It's generally difficult to do. The problem is you have no idea when the collapse in value will happen, or even if it will.
A lot of the companies I'd have bet against in the past, like AOL, sold for huge sums of money, and the purchasing company ended up regretting their decision. The actual AOL stock never collapsed.
As for the GME thing, the only reason why I sort give it a pass is because it was sort of an unprecedented thing. I am not sure if regulations have been updated to address a future similar incident.
At least it resulted in the "This Is Financial Advice" video from Folding Ideas.
Fascinating watch after following the event back in the day - and losing €1500 because I didn't reach my goal of earning €500 to buy a PS5 with the profit. If shit went up for just one more day I would have reached my goal.
I happened to "find" an very old IRA I had from a prior employer that had about $1200 sitting in it. I threw it all into GME. I pulled $500 in profits, and left the initial investment to ride.
Today, I'm down about $300 on those shares (taken with the $500 in gains, I'm technically still up by $200), and that's fine. I believe in the leadership, I like the company's current state (flush with cash, little/no debt) and I'm just going to keep letting it ride.
When I retire in 10 years or so, we'll see where it's at. Worst case, I'm out $700 bucks. Best case, I get that new riding lawnmower, for free!
Otherwise, it's Index funds, have a nice day, because none of us can compete with Wall Street.
Often the difficult thing isn't predicting "this bubble will collapse eventually"; it's predicting the _date_ of the collapse. You really need both, to short.
> never understood why Tesla valuation is orders of magnitude higher than honda
Tesla has solved the problem of unit profitably manufacturing EVs. Outside America and other petrostates, these are broadly accepted to be the future of transportation. (It’s getting its ass kicked by BYD, which didn’t distract itself with a Cybertruck or what increasingly looks like an Optimus follow-on. But being the only American challenger in a new economy is not worthless.)
Tesla’s also lead by a man who has consistently made money for his investors. Even when bets are bad, e.g. Twitter, he’s financially engineered an outcome that ensured, at the very least, nobody who backed him lost money.
Tesla being public, he can’t provide that sort of assurance to everyone who buys at any price. But he can at least credibly pretend to do that for anyone who buys in or near a primary.
> Tesla has solved the problem of unit profitably manufacturing EVs. Outside America and other petrostates, these are broadly accepted to be the future of transportation. (It’s getting its ass kicked by BYD, which didn’t distract itself with a Cybertruck or what increasingly looks like an Optimus follow-on. But being the only American challenger in a new economy is not worthless.)
They solved it by borrowing from the future and gutting their R&D. That's the main cost in the car industry and Tesla basically just stopped developing new models many years ago, to the point that they struggle with a simple refresh.
> Tesla’s also lead by a man who has consistently made money for his investors. Even when bets are bad, e.g. Twitter, he’s financially engineered an outcome that ensured, at the very least, nobody who backed him lost money.
That man also walks a very thin line between engineering outcomes and fraud, let's not forget that.
> solved it by borrowing from the future and gutting their R&D
Not relevant to unit profitability. Tesla’s American competitors can’t turn a profit on each car production-wise.
> man also walks a very thin line between engineering outcomes and fraud
Sure. But the point is to the degree investors were misled, they were made whole and then some. That’s why they keep backing him. He’s done well by them, regardless of the methods.
> Not relevant to unit profitability. Tesla’s American competitors can’t turn a profit on each car production-wise.
To quote a great commenter here, you can "engineer that outcome". While there are rules, details are mushy and as a result companies can fairly freely decide what do you include in cost per unit.
Is there anyone credibly claiming that Tesla loses--or has always lost--money on every car it made? (I'm including the proviso in case they fucked up their production in the last year, which I both wouldn't be surprised by and haven't looked into.)
> Tesla has solved the problem of unit profitably manufacturing EVs.
Well, you can say "profitably" because Tesla drivers seem to be surprisingly willing to put up with corners being cut in order to achieve said "profitability" ... panel gaps, cheap interiors and lousy software. :)
> you can say "profitably" because Tesla drivers seem to be surprisingly willing to put up with corners being cut in order to achieve said "profitability"
Low-end Chinese EVs feel like cheap Teslas. But they’re under $15k. Are panel gaps really worth tens of thousands of dollars to most car buyers?
That panel gap thing also is blown way out of proportion.
I challenge anyone to find a bad aligned one on a chinese made one - interestingly enough , those only seem to be a thing on US made vehicles, which basically are only Model X and Model S (ironically being the higher priced cars).
