Tesla Joins 4-Digit Club, Share Price Cracks $1,000 (electrek.co) 73
Tesla has become the world's most valuable automaker -- surpassing Toyota -- as its stock pushes to a new high at $1,000 a share. Slashdot reader 140Mandak262Jamuna writes: Tesla is in a tear lately, after better than expected sales report from China. Elon Musk himself tweeted, during the trading session too, that it was overvalued at $760. The speculation seems to be centered on the idea that Tesla is going to join S&P500 by eking out a token profit this quarter.
Most people think it is due to some sort of short squeeze or something. But Tesla has sold convertible bonds maturing in 2021, 2022 and 2025 at an average price of $330. 15 million shares. Experienced folks like Ihor of S3 partners or Reflex Research estimate about 12 million of these shares have been shorted to "book profits." The idea is to borrow shares and sell them at $800 or $900 now, and keep paying the borrow fee for a couple of years. When the bond matures, you get the shares for $330, or cash for the difference between market price at that time and $330. At that point the short can cover the position with cash or stock. If the stock is below $330 at that time, they are guaranteed to get $330! So it is a no-loss strategy, this accounts for 12 million shares most likely. Total short position in Tesla is just 16 million, just 4 million shares, or 4 billion by today's prices. It is big, but not big enough to squeeze, and there is plenty of shares available to borrow. So it is not short squeeze causing this.
Many engineers and teardown experts are saying Tesla has a phenomenal lead in battery technology and design. Seems to be falling short on manufacturing, paint, and assembly. But overall product is so superior it is overcoming the short falls in these areas. Traditional auto makers saw battery as the fuel tank. Nothing much can be done to improve the fuel tank, so nothing much can be done to improve the battery they seem to have thought. But assembling 8,000 cells and maintaining charge balance and voltages and currents on them is a very tricky thing and people who outsourced this part of EV wrote themselves out of the script in the EV play.
Most people think it is due to some sort of short squeeze or something. But Tesla has sold convertible bonds maturing in 2021, 2022 and 2025 at an average price of $330. 15 million shares. Experienced folks like Ihor of S3 partners or Reflex Research estimate about 12 million of these shares have been shorted to "book profits." The idea is to borrow shares and sell them at $800 or $900 now, and keep paying the borrow fee for a couple of years. When the bond matures, you get the shares for $330, or cash for the difference between market price at that time and $330. At that point the short can cover the position with cash or stock. If the stock is below $330 at that time, they are guaranteed to get $330! So it is a no-loss strategy, this accounts for 12 million shares most likely. Total short position in Tesla is just 16 million, just 4 million shares, or 4 billion by today's prices. It is big, but not big enough to squeeze, and there is plenty of shares available to borrow. So it is not short squeeze causing this.
Many engineers and teardown experts are saying Tesla has a phenomenal lead in battery technology and design. Seems to be falling short on manufacturing, paint, and assembly. But overall product is so superior it is overcoming the short falls in these areas. Traditional auto makers saw battery as the fuel tank. Nothing much can be done to improve the fuel tank, so nothing much can be done to improve the battery they seem to have thought. But assembling 8,000 cells and maintaining charge balance and voltages and currents on them is a very tricky thing and people who outsourced this part of EV wrote themselves out of the script in the EV play.
We're paid to promote this (Score:3, Informative)
SEO, baby!
Re: We're paid to promote this (Score:3, Informative)
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Reminder - not just automaker (Score:5, Insightful)
If all Tesla did was make electric cars, they would not be worth so much...
The other battery and factory efforts they are involved in, are where the real potential is.
Not to discount the auto part though where they seem to be the first company to really ship multiple models of electric cars at large scale.
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If all Tesla did was make electric cars, they would not be worth so much...
The other battery and factory efforts they are involved in, are where the real potential is.
Not to discount the auto part though where they seem to be the first company to really ship multiple models of electric cars at large scale.
