Tesla Looks a Lot More Like BlackBerry Than It Does Apple

TruckElectric

Well-known member
First Name
Bryan
Joined
Jun 16, 2020
Messages
1,050
Reaction score
1,278
Location
Texas
Vehicles
Dodge Ram diesel
Occupation
Retired
Country flag
TSLA stock investors should remember the BlackBerry story

By Wayne Duggan, InvestorPlace Contributor Mar 5, 2021, 9:05 am EST


Whenever Tesla (NASDAQ:TSLA) bears point out how overvalued TSLA stock is, there is one main rebuttal. Tesla isn’t an auto stock. It’s a tech stock.

tsla-stock-1-300x169.jpg

Source: Grisha Bruev / Shutterstock.com

Tesla bulls say Tesla isn’t like $48 billion Ford(NYSE:F). Tesla is more like $2.1 trillion Apple(NASDAQ:AAPL), they say.

I actually believe comparing Tesla to a smartphone maker is a fair analogy. However, I don’t think Apple is the proper analog. I believe TSLA stock is more like BlackBerry(NYSE:BB) than Apple.

TSLA Stock as a Tech Investment
I completely understand the argument for Tesla as a tech stock. Apple was once a hardware company, and it is transitioning to a services company.

Step one was to sell a bunch of iPhones, and step two is to sell customers subscriptions on those iPhones. Tesla is attempting to sell customers cars and then sell them subscriptions and other services tied to those cars. These services include things like self-driving software, insurance and other services.

There are several key differences between the iPhone and the Model 3. First, the iPhone has always been tremendously profitable. Tesla has yet to prove it can sell its cars at a profit without relying on regulatory credit sales.

However, the bull thesis is that if Tesla can essentially break-even on its low-margin auto sales, services revenue has a much higher margin. It can theoretically be tremendously profitable over time.
From the fourth quarter of 2015 to the fourth quarter of 2020, Apple’s services revenue has skyrocketed from around $5 billion to around $14.5 billion.
LOUIS NAVELLIER UNVEILS INCREDIBLE WAY YOU COULD 5X HIS STOCK GAINS

Apple recently said there are about 1.65 billion Apple devices in use around the world. In other words, Apple has added more than $6.30 in services revenue per device per year to its business in just the past five years.
Another way to look at it is that Apple generated about 35% more services revenue alone than Tesla’s total revenue last quarter.

History of Smartphones
The idea for TSLA stock bulls is to ignore Tesla’s barely profitable auto business as it builds its user base. Once there are billions of global Tesla owners like there are iPhone owners, Tesla will milk those users for all they’re worth via service offerings. Therefore, the profits are coming eventually.

However, it’s important to remember how Apple built its massive user base. The first iPhone launched back in 2007. As of mid-2009, BlackBerry (then called Research In Motion) held a 55.3% share of the U.S. smartphone market. Apple was a very distant second with just 19.5% share.

But as everyone who was around at the time remembers, the iPhone was a much better device. Eventually, the market share numbers shifted to reflect customers buying the superior product. By the end of 2019, Apple had 49% of the U.S. smartphone market. BlackBerry’s share is essentially now zero.

Tesla currently has about an 80% share of the U.S. electric vehicle market, but there is virtually no competition at this point. General Motors (NYSE:GM) is planning to launch 30 new EV models by 2025. Other automakers are expected to launch at least nine new EV models by the end of 2021.

Like BlackBerry, Tesla had a first-mover advantage. J.D. Power just ranked Tesla 30th out of 33 vehicle brands in dependability. Tesla is also way behind companies like GM and Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) in autonomous vehicle technology, according to Navigant Research.

It Could Get Ugly
Apparently, I’m not the only one who sees similarities between BlackBerry and Tesla. LP Research analyst Gordon Johnson recently drew the same conclusion.

“We see Tesla more as BlackBerry versus Apple,” Johnson says. “If we move to the world’s largest EV market where competition is the strongest, Europe, their market share last year fell from 30% to 10%. Their sales actually declined total in Europe by 10%.”

Speaking of market share, Morgan Stanley just reported Tesla’s share of the U.S. EV market dropped from 81% to 69% in 2020. The firm said 100% of that market share loss came from just one competing vehicle–the Ford Mustang Mach-E.

If that’s how much market share Tesla loses to just one competing model, imagine what could happen when dozens more roll out in the next several years.

How bad could things get for TSLA stock if it loses its first-mover advantage? BlackBerry’s stock price fell from as high as $88 back in 2008 to under $7 per share within three years, a more than 90% drop.

With TSLA stock trading at $653, Johnson’s price target for Tesla is currently $67, representing a potential 90% drop.

Tesla may eventually prove it is the next Apple. But all it has proven up to this point is that it is like BlackBerry. And things didn’t turn out very well for long-term BlackBerry investors.


SOURCE: INVESTORPLACE





Advertisement

 

TheLastStarfighter

Well-known member
Joined
Jul 6, 2020
Messages
238
Reaction score
520
Location
Canada
Vehicles
Dodge Challenger
Occupation
Engineer
Country flag
I dunno, Blackberry was all about the buttons, iPhones almost no buttons and Tesla's have almost no buttons. Don't know what this dude is getting at.
 

Jhodgesatmb

Well-known member
First Name
Jack
Joined
Dec 1, 2019
Messages
896
Reaction score
926
Location
San Francisco Bay area
Vehicles
Lexus Rx450H Tesla Model 3
Occupation
Researcher
Country flag
anyone that believes what market analysts say kind of deserves what they get. It was market analysts that said Nokia's market strategy was perfect. The list goes on and on. If you want to say that Blackberry or any other product that rose and fell (and fell off the edge of the planet) is a possible harbinger for Tesla that is fine, but don't use what market analysts say as your proof. I look at the sum total of what Tesla is doing and I believe in them and that is what drives me. If I lose then I lose based on that.
 

DarinCT

Well-known member
First Name
Darin
Joined
Dec 16, 2020
Messages
114
Reaction score
152
Location
California
Vehicles
M3, CT triM
Country flag
This comparison is stupid. "Blackberry was first mover and Tesla is first mover so...". A proper analysis would include the market cap of landlines and accessories (anyone remember wireless phones?) and the increase in user base because it was no longer household restricted. Then, the analogy would break down and an analysis based on user base of a specific market e.g. US cars and trucks. Then, do some actual analysis of Uber/Lyft/ride share impacts and buying habits of boomers, millennials, and others.

But nope, someone was pulling lint out of their belly button and wrote this up, probably got paid to do it too.
 

Crissa

Well-known member
First Name
Crissa
Joined
Jul 8, 2020
Messages
3,037
Reaction score
3,205
Location
Santa Cruz
Vehicles
2014 Zero S, 2013 Mazda 3
Country flag
Yeah, it's a bad analysis in several ways.

First off, is the 'regulatory credits' fiction. Their profit margin has exceeded the regulatory credits several quarters. Moreso, their automotive segment is known to be profitable. So saying their cars aren't profitable for them is trying some weird one-way transitive process.

Secondly, Blackberry specifically lost their advantage by not putting out new units, by not changing their background technology to make the units better. Tesla is the exact opposite of this, constantly adding and expanding the flexibility of the app and third-party infrastructure for their cars.

-Crissa
 

TAG

New member
First Name
Trent
Joined
May 7, 2020
Messages
2
Reaction score
2
Location
Fort Wayne, in
Vehicles
Ford Edge GMC Acadia
Occupation
IT
Country flag
Lack of exchange server support was another huge reason for companies to ditch blackberry and move on. Their products didn't keep up with the demands of the market.
 

Advertisement





 


Advertisement
Top