Flashy Valuations In A Flashy Industry
$BYD Co.(BYDDF.US$ In 2020, on the back of strong market growth and political and regulatory tailwinds, the electric vehicle industry started to garner massive attention, which has resulted in exploding share prices for many of the most-watched players, $Tesla(TSLA.US$ being a prime example. The company is valued at more than $1 trillion today, despite selling just around 1% of all automobiles in the world. Other EV pureplays have also benefited from massive hype, such as $Rivian Automotive(RIVN.US$ and $Lucid Group(LCID.US$ , which are valued at around $100 billion and $80 billion, respectively, despite having produced just a couple dozen of cars in their entire company history -- this is, for reference, a market capitalization in the ballpark of $Ford Motor(F.US$ or $DAIMLER AG ADR(DMLRY.US$ , which sell millions of cars a year.
Due to their better growth outlook, EV pureplays naturally deserve a premium relative to how legacy automobile manufacturers are valued today. But at current prices, this seems overdone, and it seems doubtful whether a company like Rivian does deserve to trade at a similar market cap as established peers that have proven they are able to scale operations and that generate billions in net profits.
Not all companies in this space are trading at the extremely high valuations seen in RIVN, LCID, TSLA, however, as the market is somehow not hyped about all EV companies to the same degree. One company that does barely get any hype and that could be one of the best picks in this space is BYD Company.
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Wilson LH : yes, BYD. Thanks.
qPg7PBSdvS : Buffet/Munger bought Byddf at $1 and Byddy at $2, the major point is that unlike Ark and Cathy Wood, they have Not sold even 1 share.
BfqseGOSuE qPg7PBSdvS: This is not a point 2 different situations unrelated. Does not show level of interest, goals for the size of position. Draw whatever conclusion you want, readers need to look at the whole story.
uploading : Coca1953Aug, Munger sold Buffet on investing in Byd, Buffet had no clue on Byd.
Babyonemoretime : I would not touch China with a ten foot pole. Don't think Munger would support Buffet on this.
Starbucks follower Babyonemoretime: munger owns BABA
JDQQ Starbucks follower: That is true but what is your take on the political risks involved in owning shares in a Chinese based company ? I am loathe to bring politics into an investment decision but the PRC offers a whole different dimension of risk, 100% unlike GOP vs. Democrats here in the US, and that risk needs to be discussed.
I am interested in hearing your thoughts..
Mikey_Vibez uploading: Can you make it clearer?