>Everyone knows the railroads will have periods of very high CapEx

I've seen analysis that demonstrates that even if Tesla weren't spending elevated levels of CapEx, and were instead spending industry average (about 5% of revenue), they'd still be losing upwards of $10k per car.

There's this sentiment that gets going that "numbers don't mean anything", and thus people are willing to buy shares in companies like TSLA at any price because "it's growing". And, sure, it's difficult to predict what a fast growing company will look like in 5, 10, 20 years. But you can model such things based on potential revenues and margins and market cap and other financial metrics. We have tons of data from tons of companies. And we know there are reasonable limitations (Tesla won't sell a trillion cars, for example).

Has anyone here ever modelled what "best-case" TSLA looks like? What do you think shares are worth?

If you compare to established, successful car companies like Ford or Honda, the best case scenario for TSLA is of the order of 2x-5x increase in market cap. And you might see more dilution to get the Model 3's rolling. So buying TSLA today isn't like buying Apple in 2005, but it might be like buying Apple in 2012.

There will be plenty of additional dilution if Tesla is successful, and not just for Model 3. Tesla's manufacturing ambitions and capital requirements are huge; the company will not be satisfied until they are selling millions of cars per year and selling much more battery storage per year than most casual observers would think reasonable. In a low interest-rate climate, this is a great situation to be in.

With that in mind, the best-case possible market cap ceiling is much greater than 5x the current. Tesla is not limited to car manufacturing only. And even then, the best-case scenario leaves a hole in car manufacturing capacity as some of the existing car manufacturers are unable to adapt to a future where electric vehicles will be obviously better than fossil-powered for most use cases.

Things get interesting if you look at $TSLA as an energy company of which cars is just one component.

Wall Street has no problem with long term capital expenditures (bonds are at very low rates!), just when the parent company also does dumb stuff like burn up their very needed cash by buying an unrelated firm that is losing money very quickly (Solar City).

I don't think they're buying solar city, isn't it a pure stock swap?

The big issue is that SolarCity is barely hanging on while Tesla has been on a tear (at least PR wise), so hanging an anchor around its neck seems silly. Everyone was expecting Tesla to need to raise cash to scale model 3 production, so this wouldn't have been news is SolarCity weren't in the picture.

So instead of issuing shares to raise capital for Tesla they are giving them to SCTY shareholders (of which Elon is the largest!) and then taking on Solar City's debts and hugely negative cash flow. As if that is not enough we're now back to Tesla needing more money and having to go raise it.

I think the thought process is if they needed cash so badly they shouldn't have just bought a bottomless money pit.

Do you think Facebook didn't buy WhatsApp either? Edit: there was a cash component, but it was 75% stock. The acquisition of Pixar by Disney is an example of a 100% stock payment.

> I don't think they're buying solar city, isn't it a pure stock swap?

Yes, but SolarCity is losing $300 million per quarter right now. Who do you think will pay that bill?

Tesla will, now that they "purchased" it. In fact, some companies sell themselves for for NEGATIVE dollars (aka, we'll pay you to take this failing business off our hands). Becoming the "owner" of a failing company means that you now have to pay for it.

TSLA stock is liquid, therefore Tesla giving away TSLA stock to SolarCity stock holders is buying SolarCity.

But SolarCity stock is also liquid so it's more like a currency exchange.

Refusing to hear out opinions you expect to disagree with isn't healthy. I don't care for the WSJ's biases either, but I'm going to at least look at their arguments.

Which biases are you talking about? The right-wing bias of the editorial pages or the left-wing bias for the news part of the paper? According to this study, the WSJ's news section is more left-wing than the NYT and other newspapers. See p. 24. http://web.archive.org/web/20061128014117/http://www.polisci...

I find myself in general agreement with the WSJ stuff I read, but I still hesitate to visit that site because it's obnoxious.

Care to name those economic interests?

The Koch brothers?