Are we biased, what do you need to see to get out of TSLA

[Causalien]

1 I invested in Elon, not Tesla. So If Elon steps down from head honcho
2 Failure of Gen 3i.e. Not achieving 500k per year
3 Tesla transitioning into an old giant like apple and start pulling corporate schenanigans instead of innovating.

 

[DaveT]

I'm expecting Tesla to become one of the largest auto manufacturers in the world within 15 years. If that trajectory changes, it'll change my investment position.

 

[mibaro2]

$400 and I'll be happily out!

I'm sure there are many Google investors that said the same thing...and cursed themselves as Google soared over $1000.
As far as my position in TSLA goes, will wait patiently until Gen 3 is out and reassess it then.

 

[Auzie]

I'm expecting Tesla to become one of the largest auto manufacturers in the world within 15 years. If that trajectory changes, it'll change my investment position.

Before TSLA, my investment rule was to stay away from air lines and car makers. They are trouble. Note to self: Never say never:smile:

I'm sure there are many Google investors that said the same thing...and cursed themselves as Google soared over $1000.
As far as my position in TSLA goes, will wait patiently until Gen 3 is out and reassess it then.

Imo investment in GOOG carries much less risk than investment in TSLA. If TSLA does reach or exceed GOOG cap, it is likely to be at a slower pace and due to Tesla being in energy management and other less risky sectors, not only in car manufacturing.

 

[Robertj]

I am with DaveT
I think Tesla could become a company that has one of the largest capitalisation compared to other companies
over the next 10 years
This is due to an expected domination of the motor vehicle and battery storage industries

Also like Auzie , previously I would have stayed well clear of slow moving capital intensive industries , which generally
report profits but no free cash


I think Tesla is not a normal automobile company and I will not treat it as such.

As a general principle however, and with Tesla , when the share price retreats from peaks, I will take profits , and re enter at the bottom of price patterns to maximise my returns

 

[Auzie]

As a general principle however, and with Tesla , when the share price retreats from peaks, I will take profits , and re enter at the bottom of price patterns to maximise my returns

That is a sure win strategy. Very difficult to execute:biggrin:

 

[Robertj]

Agreed
but with the use of trailing stop alarms, plus following general market moves using the likes of IBD
timing the market gets better
i don't expect to get the exact top or bottoms , but if I can be within 10 % there is a lot of money to be picked up
i am also trying to use leaps at the bottom of the patterns to leverage the upside

 

[laromin]

Hello,
I am new here .
I work in manufacturing,mostly aerospace related, and am sceptical about the valuation of the company.

One of the most interesting numbers I have seen is the valuation of the company
divided by the total number of miles driven so far.
Going by numbers from the Detroit Auto Show Press Conference in January,
TM is valued at over $100 per mile driven by a Model S.(17Billion Market Cap in January/168Million miles driven).
How Many Tesla Model S Electric Cars Have Been Built So Far?

Certainly this is a very unusual way of looking at things, but still.
Anyone care to comment?

 

[Auzie]

Hello,
I am new here .
I work in manufacturing,mostly aerospace related, and am sceptical about the valuation of the company.

One of the most interesting numbers I have seen is the valuation of the company
divided by the total number of miles driven so far.
Going by numbers from the Detroit Auto Show Press Conference in January,
TM is valued at over $100 per mile driven by a Model S.(17Billion Market Cap in January/168Million miles driven).
How Many Tesla Model S Electric Cars Have Been Built So Far?

Certainly this is a very unusual way of looking at things, but still.
Anyone care to comment?

Welcome laromin

I am looking forward to you sharing your insights as shaped by your interesting background.

When I invested in Tesla, my main reason for taking a large position back in March 2013 had nothing to do with valuation. My reasons for continually adding to that position and not selling yet also do not include company valuation.

My initial strongest reason for taking a large position in Tesla was my understanding that Tesla had outstanding product and a vast market with no competition at all. I was convinced then as much as I am now that ice car makers simply can not make a choice to shift to different technology, regardless of the customers preferences and technology superiority. That makes Tesla free to grow as much as it can with very little outside restrictive forces. Tesla has only internal growth restrictions. That may be changed in a general market downturn or recesion.

When making trading decisions, I consider all available information about the business, management, execution, plans, etc. That consideration is done in the context of prevailing market sentiment. Business valuation is just a bit of data in the sea of information that may be relevant and affect share price one way or the other. After all that sea of information is processed in my head, the trading decision reveals itself.

I have been investing for over a decade and discovered that I make much better returns when considering all possible market and business forces that may affect the price. Making investment decisions purely on valuation is simply too lacking and insufficient.

Such metric may be more relevant for a more mature business as it might be a dominant force that drives the share price. For a business like Tesla, share price is affected by numerous forces, and valuation does not seem to have too much effect on sp.

 

[green1]

The big thing is that what Tesla can do today is irrelevant. What matters is what they will do in the future. Now I agree that in most cases the stock price grows with the company, and that in this case the stock appears to have gotten a little ways ahead. This does not mean that the stock is over priced, it simply means that some of that future gain is already factored in. The hard part in any still growing company is in figuring out where the company will be in the future. Personally I believe that Tesla will have a lot more market share than they do today. And even more than the current stock price already has built in, that's why I'm long Tesla. If I thought that Tesla's market share would stagnate at its current level, then I would agree that the price is too high, but once you factor in the future, I think we still have a ways to go.

 

[Hogfighter]

The biggest risk is not Model X. It has too much in common with the Model S to be much of a risk. Over 10k hard orders and there's not even a prototype in the stores.

