TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker and becoming a Supporting Member. For more info: Support TMC

Blind Faith Price Targets

Discussion in 'TSLA Investor Discussions' started by jhm, May 28, 2015.

Tags:
  1. jeewee3000

    jeewee3000 Member

    Joined:
    Sep 1, 2015
    Messages:
    829
    Location:
    Belgium
    By 2030 a share price of $2.000 is kind of a bearish view IMHO.

    By 2025 we'll see that price if you ask me. 2030 maybe 5k? If FSD turns out to be a gold mine we'd be soaring towards 10k!
     
    • Like x 2
  2. hershey101

    hershey101 Member

    Joined:
    Jan 22, 2013
    Messages:
    950
    Location:
    New York, New York, United States
    HAHAHA! There are the crazy bulls, just as crazy as the crazy bears who keep on saying $TSLA will go to $100...
    I have a bridge I'd like to sell you sir.

    Seriously I'll sell you 2030 $5k calls for the low low price of $150, as many calls as you possibly want. You can easily 100x your money if we get anywhere close to ITM on those.
     
  3. jeewee3000

    jeewee3000 Member

    Joined:
    Sep 1, 2015
    Messages:
    829
    Location:
    Belgium
    My Good Sir,

    You are posting in the Blind Faith Price Targets Thread.

    I shall not be ridiculed for dreaming :)
     
    • Funny x 2
    • Like x 1
    • Love x 1
  4. adiggs

    adiggs Active Member

    Joined:
    Sep 25, 2012
    Messages:
    3,430
    Location:
    Portland, OR
    For those new to this thread, I strongly recommend going back to the beginning. There's some very interesting and crucial assumptions behind this thread that get discussed way back at the beginning. Those assumptions and their consequences are the reason this thread exists. It's been around for a few years so it's easy to jump in on the most recent posts and miss those assumptions, which makes the current discussion nearly impossible to follow.

    Those assumptions are also easy to disagree with - not everybody finds this way of thinking valuable to their investing strategy and goals.
     
    • Helpful x 2
    • Like x 1
  5. hershey101

    hershey101 Member

    Joined:
    Jan 22, 2013
    Messages:
    950
    Location:
    New York, New York, United States
    Haha XD Okay that was good:p
     
  6. johnmodely

    johnmodely Member

    Joined:
    Jan 14, 2020
    Messages:
    220
    Location:
    NY
    Well at least do some basic math with those predictions. 10k price is nearly a two trillion market cap.

    Even if tesla was the combined market cap of every car manufacturer and every ride share company combined it would be barely over 1 trillion.

    Thats the best case dream scenario.
     
  7. jhm

    jhm Well-Known Member

    Joined:
    May 23, 2014
    Messages:
    8,824
    Location:
    Atlanta, GA
    To every thing there is a season, and a time to every purpose under the heaven: A time to be born, and a time to die; a time to plant, and a time to pluck up that which is planted; A time to kill, and a time to heal; a time to break down, and a time to build up; A time to weep, and a time to laugh; a time to mourn, and a time to dance. ~ Ecclesiastes 3:1-4

    There is a time to accumulate shares, and a time to harvest stares. The lower Nominal LTPT is good for making sure we do not pay too much when accumulating. So blessed accumulation prices are below the 30% percentile Nominal target, $428. The gangha price of $420 a while back had its own positive vibes. But we do not live in a time of accumulation.

    For harvesting, the Ludicrous LTPT may help to guard against letting go at to low a price. Perhaps we can let go a little above the 70% percentile of the Ludicrous target. That is now about $678. If we shave a few shares off our positions by selling or selling a covered call, we can embrace the likelihood that lower prices will come.

    Two weeks ago I sold some covered calls while the stock price was around $670. I chose a strike of $1200 for March. BFPT suggested that such prices would remain above the 99% confidence level. So either these call options will retire worthless or the rest of my shares will be very highly valued. I sold the options at $95, bought shares of other stock for diversification with $38, and retained $47 cash to close out the trade. I've got a limit order at $47 to close this at the first opportunity. Today the stock tanked 10% and sent my short call options down to $58. A few more stormy blessing by bears, and my limit order will be triggered. So I don't mined a little stormy weather. I view this sort of trade as a way to earn a $38 dividend on the shares covering these calls. So I like that I can buy, hold, and monetize my Tesla holdings.

    Blessings, my Faithful Blind, as you find your own ways to appreciate both the runs and tumbles of holding Tesla shares. There is a time for everything.













