Maybe "orders of magnitude" was a misstatement. looks like ~12 billion (tesla) vs 53 billion (toyota). Maybe I'm a stock noob, but profit margins seem like an arbitrary silly metric to care about. What does it really mean? I could could make something for a dollar and sell it for 2 and my gross margin is 50%...but that doesn't mean i have more money than tesla. Profit margin is just an indirect measure of if you are doing ok, but at the end of the day money == money. Higher profit margin does not mean you have more money relative to your competitor, unless you can keep that profit margin AND beat your competitors in quantity sold.
The real tangible value would be cold hard cash which toyota has more of. Cash on hand for toyota is 76 billion. Tesla is 12 billion. Toyota has nearly 3x the employees but earns ~55k more per employee (profit/employee).
As an investor, you want to put your money where the growth is. A high profit margin means people value the product highly and you don’t have competitors driving you into a commodity business.
If you made something for a dollar and sold it for 2, how? How did nobody see this chance? Why don’t you have an army of competitors driving that price to 1.05? This isn’t selling a single ice cream at a beach, it’s selling millions across every beach on the planet, where there are many existing vendors.
Tesla is supply constrained and can’t sell cars fast enough. Toyota is likely near their peak.
Investors don’t invest for who has “more money” (who cares? You get 1/n of that, it’s priced in) they invest for who can grow their money.
The car sales growth yes, hasn't happened but its more or less priced-in. But most Tesla long-term investors are much more excited about other things the company does.
Comments
Maybe "orders of magnitude" was a misstatement. looks like ~12 billion (tesla) vs 53 billion (toyota). Maybe I'm a stock noob, but profit margins seem like an arbitrary silly metric to care about. What does it really mean? I could could make something for a dollar and sell it for 2 and my gross margin is 50%...but that doesn't mean i have more money than tesla. Profit margin is just an indirect measure of if you are doing ok, but at the end of the day money == money. Higher profit margin does not mean you have more money relative to your competitor, unless you can keep that profit margin AND beat your competitors in quantity sold.
The real tangible value would be cold hard cash which toyota has more of. Cash on hand for toyota is 76 billion. Tesla is 12 billion. Toyota has nearly 3x the employees but earns ~55k more per employee (profit/employee).
As an investor, you want to put your money where the growth is. A high profit margin means people value the product highly and you don’t have competitors driving you into a commodity business.
If you made something for a dollar and sold it for 2, how? How did nobody see this chance? Why don’t you have an army of competitors driving that price to 1.05? This isn’t selling a single ice cream at a beach, it’s selling millions across every beach on the planet, where there are many existing vendors.
Tesla is supply constrained and can’t sell cars fast enough. Toyota is likely near their peak.
Investors don’t invest for who has “more money” (who cares? You get 1/n of that, it’s priced in) they invest for who can grow their money.
Yes, but a reasonable price. Whereas, Tesla is priced as if the growth had already happened.
The car sales growth yes, hasn't happened but its more or less priced-in. But most Tesla long-term investors are much more excited about other things the company does.