They've been cost-cutting very aggressively so I assume there are few low-hanging or middle-hanging fruits left.

The big picture is that their business is currently not profitable without government money, which doesn't scale linearly with revenue. Sure, I guess they will slowly improve their margins in the future. But my point is that it's unlikely that their car manufacturing business will become a massive cash cow as the market seems to think.

Batteries becoming cheaper won't directly translate to margins because of competition.

There are a few things you are not considering. Service for example is a huge negative right now, while every other car company is making money with service. Because most Tesla vehicles are new most vehicles are under warranty. This will continue to be a negative but importantly, if Tesla would stop growing, this would turn into positive pretty soon.

The CEO package was large because of the large growth in stock price, that alone is almost as much all all the credits. This will not be this high quarter-quarter and only has to be paid if the company continues to hit milestones.

Importantly however, their automotive margin is still very good, and is looking to improve further next year, its industry leading margin. At the same time they show 40% growth every year and positive cashflow. Automotive is a business of scale and Tesla is still relatively small.

They have been building 3 massive new factories this year, covering Europe, Eastern US and expatiation in China. This is operating leverage, things you pay now that will payoff later. Those factories will not only expand production but also CAPX efficiency.

This Q4 solar and storage were also a negative margin (somewhat surprisingly) but showed massive growth too, in this area to I expect margin to jump back up after this Q4. Tesla global leader in storage and will likely continue to grow that, and with their aggressive strategy they will also likely be market leader in solar.

Additionally, Tesla has multiple new products that will allow them to continue growing not just next year but the year after that. There is huge demand for the Tesla Semi. There is huge demand for the Cybertruck. Model Y has not even started being delivered in China/Europe.

I think if you do the calculation and you believe that gross margin is staying as is or growing, the profit Tesla will get quite large, even as they continue to grow. Very few companies can have high growth and very good profitability, and I believe it is likely Tesla will achieve this in the next year.

Just look at 2019 margin, to 2020 margin, -0.3% to 6.3%. That is in a pandemic year.

Now, the current stock price is high, and even what I just said, might not justify the stock price. To defend the current stock price, you need to believe in the FSD story, at least partially. If you do not believe that story, Tesla is over-valued.

I for one believed Tesla was very under-valued early this year and bought based on the assumption of growth and margin. I since covered most of my position but still have a lot of stock. I do think Tesla has the best FSD story so I'm holding the stock for upside.

I hope this at least gives you perspective on the way somebody would hold Tesla. I think the focus on credits, is mostly distraction. I have never in my analysis cared about credits, in fact I always use margin without credits.

BTW, this could be said about long investors, they're hoping for their competitors to fail.

The situation is pretty bonkers but I hope in the end that the hedge funds have learned a lesson.

Parent is so quick to try to score a point arguing definitions that they entirely missed the point.

BTW, all companies that can, use lidars. Even MobileEye says that their L4 system will use lidars and they've been working on a camera based system for 2 decades. Tesla doesn't use lidars because they can't.

1. Lidar is expensive for everyone. It’s not like Tesla will pay more than other manufacturers. They’d prefer not to use Lidar, but if cameras just don’t cut it, I don't think they would die on that hill.

2. I’m sure there is some fine print around the current FSD being for camera based sensors only. They can easily say the car tops off at L4 for cameras, and L5 needs Lidar, if we come to that bridge

It's probably even less readable to be honest. And it would mean there are now 2 ways of doing something which makes the language irregular (unless everyone switches to this syntax).

I would just read it as: "Take str, convert it to an int and take the absolute value." It also corresponds to the order of steps as it actually happens.

Another example where the readability difference is clearer:

`images.first.resize(100, 100).crop(25, 25, 75, 75)`

versus

`crop(resize(first(images), 100, 100), 25, 25, 75, 75)`

The former one isn't just more readable, it's also easier to write.

What I'm saying is it's not a basic value equation. Buying an asset does not create wealth. It's the application of that asset.

It's not simply Facebook has a book-value of X -- It's The market thinks Facebook can build more wealth with their $ than Ford.

Ford's is a capital-intensive business. That's what gives it hard assets that make its market cap 70% of assets (btw, the author totally forgets the liability side of equation - equity investors aren't owed assets - they are owed (assets - liabilities) - look at big banks, they have trillions in assets - but they have equally enormous liabilities too).

