Tesla Joins the Trillion Dollar Club and Gets a Big Order From Hertz

Johnson1

4 years ago

I just read an article that SpaceX is already valued at $100 Billion and may get to $1 trillion in market cap faster than Tesla.

I am guessing Musk will be the 1st Trillionaire?

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Doug78

4 years ago

All the companies in the $Trillion+ category are American and were built by visionaries starting from very small beginnings. Four are all overwhelmingly dominant in their world-wide markets and making unprecedented amounts of money. Expect Tesla to do the same.

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numike

4 years ago

Rockets aren’t enough. Jeff Bezos and the growing commercial space industry now want to build space stations. Companies are competing as part of a NASA-funded program that would find a replacement for the International Space Station https://www.washingtonpost.com/technology/2021/10/25/private-space-stations-blue-origin-boeing/

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Doug78

4 years ago

Reply to numike

Bezos unfortunately hasn’t even put a rocket into orbit yet. He is far behind.

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numike

4 years ago

Meet Skimpflation: A Reason Inflation Is Worse Than The Government Says It Is https://www.npr.org/sections/money/2021/10/26/1048892388/meet-skimpflation-a-reason-inflation-is-worse-than-the-government-says-it-is

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Scooot

4 years ago

How will Mr Musk pay the tax on his unrealised gain I wonder.

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Eddie_T

4 years ago

Reply to Scooot

I might be very much mistaken, but if he can hang in until StarLink is built out, I think he will suddenly be awash in cash, in addition to just being stock-rich. That’s where the real value is.

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Doug78

4 years ago

Reply to Eddie_T

This should intrigue you.

https://bbc-edition.com/spacexs-starlink-business-might-go-public-tesla-shareholders-could-benefit/

Elon Musk is on record as saying that long-term Tesla shareholders might get priority in stock allocations when Starlink does an IPO. 🙂

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Eddie_T

4 years ago

Reply to Doug78

Any special consideration for Dogecoin hodlers?

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Doug78

4 years ago

Reply to Eddie_T

Who knows? Maybe worth it to buy some. He does have a sense of humor.

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Doug78

4 years ago

Reply to Scooot

By giving top-of-the-line Teslas to Congress men, women and whatevers. That’s the American way.

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Scooot

4 years ago

Reply to Doug78

Naive I know, but I didn’t realise.

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LawrenceBird

4 years ago

Major market car sales are about 65M per year, worldwide around 85M. Estimated worldwide revenue for 2021 is 3.6T. What % of the market and at what net margin does TSLA need to make their equity valuation real instead of fantasy?

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Eddie_T

4 years ago

Reply to LawrenceBird

Their business model is aimed at taking over the intergalactic market.

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Doug78

4 years ago

Reply to Eddie_T

You hit the mark. Tesla obviously will be the best positioned for the Martian market. You may think I am making a joke but I am not. He thinks big.

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Tony Bennett

4 years ago

Tesla = AOL

Boy, those were the days.

From early 2000:

“AOL’s stock will no longer be the 400% or 200% annual grower once it is attached to Time Warner. However, in a rip-roaring stock market with a lot of share prices that look “high,” AOL’s stock looks like one of the better risk-to-reward scenarios. If — and admittedly it’s a big if — if things go well, the upside in AOL shares could be 60% or more in the near term (three years or so), and in the good old days, earning anything over 50% in three years would be a great investment.”

https://www.fool.com/archive/portfolios/rulebreaker/2000/03/09/aols-price.aspx

Oh, wait … that is right … it is different THIS time …

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Eddie_T

4 years ago

Reply to Tony Bennett

My new toy gives it a value of about 88 bucks at an EPS of 15.

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Eddie_T

4 years ago

Reply to Eddie_T

Correction. Meant at a P/E of 15

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Doug78

4 years ago

Reply to Eddie_T

What did you put in for average profit margin per car?

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Eddie_T

4 years ago

Reply to Doug78

That number just comes from the latest earnings per share. Give it a 15 multiple and you get 88 bucks, roughly speaking, It’s what FASTgraphs spits out.