    Nominal LTPT $3,250

    Percentile

    Implied Discount

    2020-05-01

    2020-05-31

    2021-05-01

    2021-12-31

    2022-12-31

    2023-12-31

    2024-12-31

    2025-12-31

    95.4%​

    22.0%​

    $701​

    $713​

    $855​

    $977​

    $1,191​

    $1,453​

    $1,772​

    $2,162​

    2%​

    37.9%​

    $271​

    $279​

    $374​

    $464​

    $640​

    $882​

    $1,217​

    $1,679​

    10%​

    36.4%​

    $295​

    $303​

    $403​

    $496​

    $676​

    $922​

    $1,259​

    $1,717​

    20%​

    32.5%​

    $370​

    $379​

    $490​

    $592​

    $784​

    $1,038​

    $1,377​

    $1,824​

    30%​

    30.4%​

    $418​

    $428​

    $546​

    $651​

    $849​

    $1,108​

    $1,445​

    $1,884​

    50%​

    27.8%​

    $488​

    $498​

    $624​

    $735​

    $940​

    $1,201​

    $1,536​

    $1,963​

    70%​

    25.7%​

    $555​

    $566​

    $698​

    $814​

    $1,022​

    $1,285​

    $1,616​

    $2,032​

    90%​

    23.5%​

    $636​

    $647​

    $785​

    $905​

    $1,117​

    $1,380​

    $1,705​

    $2,106​

    98%​

    20.0%​

    $797​

    $809​

    $956​

    $1,079​

    $1,295​

    $1,553​

    $1,864​

    $2,236​











    Ludicrous LTPT $7,250

    Percentile

    Implied Discount

    2020-05-01

    2020-05-31

    2021-05-01

    2021-12-31

    2022-12-31

    2023-12-31

    2024-12-31

    2025-12-31

    78.4%​

    35.3%​

    $701​

    $719​

    $949​

    $1,161​

    $1,571​

    $2,126​

    $2,879​

    $3,895​

    2%​

    51.7%​

    $290​

    $300​

    $440​

    $581​

    $882​

    $1,337​

    $2,031​

    $3,080​

    10%​

    50.0%​

    $316​

    $327​

    $474​

    $622​

    $933​

    $1,399​

    $2,101​

    $3,152​

    20%​

    45.7%​

    $396​

    $408​

    $577​

    $741​

    $1,080​

    $1,574​

    $2,296​

    $3,345​

    30%​

    42.8%​

    $462​

    $476​

    $660​

    $837​

    $1,196​

    $1,708​

    $2,441​

    $3,486​

    50%​

    39.3%​

    $559​

    $575​

    $779​

    $972​

    $1,355​

    $1,888​

    $2,632​

    $3,668​

    70%​

    36.4%​

    $661​

    $678​

    $901​

    $1,108​

    $1,511​

    $2,060​

    $2,812​

    $3,834​

    90%​

    33.7%​

    $768​

    $787​

    $1,027​

    $1,247​

    $1,668​

    $2,230​

    $2,984​

    $3,991​

    98%​

    32.2%​

    $837​

    $856​

    $1,107​

    $1,334​

    $1,764​

    $2,333​

    $3,087​

    $4,083​
     
    • Like x 3
    • Helpful x 2
    • Informative x 2
  8. adiggs

    adiggs Active Member

    Joined:
    Sep 25, 2012
    Messages:
    3,430
    Location:
    Portland, OR
    I think this has aged pretty well (from June 2015).
    Tesla’s record 2019 has bought it some breathing room

    2019 revenue was $24.6B. A bit behind but for a 5 year simplistic estimate, seems pretty good to me. If my calcs are correct, this is 42.3% revenue growth each year.
     
    • Like x 3
  9. adiggs

    adiggs Active Member

    Joined:
    Sep 25, 2012
    Messages:
    3,430
    Location:
    Portland, OR
    Actually, I'd say that this is the best case dream scenario:
    My Tesla Investment Thesis 2.0: Tesla's Monopoly Potential

    @FrankSG arrives at $112k / share in 2030 (in a very long, very detailed blog post), complete with a financial model that's setup so that you can enter your own numbers for the different pieces and get to your own valuation.


    The other simplistic number I use is Ron Baron saying he's looking for Tesla to have $1T in revenue by 2030. If that's 10% net profit, that's $100B in profit, or about a $2T market cap at a 20 PE multiple. My guess is net profit will be higher due to economies of scale - if nothing else, I would expect operating expenses to be shrinking as a % of revenue.

    So that'd get to that $10k share price. Except maybe the company is STILL worth a higher multiple due to continuing rapid growth.


    That gets you a bracketed share value in 2030 -- 10k to 112k.

