As a guy with a large investment in Tesla I was thinking about hedging my bet with a short of some kind (will probably be options) on a competitor in the auto industry. But which company? The industry is already valued pretty cheaply on a P/E basis and especially on a P/S basis, which ofcourse means a small uptick in margins would crush a short, but as the industry is also ridden with debt so bankruptcies are a real risk as the shift in technology is substantial and a lot of companies doesn't seem very enthusiastic about electric, and if they rest on their laurels for too long the catchup game will be very difficult as electric is moving much faster than BEVs.
GM was the first that came to mind as they already went under once, but their mkt cap is pretty depressed at the moment. I actually like Toyota the best as a short candiate right now, being the largest mkt cap in the industry with a healthy profit margin they seem to have the most room to fall, and they happen to be advocates of hydrogen too instead of electric, which I personally feel very certain about being a horrible move, which I think will be obvious over the coming few years as we get some colour on the Model 3. Toyota also happens to have an enormous amount of debt; a whopping $152B, with $42B more in accounts payable and accrued expenses. Their cash and short term investments totals $41B. That is some hefty liabilities for a company valued at a relatively high 0,82 times sales, their P/E is 10,6 but their margin might tumble down to industry standards, earnings seem to be artifically inflated right now, might be becuase of the significantly weakened yen. Toyotas profit was half in FY13 compared to FY14, about 1/5 in FY 12 and 11 compared to FY14. What do you think?
GM was the first that came to mind as they already went under once, but their mkt cap is pretty depressed at the moment. I actually like Toyota the best as a short candiate right now, being the largest mkt cap in the industry with a healthy profit margin they seem to have the most room to fall, and they happen to be advocates of hydrogen too instead of electric, which I personally feel very certain about being a horrible move, which I think will be obvious over the coming few years as we get some colour on the Model 3. Toyota also happens to have an enormous amount of debt; a whopping $152B, with $42B more in accounts payable and accrued expenses. Their cash and short term investments totals $41B. That is some hefty liabilities for a company valued at a relatively high 0,82 times sales, their P/E is 10,6 but their margin might tumble down to industry standards, earnings seem to be artifically inflated right now, might be becuase of the significantly weakened yen. Toyotas profit was half in FY13 compared to FY14, about 1/5 in FY 12 and 11 compared to FY14. What do you think?
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