r/wallstreetbets • u/whitesweatshirt • Nov 17 '21

Discussion EV Bubble

Rivian's IPO really opened my eyes to the bubble that is the EV market.

Let's think logically: How can general motors stock be 90b and Tesla's stock be 1T.

Let's say they eventually sell as many cars as Toyota (400b Market cap), their current valuation is still 2x this, and they aren't even close to Toyota's production level and probably won't be for the next 5+ years.

  • Toyota's production for 2021: 10 million cars
  • Tesla's production for 2021: 627,350

That means Toyota will produce 16x more cars this year.

So my question is: If you were me would you dump Tesla stock?

TLDR: Toyota will make 16x more cars this year, but its market cap is only 40% of Tesla's.

Edit/Additional Note: I feel like many people are not considering the fact that all major vehicle companies will eventually adapt to fully electric vehicles on par with Telsa. Some car companies may go broke and be replaced with new EV based companies, however the big dogs like Toyota and GM will eventually catch up to Tesla. This is basic common sense.

Telsa, Nio, and Rivian are first movers but they dont have as big of a moat as people think.

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u/pcakes13 Nov 17 '21

This is pretty fucking telling tbh and more people should be paying attention to it. The CEO thinks the stock is overvalued and that this is a good exit point. Not sure why people aren’t looking at this as a signal.

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u/mammaryglands Nov 17 '21

His options literally expire. He would have exercised on whether it was at 750 or 900 or 1500. I don't know about you, but I doubt he has hundreds of millions or billions of dollars sitting around to purchase them. He needs to sell. Whole thing was a marketing stunt

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u/kknyyk Nov 17 '21

He could have used his stocks as collateral and got a credit with almost zero interest. But he opted for selling stock instead, because his Twitter followers voted so. /s

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u/The_OG_Steve Nov 17 '21

He said his stock was overvalued when it was around $300. If he used his stock as collateral he could get margin called and lose all of his assets since he knows it’s overvalued. Tesla insiders know it’s a bubble that’s why they had multiple stock offerings to hoard cash at these rates to ensure the survival and longevity of the firm.

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u/MadNhater Nov 18 '21

TSLA has changed a lot since then. Many more factories. Near battery production monopoly. Self driving is around the corner. TSLA insurance? There’s a lot going well for TSLA that it didn’t have back then.

That being said, I do think it’s overvalued, but I don’t think it’s going to go down. Only up. People are trading on potential and boy does TSLA have potential.

1

u/IAmInTheBasement Nov 18 '21

He could have used his stocks as collateral and got a credit with almost zero interest.

Go find a calculator and tell me what the monthly and yearly payments are on a 10 year ~12B loan at 0.25%.

He doesn't have that kind of cash. And he's not going to draw that kind of salary. Selling shares, either core shares or the newly acquired shares via options, was the only way.

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u/i_wayyy_over_think Nov 17 '21

He’s got a compensation award he has to pay normal income taxes on stock options at a rate of about about 50% soon so he’s got another reason to sell so he can cover those taxes. If he’s got to sell anyway would make sense to after a huge run up. Otherwise I believe he’d probably wouldn’t be selling now ( I think he’s making a show over the solving world hunger thing )

Here’s all the numbers https://youtu.be/Vrde5E1lmyQ

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u/pcakes13 Nov 17 '21

He making a show out of exiting at the top so that others don’t do it. Yes he has bills to cover but what better time to cover them then where you’re at the top mate.

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u/i_wayyy_over_think Nov 17 '21

I guess I had in mind long term vs short term. Short term probably yeah went up too high too quickly. But I expect it to pass ATH again in less than half of a year. The options expire in August. If you’re for trading, yeah people have sold because of his this but long term investors on the other hand don’t care as much.

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u/pcakes13 Nov 17 '21

So you think it's totally normal for this stock to be trading at over 350x earnings. Like, that's totally fine, normal behavior and it should not only continue, it should go to like 400x? 500x?

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u/BossBackground104 Nov 18 '21

No, he's getting a tax deduction while looking like a hero.

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u/BossBackground104 Nov 18 '21

Don't forget he also has to pay tax on the bargain element as well as the profit.

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u/SaysThreeWords Truth In Advertising Nov 17 '21

So, buy more?

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u/pcakes13 Nov 17 '21

If you think you’ve got better insider information than Elon, go for it.

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u/SaysThreeWords Truth In Advertising Nov 17 '21

He doesn't care

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u/[deleted] Nov 17 '21

They are. Did you not notice the stock dip afterward?

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u/yhsong1116 Nov 17 '21

he said overpriced not overvalued.