Blind Faith Price Targets

[jhm]

Ugh. So this is a pain, because the P/E should converge to the market average P/E. *But that depends on what decade you're living in*. It'll run at 20 for a decade, and it'll run at 10 for a decade, and it'll run at 5 for years. Very very much dependent on giant, global, macro factors. Very very very long run, 15 seems correct, but people's entire lives can be over before it reverts.

I've been trying for a while to only buy stocks which can survive an overall market average P/E reversion from the current highs back down to 10.

S&P 500 PE Ratio - 90 Year Historical Chart

Here's a nice chart for SP500 PE going back to 1929. The average PE is about 16. Retrosoective PE is largely viewed as indicator of market health, whether it was undervalued or overvalued. But to have any sort of prospectove view, you've got to make assumption as pick a number.

We are also making a very strong assumption about the long term health of the global economy specifically that GDP will grow at 3.5%. Whatever we may choose as our long term PE ratio, we do well to make sure that is is at least mathematically consistent with our choice of discount and GDP growth. Assuming 10 P/E, we get discount = 1/10 + 3.5% = 13.5%. This is a fairly high discount, but a time in which P/E is 10 while the economy grows at 3.5% is either very pessimistic about stocks or suffering from high interest rates. At 16 P/E, discount is 9.75%.

Of course, while we're reviewing options for a long term PE ratio, we may as well consider GDP as well. Here is a good source (GDP growth (annual %) | Data). So over the last 40 years average growth has been about 2.7%. Combining this with 16 P/E, discount is 9%. So this seems about right. My outlook on the global economy is much more optimistic than 2.7% growth. In particular, I believe that renewable energy will usher in an era of low energy cost. (It has to be cheaper if it is to ever displace fossil fuels.) Specifically, energy poverty will be addressed in unprecedented ways (solar and battery based microgrids). This will unleash tremendous growth in the developing world. Hence, I am personally optimistic about 3.5% long-term growth. I'd love to get some reaction to this.

 

[adiggs]

I'm with you on lower energy costs. My thinking is we've got multiple decades of energy declining as a % of global economic activity. That will simultaneously leave more of global economic activity available to buy something other than energy as an input to economic activity, and will see big chunks of the world population that don't currently have access to energy, gaining access to it (energy poverty - I like your term). That will generate spectacular economic growth. I don't have a guess or forecast as to global GDP as a result.

I DO expect that inflation will be and stay low as a result of one of the significant costs in today's economy, dropping to a much lower level over the next few decades. Until renewable energy sources are enough implemented that they represent the lion's share of global final energy and they are themselves the new normal, that's when we'll have a new baseline on the % of global economic activity goes into providing energy for that activity.


I bumped into this article about medium scale solar in Australia (medium scale is my term). The observation is that payback periods are consistently in the 5 year range, and after they don't know what will happen to the price of energy, and they really don't care. The systems pay back so fast, and the ongoing operating costs are so low. (My thoughts/words again - it's free energy then!)

Solar’s new sweet spot: Low cost, compact PV plants at $1/watt

This is the critical difference in the new energy economy from the old energy economy. Namely that while you have a capital cost to build the new energy generating system either way, there comes a point with solar (especially) where you've made back what you paid to build the system, and now have ongoing operating costs to offset revenue that is being generated. Those ongoing operating costs in my personal experience can be reasonably rounded to 0.

Maybe it doesn't scale up for industrial scale, but it's nothing at all like a gas / coal / etc.. plant, where if you don't buy more fuel, then you're done generating power.

 

[jhm]

I love seeing smaller scale PV get to $1/W. A payback in 5 years is quite amazing. It is roughly a 25% rate of return over a 25 year horizon.

Energy plays a key role in labor productivity. Where energy is expensive job creation will be slow and wages low. In the extreme, when oil has gone too high, it can induce demand destruction, job loss and recession. This was a factor in the last recession. By contrast locking in about 25 years of energy with no exposure to fuel price volatility is a very stable economic platform for long term job creation. It really is quite profound.

Imagine a factory that gets most of its energy from its own solar panels and batteries. The macro economy can go through gyrations where fuel prices surge and threatens employment and consumer demand, but this factory has minimized its exposure to fuel price. Power take very little cash from operations. So it just keeps producing through a recession and can even tolerate a reduction in revenue. Its hard for any company to thrive through a recession, but I think that companies powered by their own renewable energy will demonstrate robustness through the business cycle. Tesla will be one of those companies. This may well be one good reason to back the Superchargers, stores and Gigafactories with solar and batteries. They'll keep powering through the next recession, even if cash flow is tight.