There's some truth to what you say, but Tesla is in the capital position they are because Elon understands markets are only part substance... perhaps more importantly, markets are part hype, and dotcom bubble be damned, he's nailing the public opinion angle.
Realistically, does Tesla manufacture and sell the sheer number of vehicles a Ford, Toyota, Hyundai, or Chevrolet does? Of course not.
Yet, name the head of just one of those manufacturers.
And the future (Score:5, Interesting)
There's some truth to what you say, but Tesla is in the capital position they are because Elon understands markets are only part substance... perhaps more importantly, markets are part hype, and dotcom bubble be damned, he's nailing the public opinion angle.
Realistically, does Tesla manufacture and sell the sheer number of vehicles a Ford, Toyota, Hyundai, or Chevrolet does? Of course not.
Stock price is supposedly based on the investor's belief that the stock will go up. Tesla doesn't *have* to make the same number of vehicles as Ford, Toyota, or Hundai to be a valuable stock *right now*.
Tesla stock moves by events.
We're out of the stage now where a negative review in the press based on false premises will cause the stock to drop. The last one of these I saw (last year) had a prominent link at the top to a debunking article that pointed out the truth.
The standard and predictable events are the quarterly statistics (the week after the quarter ends) and the quarterly earnings call. The stock will trend up or down a couple of days before each of these depending on the outlook of the actual call, and then some more after the call.
Tesla just had one of these (Jum 8), so in response the stock trended upwards from Jume 5 to 10, then jumped up on the 10th.
Tesla completing the China gigafactory and cars started selling in China last December caused another bump. The rise started in late October and got a big bump when the first Chinese car rolled off the line and customers liked them. Due to car volume, the investing world noticed that Tesla had doubled(-ish) both its revenue and profit.
Coronavirus and shutting down the factories caused a big dip in the stock price, as expected. This of course was unrelated to any aspect of Tesla itself, so once we had a psychological handle on the virus the stock shot right back up again.
One event coming up is the factory in Germany. The German factory is expected to be completed within a year, possibly before the end of *this* year. When European Teslas begin to be delivered to customers, expect the stock to rise starting from about a week before.
The elephant in the room is the S&P 500 event. Tesla has satisfied all requirements to be included in the S&P 500 except one: GAAP profit in 3 of the last 4 quarters (IIRC). They had profit in Q3 of last year and Q1 of this year, so without the virus they would be in the S&P 500 in about a month. This means that large mutual funds will take notice of Tesla, their notoriety will skyrocket, and the stock should jump up accordingly.
Also on the horizon: a new gigafactory for making the trucks will be constructed, probably in Austin Texas. Expect the stock to bump up when that's completed as well.
Re:And the future (Score:5, Interesting)
Tesla's history of profitability is not very extensive. All standard value metrics of a stock show Tesla to be enormously over-valued (P/E ratio, revenue multiplier, etc). So, in order to justify the prices we are seeing now you have to buy in to a Tesla growth story. This is why its value is so contentious, I guess. Some people buy the growth story and some don't.
I would like to point out that unlike Tesla stock, Tesla BONDS are rated as junk grade. Of course junk bonds can still be a good investment for people able to tolerate risk. But it is not exactly a resounding vote of confidence in the company...
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"Yet, name the head of just one of those manufacturers."
Mr Ford.
Do I win?
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"Yet, name the head of just one of those manufacturers." Mr Ford.
Do I win?
Oh my yes! Congratulations!
You'll be barely able to contain your excitement when you learn the prize is a Fortnite game with Jake Paul in a Walmart on Black Friday.
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Elon Musk understands markets? The guy who was fined $40M and put on probation for tweeting "funding secured" understands markets?
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A few weeks ago Musk admitted that its stock prices were too high. At this point I think Tesla Problem isn't with money, but with production and scale.
They need to build more Factories to meet demand, and make more batteries.
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Kind of like the Hyperloop. I doubt it will ever solve anyone's transportation needs, but the boring machines developed by the Boring company could become a very big deal. The world spends over a trillion dollars a year digging tunnels, albeit for more pedestrian purposes.
