<story><title>Rivian valued at over $100B after biggest IPO of 2021</title><url>https://www.reuters.com/business/autos-transportation/ev-maker-rivian-set-high-profile-market-debut-after-mammoth-ipo-2021-11-10/</url></story><parent_chain><item><author>runako</author><text>&amp;gt; Tesla&amp;#x27;s revenue growth is not much bigger than Alphabet&amp;#x27;s or Apple&amp;#x27;s - and these are companies with orders of magnitude more revenue and profit.&lt;p&gt;I&amp;#x27;m not that big of a Tesla bull, but you have to remember that stocks trade on forward expectations. The trillion $+ market cap companies basically have saturated their primary markets. Microsoft is not likely to find another billion desktop PCs onto which to sell a US-priced Windows&amp;#x2F;Office suite anytime soon. By contrast, if you buy the Tesla story, they are really just getting started.&lt;p&gt;&amp;gt; Auto manufacturing is not suddenly going to become the most profitable business in the world.&lt;p&gt;I tend to agree with this. However, it&amp;#x27;s worth noting that Tesla&amp;#x27;s margin profile is significantly different than all legacy automakers. Their gross margin is ~30%, which is within striking distance of AMD&amp;#x27;s. And Tesla is still sub-scale for the auto industry. EVs are a different beast than traditional ICE vehicles, so margins will initially be better on EVs for all EV manufacturers.</text></item><item><author>onlyrealcuzzo</author><text>Since Tesla is now the elephant in the room - it&amp;#x27;s possible Tesla is distorting the entire auto industry.&lt;p&gt;Tesla was one of the 5 largest companies in the world - something an auto manufacturer hasn&amp;#x27;t been in almost 50 years.&lt;p&gt;Tesla had BY FAR the highest P&amp;#x2F;E ratio for any company of that market cap (as a percentage of global wealth) in history.&lt;p&gt;Tesla&amp;#x27;s revenue growth is not much bigger than Alphabet&amp;#x27;s or Apple&amp;#x27;s - and these are companies with orders of magnitude more revenue and profit.&lt;p&gt;For the last 50-ish years - outside of a few small companies (Ferrari, etc)  - auto manufacturing has been a pretty terrible business.&lt;p&gt;Tesla people keep trying to say that Tesla is really an infrastructure play or an Internet company or a services companies or even a space company - but... currently it&amp;#x27;s not. And even if it became any of those things - even at it&amp;#x27;s current growth rate - its P&amp;#x2F;E to growth rate is still unbelievably high.&lt;p&gt;I don&amp;#x27;t really care if GM and Ford and Rivian are now overvalued - and compared to them Tesla is undervalued. Auto manufacturing is not suddenly going to become the most profitable business in the world. People aren&amp;#x27;t going to suddenly start paying more for cars than housing. People aren&amp;#x27;t going to suddenly own 30 cars a piece. Tesla is never going to grow enough to be worth it&amp;#x27;s current market cap. But the market can stay irrational longer than you can stay solvent - and I wouldn&amp;#x27;t take a bet that Tesla crashes if my life depended on it.</text></item><item><author>qqtt</author><text>Lots of talk about balking at this valuation, and that is probably a reasonable reaction, but as others have said, I want to point out that companies are valued based on their future and projected growth, not how much they are worth today.&lt;p&gt;Much has been made about Tesla being worth more than all other automakers combined, but let&amp;#x27;s look at the growth.&lt;p&gt;Tesla Q3 Revenue: 13.76B, Year over year growth: 56%&lt;p&gt;Tesla Q3 Net Income: 1.6B, Year over year growth: 388%&lt;p&gt;GM Q3 Revenue: 26.78B, Year over year growth: -24%&lt;p&gt;GM Q3 Net Income: 2.42B, Year over year growth: -40%&lt;p&gt;Tesla is growing like bonkers, wildly more profitable, and has a much brighter future than GM given these trajectories. It&amp;#x27;s almost like either GM is severely overvalued at 90B market cap or Tesla is undervalued at 1T.&lt;p&gt;Tesla has also proven that traditional automakers really struggle to keep up with the electric car race - from software to supply chain. Rivian, like Tesla, is built top to bottom to play in this market, with the added backing of Amazon and products tailor made for enterprise scale needs that companies like Amazon need.&lt;p&gt;Of course Rivian is a risky investment today - their stock is priced for perfection. We saw what happened last quarter when stocks priced for perfection fall short (take a look at Snapchat). But plenty of these arguments &amp;quot;Rivian is only selling 1000 cars!&amp;quot; also applied to Tesla about 10 years ago.&lt;p&gt;A business is valued based on its future prospects. Growth companies are risky.&lt;p&gt;Edit to add Ford numbers:&lt;p&gt;Ford Q3 Revenue: 35.68B , Year over year growth: -4%&lt;p&gt;Ford Q3 Net income: 1.8B, Year over year growth: -23%&lt;p&gt;Also want to point out - all automakers are operating in the same pandemic - Ford, GM, and Tesla are all dealing with supply chain issues and chip shortages.</text></item></parent_chain><comment><author>danans</author><text>&amp;gt;  EVs are a different beast than traditional ICE vehicles, so margins will initially be better on EVs for all EV manufacturers.&lt;p&gt;Please explain.  This runs counter to the common understanding that unless a manufacturer scales up their battery production significantly, their profit margins on EVs are lower due to the high cost of the batteries.  The   California compliance EVs were sold at a per-unit loss.  Tesla shook this up by targeting and marketing to the luxury market, where they could charge a premium.&lt;p&gt;Many smaller scale non-luxury manufacturers have pretty lackluster EV offerings (looking at you, Subaru).</text></comment>