    EDIT: And yes, that's an unbelievably big number. I have a hard time believing it :). It does help understand why my overall investment thesis suggests that I'm likely to still own my shares when I die, but at least for the next 10+ years as I see things today.
     
    • Like x 3
  10. adiggs

    adiggs Active Member

    Joined:
    Sep 25, 2012
    Messages:
    3,430
    Location:
    Portland, OR
    (An old quote from Sep 2015 - I'm going back and rereading the whole thread :D)

    This has been my own observation about myself. It seems like I've got all the wrong instincts for buying options - probably because my instincts and inclination are for long term buy and hold.

    What I've found is working really well for me is selling options instead. They have capped upside (the premium sold), but simplistically, I can do nothing and the option premium will decay to 0 if the options are OTM and expire worthless (I keep the premium). Or I can be more active and close the positions at 50%, 75%, or whatever threshold makes sense to me.

    And I'm finding that selling options works better with my long term buy and hold thinking - earn some dividend scale money on far OTM option sales that decline in value as time goes on. Anyway - it's only taken me 5 years, but I've finally figured out how to work with my instincts and behavior, instead of against them.
     
    • Informative x 2
    • Like x 2
  11. adiggs

    adiggs Active Member

    Joined:
    Sep 25, 2012
    Messages:
    3,430
    Location:
    Portland, OR
    @jhm prognosticating years ago, and aging well again :)

    Your wish, the market grants. Except maybe the market hasn't yet priced in the storage properly - how futures are remaining stubbornly above spot prices is a mystery to me, but the storage vector is well and truly established.
     
    • Like x 2
  12. FrankSG

    FrankSG Supporting Member

    Joined:
    Jun 27, 2019
    Messages:
    1,196
    Location:
    Singapore
    Actually, maybe it wasn't clear enough, but the $112k "potential" price target is pretty much a best case scenario, and something not achievable by 2030.

    Perhaps by 2035-2040 Tesla could achieve:
    1. Majority market share in battery storage.
    2. Majority market share in automotive.
    3. Attach FSD package to 100% of the cars it sells.
    4. Majority market share in autonomous mobility as a service market (passengers & cargo).
    If it also manages to achieve the margins I laid out (20% Energy, 20% Automotive, 95% Autonomy, ~25% AMaaS, 15% Operating), and governments don't break up the economic powerhouse that Tesla would become, Tesla's $6T in revenue, $2T in Gross Profits, and $1.5T in EBIT, could lead to a valuation of ~$25T, and a SP of ~$112k.

    By 2030, I think that as long as Tesla achieves "safer-than-a-human" FSD, SP should end up somewhere between $20k and $60k. If it doesn't achieve hands off the wheel autonomy, perhaps it'll be ~$10k give or take a few thousand.
     
    • Like x 1
  13. ken830

    ken830 Model S 85, Model 3 Performance

    Joined:
    Jun 19, 2012
    Messages:
    1,106
    Location:
    San Carlos, CA
    For the next 10 years... if you look at Elon's pay-for-performance award, which takes us to almost 2030 (2028), full vesting occurs when market cap reaches $650B (plus operational milestones). Assuming mild dilution bringing us to about 200M shares, that's $3,250/share, which is exactly @jhm 's Nominal LTPT.

    For conservative planning, reduce expectations to around the middle of the chart somewhere between $300B or $400B, which is $1,500 or $2,000 per share. Then take that and create a target for the number of shares you need to accumulate to achieve your 10 year goals.
     
    • Like x 3
  14. hershey101

    hershey101 Member

    Joined:
    Jan 22, 2013
    Messages:
    950
    Location:
    New York, New York, United States
    @jhm Can you remind me how you calculate the percentiles? Are you keeping a trailing 12-month range of the prices and then looking at the distribution of those prices to back-calculate the discount ratio? If yes, doesn't dramatic price swings like we had in the beginning of 2020 when the market caught on to what $TSLA is doing, and now with COVID dramatically affect those results?
     
  15. hershey101

    hershey101 Member

    Joined:
    Jan 22, 2013
    Messages:
    950
    Location:
    New York, New York, United States
    Suggestion: I would recommend recalculating the PT by modeling the # of shares outstanding, and assuming a ~3-4% yearly dilution. I went back to the 2018 post where you last updated these PTs (the nominal being $3250 in Jan. of 2028 @$650B valuation) but that assumed 200M shares outstanding. I think we can safely say that given the current rate of share increase (we are already close to 200M), this is far too low. Modeling a 4% annual dilution (it's been much more than that historically, and Musk isn't the type of person who spends money on share buy-backs, he'd rather invest in further growth), we get to ~275M in 2028, which would mean that a $650B valuation on $TSLA would bring the stock price to $2,360, and a $1T valuation would bring the stock price to $3,635 (give or take a few bucks).