Or SpaceX's rocket engines -- those could be a solid business all on their own.
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The other battery and factory efforts they are involved in, are where the real potential is.
Even so, I think its kind of insane for Tesla to be valued over every other automaker. By this valuation, it's worth $6 billion more than Toyota, more than double Volkswagen, 4 times the value of each of Honda, Daimler, Ferrari and BMW. 6 times the value of Ford.
There are many other battery makers, and many other robotic factories out there. And Toyota is no slouch when it comes to electric vehicles - it's been successfully commercializing hybrids since 1991!
I know the market is never wrong, but to me t
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Market prices haven't had any resemblance to sanity or logic in their operations for decades. It's herd mentality augmented by poorly programmed bots now, where a misplaced decimal eliminated 10% of the market value of the Chilean stock market in an afternoon. Expecting Tesla stock to have any sort of rational relation to is a fool's game.
Re: Reminder - not just automaker (Score:1)
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The battery development and manufacturing is all by other companies, Panasonic mostly but also some Chinese companies they are working with.
Tesla does much of the work on the battery packs for the cars.
Stock price vs reality dissconnect. (Score:3)
The Stock Price is mostly due to what investors feel that Tesla can become.
However in terms of technology Tesla is years ahead of the other Automakers. It seems from everyone who has gotten a Tesla seems to say the same things.
1. They don't want to go back to ICE cars, as all the ICE models just seem so antiquated.
2. This is how driving is meant to be.
3. How this would be a perfect car if they fix the Panel Gaps and Paint Quality.
Now I am sure a lot of that is buyers protectionism. (where the buyer of a pr
So it sucks at everything a car should be good at? (Score:1)
So it fails at everything a car manufacturer should be good at?
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Elon said in one interview,"If the experts said you are doing A, B and C right, but you are wrong in D, E and F I would have listened to them. But they said there is not a single thing right in what we were doing. We knew we were right in a few things. That's how the experts lost their credibility".
Even Sandy Munro, t
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Yeah. But these are all well understood issues in the car business. True, Tesla may have let QC slide on these. But they are all fixable and the know how to do so is readily available. What they do well (EV drivetrains, batteries, software) they are really good at. And they keep that in house. That's why they are valued as they are.
Meh, wake me up later (Score:1)
All the really cool kids are in the five-digit (decimal) club.
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All the really cool kids are in the five-digit (decimal) club.
68843? Noob.
Better Battery Design The Key (Score:2)
Tesla got a head start because the major auto manufacturers were tied with investments to the fossil fuel industry and service stations et al and it made it fiscally hard for them to change to electric, giving Tesla a free run. By the time the auto makers caught up, one of them wanted to buy Tesla but it was too expensive, so shorting was arranged through hedge fund types to make it much cheaper, for a buyout but it failed.
They now have to play catch up, fortunately the new thing will be 2 minute replaceab
There is no way that is the thing (Score:1)
fortunately the new thing will be 2 minute replaceable batteries
I agree with you up to that point but I just don't see that tech being more than a niche.
Yes it is quick, but there do you store all of those batteries to be swapped in, at scale? And they all need to be able to be charged as they sit... and they all have to be compatible with every car, and you kind of need to store 10 or so of them for every car on the road because someone might strike out in nay direction...
Yes it's quick but the technology
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On the other hand, leasing the most expensive part of the EV might make EVs cheaper to buy off the dealer's lot. You enroll into a battery swapping network and never own the battery. May be a tiny limp home battery with small range for emergencies may be ...It can work out, if the EV makers agree on a stand
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Given they are not even able to agree to a common standard for L3 chargers, (there are three or four plugs and different billing and metering protocols) its going to be tough to make them agree.