<story><title>Rivian valued at over $100B after biggest IPO of 2021</title><url>https://www.reuters.com/business/autos-transportation/ev-maker-rivian-set-high-profile-market-debut-after-mammoth-ipo-2021-11-10/</url></story><parent_chain><item><author>runako</author><text>&amp;gt; Tesla&amp;#x27;s revenue growth is not much bigger than Alphabet&amp;#x27;s or Apple&amp;#x27;s - and these are companies with orders of magnitude more revenue and profit.&lt;p&gt;I&amp;#x27;m not that big of a Tesla bull, but you have to remember that stocks trade on forward expectations. The trillion $+ market cap companies basically have saturated their primary markets. Microsoft is not likely to find another billion desktop PCs onto which to sell a US-priced Windows&amp;#x2F;Office suite anytime soon. By contrast, if you buy the Tesla story, they are really just getting started.&lt;p&gt;&amp;gt; Auto manufacturing is not suddenly going to become the most profitable business in the world.&lt;p&gt;I tend to agree with this. However, it&amp;#x27;s worth noting that Tesla&amp;#x27;s margin profile is significantly different than all legacy automakers. Their gross margin is ~30%, which is within striking distance of AMD&amp;#x27;s. And Tesla is still sub-scale for the auto industry. EVs are a different beast than traditional ICE vehicles, so margins will initially be better on EVs for all EV manufacturers.</text></item><item><author>onlyrealcuzzo</author><text>Since Tesla is now the elephant in the room - it&amp;#x27;s possible Tesla is distorting the entire auto industry.&lt;p&gt;Tesla was one of the 5 largest companies in the world - something an auto manufacturer hasn&amp;#x27;t been in almost 50 years.&lt;p&gt;Tesla had BY FAR the highest P&amp;#x2F;E ratio for any company of that market cap (as a percentage of global wealth) in history.&lt;p&gt;Tesla&amp;#x27;s revenue growth is not much bigger than Alphabet&amp;#x27;s or Apple&amp;#x27;s - and these are companies with orders of magnitude more revenue and profit.&lt;p&gt;For the last 50-ish years - outside of a few small companies (Ferrari, etc)  - auto manufacturing has been a pretty terrible business.&lt;p&gt;Tesla people keep trying to say that Tesla is really an infrastructure play or an Internet company or a services companies or even a space company - but... currently it&amp;#x27;s not. And even if it became any of those things - even at it&amp;#x27;s current growth rate - its P&amp;#x2F;E to growth rate is still unbelievably high.&lt;p&gt;I don&amp;#x27;t really care if GM and Ford and Rivian are now overvalued - and compared to them Tesla is undervalued. Auto manufacturing is not suddenly going to become the most profitable business in the world. People aren&amp;#x27;t going to suddenly start paying more for cars than housing. People aren&amp;#x27;t going to suddenly own 30 cars a piece. Tesla is never going to grow enough to be worth it&amp;#x27;s current market cap. But the market can stay irrational longer than you can stay solvent - and I wouldn&amp;#x27;t take a bet that Tesla crashes if my life depended on it.</text></item><item><author>qqtt</author><text>Lots of talk about balking at this valuation, and that is probably a reasonable reaction, but as others have said, I want to point out that companies are valued based on their future and projected growth, not how much they are worth today.&lt;p&gt;Much has been made about Tesla being worth more than all other automakers combined, but let&amp;#x27;s look at the growth.&lt;p&gt;Tesla Q3 Revenue: 13.76B, Year over year growth: 56%&lt;p&gt;Tesla Q3 Net Income: 1.6B, Year over year growth: 388%&lt;p&gt;GM Q3 Revenue: 26.78B, Year over year growth: -24%&lt;p&gt;GM Q3 Net Income: 2.42B, Year over year growth: -40%&lt;p&gt;Tesla is growing like bonkers, wildly more profitable, and has a much brighter future than GM given these trajectories. It&amp;#x27;s almost like either GM is severely overvalued at 90B market cap or Tesla is undervalued at 1T.&lt;p&gt;Tesla has also proven that traditional automakers really struggle to keep up with the electric car race - from software to supply chain. Rivian, like Tesla, is built top to bottom to play in this market, with the added backing of Amazon and products tailor made for enterprise scale needs that companies like Amazon need.&lt;p&gt;Of course Rivian is a risky investment today - their stock is priced for perfection. We saw what happened last quarter when stocks priced for perfection fall short (take a look at Snapchat). But plenty of these arguments &amp;quot;Rivian is only selling 1000 cars!&amp;quot; also applied to Tesla about 10 years ago.&lt;p&gt;A business is valued based on its future prospects. Growth companies are risky.&lt;p&gt;Edit to add Ford numbers:&lt;p&gt;Ford Q3 Revenue: 35.68B , Year over year growth: -4%&lt;p&gt;Ford Q3 Net income: 1.8B, Year over year growth: -23%&lt;p&gt;Also want to point out - all automakers are operating in the same pandemic - Ford, GM, and Tesla are all dealing with supply chain issues and chip shortages.</text></item></parent_chain><comment><author>long_time_gone</author><text>&amp;gt; Microsoft is not likely to find another billion desktop PCs onto which to sell a US-priced Windows&amp;#x2F;Office suite anytime soon.&lt;p&gt;Which is why Microsoft pivoted to additional revenue streams years ago. XBox, Azure, GitHub, SQL Server, LinkedIn, the Surface line, and more.</text></comment>