 

[neroden]

I don't know about global GDP growth. One thing I will say is that the market P/E in a given decade is very clearly a matter of "mood", and does not necessarily correlate closely with *real* economic phenomena... more with the "taste" for stocks vs. cash / bonds / etc. It's great to invest in stocks when the whole country is afraid to do so for a decade. It's not nearly so good when every newspaper is shouting "you must be in stocks!!!".... like now. What changes the mood? Various random stuff. Big scandals in the stock market. Big job losses, etc.

I do think Tesla can survive any recession or general withdrawal of money from stocks, but it raises a question of valuation. If said scenario happens, I think we have to treat it like a long-term P/E of 10.

 

[jhm]

I don't know about global GDP growth. One thing I will say is that the market P/E in a given decade is very clearly a matter of "mood", and does not necessarily correlate closely with *real* economic phenomena... more with the "taste" for stocks vs. cash / bonds / etc. It's great to invest in stocks when the whole country is afraid to do so for a decade. It's not nearly so good when every newspaper is shouting "you must be in stocks!!!".... like now. What changes the mood? Various random stuff. Big scandals in the stock market. Big job losses, etc.

I do think Tesla can survive any recession or general withdrawal of money from stocks, but it raises a question of valuation. If said scenario happens, I think we have to treat it like a long-term P/E of 10.

Ok, you seem to be interested in a worst case scenario. Let me see if I can easy your mind. Going back to the global 2000 data, asset are $169.1T against $2.5T earnings. To keep growing earnings at 3.5%, assets will need to grow about as fast. Depreciation is already covered in Earnings so that assets remain at same level without need of retaining earnings. Suppose you pay out half in dividends and retain half to grow assets. Thus, retained earning grow assets at 0.74%, but financing 80 debt to 20 equity gets asset growth of 3.7%. This is more than enough to sustain 3.5% growth in earnings.

So the upshot hear is that in an environment where P/E is 10. The dividend yeild can be 5%. I think this is how you ride out an undervalued market. In retirement, when you need income from your investments, solid dividend performance is more important than stock price. You live off of the dividends and leave the shares to your estate. If you have to sale shares for income then you really worry about share price, but if the dividends are solid income it matters less.

So along with a really long term view of Tesla, we need to contemplate dividends. When do we see Tesla paying dividends? What sort of approach would they take? Or more generally, how will Tesla ultimately return capital to shareholders?

 

[winfield100]

I love seeing smaller scale PV get to $1/W. A payback in 5 years is quite amazing. It is roughly a 25% rate of return over a 25 year horizon.
Imagine a factory that gets most of its energy from its own solar panels and batteries.

this casual talk is quite intriguing. ~100% solar. you do understand what you are saying?
In 2004 the US got 0.06% of its power from PV. In 2016 it got 0.587% from PV (a growth of 10x in 12 years.
You are talking about short circuiting whole industries.
below is a representation from 2004 and 2016 of Energy flows
2004
https://flowcharts.llnl.gov/content/energy/energy_archive/energy_flow_2004/LLNL_US_Energy_2004.png
2016
https://flowcharts.llnl.gov/content/assets/images/energy/us/Energy_US_2016.png

You are proposing completely eliminating,nuclear, hydro, wind geothermal, natural gas, coal, biomass and petroleum from the left side of the chart, for individuals, factories, etc (wasted energy would go down a lot though)

Is this a reasonable scenerio? I tried to discuss this with a renewable energy enthusiast and they told me I was nuts, don't understand politics, way way longer in time, not in the US, etc

 

[adiggs]

this casual talk is quite intriguing. ~100% solar. you do understand what you are saying?
In 2004 the US got 0.06% of its power from PV. In 2016 it got 0.587% from PV (a growth of 10x in 12 years.
You are talking about short circuiting whole industries.
below is a representation from 2004 and 2016 of Energy flows
2004
https://flowcharts.llnl.gov/content/energy/energy_archive/energy_flow_2004/LLNL_US_Energy_2004.png
2016
https://flowcharts.llnl.gov/content/assets/images/energy/us/Energy_US_2016.png

You are proposing completely eliminating,nuclear, hydro, wind geothermal, natural gas, coal, biomass and petroleum from the left side of the chart, for individuals, factories, etc (wasted energy would go down a lot though)

Is this a reasonable scenerio? I tried to discuss this with a renewable energy enthusiast and they told me I was nuts, don't understand politics, way way longer in time, not in the US, etc

You need to come spend more time with us in the Shorting Oil thread Yes, this is exactly what we're contemplating.

