Tesla still an unprofitable automaker

[Kittygalore]

I honestly don't understand why people valuate Tesla at such high levels.

It virtually makes no sense. People are essentially pricing in decades worth of earnings growth into an unprofitable company. Automakers that have been making profits for decades, like BMW and Mercedes, are somehow outpriced in terms of market cap.

A 50 P/E ratio is considered to be bubble territory. Tesla currently has a four digit P/E of 1,100. Think about that.

Well, my guy the reason that make a big deal out of them is because they have a relatable CEO and they are almost the talk of a lot of forums and message boards. Not to mention that they are innovative in terms of automobile, the reason I believe that they are unprofitable is because electric cars in general are still expensive compared to gas powered guzzlers.

[philipma1957]

I honestly don't understand why people valuate Tesla at such high levels.

It virtually makes no sense. People are essentially pricing in decades worth of earnings growth into an unprofitable company. Automakers that have been making profits for decades, like BMW and Mercedes, are somehow outpriced in terms of market cap.

A 50 P/E ratio is considered to be bubble territory. Tesla currently has a four digit P/E of 1,100. Think about that.

Well, my guy the reason that make a big deal out of them is because they have a relatable CEO and they are almost the talk of a lot of forums and message boards. Not to mention that they are innovative in terms of automobile, the reason I believe that they are unprofitable is because electric cars in general are still expensive compared to gas powered guzzlers.

only because governments choose to subsidize oil over solar.

simply make oil pay for all the spills and all the pollution it does. and gas cars are no longer cheap.

[Kittygalore]

~

only because governments choose to subsidize oil over solar.

simply make oil pay for all the spills and all the pollution it does. and gas cars are no longer cheap.

It's deeper than that, they don't want their oil baron friends stop paying their vacations and their grandsons college fund so they have to do anything they can to make oil and fossil fuels as an energy source not to mention that when green energy is introduced, a lot of businesses are going to go under because they are not green energy and they will lobby everyone in power to make it impossible to fully adopt green energy.

[paxmao]

I honestly don't understand why people valuate Tesla at such high levels.

It virtually makes no sense. People are essentially pricing in decades worth of earnings growth into an unprofitable company. Automakers that have been making profits for decades, like BMW and Mercedes, are somehow outpriced in terms of market cap.

A 50 P/E ratio is considered to be bubble territory. Tesla currently has a four digit P/E of 1,100. Think about that.

Well, my guy the reason that make a big deal out of them is because they have a relatable CEO and they are almost the talk of a lot of forums and message boards. Not to mention that they are innovative in terms of automobile, the reason I believe that they are unprofitable is because electric cars in general are still expensive compared to gas powered guzzlers.

Tesla, big as it has become, is essentially still a start-up that is burning through more cash that it can sustainability generate, even if they have decided to declare profits. You are using the wrong metrics to evaluate Tesla, e.g. if you wanted to value Amazon on a P/E ratio a few years ago it would have been infinite because they were not making profit.

For companies such as Tesla is all about optionality and growth, you can´t just throw a P/E to it.

[davis196]

Despite Tesla's first quarter earnings, Tesla is still an unprofitable automobile manufacturer. Digging into the numbers, Tesla reported a $438M GAAP net income, but they had $518M in regulatory credit sales and more than $100M in profit related to bitcoin sales (they sold a total of $272M worth of bitcoin in Q1), which means the primary business of manufacturing cars is still not profitable.  Perhaps as they continue to scale this will change, but the valuation still looks insane at these levels, and electric vehicle competition is only going to get stiffer going forward.

Tesla cars are still expensive(mostly because of the batteries) and the supporting infrastructure or is not well developed.Perhaps,if Tesla engineers find a way to produce cheaper batteries,then Tesla cars might be more affordable for the working class.It will take decades for electric cars to beat the competition of conventional cars.The consumers are used to driving conventional cars,so switching to an electric car will be weird for the "old school" automobile fanatics.

