Tesla now worth half GM's value

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/22/BUU117O7UC.DTL

by gibsonf1 • 17 years ago

36 23 17 years ago

phoxix2• 17 years ago

Valuating the mess that is GM ... now there is something worthy of a Doctorate from Wharton, heh

mdasen• 17 years ago

This isn't saying that Tesla is worth much, just that GM is worth next to nothing. At this point, it looks like a foregone conclusion that GM shareholders will be wiped out in a month or two. GM's obligations seem worth more than its assets and its costs (parts, labor, etc.) are greater than its revenues which makes it unlikely they shall ever meet those obligations in the future.

To be honest, I'm surprised GM is worth a whole billion dollars. All of the plans - from the President's plan to award 50% of the company to the treasury, 40% to the UAW, and 10% to creditors to bankruptcy which would see all common shares voided - would see any stake in common stock worth nothing. Are there people who think GM is going to get a scenario where they are able to pay off their creditors, the UAW, and the government in order to avoid wiping out common shareholders?

mynameishere• 17 years ago

GM's value is zero. The stock price represents a nervous dance between shorts and longs who try to force sqeezes. (And I suppose there are gamblers who are betting that the government will bail them out without a ch 11 style reorg.)

yummyfajitas• 17 years ago

Depends on what you mean by "GM's value".

There is the Net Present Value (NPV) of GM, which is the value of it's future revenue streams - future losses. (Future revenue streams include some bailout money, etc.) Currently, the expected NPV of GM is negative.

Then there is the share price of GM. This is equal to max(NPV,0) because even if the NPV of GM is negative, you won't lose more than the value of your shares. So a share of GM stock is actually an option on the NPV of the company. This is nonzero, since there is a chance GM will recover.

Fun fact: to increase the value of GM's shares, you can either increase NPV or increase volatility.

[edit: my use of the term enterprise value was wrong. I think I meant NPV, but I'm not 100% sure of terminology. Thanks sachinag.]

sachinag• 17 years ago

Enterprise Value is not revenue minus losses. EV is equity market capitalization plus debt.

But, woooo NYU.

danteembermage• 17 years ago

Also, fun: If equity is an option on the underlying firm, then who wrote it?, the debt holders. So more accurately "The long tail of GM's upside worth double Tesla Motors" since the value of GM's public debt, even in bankruptcy, would dwarf Tesla.

medearis• 17 years ago

If GM's value speculative then Telsa's valuation is completely pulled out of thin air. Just a few months ago Tesla was actually losing money on every car they sold. Now they're asking for government money to stay afloat and promising a 50k sedan for the masses. Let me get this straight... at the moment, they cant build a miata sized roadster with a sparse interior on an existing platform for less than 90k, but in 2 years they're going to have a profitable full-sized sedan to go up against cars like the Lexus GS, BMW 5 and Mercedes E selling for half that?

I love Tesla, but if I had to place my bets, I'd think it more likely that you'll be able to buy a Corvette in 10 years than a Tesla roadster.

gojomo2• 17 years ago

A value "pulled out of thin air" is still better than "almost certainly zero via bankruptcy". And even if Corvettes rather than Teslas are still on sale 10 years from now, that might not mean any value flows to current GM stockholders.

The most likely discontinuity ahead for GM is a zeroing-out of all current stockholders. For Tesla, there are certain discontinuities -- such as acquisition for technology -- that pay off stockholders even if the nameplate disappears.

rrival• 17 years ago

It's ok. They'll make it up in volume ;)

chollida12• 17 years ago

> "It's sort of amusing," remarked Daimler co-founder, Martin Eberhard.

He's actually the cofounder of Tesla. There's a reason the SF Gate is going out of business:(

timr• 17 years ago

I'm pretty sure that the SF Chronicle isn't facing bankruptcy because they occasionally make mistakes.

After all, everyone knows that the internet is a 100% factual replacement for newspapers.

chollida12• 17 years ago

> I'm pretty sure that the SF Chronicle isn't facing bankruptcy because they occasionally make mistakes.

Agreed, but shoddy reporting and a lack of fact checking certainly has helped lead it down the path towards bankruptcy.

kirse• 17 years ago

How many Tesla cars does America drive (in total?)

That and does anyone know what Tesla's current net profit figures are? I know it's a private company but I'm wondering if anyone has general figures.

aka-• 17 years ago

GM sold 8.35 million vehicles last year. Tesla less than 200. How surreal.

gojomo2• 17 years ago

You can't make up a loss on every vehicle through volume, except maybe by being "too big to fail". And even that is unlikely to help the GM stockholders (as opposed to the staff and unions and warrantyholders).

ssharp• 17 years ago

Why do people insist on making these stupid comparisons? It reminds me of how drama-queenish techcrunch was when the markets were free falling. GOOGLE LOSES HALF ITS VALUE!!!! it's a pointless exercise. market cap isn't the be all and end all of a company's value. And the valuation agreed upon by a single investor and a company is even less of an indicator of that company's real value.

vaksel• 17 years ago

yeah its like that old idea that Facebook had 16 billion dollar valuation which supposedly made them larger than Ford.

GM's Corvette's Brand Value is probably more than Tesla's actual value.

nazgulnarsil• 17 years ago

quick, bury this article! we can't let people know that if giant companies collapse that new companies will compete with new and/or improved products!

If everyone gets wind of this we won't be able to justify massive bailouts anymore...

derrickc• 17 years ago

Bad analysis - can't forget $54 billion in debt. Minus $11 billion in cash plus the equity, so enterprise value of GM is $44 billion according to the latest financials.

jam• 17 years ago

I'd rather own Tesla.

ckinnan• 17 years ago

Welcome to the rotten fruits of crony capitalism 2.0. The millionaires who own Tesla got a $350 million loan from the U.S. government this year. Taxpayers only get downside, while a bunch of insiders and now a foreign carmaker capture all the upside.

http://www.redherring.com/Home/25831

noonespecial• 17 years ago

As opposed to what? The millionaires in charge of GM that got billions? Sounds like Uncle Sam is just hedging his automotive bet. If I didn't know any better I'd say that (cough) made sense.

Tesla now worth half GM's value

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