Tesla Earnings Teach Us Almost Nothing

Tesla Earnings Teach Us Almost Nothing
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I was hopeful to gain insight into Tesla’s fair value from the company’s earnings announcement. No such luck. The value is still based on speculative growth options whose value depends more on sentiment than hard analysis. The big questions remain unanswered. Do a vast number of Americans really want an all electric sedan? What price are they willing to pay for it? Can Tesla profitably produce the cars at that price? If so, will it cannabalize the Model S? What are the cash flow implications for building, servicing and powering all those cars if the Model 3 is a success? None of these questions were answered. What’s worse it looks like it will be six months, at least, until we start to learn the answers.

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In the meantime, there were some curious financial details associated with the announcement and the manner in which Tesla "beat" the streets earnings forecast. Those will be addressed in an upcoming post.

Klarman: Baupost’s Core Principles Have Helped The Fund Outperform

Seth KlarmanWhen Baupost, the $30 billion Boston-based hedge fund now managed by Seth Klarman, was founded in 1982, it was launched with a core set of aims. Q4 2021 hedge fund letters, conferences and more Established by Harvard professor William Poorvu and a group of four other founding families, including Klarman, the group aimed to compound Read More


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Bradford Cornell is an emeritus Professor of Financial Economics at the Anderson School of Management at UCLA. Prof. Cornell has taught courses on Applied Corporate Finance, Investment Banking, and Corporate Valuation. He is currently developing a new course on Climate Change, Energy and Finance. Professor Cornell has published more than 125 articles and four books on a wide variety of topics in applied finance. Professor Cornell is also a managing director at BRG where he heads the practice on Climate Change, Energy and Finance. In addition, he is a senior advisor to the Cornell Capital Group and to Rayliant Global Advisors. In both capacities, he provides advice on fundamental investment valuation.
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