[Fesatmas]

everyone wants Tesla, but not everyone can buy Tesla. it's just a display for billionaires to show off their collection. If I were to choose between Tesla and Bitcoin, I would definitely choose Bitcoin. apart from the Tesla company business to adopt Bitcoin and so on, what makes Tesla that special in the eyes of bitcoiners?

[el kaka22]

Making a profit is not as important as you might think if you are making that much revenue. I understand that people who own a shop, any small business usually end up spending the income either to upgrade their business a bit more, or usually to live basically, most barely make enough to continue living.

Tesla is not like that, it is not even nowhere near that level, Tesla makes so much revenue that they keep pumping it back into business and grow it as big as it gets, they are focusing on starting more and more manufacturing places which will allow them to actually manufacture cars at a rate where people can buy one anytime they want, without waiting, without color problems, you go to tesla dealer, say whatever you want and get exactly that, in order to reach those levels you need to actually spend a quite good amount of money, tens of billions of dollars. However I do believe that they will be profitable in less than a decade.

[Hydrogen]

I honestly don't understand why people valuate Tesla at such high levels.

It virtually makes no sense. People are essentially pricing in decades worth of earnings growth into an unprofitable company. Automakers that have been making profits for decades, like BMW and Mercedes, are somehow outpriced in terms of market cap.

A 50 P/E ratio is considered to be bubble territory. Tesla currently has a four digit P/E of 1,100. Think about that.

Think about the scale of projected future EV market growth.

Future government requirements for a percentage of cars produced by manufacturers to be electric vehicles.

Tesla's expected sales growth when cybertruck production begins in 2022. Tesla's presentations on their new battery technology and licensing plans.

TSLA's current price doesn't so much reflect its current market value, as it does its projected worth in the future.

[stompix]

Tesla is not like that, it is not even nowhere near that level, Tesla makes so much revenue that they keep pumping it back into business and grow it as big as it gets, they are focusing on starting more and more manufacturing places which will allow them to actually manufacture cars at a rate where people can buy one anytime they want, without waiting, without color problems, you go to tesla dealer, say whatever you want and get exactly that, in order to reach those levels you need to actually spend a quite good amount of money, tens of billions of dollars. However I do believe that they will be profitable in less than a decade.

No car manufacturer will ever aim at this as it's a waste of money to have all the combinations possible on stock, it's simply isn't efficient and you lock a lot of production time into cars that might never be sold and with the acceleration in the change of design and depreciation for older models that simply can't waste money on that. It does work for cars with fewer options with customers that can easily change their mind for a 100$ discount but it doesn't work for luxury cars, and that's where Tesla has always aimed to be.

Plus, even if the capitalization now is for what is Tesla supposed to do in ten years, the number are still ridiculous, Tesla has a market cap larger than the 8 biggest car makers who manufacture right now more than 60 million cars a year, and even if we count only electrics the 4 german brands have already sold more than Tesla if we combine their electric car sales. And this while having a lot of ground to recuperate, so, how could Tesla achieve more than 50 million cars sold in the world to justify that market cap, it's either they are overvalued or the others are the opposite.

[awik p]

everyone wants Tesla, but not everyone can buy Tesla. it's just a display for billionaires to show off their collection. If I were to choose between Tesla and Bitcoin, I would definitely choose Bitcoin. apart from the Tesla company business to adopt Bitcoin and so on, what makes Tesla that special in the eyes of bitcoiners?

we can see that Tesla is for the upper class. Of course, for myself, I prefer bitcoin over Tesla, and I don't think the production is too booming to be accepted by the general public. and currently Tesla is looking for money from bitcoin, after yesterday recording a profit on its investment

[Sithara007]

everyone wants Tesla, but not everyone can buy Tesla. it's just a display for billionaires to show off their collection. If I were to choose between Tesla and Bitcoin, I would definitely choose Bitcoin. apart from the Tesla company business to adopt Bitcoin and so on, what makes Tesla that special in the eyes of bitcoiners?