    This makes the implied discounts of today's price of ~15-25% far more reasonable. Also, note that I switched to using continuous discounting vs. what I think you are doing with yearly discounting, this makes a substantial difference in the stock price.

    For reference here's a spreadsheet with the growth rates based on my calculations:
    TSLA growth model
     
    • Love x 2
  16. jhm

    jhm Well-Known Member

    Joined:
    May 23, 2014
    Messages:
    8,824
    Location:
    Atlanta, GA
    Tesla’s Most Important Metric

    Surprising piece from Trefis. They are getting that a long-term horizon is essential to seeing the value that Tesla is creating. Very refreshing to see push back from the short term ism that dominates the market.

    Basically if you see Tesla approaching 10m vehicle unit sale while holding onto healthy profit margins (which is essential to keep growing to such a scale), then Tesla reaches $100B earnings eventually. So the question is simply what value do you put on that today. Thus, Trefis is making up its own LTPT about 10 years out and recognizing that that implies enormous value today.

    Yup.

    We do need to think more carefully about discount rates. Note that 10-year Treasuries yeild 0.70% right now, which is practically nothing for the risk-free rate. So whatever discount you put on Tesla earnings 10 years out is simply a risk premium for execution (inclusive of stuff like dilution risk and bankruptcy risk). What sort of risk premium should apply to a stock that has a credible business opportunity to sustain >40% annual revenue growth for 10 years. Unlike most names in the SP500, this list of high duration growth peers is pretty small. The point I'm making here is that CAPM is based mostly on companies with short duration cash flows. CAPM is fine for valuing companies within a typical range of growth rates, but edge cases with very high growth sustainable rates are problematic for the theory.
     
    • Like x 1
  17. hershey101

    hershey101 Member

    Joined:
    Jan 22, 2013
    Messages:
    950
    Location:
    New York, New York, United States
    @jhm How's the BFPT looking now? My base case of $750T by end of 2028 is showing an implied discount of 13% and my most likely case of $1T by 2028 (10m cars @ $40k ASP, 10% net margins, and 25x P/E) shows an implied discount of roughly 16%... with a bull case of 2T showing an implied discount of 25%..

    We are getting very frothy here... What's your play? Sit on the sidelines? or dare to short?
     
  18. jhm

    jhm Well-Known Member

    Joined:
    May 23, 2014
    Messages:
    8,824
    Location:
    Atlanta, GA
    I'm blinded by the light... And this little number doesn't help.
    [​IMG]
     
    • Funny x 2
  19. hershey101

    hershey101 Member

    Joined:
    Jan 22, 2013
    Messages:
    950
    Location:
    New York, New York, United States
    I'm gonna post here just to bump this thread to the front page because we apparently have some n00b who makes 10 new threads a day on the fourms :facepalm:.

    @jhm care to update your BFPT given the current price targets just to see how out-of-norm the current prices are?
     
  20. jhm

    jhm Well-Known Member

    Joined:
    May 23, 2014
    Messages:
    8,824
    Location:
    Atlanta, GA
    Yes, it is a good time to update. The price movement of late has been exceedingly abrupt. The BFPT approach is based on the idea that market prices moved progressively toward some long-term valuation. There is the normal volatility of the market along that journey. But the abrupt re-valuation of Tesla seems greater than what can be can be attributed to normal market volatility.

    In the past, I was calibrating sentiment against the most recent 3 years of trading. This made sense because Tesla could cycle between bull runs and bear runs several times in that span of time. But now the shift in valuation is so abrupt that going back 3 years seems to drag a lot of irrelevant history to it. So I'd like to show two different options. The first option is to calibrate the model on just the most recent 12 months, the second goes back 36 months as we have been doing up to this point.

    I'd like feed back on which seems preferable going forward.













