In what other companies is Apple invested? (By which I mean, has purchased common stock.) A 10% common stock stake is actually very large and would come with the expectation of influence on the board. It would also come with the expectation that the holding could increase -- none of which Apple would do without prior agreement from Tesla (see: hostile takeover). If Apple and Tesla had any common interests, a far more likely avenue for it to be expressed would be a joint venture. Unfortunately for your argument not one iota of these "tons of synergies" have been expressed by either company.
I have plenty of vision. What I lack are delusions. The automotive industry is historically a very risky, low-margin business. True to that history, Tesla remains, to date, an unprofitable company. They may have a great future, or none at all. I have no idea. But I suspect it's highly unlikely that Apple would place a huge bet on it.
BTW, I've been an AAPL investor for nearly 20 years. That's a terrible way to not understand the company.
The synergies are obvious, A platform for Carplay or a merger of the Tesla software and Carplay technologies. Both companies are working on battery technology. Apple has expressed an interest in either making cars or making software for cars. Tesla appears to be further along though we do not know the extent of what Apple has done yet.
Tesla has a margin far in excess of other car companies, near Apples even. The only reason Tesla is not profitable is that is making huge investments in R&D and the battery factory. Those investments will pay of greatly considering that it will reduce further Tesla's battery cost on a vehicle they simply cannot make enough of right now.
The synergies are obvious, A platform for Carplay or a merger of the Tesla software and Carplay technologies. Both companies are working on battery technology. Apple has expressed an interest in either making cars or making software for cars. Tesla appears to be further along though we do not know the extent of what Apple has done yet.
Tesla has a margin far in excess of other car companies, near Apples even. The only reason Tesla is not profitable is that is making huge investments in R&D and the battery factory. Those investments will pay of greatly considering that it will reduce further Tesla's battery cost on a vehicle they simply cannot make enough of right now.
Batteries, maybe, but it's far from demonstrated that the battery tech Tesla is perusing has much application to the products Apple sells, and as you say, Apple isn't napping in this department either. As for CarPlay, at this point it isn't much more than a way to interface your iPhone with the audio system. Tesla's onboard control systems do a hell of a lot more than that already. So how is it worth Apple buying Tesla to promote CarPlay? Obvious answer: it is not.
Tesla's margins are currently negative. The "only reason" they aren't profitable is due to the very high capital costs of manufacturing automobiles (and in Tesla's case, the additional costs of creating and supporting a charging network). This isn't an afterthought, an oh-by-the-way, it's a key fact to know about this industry in general, and Tesla's challenge specifically.
Batteries, maybe, but it's far from demonstrated that the battery tech Tesla is perusing has much application to the products Apple sells, and as you say, Apple isn't napping in this department either. As for CarPlay, at this point it isn't much more than a way to interface your iPhone with the audio system. Tesla's onboard control systems do a hell of a lot more than that already. So how is it worth Apple buying Tesla to promote CarPlay? Obvious answer: it is not.
Tesla's margins are currently negative. The "only reason" they aren't profitable is due to the very high capital costs of manufacturing automobiles (and in Tesla's case, the additional costs of creating and supporting a charging network). This isn't an afterthought, an oh-by-the-way, it's a key fact to know about this industry in general, and Tesla's challenge specifically.
As Melgross noted previously, Tesla's batteries come from Panasonic. Apple could cut out the middleman and just form a partnership with Panasonic instead.
As Melgross noted previously, Tesla's batteries come from Panasonic. Apple could cut out the middleman and just form a partnership with Panasonic instead.
Quite possibly. Apple has made this kind of investment any number of times.
TSLA offers a better rate of return? How do you know this? The stock could EASILY drop 50% in the next year.
We are talking about a company that has NEVER turned a profit even with massive welfare checks from the US government.
Yes, throw $50B to buy an extremely overvalued company in an incredibly low margin business. What could possiblily go wrong?
I have a problem with the entire "rate of return" argument. Even a company with gobs of cash should not be in the business of designing investment portfolios. Capital not reinvested in growing a company's core business is typically held in very conservative investment vehicles, such as bonds, treasury notes, and commercial paper.
TSLA offers a better rate of return? How do you know this? The stock could EASILY drop 50% in the next year.
We are talking about a company that has NEVER turned a profit even with massive welfare checks from the US government.
Yes, throw $50B to buy an extremely overvalued company in an incredibly low margin business. What could possiblily go wrong?
Tesla is making a net profit on cars, they are just spending it on R&D and expansion. On top of that they are making a MUCH larger profit per car than most other car companies. They will be the Apple of car companies.
I have stock in both and are long term. I don't care if it drops tomorrow, I am looking towards 2018.
Ha! I just sold a boatload of April 24 call options against my Apple shares to take advantage of the volatility premium associated with earnings. With earnings now announced to come out on the following Monday, the premium on the 24th is going to turn to dust! Tomorrow morning I'm going to wake up to a nice bonus. Sweet!
Most people one this board know little-to-nothing about the market, but you're one of the few that I don't skim past when I read these market-oriented threads, so I have to say this comment surprised me a bit.