we can see that Tesla is for the upper class. Of course, for myself, I prefer bitcoin over Tesla, and I don't think the production is too booming to be accepted by the general public. and currently Tesla is looking for money from bitcoin, after yesterday recording a profit on its investment

Tesla cars are very expensive, but that alone won't make them upper class. The quality and specs are not as good as the luxury brands, such as BMW or Mercedes Benz. Tesla vehicles have become some sort of a status symbol among the young, especially who want to show that they are environmentally sensitive. But you will never get the feeling of driving a Lamborghini or Audi with Tesla. And perhaps that is the reason why the EVs still have a very small market share among the overall automobile market.

[nightxglow]

Wow that's such a huge amount of profit from bitcoin. Such a great company, able to take the chance, grab every opportunity and make the most of it.
But well, tesla is getting more and more popular, especially with their electric car, at least in my country it's getting more hype and many people want to buy it. I bet, they will not have any problem with their car sales, it might just take some times, since their car is super expensive as well, huge volume of sales is quite hard to achieve, although doesn't mean that it's impossible.

[Silberman]

Despite Tesla's first quarter earnings, Tesla is still an unprofitable automobile manufacturer. Digging into the numbers, Tesla reported a $438M GAAP net income, but they had $518M in regulatory credit sales and more than $100M in profit related to bitcoin sales (they sold a total of $272M worth of bitcoin in Q1), which means the primary business of manufacturing cars is still not profitable.  Perhaps as they continue to scale this will change, but the valuation still looks insane at these levels, and electric vehicle competition is only going to get stiffer going forward.

It is entirely possible that Tesla will become profitable not because of their car sales business but as holders of bitcoin, also we must understand that even if Tesla is not profitable now the value of something not only depends on its past and present it also depends on its future, and stockholders are looking at the future of Tesla and they think there is a lot of potential there and they do not want to miss it, in the worst case scenario they earn some money and drop the stock in the future, but in the best case scenario they are holding the next Microsoft or Apple and they become insanely rich because of it.

[kawetsriyanto]

snip

They probably don't make big profits as an automobile manufacturer right now because it is about electric cars. But. let's see what can Tesla does in the next future, maybe for several periods nearly, when electric cars become the most wanted in the world, probably Tesla will be the one leading.
Every company has its own target and also progress about its promotion, marketing, income, selling points, and others. Although it is not too profitable right now (as what the OP said), in fact, it is a big company that brings more profits with many developments, and also technology about tomorrow automobile.

[uneng]

snip

They probably don't make big profits as an automobile manufacturer right now because it is about electric cars. But. let's see what can Tesla does in the next future, maybe for several periods nearly, when electric cars become the most wanted in the world, probably Tesla will be the one leading.
Every company has its own target and also progress about its promotion, marketing, income, selling points, and others. Although it is not too profitable right now (as what the OP said), in fact, it is a big company that brings more profits with many developments, and also technology about tomorrow automobile.

Tesla is still growing their business' range. This is a very ambitious company which is investing a lot of money in development, but it will take some time yet until they start working at the same level of the competitors. I think it's not an issue for them though, because they always work thinking on long run. Tesla isn't even disponible in every countries yet, while another automotive companies are probably everywhere.
Furthermore there is some difference between not being profitable and not fully declaring the profits...

[crzy]

Despite Tesla's first quarter earnings, Tesla is still an unprofitable automobile manufacturer. Digging into the numbers, Tesla reported a $438M GAAP net income, but they had $518M in regulatory credit sales and more than $100M in profit related to bitcoin sales (they sold a total of $272M worth of bitcoin in Q1), which means the primary business of manufacturing cars is still not profitable.  Perhaps as they continue to scale this will change, but the valuation still looks insane at these levels, and electric vehicle competition is only going to get stiffer going forward.

