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Tesla (NASDAQ: TSLA) has had one of the most productive performances on the market since its IPO, but it’s an inventory I’ve never controlled to buy. And now that inventories are traded at more than $1,500, they’ll probably never be in my portfolio.
As things stand, I think the market isn’t at Tesla properly, and that’s why I see it incredibly overrated. Its value is valued as a technological stock, but it has no characteristic of typical technological actions. And I don’t see that changing.
Technology stocks have been massive winners for investors who have selected the right corporations over the past few decades, and there’s a big explanation for why. If a company is built properly, you can spend cash on product studies and progression to build a generation and then resell it over and over again at a very low marginal charge for more customers.
Microsoft (NASDAQ: MSFT) uses this on its merit with Windows and Microsoft Office, which has spent millions of dollars developing, but has subsequently been able to sell millions of times to nearly one and both PC users worldwide. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) does something similar on the Internet, generates a valuable generation and search engine, and then allows users and advertisers to use the platform billions of times a year, capturing little cash in one. Time. What is not unusual here is that the marginal load of the next additional user is very low and the profit margin of an additional user is very high.
Tesla’s business doesn’t look like that at all. It looks and acts a lot more like a production company because that’s what it is. The next visitor who buys a Model 3 vehicle, for example, can generate a gross margin of about 25% for Tesla if the company operates efficiently. But it doesn’t apply the typical incremental technology margins of 70%, 80% or more.
There is also no significant recurring revenue on Tesla vehicles, which is not unusual for generation companies. Once you’re a Microsoft user, for example, chances are your next device is some other Microsoft product. And given the shelf life of generation products, this can generate recurring revenue every two to three years. In a company like Google, once you’re a user, Google can generate prices for you almost every single day.
Tesla gets all of its profits in advance, and if your cars are of the best quality, they will last for decades (original owners or buyers of used cars).
Although Tesla is not a technological action, its value is comparable. It is negotiated for a higher value/sales ratio to Alphabet and Facebook and close to that of Microsoft.
The implication is that Tesla is expected to grow and generate the biggest profits. But that hasn’t demonstrated the ability to generate consistent profits, and in a very competitive capital-intensive company, I wonder if ordinary profits will ever come.
Does the mere fact that I don’t see Tesla as a technology company in the transportation sector mean that there are transport companies that may not look much like technology? Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT) are examples of corporations where a generation platform can be used continuously with a very low marginal charge to serve the next additional customer. The challenge with their platforms is that they don’t own cars and have to pay drivers in the low-margin carpool space.
If we think about the long-term transportation, Uber and Lyft are smart models of transportation generation. But they have even struggled to cope with the maximum prices because they have to pay thousands of drivers across the country.
Disruption of shipping through generation will occur when separate telephony platforms are introduced. That’s what General Motors (NYSE: GM) is building with Cruise Origin, and we know that Uber and Lyft are also looking for driverless solutions.
Tesla is approaching autonomous driving technology, however, it comes from being an industry leader in the box, as its cars do not adapt well to fully autonomous car sharing solutions.
I don’t think the interest of transportation corporations in corporations will increase their production capacity as Tesla has in recent years. You’ll discover themselves taking advantage of a generation platform and shared cars to attract the largest user base to serve with trips over and over again.
I’ll have to admit that Tesla has built an incredibly valuable business when compared to the old style of automotive commerce. The elimination of the dealership style, the structure of an all-electric platform and the addition of the supercharger network have created a breakthrough that classic corporations could not possibly achieve.
But when I look at the price of Tesla’s inventory and think about what shipping will be like when my three-year-old is old enough to drive, I wonder if he’s going to drive. I locate it more likely than in an urban area, it only requires a trip from any number of car-sharing platforms in an app, and in a matter of minutes, the driving force of that vehicle, if there are driving forces through then, will. show on your doorstep.
In the end, transportation as a service is more of a typical generation business than car manufacturing. And if the market continues to give Tesla a technological valuation, I guess I’ll run out of stock.