Yep I think more than the other potential issues, that is what makes me think it's not going to happen. By the time all the automakers agree on a standard Tesla will have bought up all remaining gas stations and converted them to Supercharger stations... :-)
Just to show I'm not totally throwing a wet blanket on the
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... By the time the auto makers caught up, one of them wanted to buy Tesla but it was too expensive, so shorting was arranged through hedge fund types to make it much cheaper, for a buyout but it failed. ...
Who that would be? Porsche? They engaged in borderline illegal activity and triggered the most massive short squeeze ever in Europe playing with VW stock.
Also the corporate culture of VW dominated by engineers was changed by Porsche's take over and the diesel gate scandal has roots in the play fast and loose, push the envelop of legal activity by the Porsche managers. Do you think it could be Porsche?
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Replaceable batteries won't catch on until the value of the battery itself drops to a range that is comperable with the value of the energy stored.
One of the big benefits of an electric is that you charge it overnight, so it always has a full charge for the normal commute. You don't have to go through the hassle of going to a station to fill up every week or so. But that benefit relies on the battery condition, which depends on usage, so the only times people would use the swap are when they're going on a l
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> for instance propane tanks for gas grills
Bad example. I have NEVER gotten a better tank than I had originally on a swap. Every time I swap I regret it. I'd much rather fill my known, good tank that I take care of properly. The only reason I don't, is it is almost impossible to find a place to refill the tanks anymore.
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That just proves my point. There are actually two reasons you swap. Your main one might be that you can't find a place to refill it, but the hidden one is that the value of the tank itself is low enough that you're willing to accept the swap tank to get the propane. If a good tank cost $1,000 to replace, you'd be a lot less likely to swap it for one of unknown condition.
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They now have to play catch up, fortunately the new thing will be 2 minute replaceable batteries.
Nope, it won't. It's an old thing, and it's already been discussed to death. And it's dead. Stick a fork in it.
Tesla was originally intending to build battery swap capability into the Model S, going so far as to actually build Model S cars equipped for it, and building a prototype of the machinery to do it.
And absolutely no one would tolerate it. Consumers are dumb about many things, but when you tell them the reason their car is expensive is the cost of the battery pack, and you tell them the capacity
Back of the book... (Score:2)
If Tesla joins the S&P 500... what page of the magazine will they be on? Somehow, I think they belong with the Poors.
Many of you do not own a Tesla (Score:4, Interesting)
Many of you do not own a Tesla, and therefore it will be hard for you to fully understand the value of this company. I have owned a Tesla car for a couple of years, and I find it so far ahead of everything else I have owned (maybe a dozen cars over my lifetime), that it is not even funny. Sure you will find some people complain about this or that. And some of these complaints may be real. But compared to the rest of the industry, Tesla quality is far far superior. There is reason why almost all owner surveys put Tesla at the very top of quality.
I occasionally drive new luxury cars that belong to friends and family and they all feel very antiquated. I also own other electric cars. A Nissan Leaf and a Chevy Volt. Every time I drive them I find it very hard to believe how poorly designed these cars are. Something that did not bother me, until I started driving the Tesla.
Having said that, do I think the company's current stock valuation is warranted? I don't know. I bought $100K of Tesla stock last year when it dipped below $200. I sold at $260 and thought I did really good. And now I am kicking myself for selling it.
Re:Many of you do not own a Tesla (Score:5, Interesting)
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I know parent will get modded up. Let's try the same for another product from another also highly-valued company, and see what kind of response we will get here:
Many of you do not own an iPhone, and therefore it will be hard for you to fully understand the value of this company. I have owned an iPhone for a couple of years, and I find it so far ahead of everything else I have owned (maybe a dozen cars over my lifetime), that it is not even funny. Sure you will find some people complain about this or that.
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I know parent will get modded up. Let's try the same for another product from another also highly-valued company, and see what kind of response we will get here:
Many of you do not own an iPhone,...
Fits for me. In the abstract I can understand why people value Apple products. They mostly, simply are easier to use and in many ways better (e.g. privacy). At the same time the fundamental restrictions on them make me sick and there are a bunch of things I really can't stand about them. The idea of a phone that you can't reflash just seems stupid. The idea that you can't install your own software seems insane. Not having the full source code for your operating system, the thing that controls your data, se
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Not having the full source code for your operating system, the thing that controls your data, seems wrong (and I still have a problem with having google apps set up).