What’s the basis of being profitable? Is there a limit for that?
As far as I understand, TESLA is still on a net profit despite of the pandemic we’re into right now and that can still be consider as profitable excluding those profit outside their real business. TESLA is growing because they continue to adopt change and they develop good things, more cars of TESLA will be sold in the coming years.

[AndySt]

Tesla is still growing their business' range. This is a very ambitious company which is investing a lot of money in development, but it will take some time yet until they start working at the same level of the competitors. I think it's not an issue for them though, because they always work thinking on long run. Tesla isn't even disponible in every countries yet, while another automotive companies are probably everywhere.
Furthermore there is some difference between not being profitable and not fully declaring the profits...

The most important problem of companies like Tesla is their overvaluation by the market, because having a small profit compared to traditional car companies, Tesla's capitalization is higher. This is not the real state of affairs, but rather the hopes of investors and the stock market about the hypothetical future of the company multiplied by government funds to support the economy, which flow into the stock and other speculative markets. Therefore, it is difficult to imagine what will happen if, for example, Tesla does not meet the expectations of investors with its activities and whether its collapse will serve as a trigger for the collapse of the entire stock market.

[Sithara007]

It is entirely possible that Tesla will become profitable not because of their car sales business but as holders of bitcoin, also we must understand that even if Tesla is not profitable now the value of something not only depends on its past and present it also depends on its future, and stockholders are looking at the future of Tesla and they think there is a lot of potential there and they do not want to miss it, in the worst case scenario they earn some money and drop the stock in the future, but in the best case scenario they are holding the next Microsoft or Apple and they become insanely rich because of it.

Just because Bitcoin added $100 million plus to the Tesla balance sheet for this quarter, I don't expect this to happen every time. Right now Bitcoin is going through a bullish phase and Tesla is also benefitting from it. But my question is what will happen once the bullish phase ends and a correction occurs. Instead of a net gain from Bitcoin sales, Tesla will be showing a net loss. And this may be unpalatable for many Tesla investors.

[andriarto]

It is entirely possible that Tesla will become profitable not because of their car sales business but as holders of bitcoin, also we must understand that even if Tesla is not profitable now the value of something not only depends on its past and present it also depends on its future, and stockholders are looking at the future of Tesla and they think there is a lot of potential there and they do not want to miss it, in the worst case scenario they earn some money and drop the stock in the future, but in the best case scenario they are holding the next Microsoft or Apple and they become insanely rich because of it.

Just because Bitcoin added $100 million plus to the Tesla balance sheet for this quarter, I don't expect this to happen every time. Right now Bitcoin is going through a bullish phase and Tesla is also benefitting from it. But my question is what will happen once the bullish phase ends and a correction occurs. Instead of a net gain from Bitcoin sales, Tesla will be showing a net loss. And this may be unpalatable for many Tesla investors.

indeed when the bearish season arrives, Tesla will be confused about looking for profit, but for me all of this has been taken into account Tesla, when they are still minimal in electric car turnover, they are looking for other fields to support the implementation of their main business which initially requires a large turnover.

[mojun7982]

Despite Tesla's first quarter earnings, Tesla is still an unprofitable automobile manufacturer. Digging into the numbers, Tesla reported a $438M GAAP net income, but they had $518M in regulatory credit sales and more than $100M in profit related to bitcoin sales (they sold a total of $272M worth of bitcoin in Q1), which means the primary business of manufacturing cars is still not profitable.  Perhaps as they continue to scale this will change, but the valuation still looks insane at these levels, and electric vehicle competition is only going to get stiffer going forward.

Musk knows how to deal with numbers. They are far from being profitable as a car manufacturer but you have to consider the D&R and investments in capital assets they are doing. Yes investments can be activated, but purely from car sales that will take some time. Once they get rolling I think they will become not only profitable, but the most profitable car company in the world.

I am not saying that's going to happen by 2023, but I would say by 2030 they are unstoppable when research in batteries has progresses and more renewable energy is available and much more.