    Ludicrous LTPT $7,250
    Lookback 12 months
    Percentile
    Implied Discount
    2020-07-16
    2020-12-31
    2021-07-16
    2021-12-31
    2022-12-31
    2023-12-31
    2024-12-31
    2025-12-31
    98.4%​
    23.5%​
    $1,482​
    $1,633​
    $1,830​
    $2,017​
    $2,492​
    $3,078​
    $3,803​
    $4,698​
    2%​
    51.7%​
    $316​
    $383​
    $480​
    $581​
    $882​
    $1,337​
    $2,031​
    $3,080​
    10%​
    50.6%​
    $334​
    $403​
    $502​
    $607​
    $914​
    $1,376​
    $2,075​
    $3,125​
    20%​
    50.0%​
    $345​
    $415​
    $517​
    $623​
    $934​
    $1,401​
    $2,103​
    $3,153​
    30%​
    46.3%​
    $414​
    $494​
    $606​
    $722​
    $1,057​
    $1,547​
    $2,266​
    $3,316​
    50%​
    41.5%​
    $533​
    $625​
    $754​
    $885​
    $1,252​
    $1,772​
    $2,510​
    $3,552​
    70%​
    33.9%​
    $807​
    $923​
    $1,081​
    $1,236​
    $1,655​
    $2,217​
    $2,971​
    $3,979​
    80%​
    32.9%​
    $853​
    $972​
    $1,134​
    $1,292​
    $1,718​
    $2,284​
    $3,038​
    $4,039​
    90%​
    30.2%​
    $998​
    $1,127​
    $1,299​
    $1,467​
    $1,909​
    $2,486​
    $3,239​
    $4,216​
    99%​
    23.2%​
    $1,509​
    $1,661​
    $1,859​
    $2,047​
    $2,522​
    $3,108​
    $3,831​
    $4,721​












    Ludicrous LTPT $7,250
    Lookback 36 months
    Percentile
    Implied Discount
    2020-07-16
    2020-12-31
    2021-07-16
    2021-12-31
    2022-12-31
    2023-12-31
    2024-12-31
    2025-12-31
    99.5%​
    23.5%​
    $1,482​
    $1,633​
    $1,830​
    $2,017​
    $2,492​
    $3,078​
    $3,803​
    $4,698​
    2%​
    51.7%​
    $316​
    $383​
    $480​
    $581​
    $882​
    $1,337​
    $2,031​
    $3,080​
    10%​
    50.0%​
    $344​
    $415​
    $516​
    $622​
    $933​
    $1,399​
    $2,101​
    $3,152​
    20%​
    45.7%​
    $428​
    $509​
    $624​
    $741​
    $1,080​
    $1,574​
    $2,296​
    $3,345​
    30%​
    42.8%​
    $498​
    $586​
    $711​
    $837​
    $1,196​
    $1,708​
    $2,441​
    $3,486​
    50%​
    39.3%​
    $599​
    $698​
    $835​
    $972​
    $1,355​
    $1,888​
    $2,632​
    $3,668​
    70%​
    36.4%​
    $705​
    $813​
    $961​
    $1,108​
    $1,511​
    $2,060​
    $2,812​
    $3,834​
    80%​
    34.7%​
    $773​
    $886​
    $1,041​
    $1,193​
    $1,608​
    $2,165​
    $2,919​
    $3,931​
    90%​
    33.3%​
    $834​
    $952​
    $1,112​
    $1,269​
    $1,692​
    $2,256​
    $3,010​
    $4,014​
    99%​
    25.8%​
    $1,290​
    $1,434​
    $1,623​
    $1,803​
    $2,269​
    $2,854​
    $3,593​
    $4,521​
    You can see that some of upper quantiles are a little bit higher using the 12 month lookback. This is picking up on the most recent prices. But even so the 12-month high and low are so far apart that is it hard to tell how trading will stabilize within a reasonable range.

    So it is ironic that is it not the LTPT that is upsetting the distribution, but it is an abrupt change in trading that makes the near-term uncertain. Can we trust that the market will trade within 30% of the path from $1482 to the Ludicrous price target? Or could we actually circle back to prices near $300?

    Has the market found the faith and truly repented of the misbelief of the past? Or will the dog return to its vomit? Perhaps those of us who have kept the blind faith may feel like the prophet Jonah. He was sent to warn Nineveh of divine judgment. But when Nineveh repented, Jonah was peeved that God refused to destroy the city as he had said. BFPT was fine for gauging how little of long-term vision the market was willing to believe, but if the market has truly repented, this device may lose its purpose. Perhaps I'll just sit in the shade of this bush for a while.
     
    • Like x 2
    • Helpful x 1
    • Informative x 1
    • Funny x 1

Share This Page

  • About Us

    Formed in 2006, Tesla Motors Club (TMC) was the first independent online Tesla community. Today it remains the largest and most dynamic community of Tesla enthusiasts. Learn more.
  • Do you value your experience at TMC? Consider becoming a Supporting Member of Tesla Motors Club. As a thank you for your contribution, you'll get nearly no ads in the Community and Groups sections. Additional perks are available depending on the level of contribution. Please visit the Account Upgrades page for more details.


    SUPPORT TMC