Though I would add that in the 100% renewable future state, I personally figure it'll be a mixture of solar and wind (big buckets), along with some geothermal, hydro - maybe some tidal (though I tend to think that solar will grow fast enough, that tidal sourced energy really won't get off the ground). If nothing else, we'll want the mixture as there is a tendency for one to wind up when the other winds down (more wind in the winter where I live for instance, while the sun goes away for months on end - or so it seems).

One implication, and it requires a new mindset or mental model of energy, is that to run society on 100% renewables (and I mostly exclude biomass for this thinking), you need an energy sector that is grossly overgeared for some days of the year, and adequate for other days of the year. If we are overproducing the daily needed energy by 2x in the summer (good solar) so we have enough in the winter (and in Oregon, 10x is probably still not enough), then we're going to have a LOT of surplus power in the summer. What new industries / economic activity can we create when we have seasonally reliable levels of excess energy production (even if individual days aren't reliable)?

I mean - if you have sporadically available, and functionally free energy, in copiuos quantities, what would we do that we can't do when you have to pay for the fuel to be burned to get the energy?


And no, in my estimation this won't be a state we arrive at in a few years or even a few decades. Twenty years seems far too fast to me (100% solar/wind, ~0% natural gas / coal / oil / biomass for electricity). But we won't need to wait 20 years to start seeing signs of this change - I think we're already seeing the signs today, and the only reason people are having trouble grokking the change is the points you're making - solar is still such a puny % of the total today, how could it take over?

 

[beeeerock]

And no, in my estimation this won't be a state we arrive at in a few years or even a few decades. Twenty years seems far too fast to me (100% solar/wind, ~0% natural gas / coal / oil / biomass for electricity). But we won't need to wait 20 years to start seeing signs of this change - I think we're already seeing the signs today, and the only reason people are having trouble grokking the change is the points you're making - solar is still such a puny % of the total today, how could it take over?

The speed of change is really what I find the most interesting these days. It seems that every year, the 'far-fetched' timeline gets shorter. Never longer! While I tend to agree with your 20 years comment, I suspect I'll think it's overly long by this time next year. Which is a Good Thing...!

Up my way, the Alberta Tar Sands seems to be considered by many to be the Holy Grail of energy self-sufficiency and export profits. I disagree. The Energy Return on Investment (EROI) on that tar sands oil is crazy-bad. When you ponder how much energy goes in to get a unit of energy out, you question how anyone would support it. But when you consider energy that expensive and compare it with solar and wind, where the 'consumables' are supplied indefinitely for free, you have to ponder how our economies will transition. So much of what we understand about our system today orbits the notion that energy is, always was, and always will be, expensive...

I stumbled upon this little gem a while ago... I find it quite interesting!

 

[jhm]

Gigafactory 1 already has the ambition to generate all of its energy using solar, wind and geothermal. I expect other Tesla facilities will go this way too. Even the Supercharging stations will use solar and batteries and may even be able to operate off grid.

Other companies are making extensive use of their own renewables. For example Wal-Mart has an enormous amount of solar on store roofs and batteries too. Just wait until they can get electric semis and power them with their own juice.

Forward thinking companies will do this. Getting to 100% is not necessarily the goal, but self-generating as much as a company can consume is making good business sense. Commercial solar is quite nearly as cheap as utility solar, so why pay retail prices to the utility? Adding electric trucks and batteries to the mix only expands how much super cheap solar (< 5 c/kWh) a company can self-consume. With diesel at $1.8 to $3 per gallon, you're spending 30 to 50 c/mile for fueling a semi. But this can be cut to 10 to 15 c/mile in an electric semi with self-generated solar.

