Valuation Mojo — Tesla v Ford v GM

Big Red Car here on a lovely Thursday in the ATX. On Earth as it is in Texas! Today, we talk valuation mojo. What?

So, the Big Red Car is ciphering about the market caps and other data of car companies. “Some interesting stuff, Big Red,” said NOBODY ever. [“Hey, I resent that,” sayeth the Big Red Car.]

So,  here you have three car companies: Tesla, Ford, and General Motors. Three companies who are struggling to make a profit — or are they?

Tesla pic

Sexy Tesla enjoying the ocean air at sunset?

Profits

Let us begin by looking at the financial performance of Tesla, Ford, and General Motors, shall we? I like to use Market Watch for info as they have very comprehensive data.

 1. Tesla — ($674MM) net loss in 2016 [Market Watch Tesla here]

 2. Ford — $4.6B net income in 2016 [Market Watch Ford here]

 3. General Motors — $9.43B net income in 2016 [Market Watch GM here]

Not to insult your intelligence, but both Ford and GM made money while Tesla lost money.

Market cap

Let us take a look at how the stock market and investors valued each of the companies with an eye toward their financial performance noted above.

 1. Tesla — $48.11B

 2. Ford — $44.84B

 3. General Motors — $51.23B

Whoa, hello, America — Tesla is worth $48.11B and Ford (which made a profit) is only worth $44.84B? How is that possible?

Test

Can you tell me the names of the CEOs of Tesla, Ford, General Motors?

This is a test, but the Big Red Car will not tell you the results. Can you name them?

Unit sales

Unit sales — US unit sales — is another interesting data point.

 1. Tesla “delivered” 76,238 units in 2016 while “producing” 83,922. They are the only car company to report and make a distinction between “delivered” and “produced.”

 2. Ford sold 2,614,697 units in 2016.

 3. General Motors sold 3,042,773 units in 2016.

 4. As a frame of reference, Mercedes Benz sold 380,752 units in the US in 2016.

As you can see, dear reader, Tesla is a tiny company when it comes to actual units “delivered.”

Valuation mojo

So, dear reader, the question on your lips is: How does Tesla have such a high market cap when they lose money and are tiny in comparison to other American car companies and sell relatively few units annually?

And, that, dear reader, is called “valuation mojo” and the Big Red Car doesn’t have the answer to that question.

The Big Red Car is not editorializing or criticizing how the stock market or investors value Tesla or any of the other companies. The crowd and the markets usually get these things right — eventually.

But, hey,  what the Hell do I really know anyway? I’m just a Big Red Car. Be kind to yourself and did you love the Tarheels winning it all? Ugly on an ape sort of game, no, but liked the outcome. Thank you for indulging me.cropped-LTFD-illust_300.png

 

  • sigmaalgebra

    Off Topic: This just in.

    Trump Orders Strikes Against Syrian Regime Airbase in Response to Chemical Attack

    WASHINGTON –President Trump has ordered cruise missile strikes against a Syrian regime military airbase, a defense official said late Thursday.

    A U.S. official said “more than 50” Tomahawk cruise missiles were launched at the airbase, located in Western Syria. That base was where the U.S. believes the Assad regime carried out a chemical weapons attack on Syrian civilians this week. The strikes were carried out from two U.S. destroyers in the Mediterranean Sea.

    WOW!

    “more than 50” Tomahawk cruise missiles …”.

    That’s enough to send a message and have it received loud and clear.

    Lesson: There’s a new sheriff in town.

    Message: Don’t mess with the US.

    So, right, maybe Trump had a chat with Jordan’s King Hussein.

    Maybe we now know why Bannon just sat in on a National Security Council meeting.

    As at

    https://www.whitehouse.gov/the-press-office/2017/04/05/remarks-president-trump-and-his-majesty-king-abdullah-ii-jordan-joint

    in part

    Q Before I move on to the King, could I just quickly ask you if the chemical attack crosses a red line for you?