Competition, or 'acceptance', aren't risks either. TSLA is producing Model S at a faster rate than ever before and the wait time for a new vehicle is increasing, not decreasing. As for competition, it's a big world and there's plenty of room for other compelling EVs. Tesla is the Kleenex of electric vehicles.

The biggest risk is the timing of the GF and the ramp-up of the gen III. It has to be just right.....if one is ready and the other is not, TSLA is going to burn through cash like my first wife did.

 

[Robert.Boston]

One of the most interesting numbers I have seen is the valuation of the company
divided by the total number of miles driven so far.
Going by numbers from the Detroit Auto Show Press Conference in January,
TM is valued at over $100 per mile driven by a Model S.(17Billion Market Cap in January/168Million miles driven).
How Many Tesla Model S Electric Cars Have Been Built So Far?

Certainly this is a very unusual way of looking at things, but still.
Anyone care to comment?

Welcome to the discussion.

I find no merit in this valuation-per-mile-driven metric. Let me give you a hypothetical: a small pharma company, with no approved products currently being sold, receives FDA approval for a new drug that, in a single dose, cures any known cancer. Would it be reasonable to value this company on a valuation-per-doses-sold metric? It will look vastly overvalued compared to, say, Merck, which has sold billions upon billions of doses, but any rational investor will realize that this new company is poised to earn untold billions in the future.

The "per miles" metric is not merely backwards-looking, it's about cumulative backwards history. Of course there have been more miles driven in Fords than Teslas, but that doesn't tell us anything about their value today. Heavens, there were probably more miles driven in Edsels, and we know what that company is worth today.

Stock valuation is inherently about the future, not the past.

 

[pz1975]

Even if that metric were used to compare existing ICE manufacturers, it doesn't have much value. For example, a "mile" driven by a Ford Focus does not equal same value as a Porsche Panamera. Porsche makes way more in profit per car sold and one would expect the Porsche driver to put less miles on it per year. Using "miles driven" as a metric would value Ford much more per car sold then Porsche using this example.

 

[ggr]

Welcome to the discussion.

I find no merit in this valuation-per-mile-driven metric. Let me give you a hypothetical: a small pharma company, with no approved products currently being sold, receives FDA approval for a new drug that, in a single dose, cures any known cancer. Would it be reasonable to value this company on a valuation-per-doses-sold metric? It will look vastly overvalued compared to, say, Merck, which has sold billions upon billions of doses, but any rational investor will realize that this new company is poised to earn untold billions in the future.

The "per miles" metric is not merely backwards-looking, it's about cumulative backwards history. Of course there have been more miles driven in Fords than Teslas, but that doesn't tell us anything about their value today. Heavens, there were probably more miles driven in Edsels, and we know what that company is worth today.

Stock valuation is inherently about the future, not the past.

Ummm, I think Edsels were made by Ford, nu?

 

[Robert.Boston]

Ummm, I think Edsels were made by Ford, nu?

Yea, yea, I was thinking about that after my post. Anyway, take your pick of bankrupt car companies.

 

[Auzie]

Anyway, take your pick of bankrupt car companies.

Isn't that scary. Car making is such a business in which bankruptcy is too common, for very good reasons, and here we are TSLA longs discussing our favourite investment. :wink:

 

[Robertj]

But I am sure we all agree , we are not valuing Tesla as a car company

The incumbents in the industry have so much capital and resources tied up in their ICE models
the management , with their quarterly focus cannot deviate from their path.

we are valuing Tesla as a technology company with a strong lead in its market and the dominant player

the path ahead looks good and gen 111 will be its next testing point

 

[Auzie]

But I am sure we all agree , we are not valuing Tesla as a car company

The incumbents in the industry have so much capital and resources tied up in their ICE models
the management , with their quarterly focus cannot deviate from their path.

we are valuing Tesla as a technology company with a strong lead in its market and the dominant player

the path ahead looks good and gen 111 will be its next testing point

So far Tesla makes cars only, maybe better than other cars but still cars. Tesla have rapidly increasing amount of capital and resources tied in their manufacturing plants, so they are on the way to become very similar to other car makers.

Other car makers are not necessarily bad, they are just big and unable to quickly and efficiently change without incurring significant costs and risks to their business. That is the nature of the industry, big size is required to achieve economies of scale and to recover large plant fixed costs. That big size then traps the incumbents if and when time comes for big changes. They all had very good run, and have many more good years ahead before their technology gets displaced.

Car manufacturing, especially Toyota, is the birth place of manufacturing excellence, practices such as Toyota Way, Lean Manufacturing. Toyota practices are studied and adopted by other manufacturers as the best manufacturing practices. Many employees from around the world attend the University of Toyota to increase their skills and knowledge.

Tesla has a chance to become what Toyota is now, leader in the sector. If that happens, in some remote years Tesla might suffer the same fate as Toyota, it might become unviable for Tesla to change its entrenched technology to something different.

I am personally not paying much attention to valuation. Growth potential seems to have much larger impact on TSLA than current valuation.

 

[Robertj]

Valuation and Share Price Growth

Well, if we are valuing it like an automobile company , it must be this one

 

[Auzie]

Well, if we are valuing it like an automobile company , it must be this oneView attachment 53006

Stunning.

History indeed may repeat itself, with some improvement.

History is like DNA, spiral that repeats the pattern but gets better and better due to slight variation introduced along the way. Tesla will improve on GM story.

My trading tool suggested $600 as the exit price for TSLA.