Think about how Amazon is starting to develop its own delivery fleet. It still uses UPS, but it is able to carve out the cheapest delivery routes for itself and leave the rest to UPS. If they had to deliver 100% of their packages, this would require such an extensive infrastructure that it would likely not be profitable. But on the other hand, they can pick the low hanging fruit and retain shipping revenue at low cost where they can. So this is how I see many companies working with the utilities. They will go after cheap self-generation and self-consumption where is is economical to do so and source the utilities for whatever is left. But over time self-consumption can expand while the cost of self-generation declines. The long term trajectory may be 100% renewable self-generation. Similarly, the long term for Amazon trucking could be delivery of nearly all their own packages plus other vendors in the Amazon platform. Moreover, these trucks will be electric running on as much self-generated renewable power as possible.

How long this will take? I don't know. I think it comes down to how quickly prices decline for solar, EVs and batteries as well as how resistant utilities are to lowering their rates. Either way big companies that have a credible option to self-generated at low cost will be able to obtain lower prices from utilities or on their own. Either way nuclear, gas and coal will not be able to compete for long.

So Tesla Energy and Tesla Semi will complement each other within the commercial space integrating power systems with logistics.

 

[jhm]

The speed of change is really what I find the most interesting these days. It seems that every year, the 'far-fetched' timeline gets shorter. Never longer! While I tend to agree with your 20 years comment, I suspect I'll think it's overly long by this time next year. Which is a Good Thing...!

Up my way, the Alberta Tar Sands seems to be considered by many to be the Holy Grail of energy self-sufficiency and export profits. I disagree. The Energy Return on Investment (EROI) on that tar sands oil is crazy-bad. When you ponder how much energy goes in to get a unit of energy out, you question how anyone would support it. But when you consider energy that expensive and compare it with solar and wind, where the 'consumables' are supplied indefinitely for free, you have to ponder how our economies will transition. So much of what we understand about our system today orbits the notion that energy is, always was, and always will be, expensive...

I stumbled upon this little gem a while ago... I find it quite interesting!

View attachment 232515

Wow that is awful Eroi, net energy is about 56%. But this does not even count the embedded energy cost in all this infrastructure or distribution and sales of the final product. Then, of course, you put that gallon into a car and only about 20% of that does the ultimate work of propelling the vehicle.

We need a short cut. Sun -> PV -> EV -> miles.

 

[adiggs]

The speed of change is really what I find the most interesting these days. It seems that every year, the 'far-fetched' timeline gets shorter. Never longer! While I tend to agree with your 20 years comment, I suspect I'll think it's overly long by this time next year. Which is a Good Thing...!...

I'm the same, all the way through. The pace of change is amazing, and it seems like timelines are always getting shorter. One year old reports on pace and price of solar are hopelessly out of date. I've read articles from Australia about energy markets / supply where some report is published, and that report is already badly out of date on it's day of publishing. (Sometimes for politically motivated reasons, but sometimes not).

And as you point out, as new information comes in, and new adjustments need to be made, the timelines shorten, not lengthen. Exciting times ahead over the remainder of our lives. We're going to witness and participate in the next economic revolution for the species - we've already seen the communication revolution. Approximately zero marginal cost energy will be next, and it's going to create fantastic wealth and better life for everybody.

Here's a really long view way of looking at inflation and quality of life changes:
Your Neighbor's Fancy Car Should Make You Feel Better About Income Inequality: New at Reason

From this point of view, the real differences in quality of life today (MHO) globally comes from the quantity of energy available to each of us. I see that disparity collapsing with renewable energy, and I see that as good for us all.

 

[neroden]

FWIW, naive projections along the exponential curve give us 100% renewable energy in roughly 20 years (maybe 25). The fact is it'll slow down near the end so 30 is probably more realistic, but we should be well over 50% by 20 years.

 

[adiggs]

Y'all are going to love this article:
Fossil fuels are finished – the rest is just detail

The author pegs the fossil fuel industry as dead today (agreed), and it'll take 15-30 years to settle the details. The rationale and combination of factors leading to the outcome is more completely and well articulated than anywhere else I've seen outside of this forum.

 

[jhm]

Y'all are going to love this article:
Fossil fuels are finished – the rest is just detail

The author pegs the fossil fuel industry as dead today (agreed), and it'll take 15-30 years to settle the details. The rationale and combination of factors leading to the outcome is more completely and well articulated than anywhere else I've seen outside of this forum.