As you said, Google's "secret sauce" makes the average Android phone no better than Apple in this regard. Personally, I find Google's approach far more insidious, since the user has absolutely no ability to block Google services updates without rooting the phone.
The sad fact is, both major mobile OS vendors are user-hostile. Pick your poison.
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Many of you do not own an iPhone
And you've already failed to draw a comparison to the OP.
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iPhone
False equivalence.
For the last several generations, Apple has either offered a "SE" model or previous versions to fit a wider range of budgets. These phones are frequently heavily discounted when purchased bundled with wireless service. As an example, T-Mobile's Metro brand is presently selling the iPhone 7 for $30.
Apple's ecosystem is a matter of preference, not income level. If your budget for a new car has you shopping between the Nissan Versa, Mitsubishi Mirage, Kia Rio, and Hyundai Accent, then Tesl
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They still make the iPhone 7? It's an almost certain when Apple releases iOS 14 in September that they'll cut off the iPhone 7 from further updates. I'm guessing those are probably used/refurbished phones or possibly some new-old stock they are dumping for cheap.
Re: Many of you do not own a Tesla (Score:1)
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I bought $100K of Tesla stock last year when it dipped below $200. I sold at $260 and thought I did really good. And now I am kicking myself for selling it.
Think about it this way. You disn't lose anything. You got $30k, real money, right there in you bank account. There is absolutely no reason to kick yourself for it. That's better than me, who got $0 because I didn't buy Tesla stocks, and that's much much better than those who lost money selling their stocks for less than they have paid.
By that reasoning, I could kick myself for not playing the right numbers at the national lottery, I mean, it is so easy, just check a few numbers and boom, you are a milliona
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Many of you do not own a Tesla
Tesla's entire product line is priced out of reach for the average American [cnbc.com], and that was even before we went into the Covid-19 induced recession.
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Tesla's entire product line is priced out of reach for the average American, and that was even before we went into the Covid-19 induced recession.
Tesla knows it, which is why Elon Musk wrote the memo declaring it time to go into production on the Tesla Semi. The customers for the Semi are all giant corporations with very deep pockets. It's a perfect time for Tesla to grab as many commercial customers as they can.
That was the reason for yesterday's jump in Tesla's price. The market is anticipating tens of millions and then hundreds of millions in revenue from commercial customers. UPS is going to take delivery of their preorders, try them out, dis
Vertical Integration (Score:4, Insightful)
One factor here is Tesla's vertical integration. A typical car company brings in tons of parts from parts suppliers and assembles the cars. In some cases, these parts companies were spun off from the larger automakers years ago. Tesla also brings in some outside parts, but does a lot more of its supply chain in-house. If you took the market cap of each car company, and added to it the amortized market cap of their parts suppliers (based on the percentage of business coming from each car company), then I expect Toyota would look much larger than Tesla still.
Of course, the real story is that Tesla is a growth stock, and the rest of the auto industry is fighting to avoid market share loss. And of course, Tesla is also an energy stock with some out-of-this-world marketing.
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But they retain control over the most critical parts of the car, the software, the battery pack mother board, and the electric motor. The number of parts and s
Re: Vertical Integration (Score:1)
Tesla is also an energy stock with some out-of-this-world marketing.
If by that you mean Teslas market themselves, I wholeheartedly agree with you.
When the CEO is an Engineer (Score:1)
Traditional auto makers saw battery as the fuel tank. Nothing much can be done to improve the fuel tank, so nothing much can be done to improve the battery they seem to have thought. But assembling 8,000 cells and maintaining charge balance and voltages and currents on them is a very tricky thing and people who outsourced this part of EV wrote themselves out of the script in the EV play.
This is the difference between companies that promote sales, marketing and financial guys into CEO roles and keep engineers pigeon holed in engineering.