I don't know what investment opportunities Ford has, but regarding Facebook, I really don't think they can invest additional capital sensibly. An additional $1 invested in Facebook will end up being an additional $1 paid for some Instagram-like acquisition.

Furthermore, additional $$ spent on Facebook IPO stock will just end up an additional $$ in the founders' pockets.

Summary: Since 1980s, the decision power in US corporations started to move to the hands of shareholders. They care about short term profits, not about the employees.

> And then, in the 1980s, the holy grail was found. It was called the principle of shareholder value maximization. It was argued that professional managers should be rewarded according to the amount they can give to shareholders. In order to achieve this, it was argued, first profits need to be maximized by ruthlessly cutting costs – wage bills, investments, inventories, middle-level managers, and so on. Second, the highest possible share of these profits needs tobe distributed to the shareholders – through dividends and share buybacks. In order to encourage managers to behave in this way, the proportion of their compensation packages that stock options account for needs to be increased, so that they identify more with the interests of the shareholders. The idea was advocated not just by shareholders, but also by many professional managers, most famously by Jack Welch, the long-time chairman of General Electric (GE), who is often credited with coining the term ‘shareholder value’ in aspeech in 1981.

> Soon after Welch’s speech, shareholder value maximization became the zeitgeist of the American corporate world. In the beginning, it seemed to work really well for both the managers and the shareholders. The shareof profits in national income, which had shown a downward trend since the 1960s, sharply rose in the mid 1980s and has shown an upward trend since then. And the shareholders got a higher share of that profit as dividends, while seeing the value of their shares rise. Distributed profits as a share of total US corporate profit stood at 35–45 per cent between the 1950s and the 1970s, but it has been onan upward trend since the late 70s and now stands at around 60 per cent. The managers saw their compensation rising through the roof, but shareholders stopped questioning their pay packages, as they were happy with ever-rising share prices and dividends. The practice soon spread to other countries – more easily to countries like Britain, which had a corporate power structure and managerial culture similar to those of the US, and less easily to other countries, as we shall see below

> Now, this unholy alliance between the professional managers and the shareholders was all financed by squeezing the other stakeholders in the company (which is why it has spread much more slowly to other rich countries where the other stakeholders have greater relative strength). Jobs were ruthlessly cut, many workers were fired and re-hired as non-unionized labour with lower wages and fewer benefits, and wage increases were suppressed (often by relocating to or outsourcing from low-wage countries, suchas China and India – or the threat to do so). The suppliers, and their workers, were also squeezed by continued cuts in procurement prices, while the government was pressured into lowering corporate tax rates and/or providing more subsidies, with the help of the threat of relocating to countries with lower corporate tax rates and/or higher business subsidies. As a result, income inequality soared and in a seemingly endless corporate boom (ending, of course, in 2008), the vast majority of the American and the British populations could share in the (apparent) prosperity only through borrowing atunprecedented rates.

But that's not what happened. It was just rhetoric for covering executive team compensation maximization. Shareholders have been screwed along with the rest of us (he says while checking his 401k).

Wild-eyed socialist that I am, the single biggest, quickest improvement to corporate responsibility and governance would be to increase shareholder rights.

Moreover, if your primary shareholders are, say, hedge funds, the motivations for all parties have become so removed that in that case increased shareholder rights would almost always be a bad thing, especially if your metric is over worker happiness.

I'm aware of the "low information voter" problem. And yet I'm a pollyanna. I believe (as a matter of faith) that high quality information leads to high quality decisions.

Given the choice between corporate rule (oligarchy) and mob rule, I guess I'd side with the mob.

To put a face on this: I had a boss who lectured my team on "shareholder value" and "capitalism" to justify his decisions regarding how he chose to restructure our team, set goals, etc. I left that company within 60 days of that lecture. Not because I fundamentally disagree with the philosophy of shareholder value, but because the outcome of his decisions destroyed my morale. Any attempt to discuss the issue with him was always steered back to increasing shareholder value. He didn't seem to grasp the fact that other things matter, too.

Wow, that's quite a coincidence, because I don't really give a rat's ass about them either.

The decision-making power was always in the hands of the shareholders. They own the corporation, fer chrissake.

Corporations are no different. Shareholders want higher returns and less risk. But they ultimately get the compromise they're willing to live with.

Shareholder short-term value maximization is a bad thing.