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Doug78

4 years ago

Reply to Eddie_T

Margins are the the most important factor. Apple’s margins are huge and that with 20% market share it is generating huge amounts of cash. The other telephone makers have 80% of the market but no where near Apple’s margins. Apple makes 60% of all the profit in their market. The other many competitors fight over the rest. For Tesla to understand the story you have to look at margins and they are very nice and much better than the other major players.

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TexasTim65

4 years ago

Reply to Doug78

But if your Tesla you have to be able to maintain those margins for decades, not just a couple of years.

The traditional auto makers are playing catchup in the EV space but they are coming fast and with way more models than Tesla (that’s now starting to look dated).

Apple is shrinking steadily in terms of market share. Long term its probably doomed to a niche space of Apple fan-boys. It may take a decade but I would not want to be a long term Apple investor.

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Doug78

4 years ago

Reply to TexasTim65

Tesla has the technical and financial means to maintain their margins which they already have. The traditional car companies have to acquire the technology and allocate vast sums of money order to acquire those margins. To be brief, they are behind in finance and technology and trying to play catchup. That is not a very good position to be in. Tesla stole a march on the car companies and will be very hard to dislodge them from the top of the hill.

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Zardoz

4 years ago

Reply to Tony Bennett

It is. People want what Tesla makes bad enough to wait 6 months to get it. Deferred gratification in America is exceedingly rare.

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Tony Bennett

4 years ago

P/E still only 3 digits … wake me when it is 4 …

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Eddie_T

4 years ago

OT….gold, oil, and the USD are all on cusps. If the dollar breaks out, gold is apt to weaken. Oil is due for at least a minor correction.

I’m now long a few beat-down miners and lots of oil and gas. The portfolio is probably gonna feel a little pain. My NGD trade is working. CXB fell yesterday on a sell-the-news event. They announced another acquisition. It would be a good time to add if gold breaks out, but that looks unlikely right now. I might lighten my load on the miners if gold can’t hold above 1790.

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Eddie_T

4 years ago

Reply to Eddie_T

I’m adding another covered-call ETF……JEPI. I don’t like it quite as much as NUSI, but it’s close to fair value, looks well-managed, pays out 7.49%, and actually has had nice price appreciation too, since its inception May 2020. Low fees too.

It tracks the S&P 500, whereas NUSI tracks the NASDAQ 100.

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Eddie_T

4 years ago

Reply to Eddie_T

When gold touched 1790 this morning I exited my miners for the moment. I still think gold is approaching its low….but it looks like we aren’t quite there yet.

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KidHorn

4 years ago

I’m skeptical if this deal ever gets completed. You need to read the fine print. What are the penalties for backing out? if there are none, this is no different than the huge NFL contracts where only the signing bonus is guaranteed.

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thimk

4 years ago

well good – Tesla wont need subsidies and tax incentives anymore , right ? Book value of Tesla is 24.04 per share .

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QTPie

4 years ago

It’s hard enough having an electric car if you don’t have a way to charge it at home… and more so on a rental when you are away and pressed for time and you don’t have say a spouse’s car to fall back on if you had an issue charging.

Renting an EV over the next few years might be ok as a novelty rental, or if your car is at the shop or as an extended test drive but for a run of the mill rental it doesn’t really make a lot of sense. What if say the charger at the hotel isn’t working or is too slow? What if you return the car with less than a full charge? You can’t just stop at a gas station for 5 minutes and top off. I personally wouldn’t want to deal with the hassle on a trip away from home.

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KidHorn

4 years ago

Reply to QTPie

I was thinking the same thing. I would not want an electric rental.

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Zardoz

4 years ago

Reply to QTPie

The home charging is key. My wife never charges hers at a station. If we go anyplace out of its range, we fly or take my pickup. Has saved us about 4K in gas in 2 years.

I really dislike the gas station experience anymore, will probably get a lightning or cyber truck when they come out. They have the range to compare with my f150, and I don’t care to drive longer than that.

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StukiMoi

4 years ago

“Tesla Joins the Trillion Dollar Club”

Of which something between $950 billion and $3 trillion have simply been stolen from more competent people who could otherwise pursue things which just may have been useful and viable.

