A result of the cancer that is continuously floating silicon valley companies in perpetuity despite them not making a profit for years.
Tesla is overvalued simply by name. Same with Apple. Autonomous driving is still years out and their custom AI chip apparently doesn't do much in the way of helping that yet.
And most of their products are overpriced and poorly engineered. They only really make money on phones and branding. I can't think of single reason to buy any of their laptops or desktops.
That and the most obvious reality that love the guy or hate him, Tesla isn't Tesla without Elon. Unlike SpaceX, Tesla has to Gwynne Shotwell. It is Musk who drives the engineering (and causes an enormous amount of turnover as a result). It would be a hard sell for a lot of share holders (including Elon and Kimbal Musk) to take the temporary raise in share price of a buyout knowing it would tank the max upside of the company in the long term.
Toyota’s market cap is more than twice that of Tesla, around 200 billion, and they sold 10 million cars last year.
I do expect Tesla’s is dramatically inflated, I have no idea if Toyota would buy them, but it’s not out of the realm of possibility. If Toyota could successfully integrate all the Tesla stuff into their vehicles, it would also have a greater impact than anything Tesla will likely accomplish on their own.
As of this very moment, the market caps of both are as follows:
Toyota: 228.41 Billion
Tesla: 144.2 Billion
That's time and a half, but not more than twice. I find it stretching credibility to think Toyota could afford to buy a company with such a high market cap knowing the stock would rocket up on any rumor of an acquisition.
That Tesla’s market cap is anywhere close to Toyota’s should give you pause, given the difference in scale and market penetration of the two companies.
Look, I’m a firm believer in the “market can stay irrational longer than you can remain solvent” and especially in our post-2008, QE money printing, Saudi sovereign wealth fund, unmoored-from-reality present. So honestly, who knows how it will all pan out. Maybe we now just live in a hyperreal future where Musk’s marketing shenanigans are materially equivalent to the solid fundamentals and record of a company like Toyota. Could very well be.
Tesla isn't just an auto manufacturer. It is also a distribution network, a direct dealer network, service network, and fueling station system. They aren't displacing the market opportunity of just Toyota / VAG / etc. They are displacing the market opportunity of much more of the value chain.
The Toyota engineer worried about jobs in the supply chain is just the tip of the ice berg. ICE cars are substantially more complex and require much more regular maintenance (all the way down to increased tire and brake wear).
Incumbent auto makers not only have to worry about resistance to change upstream, they need to worry about downstream too.
[I hold no equity short or long position on Tesla now, have not over the past few years, and do not plan to going forward. My personal investing is outside of public markets in general.]
Tesla is valued according to fundamentals. Look at their growth trajectory and do the math.
Sounds like you expect their growth to plateau in the next few years. That’s an fine theory, but it’s not “more fundamentals-based” than the theory it will continue for another 10 years.
I'm entirely with you on Tesla's market cap defying reality, but the idea that Toyota is going to buy a company with a market cap that is 75% of its own market cap it utterly ridiculous.
(as of mid-January) Tesla's market capitalization is $93 billion, compared to $50 billion for General Motors and $37 billion for Ford
No other car company is going to be buying them out unless they crash very very badly