Curious, this article was publish two years ago. It is still relevant. A key issue is how multiple industries start to reorient around new technologies to accelerate the pace of disruption. In isolation, technologies such as solar power, EVs and grid batteries struggle to make in roads in to various market. Those markets have been optimized around fossil fuels. So if you make money in those areas, it has tended to serve the efficient flow of fossil fuels. There are self-reinforcing feedback loops that hold the status quo in place and make it hard for new technologies to gain a toe hold. However, as the connections between renewable energy, EVs, and batteries come into light, this creates new self-reinforcing feedback loops. The technologies just snap together and create opportunities for many industries to reorient around this confluence of related technologies. This, many industries start to converge and optimize around this new core. And capital flows with this as well.

This is literally disorienting for the industries that have centered on fossil fuels. Before this disorientation begins, it is hard for most to see the dynamic future of the new technologies. That's where we were before about 2015. Presently we are in a period of disorientation. Fossil fuels are imploding, but few know why or where this will lead. But some like Tesla see the future and start sprinting. This disorientation phase comes to a close as many begin to see the new technology core. I think this will be about 2020. After that we see a reorientation phase. All industries will try to orient themselves around the new technology core. This is where we may see things like the UAE build out a Gigafactory powered by renewables. Progress will feel like it is speeding up and had come out of nowhere. As the entire economy is reoriented around batteries, renewables and EV, fossil fuels will be marginalize and appear increasingly irrelevant. This final phase of marginalization should come by 2030.

It is telling that the big controversy in energy thinking circles right now whether 100% renewable is ultimately possible,
whether wind, water and solar can ultimately suffice. Honestly I think it is a silly question. It simply exposes one's beliefs around the future relevance of fossil fuels. Those who are attached to fossils have a psychological need to believe fossils will always be needed. They are struggling with existential questions. The basic problem is that regardless the technical merits of 100% renewable theories, fossil fuels will cease to be central to the global economy. Suppose we get to 90% renewable. At that point no one will really care about this debate. That 10% fossil one year will shrink to 9.3% the next year, and 8.7% the year after that. Ten years later it will be just 5% and 2.5% after another decade. Why worry about whether 0% fossil is possible when it has become an ignorably small fraction of the energy mix. 100% renewable is just an asymptotic limit. Wrestling over Zeno's paradoxes is misses the point. The economy of the last half of this century will not revolve around oil. At least the energy economy will revolve around the sun, integrated solar and storage.

 

[winfield100]

You need to come spend more time with us in the Shorting Oil thread Yes, this is exactly what we're contemplating.

Though I would add that in the 100% renewable future state, I personally figure it'll be a mixture of solar and wind (big buckets), along with some geothermal, hydro - maybe some tidal (though I tend to think that solar will grow fast enough, that tidal sourced energy really won't get off the ground). If nothing else, we'll want the mixture as there is a tendency for one to wind up when the other winds down (more wind in the winter where I live for instance, while the sun goes away for months on end - or so it seems).

One implication, and it requires a new mindset or mental model of energy, is that to run society on 100% renewables (and I mostly exclude biomass for this thinking), you need an energy sector that is grossly overgeared for some days of the year, and adequate for other days of the year. If we are overproducing the daily needed energy by 2x in the summer (good solar) so we have enough in the winter (and in Oregon, 10x is probably still not enough), then we're going to have a LOT of surplus power in the summer. What new industries / economic activity can we create when we have seasonally reliable levels of excess energy production (even if individual days aren't reliable)?

I mean - if you have sporadically available, and functionally free energy, in copiuos quantities, what would we do that we can't do when you have to pay for the fuel to be burned to get the energy?


And no, in my estimation this won't be a state we arrive at in a few years or even a few decades. Twenty years seems far too fast to me (100% solar/wind, ~0% natural gas / coal / oil / biomass for electricity). But we won't need to wait 20 years to start seeing signs of this change - I think we're already seeing the signs today, and the only reason people are having trouble grokking the change is the points you're making - solar is still such a puny % of the total today, how could it take over?

