Imagine if the CEO of any company ran by adults that wasn’t selling unicorn farts came out and told everyone how tough it was on HIM while running a crematorium for other people’s money.
Came across an interesting article from Fortune, entitled "For investors, Tesla is a Bad Bet". The math is pretty sobering.
The full article can be found at:
http://fortune.com/2018/08/28/investors-tesla-bet/ but for those not inclined to click through, here are some highlights:
— Assume investors will require a 8% return on their Tesla shares — which is probably a bare minimum given that this is the epitome of a high-risk stock — Tesla would need to grow its value by 51% by the end of 2024. By the end of that five year, four month period, Tesla's market cap would need to reach $88 billion.
— Today, the world's most profitable major luxury car producer is BMW, which posted after-tax margins of 8.8% in 2017. The view of many analysts is that Musk can advance not only automotive technology, but profitability, and they forecast net margins of 10% — which is a full 14% above BMW. In that case, Tesla would be generating sales of $53 billion in a little over five years. That's an annual growth rate of 31%.
— To achieve that $53 billion goal, Tesla would need to grow its sales by $40 billion, and grab 30% of the premium car market. It would absorb no less than 54% of the category's total growth over that period, leaving less than half for its competitors.
— As it stands today, a trio of luxury brands from three German carmakers BMW, Mercedes-Benz (Daimler), and Audi (Volkswagen), control almost 80% of the premium market, each holding between 23% and 26%. Tesla would need to steal around 14 points of share from the three German companies, or almost five points each.
"Tesla's road to success also requires by 2024, something like half of all the premium cars on the road are electric vehicles, a multiple of today's number," Tully writes. "Elon Musk wants his investors to believe in miracles. He'll need one to make his stock anything but a creaking jalopy in the years ahead."
arty