You put an engineer in charge and he might blow his mouth off, pissing off the stock market peeps, every so often but he's going to make sure the engineering focus on developing a product isn't plucked out of his arse on the golf coarse with his mates.
I give you SpaceX and Tesla. The result of what happens when you put an engineer, who has business savy, in
Re: When the CEO is an Engineer (Score:2)
And if Telsa goes bankrupt... (Score:4, Insightful)
The guys over at Robin Hood are also buying up bankrupt Hertz and splurging on FANGDD
Stock price has zero correlation with a businesses worth anymore, it is a Fed Reserve pumped casino.
Stupidly invalid stock market math (Score:1)
ANY company can push their stock price to over 1000 by doing a reverse split.
Stock price per share TIMES NUMBER OF,OUTSTANDING SHARES!!!!! is what counts. That is how you get the company's total market cap.
This is one of the dumbest and most ignorant headlines slashdot has seen in a while and that's saying something for a site known for stupid headlines.
Jfc, this is BASIC DAY ONE stock market knowledge.
Saying Tesla is in the four digit club is bullshit (Score:3)
Before their 7:1 stock split, at current prices, Apple would be worth ~$2100.
Share price is entirely dependent on the number of shares and the perceived value of the company.
Microsoft at ~$190 per share is worth more than Tesla at over $1000 a share. In fact, at the current number of shares, Tesla could be worth $5000 a share and STILL not be worth more than Microsoft.
This is bullshit and pointless reporting.
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Pushing past Toyota to have the largest market cap of any automaker, on the other hand - that's quite a milestone.
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They looked at the market cap of Toyota US, not the parent company of Toyota in Japan. So they are looking at the market cap for ALL of Tesla globally, but comparing it to only the US side of Toyota.
By that measure, my business is more valuable than any business in the planet because it's total value is worth more than the change that's perfectly vertically balanced on a single grain of sand in the basement of all the companie
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bad reporting
On those convertible bonds (Score:5, Informative)
The idea is to borrow shares and sell them at $800 or $900 now, and keep paying the borrow fee for a couple of years. When the bond matures, you get the shares for $330, or cash for the difference between market price at that time and $330. At that point the short can cover the position with cash or stock. If the stock is below $330 at that time, they are guaranteed to get $330! So it is a no-loss strategy
Not quite no-loss! If Tesla goes bankrupt, you get: $0. In that case, you have "paid the borrow fee" for a few years and still own something worthless, so you have suffered losses.
In current circumstances, those convertible bonds change in value (after correcting for conversion ratio) by $1 for every $1 move in the stock. Anyone buying a convert now, and shorting the equivalent stock, locks in essentially nothing. Transaction costs will eat up every dime of expected profit and then some.
Those who bought convertibles hundreds of dollars ago, however, will not have shorted on a 1-1 basis initially, due to the (at the time) higher likelihood of Tesla stock ending up not-bankrupt but below $330. Those convertible buyers definitely made money as the stock price rose. They did much worse than outright buyers of the stock who of course did no shorting at all, but convertibles holders took on less risk for their lower reward.
For at least the last 5 years, these Tesla convertibles have been very efficiently priced in no-free-lunch mode. Only someone who misunderstands that (admittedly complex) security type would think otherwise.
(I spent most of a decade doing convertible bond modeling)
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Basing your decisions on "Money Supply" is just dumb. Money supply can change on a whim. Fed/Gov't/People determine there is not enough circulating, more is "printed" (effectively). Too much circulating, start destroying it.
Me fail math... (Score:2)
Free OTA Is the Real Clincher (Score:2)
Updates (Score:1)
Oh joy, my least favorite thing about mobile OSes has made its way to vehicles.
Maybe I'm getting old, but I've really started to appreciate the fact that when I get in my (gasoline-powered) vehicle, it's still exactly the way I left it. My car has no need for an internet connection and that's the way I like it.
All a shell game (Score:2)