look at this chart again, but the right side this time, and the top
https://flowcharts.llnl.gov/content/assets/images/energy/us/Energy_US_2016.png
note: 97.3 Quadrillion BTU's consumed
66.4 Quadrillion does nothing except heat up the US
30.8 Quadrillion does useful work a bit over 31%

for petroleum of the 27.9 Quadrillion, only 5.86 moves vehicles, the other 22 Quadrillion is just heat 21% moves the vehicles

and electricity generation 66% is wasted.
PV and Wind are growing rapidly, yes, we are in transition

then look at the left side of the chart.
How does everything EXCEPT solar, wind and hydro generate electricity 'n such
they boil water

 

[jhm]

How does everything EXCEPT solar, wind and hydro generate electricity 'n such
they boil water

After agriculture, the energy sector is the largest consumer of water. Moreover, energy production can carry substantial risk of polluting water sources. Perhaps the scariest scenario is having a frack well or frack water injection well pollute a major aquifer. Permanently polluting drinking water is a risk that hardly seems worth the oil extracted.

 

[winfield100]

After agriculture, the energy sector is the largest consumer of water. Moreover, energy production can carry substantial risk of polluting water sources. Perhaps the scariest scenario is having a frack well or frack water injection well pollute a major aquifer. Permanently polluting drinking water is a risk that hardly seems worth the oil extracted.

ya perhaps alluding to 50 years ago when the Cuyahoga RIVER caught ??FIRE?? as others have done so, thanks to fossil fuels

 

[GoTslaGo]

ya perhaps alluding to 50 years ago when the Cuyahoga RIVER caught ??FIRE?? as others have done so, thanks to fossil fuels

For reference:

http://www.environmentalcouncil.org/priorities/article.php?x=264

quote:

When Lake Erie – or more exactly the Cuyahoga River which flows into Lake Erie – caught fire in 1969, it ignited a firestorm of public outrage over the indiscriminate dumping of sewage and industrial chemicals into the Great Lakes.

But the incident was not particularly unusual. Nor was it the most significant of a long history of fires fueled by the thick oily sludges that fouled the Lakes and their arteries. The Chicago and Buffalo rivers also repeatedly caught fire. So did Michigan’s Rouge River.

end quote.


What @jhm is referring to:

Fracking Can Contaminate Drinking Water

But ultimately the same problem (pollution) from the same source (oil).

 

[jhm]

Logistic Growth Model for Revenue

Let's pick back up on modeling long term revenue growth on the basis of converging to an ultimate share of GDP. First we need some notation.

G(t) is global GDP in year t, G(2016) = $77.8T
g is assumed GDP growth rate for t > T
T is most recent historical or assumed year, 2016

So in principle we may use any GDP forecast we like, but here well assume the following:

G(t) = G(T)×(1+g)^(t-T) for t>T

R(t) is revenue in year t, R (2016) = $7B
S(t) = R(t)/G(t) is revenue share of GDP, S(2016) = 0.0090%
U is the ultimate share, S (t) -> U

We will assume that U = 1.2%

The logit transform is a convenient way to map from fractions to linear growth along the real line. Specifically, the transform is

Logit(S) = ln(S /(U - S))

And linear growth in the logit space is

Logit(S(t)) = a + b (t-T).

We can determine the intercept and slope if we know or assume two points.

The most recent historical is

Logit(S(2016)) = ln(0.000090 / (0.012 - 0.000090))

Thus, a = -4.8856

Based on our LTPT assumption of 50% annualized revenue growth, we have the next assumed point.

R (2027) = $605.48B
G(2027) = $77.8T
S (2027) = 0.5622%
Logit(S(2027) = -0.1261

From our linear assumption we get

11b = Logit(S(2027)) - Logit(S(2016)) = 4.7595

Thus, b = 0.432685.

This measures how quickly we progress a long the logit scale, but we need to invert this transform to get back to market share. Thus,

S(t) = U × exp(a+b (t-T)) / (1+ exp(a+b (t-T)))

This is called the logistic curve, or S curve.

Now we can multiply this times our GDP curve to get revenue. This is easy to set up in a spreadsheet.

