in a good way). If Tesla were to ever hit even 10 trillion, I would happily be watching the action from the sidelines, having sold a majority of my shares already. I'll likely always have a small amount of shares(like 15% of my Tesla position now) that I'll never end up selling until I'm old old no matter the share price.......but Tesla hitting 1 trillion market cap already puts me past my retirement number and a 2 trillion dollar market cap would put me in scenario where there's no real financial incentive to hold any longer.
Granted with my selling strategy that will get triggered when the market cap hits 1 trillion (which will then take me quite a few years to sell off the majority of my shares) by the time I'm able to efficiently sell off my shares, the market cap could be approaching/past 2 trillion and on to new heights
Granted with my selling strategy that will get triggered when the market cap hits 1 trillion (which will then take me quite a few years to sell off the majority of my shares) by the time I'm able to efficiently sell off my shares, the market cap could be approaching/past 2 trillion and on to new heights
Knightshade
Well-Known Member
This has little to do with replication.
There's simply not that much money to be had from the ENTIRE sector- let alone whatever % of it would specifically belong to Tesla.
Especially when we have to expect Tesla will use the same model in energy they do in vehicles- Continually lowering cost AND pricing to customers to keep NET profit very very low in order to accelerate the mission.
(which of course is yet ANOTHER competitive advantage of the company... other companies caring more about net profits will keep more of their revenue out of lowering product cost or innovating new product)
Knightshade
Well-Known Member
My original statement to the other guy was that there's no monopoly enforcement concerns if a company only has 25% market share in the first place.
You quoted my post and suggested this wasn't correct and market share made no difference.
I cited the FTC saying otherwise- and suggested if you don't agree with my claim a 25% market share would exclude a company from having anti-trust action taken against it you should cite some cases where that has ever happened.
Yes- that was literally the point of the post you initially quoted and appeared to disagree with- dismissing market share as not having relevance when it surely does.
Hence my confusion that you now seem to agree when what I've been saying hasn't changed at all.
BrownOuttaSpec
Active Member
I'm more of a picture kinda guy (picture from 2016)..
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So we'll see Tesla get broken up (Vehicles, Energy, Autonomy, etc) and then come all back together in 30 years even more valuable than before? So we're thinking a 50T+ Market cap?
HODL!!!!!
StealthP3D
Well-Known Member
Yeah, it shouldn't affect the courts at all but judges are human too. The good thing is that lobbying is open to all viewpoints. And I don't see why the smart and forward-thinking people that lobby to protect innovation and business excellence will start to lose out to people arguing for protectionism and cronyism as that's what got America into the hole we are in. Lobbyists lean all ways but the most intelligent arguments tend to carry the most weight.
Another point Tesla has on it's side: Bringing an anti-trust suit against a huge corporation is an exceedingly slow process. It can take a decade to get anywhere. By then, Tesla will have won the war against oil, the war against climate change will be in full swing, and the bankrupt nature of those people who want Tesla to fail will no longer be limited to moral bankruptcy. It takes money to lobby.
Since we are getting even more factories, does that mean more models or will the existing cars be able to service the market enough? Obviously the 25k car in 3 years, but what else? Van? Cyber-jeep?
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