Because there's a very good chance you go bankrupt in year 3, turning your $1.00 into $0.00 instead of $15.
> Being "profitable" is irrational and stupid. [...] Profitability is a very narrowminded view of how to run a company.
What a weird, weird thing to say. As if it were straight out of the Silicon Valley TV show.
Now you'll say that Amazon __could__ have turned a profit earlier than that. Which is true. For Tesla it is not, turning a profit isn't an option. The difference being that selling books and other things on the internet is relatively easy compared with manufacturing cars using an entirely new set of unproven technologies and techniques.
So if we use that model to think about Amazon overwriting retail, then Tesla would be looking to overwrite transportation. Given the difficulties of doing the latter I would expect Tesla to flounder around for another 10 years before it really starts to get going.
After that, if they get there (big if), the sky is the limit and the market is Teslas market. That's the point behind the "being profitable is irrational and stupid" comment. Penny wise, dollar stupid.
But as it has been pointed out ad infinitum, it's a big gamble. So far Tesla has delivered on product, they'll need to prove that they can deliver on operations for this thing to take off all the way.
Juries out, but I'm willing (and do) bet that they'll make it. Too many people (including banks and governments) want this to work.
It’s different than the scenarios parodied in Silicon Valley, where companies with no business model, who can’t be profitable with their product, posture in order to be acquired to the extent that their founders believe the posturing.
I'm familiar with the discounted cash flow model of valuing a company. You're missing the point: If they keep losing money, they need more investments. At some point, they won't get any more investments, because potential investors won't believe that the company will be profitable in the future.
> [...] it has a good chance of making a lot more money by continuing to invest in itself.
Only if they don't go bankrupt in the near future, which is a very real possibility. Then all this talk about growth and "investing in itself" will be useless – they will make zero money.
At the moment, Tesla seems to have no real trouble raising the kind of capital they need in order to maintain the level of growth they're experiencing. But it's going to take a lot more growth before they're on par with GM or Toyota or the like. And since that's the obvious goal, it's foolish to be "profitable".
Tesla's annual depreciation outpaces their capital spending, so they aren't even spending enough to maintain their current assets. Last year they missed their planned CapEx by something like $1 billion. Also not something a "growth" company does.
That's because they are (and have been) in a precarious financial condition for almost their entire history, only made worse by the recent acquisition of an insolvent solar company in order to bailout you and your family members financial stakes.
It took Amazon about 12 years to get to the same revenue/income balance... http://infographic.statista.com/normal/chartoftheday_4298_am...
There is very high operating leverage in Automotive manufacturing. Hence why this cycle continues forever:
Elon: That's it, we don't need to raise anymore outside capital! 9 months later: Insert equity/bond/convert raise here.
The goal isn't to turn a profit next year. The goal is to become a bigger company than Apple, to wipe out entire car companies in the process, and to change how we power the cars we drive.