Year GDP$T Share Rev$B Growth
2016 77.8 0.009% 7.0
2017 80.1 0.014% 11.1 58.1%
2018 82.5 0.021% 17.5 57.8%
2019 85.0 0.032% 27.5 57.3%
2020 87.6 0.049% 43.0 56.5%
2021 90.2 0.074% 66.8 55.3%
2022 92.9 0.110% 102.6 53.6%
2023 95.7 0.162% 155.1 51.2%
2024 98.6 0.233% 229.5 47.9%
2025 101.5 0.325% 329.7 43.7%
2026 104.6 0.437% 456.5 38.5%
2027 107.7 0.562% 605.5 32.6%
2028 110.9 0.691% 766.8 26.6%
2029 114.3 0.812% 928.0 21.0%
2030 117.7 0.916% 1,078.2 16.2%
2031 121.2 0.999% 1,211.1 12.3%
2032 124.8 1.062% 1,325.4 9.4%
2033 128.6 1.106% 1,422.8 7.3%
2034 132.4 1.138% 1,506.7 5.9%
2035 136.4 1.159% 1,580.8 4.9%
2036 140.5 1.173% 1,648.1 4.3%
2037 144.7 1.182% 1,711.1 3.8%
2038 149.1 1.188% 1,771.7 3.5%
2039 153.5 1.192% 1,831.0 3.3%
2040 158.2 1.195% 1,890.1 3.2%
2041 162.9 1.197% 1,949.6 3.1%
2042 167.8 1.198% 2,009.9 3.1%
2043 172.8 1.199% 2,071.5 3.1%
2044 178.0 1.199% 2,134.5 3.0%
2045 183.3 1.199% 2,199.1 3.0%
2046 188.8 1.200% 2,265.4 3.0%
2047 194.5 1.200% 2,333.6 3.0%
2048 200.3 1.200% 2,403.8 3.0%
2049 206.4 1.200% 2,476.0 3.0%
2050 212.5 1.200% 2,550.4 3.0%

So we see that share is growing fastest near 0.6%, half the ultimate share. Growth in revenue begins very fast when share is lowest, but declines to near the GDP growth rate in the 2040s.

If you take the time to work this out in a spreadsheet, you can easily play with the assumptions and fit any number of scenarios where initial growth rate is fast, but smoothly declines to the GDP growth rate. If one wants to assume particular near term assumptions regarding revenue and GDP, this can also be accommodated. One sets T to the last assumed year and allows the logistic growth curve approach to fill in the rest.

The logistic curve is very useful for modeling transitions smoothly, especially capturing market share. It's good to have in your toolkit.

So I want to leave this here for reaction.

Next, we'll look at modeling profit from a growth curve. I've got a clever innovation for that to transition from high growth, negative earnings to lower growth, positive earnings.

 

[ggr]

Same table, a bit more readable.

Year GDP$T Share    Rev$B Growth
2016 77.8  0.009%     7.0
2017 80.1  0.014%    11.1 58.1%
2018 82.5  0.021%    17.5 57.8%
2019 85.0  0.032%    27.5 57.3%
2020 87.6  0.049%    43.0 56.5%
2021 90.2  0.074%    66.8 55.3%
2022 92.9  0.110%   102.6 53.6%
2023 95.7  0.162%   155.1 51.2%
2024 98.6  0.233%   229.5 47.9%
2025 101.5 0.325%   329.7 43.7%
2026 104.6 0.437%   456.5 38.5%
2027 107.7 0.562%   605.5 32.6%
2028 110.9 0.691%   766.8 26.6%
2029 114.3 0.812%   928.0 21.0%
2030 117.7 0.916% 1,078.2 16.2%
2031 121.2 0.999% 1,211.1 12.3%
2032 124.8 1.062% 1,325.4  9.4%
2033 128.6 1.106% 1,422.8  7.3%
2034 132.4 1.138% 1,506.7  5.9%
2035 136.4 1.159% 1,580.8  4.9%
2036 140.5 1.173% 1,648.1  4.3%
2037 144.7 1.182% 1,711.1  3.8%
2038 149.1 1.188% 1,771.7  3.5%
2039 153.5 1.192% 1,831.0  3.3%
2040 158.2 1.195% 1,890.1  3.2%
2041 162.9 1.197% 1,949.6  3.1%
2042 167.8 1.198% 2,009.9  3.1%
2043 172.8 1.199% 2,071.5  3.1%
2044 178.0 1.199% 2,134.5  3.0%
2045 183.3 1.199% 2,199.1  3.0%
2046 188.8 1.200% 2,265.4  3.0%
2047 194.5 1.200% 2,333.6  3.0%
2048 200.3 1.200% 2,403.8  3.0%
2049 206.4 1.200% 2,476.0  3.0%
2050 212.5 1.200% 2,550.4  3.0%