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Tesla's Ride-Sharing Biz Worth $17.7B: Morgan Stanley By Daniel Liberto | September 5, 2018 — 4:44 AM EDT
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Tesla Inc.’s (TSLA) robo-taxi business is worth about a tenth of Alphabet Inc.’s (GOOGL) Waymo and just slightly more than General Motors Co. (GM) subsidiary Cruise Automation, according to Morgan Stanley.
In a research note, reported on by Bloomberg and TechCrunch, analyst Adam Jonas valued the electric car maker’s autonomous vehicle ride-sharing venture, an idea floated by CEO Elon Musk three years ago that has still yet to be commercialized, at about $17.7 billion or roughly $95 per Tesla share. The analyst previously predicted the service could be worth as much as $244 per share in 2015.
Morgan Stanley said its lower valuation of Tesla’s ride-sharing potential was partly reflective of the company’s apparent lack of progress compared to peers. Jonas, who currently has a price target of $291 on Tesla’s stock, down from his 2015 target of $465, claimed that the Palo Alto, California-based company has shared “extremely few details about how shared autonomy can be positioned as a separate business model,” while Cruise and Waymo have become “increasingly conspicuous with their efforts to grow the business with specific targets for commercialization and deployment.”
Tesla Rivals Hold Several Advantages
Aside from showing greater transparency and determination, Jonas also said that Cruise and Waymo benefit from lower costs of capital and better adjacent revenue monetization opportunities. Tesla, he added, will have its work cut out going against Cruise and Waymo because the “mega-tech platforms” are better equipped to monetize consumer data and offer more attractive pricing and competitive flexibility.
“In our opinion, Tesla may one day need to make a strategic decision over whether to pursue a shared autonomy strategy on ‘go-it-alone’ basis or whether to find ways to ‘attach’ their vehicle data and fleet management ecosystem to one or more external platforms that maybe in a far better position to pursue data monetization, improved customer engagement/experience and lower cost to the consumer,” Jonas wrote in the research note.
Morgan Stanley added that these challenges are likely to become more apparent over time. At first, the brokerage expects Tesla’s ride-sharing business to generate more revenues than peers as it will have more vehicles available. However, by 2040, Morgan Stanley predicts Waymo to lead the market, thanks to its stronger business model. (See also: Waymo to Boost Alphabet Valuation: Morgan Stanley.)
“In short, we assume Tesla gets off to a faster start than Waymo in terms of shared miles accumulation, but that Waymo catches up and surpasses Tesla just a few years later and with likely a more sustainable and protected business model,” Jonas wrote.
Morgan Stanley’s forecasts value Waymo at $175 billion, Tesla’s ride-sharing business at $17.7 billion, and Cruise at $11.5 billion. (See also: Tesla to Fall 30% in 6 Months on Rising Competition: Goldman.)
Read more: Tesla's Ride-Sharing Biz Worth $17.7B: Morgan Stanley | Investopedia https://www.investopedia.com/news/teslas-ridesharing-biz-worth-177b-morgan-stanley/#ixzz5QF28iLhE
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