    PRESIDENT TRUMP: It crossed a lot of lines for me. When you kill innocent children, innocent babies — babies, little babies — with a chemical gas that is so lethal — people were shocked to hear what gas it was — that crosses many, many lines, beyond a red line. Many, many lines.

    From

    http://freebeacon.com/national-security/the-best-from-mad-dog-mattis/

    by Defense Secretary General James Mattis:

    You go into Afghanistan, you got guys who slap women around for five years because they didn’t wear a veil. You know, guys like that ain’t got no manhood left anyway. So it’s a hell of a lot of fun to shoot them. Actually it’s quite fun to fight them, you know. It’s a hell of a hoot. It’s fun to shoot some people. I’ll be right up there with you. I like brawling.

    And not just Afghanistan but also some parts of Syria?

    “guys like that ain’t got no manhood left anyway. So it’s a hell of a lot of fun to shoot them.”

    e.g., people who use poison gas to kill babies.

    The first time you blow someone away is not an insignificant event. That said, there are some assholes in the world that just need to be shot.

    “That said, there are some assholes in the world that just need to be shot.”, e.g., people who use poison gas to kill babies?

    I’m going to plead with you, do not cross us. Because if you do, the survivors will write about what we do here for 10,000 years.

    Message likely also received by an arrogant, dangerous fat slob with a bad haircut in North Korea.

  • Andrew Cashion

    I parked someone’s Porsche Panamera a couple weeks ago and told him it was my favorite Porsche model that they made because it’s bigger than the small ones. He added, ” It’s the fastest car in the world.”

    I added, ” The tesla is the fastest car zero to 60mph in the world.”

    http://money.cnn.com/2017/02/07/technology/motor-trend-tesla-acceleration/

    • Andrew Cashion

      could be wrong, a drag race in person would solidify it as they are close.

    • JLM

      .
      Tesla is a great car. If it got 500 miles to the charge — which it will likely do one day — I would buy one. But, I just don’t want to worry about the lights going out.

      It would also be nice if they had one with a 1966 Impala convertible body style.

      BRC
      http://www.themusingsofthebigredcar.com

      • Andrew Cashion

        exactly, how mind blowing would that be when they take an old body style make and it a new car inside. would be epic American insanity if they did it. Not sure the italian guy would go for it, the one that runs a big car company.

      • sigmaalgebra

        And after the 499 miles, with a lot of use of the A/C for July in Texas, you might also want a means of fast recharging.

        IIRC ballpark the battery will have 30 KWh of energy. So, if in your garage you have a spare 240 V at 200 A circuit, that would be 48 KW so that could get the 30 KWh of energy in

        60 * 30 / 48 = 38

        minutes.

        Alas, that might overheat the battery so that maybe have to use a garden hose to rinse the battery to cool it while recharging — maybe, depends on the internal resistance of the battery.

        A big capacitor would not have this heat problem, but I haven’t heard much about EEStor and their capacitors in a long time.

  • sigmaalgebra

    Explanation?

    Okay, here’s one:

    Of course, humans are stupid, evil, sinful, evil, stupid, sinful. The humans, due to their stupid, evil, sinful ways are destroying the earth, that is, Mother Earth, the 100% all natural, sensitive, delicate, protective, nurturing, caring, compassionate Mother Earth.

    One of the worst ways those humans are destroying Mother Earth is with old, ugly, rusty, grotesquely big, wasteful, private cars powered by fossil fuels that spew filthy, polluting, poisonous, toxic CO2 into Mother Nature’s pure, precious, pristine, 100% all-natural, delicate, vulnerable atmosphere.

    Those cars are from ugly, old, filthy, dirty, polluting, rapacious, money-mad, greedy, profit hungry, faceless, giant international corporations.