Usually people respond to this by questioning Tesla's high valuation, and that's fair.
TBH, though, I also wonder why auto companies tend to be valued so lowly. Often P/E ratios are in the single digits, and frequently paired with high dividends.
Auto companies aren't valued as lowly as the P/E ratio indicates. Auto companies have massive amounts of debt, and debt has higher priority than equity.
Instead of "P" you should use "Enterprise Value", which is Equity + Debt - Cash. (cash subtracted to prevent double counting it).
Their EV/E ratios are much more reasonable. And Tesla's used to be only a small multiple of traditional companies, when I owned shares. Now they aren't, and I don't own shares.
I understood it when Tesla was the path towards widespread electric car adoption. Now they have tons of competition and an aging lineup, I'm amazed they're competitive at all in East Asia.
The current valuation is largely driven by a future in robotics, not in traditional consumer vehicles. Both in driverless cars and the humanoid form factor. There is not another US company with anything near the position of tesla in terms of vertical integration, in-house self driving technology, manufacturing advancements, ambitious leadership, engineering talent, etc etc.
Chinese companies are the only large threat on the horizon.
> current valuation is largely driven by a future in robotics
It probably isn’t, given Tesla has no unique lead in robotics and its recent news of setbacks didn’t move the market.
Tesla stock is a bet on Musk. It’s why the Board pays him hundreds of billions of dollars to not lose focus on a business he’s very obviously bored with.
No unique lead on robotics, except the largest fleet of self driving cars by several orders of magnitude, the largest training cluster, custom silicon, experience in mass produciton and vertical integraiton, a much more ambitious Optimus program than the causal headlines would have you know about...
> No unique lead on robotics, except the largest fleet of self driving cars by several orders of magnitude
Not correct to call advanced driver assist self driving when we have an actual self-driving fleet in Waymo.
> experience in mass produciton and vertical integraiton
This remains Tesla's sole actual advantage. If (probably when) someone else beats them up the tech tree, chances are Tesla could beat them to scale.
> a much more ambitious Optimus program than the causal headlines would have you know about
The talent bleed at Tesla (specifically, Optimus) contrasts with e.g. SpaceX's virtual monopoly on aerospace talent excellence in America, possibly broader. And it shows. SpaceX routinely does the unprecedented. It's been years since Tesla did anything first.
(If I had to look at Musk's portfolio, SpaceX is where his soul is. It, Neuralink and xAI are where his heart is. X f/k/a Twitter was a clusterfuck from the get go, but it makes sense as a data pump for Grok, and he has fun with it so whatever. Boring Company has quietly failed, and may need to be acquired into SpaceX to rescue investors. Tesla increasingly looks like it's out of touch, too. My guess is he waits for the valuation to temper and then merges it into a private xAI.)
The answer is fairly obvious, humanity is always more obsessed with potential value than actual value. Elon sells that potential very well, but he does actually follow up in a decent way.
Turning the impossible into late is a legitimate business strategy, because you create markets that weren't there before (like cheap satellite launches).
And he has a history of doing this, and he's trying to do it again with optimus and robotaxi. There's massive potential in humanoid robots and robotaxis, which is why people are willing to take a risk. You might think that's irrational, and that's fine. Others do not.
Compare this to other car companies, they don't offer any vision of changing the future in any major way or bringing new products to market. That is boring and predictable. Still valuable, but not as much as Tesla.
Besides being a meme stock, Tesla is also in the enviable position of owning its entire stack - software, hardware, chips, manufacturing etc., unlike Honda that has many critical components built by other manufacturers and not tightly integrated with the software. It is therefore well placed to make much more revenue per vehicle, if only the owner of the company can get out of its way.
Owning entire stack has benefits for sure, especially if you're dominating market. But it also comes at a huge cost - you now need to pay for R&D for the whole stack yourself.
Tesla was dreaming of dominating market. But it looks like it peaked already and its sales are falling. Having to do R&D for entire stack without growth is a very very costly proposal. It often results in just not doing R&D, and falling behind.
For the same reason that Bitcoin is valuable and property prices in many markets are insane. It's valuable because other people consider it valuable. The stock market stopped being an accurate measure of the underlying value of the assets it tracks decades ago, if it ever was.
Me neither. Which is prob why I remain poor (comparatively).
Now that our domestic grid storage market has "crossed the chasm" -- new energy with solar & battery is cheap enough and quickest to deploy -- methinks future Tesla will do fine. Surely making up for any lost vehicle revenue.