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Doug78

4 years ago

Reply to StukiMoi

I have no idea what you are talking about. Could you please elaborate on your reasoning?

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StukiMoi

4 years ago

Reply to Doug78

Tesla still, after all this, don’t manage to sell cars profitably in places where they are not arbitrarily advantaged by government intervention. Which simply means, they are still destroying value with every car put out.

And to get to that point, the amount of capital burned through has been staggering. Very little of which would have been made available to them, were it not for massive, debasement driven redistribution to the dilettante “investor” classes, along with nudge-nudge-winnk-wink “we have your back” de facto promises to same.

IOW, in a free market, where capital was allocated efficiently, if Tesla was even ever started (it may have been, the Roadster was kind of neat as a novelty, I almost bought one.), it certainly wouldn’t have been more than a maker of toys for wealthy tinkerers and novelty seekers. Hence not worth very much. That’s the first trillion.

The second, is that redistribution is never 100% efficient. To hand a trillion to the dilettantes who “own” Tesla, has cost society a lot more than that single trillion. In terms of putting up roadblocks in the way of more efficiently allocated capital, in terms of printing/redistribution to keep gullible dilettantes flush enough to keep the pyramid alive etc. That’s the second trillion.

Left alone to a free market, none of this would have been possible. Potentially productive users of capital wouldn’t have been squeezed out by this sort of entirely State-intervention-dependent nonsense. Hence would have had their trillions back.

Does’t mean there aren’t, nor wont ever be, any use for electric vehicles. Just that, while there may one day be sound economic reasons for Congolese to travel to Pluto, redistributing wealth by the trillions to the Congolese Space Administration, when the country have noone who yet understands anything about aeronautics, and everyone is struggling to meet daily caloric needs, is not efficient use of capital. Hence is a use which would never come about without state intervention. Ditto Tesla. As well as most of the nonsense attempted passed off as “the economy” in the currently free falling has-been West.

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Zardoz

4 years ago

Reply to StukiMoi

Then there’s cybercoins. There is no limit on human stupidity.

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Doug78

4 years ago

Now if we look at the EV ecosystem we find right away that it will need gobs of dependable electricity to charge them. What can deliver large amounts of dependable electricity?

Also the Gigafactory, a term he coined, concept is proving to be fruitful. Making it all under one roof allows the best quality controls and the quickest response to resolving problems. It’s a turn away from what most factories are today where they just put together parts made by suppliers.

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prumbly

4 years ago

Reply to Doug78

And yet Tesla always comes in near last in quality according to JD Power, compared to companies that don’t make their cars under one roof.

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Doug78

4 years ago

Reply to prumbly

From JD Power:

“Tesla’s quality issues are primarily with cosmetic items, such as paint imperfections, poorly fitting body panels, and squeaks and rattles – rather than core powertrain or infotainment functions.”

Cosmic stuff is easily fixed. Tesla’s most important aspects are very high quality. In any case they are not losing business it seems and make Hertz pay the sticker price for 100,00 units.

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TexasTim65

4 years ago

Reply to Doug78

We don’t know what price Hertz has paid because the deal isn’t finalized. We only know they said 100K cars and you’d be able to drive a Model 3. They didn’t say all 100K were Model 3s (a careful omission).

Let’s see what the final numbers look like and whether Hertz manages to get financing for such a deal.

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Doug78

4 years ago

Reply to TexasTim65

Musk conformed that Hertz paid the full price;

https://www.torquenews.com/video/elon-musk-tweets-about-tesla-hertz-pricing-reveals-details

https://www.teslarati.com/tesla-model-3-hertz-full-price-order-elon-musk/#:~:text=Posted%20on%20October%2025%2C%202021%20Elon%20Musk%20has,clear%2C%20cars%20sold%20to%20Hertz%20have%20no%20discount.

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TexasTim65

4 years ago

Reply to Doug78

I don’t believe much of what Musk tweets/says as he’s a relentless self-promoter.

I’ll wait and see how this plays out order wise over the next few years. It’s very interesting that the timing of the Hertz order coincides exactly with the stock being relisted (ie need a pop for the insiders).