    From dedicated, devoted Save Mother Earth efforts, by less than an onion skin we saved the good ozone of Mother Earth from the poisonous CFCs from leaky car air conditioning systems. But, now, the evil, juggernaut, giant, money-mad car companies are spewing out bad ozone and filthy CO2, once again to destroy Mother Earth.

    But, just in time, we have dedicated, devoted, Mother Earth saving Tesla to the rescue with totally clean, non-polluting all electric cars! So dedicated to Mother Earth is Tesla that they are willing actually to lose money!

    All responsible, caring, public citizens should junk their old smoky fossil fuel burners and to save Mother Earth, avoid terrible retribution and obtain redemption for their sins, drive only a new Tesla!

    Oh, and by the way, as at

    http://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html

    are some scurrilous, despicable, disgusting accusations that the L. Musk businesses, e.g., Tesla, got $5 billion in subsidies.

    How ’bout that explanation, BRC?

  • The market is way overestimating the impact of autonomous cars over the next 5 years. Solid companies like Ford/GM/Chrysler are getting crushed because of it. I actually did a write up on Chrysler recently. You can read it here if you’re interested (starts on pg. 17): http://operators.macro-ops.com/wp-content/uploads/2017/04/MIR-The-Dead-Hand-Of-Inevitability.pdf

    Not sure if you keep track of Chrysler CEO Sergio Marchionne, but I would be interested to hear your thoughts about him.

  • You just did the research for me. Thanks!

    • JLM

      .
      Plus GM pays a 4.44% dividend and Ford pays a 5.23% dividend.

      BRC
      http://www.themusingsofthebigredcar.com

      • SFG

        In a weird way, that’s probably a big reason why the hot shot fund managers all dive into TSLA. A dividend is old school taboo versus revenue growth. Ultimately, I feel TSLA is one fat, honking short squeeze that will ultimately fall back to earth. If anyone could scale electric, it probably would be GM or Ford. But Elon is pretty trendy…

        • JLM

          .
          At some point in time, the law of gravity shows up and demands a final accounting. Tesla is a small company when measure by actual production.

          There is no way the big boys don’t go after Tesla and hard. The numbers, right now, are too small to really catch their interest.

          When all the foreign cars came to the US, US style met the challenge. Tesla has a first mover advantage which is on life support.

          It is only a matter of time.

          Give Musk his due. The guy is a huge promoter and as long as the circus is in town, he will be the star. I don’t think you can stuff your failing deal into your mediocre deal more than once.

          BRC
          http://www.themusingsofthebigredcar.com

    • sigmaalgebra

      Here BRC is missing out big time and, instead, should offer to each pretty girl/woman posting here, aren’t they all, a nice, cool TX evening, top down ride through the Blue Bonnets to and from some really good BBQ! Missing out, BRC!!!!!

  • Interesting questions, Mr Car. Heaven only knows what the answer might be! On an unrelated note, I watched The Color of Money again the other night, which starred an aging Paul Newman and a young Tom Cruise. Great film, highly recommended….

    • JLM

      .
      The old movies are great. Paul Newman was an incredible actor. I still buy his salad dressings because I liked him so much.

      I watched Zulu which was the debut of Michael Caine the other night. I wonder how one stages a mass Zulu attack? What is the rate per Zulu?

      Be well, friend.

      BRC
      http://www.themusingsofthebigredcar.com

      • I, too, am a big of the Newman’s Own brand — so much so I frequently wish the bottles were bigger (they run out just when you need them most). But I can’t help thinking that salad dressing was not really Mr. Newman’s core business….

        As regards the rate per Zulu, well I would say the only possible answer is “can of worms”.

        You take care too, JLM.

    • Um, ok. I was joking when I said ‘unrelated’…..

  • JLM

    .
    How is it possible that money losing Tesla has a larger market cap than money making Ford? How is that possible?

    http://themusingsofthebigredcar.com/valuation-mojo-tesla-v-ford-v-gm/

    It’s called valuation mojo. Read about it here.

    BRC
    http://www.themusingsofthebigredcar.com