Monday, February 3, 2020

Update to Tesla Enterprise Value


When we last posted the TSLA enterprise value chart in December, it was $80 billion. Today it hit $149 billion.

A lot of people are wondering whether there has ever been a company so highly valued that has never had a profitable year. The two closest might be Uber and WeWork - both from this current cycle / bubble. Neither one was ever profitable - Tesla's enterprise value is now about as big as the peak Uber and WeWork EVs combined.

AOL's peak market capitalization was $249 billion - which was ridiculously high - but they had been profitable in at least the years 1993, 1994, 1996, 1999, and 2000. (Although they lost money cumulatively or in aggregate over that decade.)
 
Lucent had a peak market capitalization of close to $300 billion. However, Lucent had reported full fiscal year profits too.

An interesting philosophical complication of this exercise is that there are two different numbers to look at for the contenders from the previous bubble cycles - the contemporaneous "as reported" income numbers, and then the "revised" numbers.  

Lucent, for example, had inflated its sales with customer financing. 
 
Even with questionable accounting, however, Tesla has not been able to report full fiscal or calendar year profits. If you look at the chart of TTM net income by quarter, you can see that things have not been getting better:

Someone on Twitter was arguing this weekend that "fraud could actually be bullish" in general since a conman running a company can use it to "get closer to escape velocity".

2 comments:

CP said...

Nortel market cap peaked at $250 billion in July 2000:

https://twitter.com/WallStCynic/status/1224496540359806977

That is Jim Chanos' sockpuppet account.)

Nortel lost money 1998-2001 but they had reported net income in 1997:
http://getfilings.com/o0001130319-02-000168.html

Nortel had very little debt: under $2 billion from 1997-2000.

eahilf said...

Someone on Twitter was arguing this weekend that "fraud could actually be bullish" in general since a conman running a company can use it to "get closer to escape velocity".

link --> Cynics even take it a step further - can’t recall whether this was with regard to Madoff or someone else, but story goes that some investors‘ reaction to hearing (in private) that the books were (probably) cooked was: "Perfect - that means they’ll never miss their numbers!"