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Doug78

4 years ago

Nothing succeeds like success. Musk has blown away the competitors by being the Apple of the EV world. It’s the premium product with the best technology plus the “cool” factor. He did what he said he would do and now the people who had shorted the stock learned not to underestimate him. The Hertz order is the first of many. All rental companies will have to have their fleet of Teslas worldwide otherwise they will not attract the high-margin clients. Elon Musk has made me very very happy.

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KidHorn

4 years ago

Reply to Doug78

An echo of the dot com companies and home loan companies circa 2007. This time is always different.

And who are these high-margin clients renting cars?

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Doug78

4 years ago

Reply to KidHorn

High margin clients want cars that work well and are recognizable above all and are willing to pay up for them.

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TexasTim65

4 years ago

Reply to Doug78

Will these same clients want to spend 20-30 minutes charging the car before returning it or is Hertz going to provide that service for free (minus the added electric cost which is like pre-paying gas). People who rent cars (primarily at airports) don’t want to spend 20-30 minutes charging the car (vs <5 for refueling). So Hertz absolutely must provide this for free which means Hertz eats the time cost of the employees charging cars.

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Doug78

4 years ago

Reply to TexasTim65

It’s electric and Hertz will have chargers at the location. You bring back the car, they plug it in and you pay the difference between that and a full charge. Returning a car with a full tank of gas is always a hassle. With a Tesla you don’t need to do that. You save time over gas cars and is a good selling point in itself. The time cost for an employee to plug it in and unplug it is about 5 seconds. Hell they could even have the car plug itself in like my Roomba.

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KidHorn

4 years ago

Reply to Doug78

You can return a car without a full tank just as easily. And it will be more of a hassle for a renter to fully charge a tesla than to fill up a tank of gas.

What about hotels? Will they have charging stations for those who rent a car for multiple days?

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Doug78

4 years ago

Reply to KidHorn

You can return without a full tank but few do because of the penalties. Will Hertz do that for Teslas? Maybe but maybe not. There is no need to handle gas which is a bitch and is costly. Electricity is much easier. If you go to cheap hotels there probably will be a problem but those who can rent a Tesla probably don’t go to cheap hotels. Hotels having charging stations will be sought after therefore they will become ubiquitous in a soon enough time if the hotel wants to stay in business. Lots of infrastructure will have to be built and it will. Teslas are luxury cars and that is their market and that is where the money is.

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TexasTim65

4 years ago

Reply to Doug78

Returning with a full tank is trivial at any airport I’ve ever been to. There’s always a gas station or 2 right there specifically for that purpose.

As for Hertz, they will have to build out charging stations in all their rental places. In most airports, they don’t own that space, it’s part of a larger car center that they most likely rent space in. They may not have the ability to build out charging or it may be costly if they need to build 3-4 stations.

Your vastly over simplifying what Hertz will have to do besides just ‘buy a Tesla’. They also have to sell said car into the used car market in 2 years since that’s the life of a rental car. Not sure what the used market looks like for Teslas but that has to be factored in.

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Doug78

4 years ago

Reply to TexasTim65

It’s not trivial in time spent and the prices are not the cheapest either. At first they won’t be rolled out everywhere at once and concentrate on the best markets and take it from there just as you do when you are growing a business. Teslas hold their used prices at least as well as the others from what I see. If we are going electric and we probably are the infrastructure will get built by hook or by crook. That’s the way it goes with innovation. I remember when they said cell phone can’t take off because of the cost of building towers. I remember when the internet was liked in the ’80s but they couldn’t see where the money would come from to build the infrastructure. The charging stations will get built and the power to charge them will get available. How I am not sure but the future has always been murky.

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Webej

4 years ago

B$4.2, let’s say B$0.42 profit, B$140 stock price increase.

Even if Hertz does this every year, the dividend would be no more than 0.3% of the investment.

Disproportionate, inordinate, unanchored, unmoored, unhinged, aberrant, verrückt, krankjoram, loco

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Christoball

4 years ago

Tesla has a market cap bigger than the 10 largest automobile conglomerates combined. Tesla’s sales market share is quite small compared to the other 10 combined.