What makes you think the premium is going to evaporate now? I ask because I swallowed hard and paid a high IV premium just prior to last quarters earnings, buying short-term calls. Yes, the premium did indeed drop, but the underlying stock rose more than enough to compensate and I still made a nice profit. I would not have wanted to be short, trying to time things! The IV is high for a reason, and market forces are usually more or less in balance when it comes to expectations.
I'm writing distracted, and could easily be missing something, just wondering what your thinking is here.
Comments
In what other companies is Apple invested? (By which I mean, has purchased common stock.) A 10% common stock stake is actually very large and would come with the expectation of influence on the board. It would also come with the expectation that the holding could increase -- none of which Apple would do without prior agreement from Tesla (see: hostile takeover). If Apple and Tesla had any common interests, a far more likely avenue for it to be expressed would be a joint venture. Unfortunately for your argument not one iota of these "tons of synergies" have been expressed by either company.
I have plenty of vision. What I lack are delusions. The automotive industry is historically a very risky, low-margin business. True to that history, Tesla remains, to date, an unprofitable company. They may have a great future, or none at all. I have no idea. But I suspect it's highly unlikely that Apple would place a huge bet on it.
BTW, I've been an AAPL investor for nearly 20 years. That's a terrible way to not understand the company.
The synergies are obvious, A platform for Carplay or a merger of the Tesla software and Carplay technologies. Both companies are working on battery technology. Apple has expressed an interest in either making cars or making software for cars. Tesla appears to be further along though we do not know the extent of what Apple has done yet.
Tesla has a margin far in excess of other car companies, near Apples even. The only reason Tesla is not profitable is that is making huge investments in R&D and the battery factory. Those investments will pay of greatly considering that it will reduce further Tesla's battery cost on a vehicle they simply cannot make enough of right now.
The synergies are obvious, A platform for Carplay or a merger of the Tesla software and Carplay technologies. Both companies are working on battery technology. Apple has expressed an interest in either making cars or making software for cars. Tesla appears to be further along though we do not know the extent of what Apple has done yet.
Tesla has a margin far in excess of other car companies, near Apples even. The only reason Tesla is not profitable is that is making huge investments in R&D and the battery factory. Those investments will pay of greatly considering that it will reduce further Tesla's battery cost on a vehicle they simply cannot make enough of right now.
Batteries, maybe, but it's far from demonstrated that the battery tech Tesla is perusing has much application to the products Apple sells, and as you say, Apple isn't napping in this department either. As for CarPlay, at this point it isn't much more than a way to interface your iPhone with the audio system. Tesla's onboard control systems do a hell of a lot more than that already. So how is it worth Apple buying Tesla to promote CarPlay? Obvious answer: it is not.
Tesla's margins are currently negative. The "only reason" they aren't profitable is due to the very high capital costs of manufacturing automobiles (and in Tesla's case, the additional costs of creating and supporting a charging network). This isn't an afterthought, an oh-by-the-way, it's a key fact to know about this industry in general, and Tesla's challenge specifically.
As Melgross noted previously, Tesla's batteries come from Panasonic. Apple could cut out the middleman and just form a partnership with Panasonic instead.
As Melgross noted previously, Tesla's batteries come from Panasonic. Apple could cut out the middleman and just form a partnership with Panasonic instead.
Quite possibly. Apple has made this kind of investment any number of times.
TSLA offers a better rate of return? How do you know this? The stock could EASILY drop 50% in the next year.
We are talking about a company that has NEVER turned a profit even with massive welfare checks from the US government.
Yes, throw $50B to buy an extremely overvalued company in an incredibly low margin business. What could possiblily go wrong?
I have a problem with the entire "rate of return" argument. Even a company with gobs of cash should not be in the business of designing investment portfolios. Capital not reinvested in growing a company's core business is typically held in very conservative investment vehicles, such as bonds, treasury notes, and commercial paper.
TSLA offers a better rate of return? How do you know this? The stock could EASILY drop 50% in the next year.
We are talking about a company that has NEVER turned a profit even with massive welfare checks from the US government.
Yes, throw $50B to buy an extremely overvalued company in an incredibly low margin business. What could possiblily go wrong?
Tesla is making a net profit on cars, they are just spending it on R&D and expansion. On top of that they are making a MUCH larger profit per car than most other car companies. They will be the Apple of car companies.
I have stock in both and are long term. I don't care if it drops tomorrow, I am looking towards 2018.
A much higher dividend would increase stability, wouldn't it?
Most people one this board know little-to-nothing about the market, but you're one of the few that I don't skim past when I read these market-oriented threads, so I have to say this comment surprised me a bit.
What makes you think the premium is going to evaporate now? I ask because I swallowed hard and paid a high IV premium just prior to last quarters earnings, buying short-term calls. Yes, the premium did indeed drop, but the underlying stock rose more than enough to compensate and I still made a nice profit. I would not have wanted to be short, trying to time things! The IV is high for a reason, and market forces are usually more or less in balance when it comes to expectations.
I'm writing distracted, and could easily be missing something, just wondering what your thinking is here.