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anoop

4 years ago

how long is this boom going to go on? companies are finding more and more creative ways to borrow money in ways that’ll make them too big to fail. i think kodak should revive kodakcoin. the time is ripe. the ico will sail right through this time.

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Six000mileyear

4 years ago

If hertz plans on using wireless induction charging, then at least 66% more power will be needed since wireless induction charging is 50 to 60% efficient. The slight of words is ZERO EMISSIONS from the vehicle, but those emissions or heat transfer must take place somewhere else.

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Zardoz

4 years ago

Reply to Six000mileyear

Why would they? They can have the lot monkeys plug them in.

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Ralph

4 years ago

A friend ordered a Tesla S at least six months ago, possibly longer, and is still awaiting delivery. Fortunately he locked in his price because Tesla has had two price increases since placing his order. Moreover, the price of copper is at or near record levels (EV’s contain three times more copper than an ICE vehicle) and there’s a worldwide shortage of magnesium, an important component of aluminum smelting. Euro auto manufacturers are on the verge of shutting down due to the shortage of aluminum parts. Taiwan Semiconductor recently increased prices by 20% and still can’t meet automotive chip demand. It will be interesting to watch the delivery timelines for Tesla to deliver 100K vehicles to Hertz.

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SAKMAN1

4 years ago

Reply to Ralph

Teslas are a veblen good now. Its rolex. Sociopaths that obtained too much money by bringing pain into the world wait and beg to pay too much money for ab object that reflects their status. It never ends. Soon that Tesla will be worth 3 million usd.

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yooj

4 years ago

Hertz can’t afford to pay for the cars. Will SpaceX finance them? And what good are rental cars in Musks’ robotaxi world?

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Zardoz

4 years ago

Reply to yooj

Government purchased bonds?

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Business Man

4 years ago

I remember looking at Tesla a couple of years ago and thinking, “how the heck are they going to service and pay for all that debt?”

And there were a lot of big shorts that thought the same thing.

I’m glad I didn’t act on my “theory” and boy was I wrong!

Good for Elon Musk. I like his sense of passion, adventurism and humor. We need more like him.

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Doug78

4 years ago

Reply to Business Man

The best is yet to come. SpaceX and Starlink are revolutionizing space exploration and worldwide high-speed internet. They are lowering the costs for these services so much that no other company will be able to get a foothold.

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Johnson1

4 years ago

Reply to Doug78

Time will tell. Almost every satellite company has ended up in bankruptcy. OneWeb, whose CEO was Elon friend and it was the OneWeb CEO idea that Elon copied to build Starlinnk has already filed for bankruptcy.

Elon is smart because he goes into industries where he gets the government to subsidize his company. OneWeb tried to do it the normal way of business and raised capital from investors. I think Elon was given 900 million by the U.S. government for Starlink.

The Government should be given common stock in these companies. The stock price increase would help the government budget. So for every tax rebate Telsa uses, it should have to give the government some Tesla shares.

Afterall, I do not own a Tesla but I am subsidizing other peoples purchases.

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Eddie_T

4 years ago

I saw that news. My first thought is I want to rent one…..Second is “ charging might be a problem for a rental”. Third is…if it doesn’t work out for Hertz it could be an embarrassment to Tesla…

But it probably won’t matter.

Didn’tTesla just jack up all their prices?

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TexasTim65

4 years ago

Reply to Eddie_T

It only makes sense to rent these if you are doing a day rental or know before hand that the hotel or place you are staying has a charging port. Otherwise it’s likely you will have a massive inconvenience charging them.

I’m a big surprised the stock jumped as much as it did. 100K cars isn’t very many for a big car manufacturer nor for rental car fleets. Crazy how high the stock price is relative to the cars actually sold.

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KidHorn

4 years ago

Reply to TexasTim65

Hertz went bankrupt and dumped much of their inventory. They had to replenish and likely thought electric is the future. I highly doubt they went straight to tesla and made a deal. They probably negotiated with other car manufacturers and the other manufacturers refused to give concessions. I would guess the deal will end up being for far less then 100k cars and tesla will probably lose money on the deal. Not unusual for Tesla.

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Tesla Joins the Trillion Dollar Club and Gets a Big Order From Hertz

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