Crossroads: Sell P3D- and Invest in TSLA?

[Spacep0d]

I recommend not having more than 5% of your total net worth invested in a single company. Diversify and don’t speculate.

Too conservative!

 

[Spacep0d]

What in the name of Gin and tonic are we talking about.
Sell your house and move in with mon and dad. Go to blackjack
school and hang out in Vegas? Go to day trading school?
There are a lot of supper duper smart folks here, but I would not
take stock tips from the Pope himself. Go to a finical adviser or
better yet an investment bank. Run this by them.
Sorry, early happy hour, got to buzz off.

I would take 100% more advice from this forum than any religious figure. I would never hire a financial advisor for this. My own intuition and pattern-recognition (and understanding of human behavior) has been right when most financial advisors were burying themselves (and others) in FUD. I'm just looking for a way to free up capital.

 

[Spacep0d]

This could not be any simpler in my single view. You have another car and you work from home. You are questioning the purchase and what you are getting out of it. Depreciation aside, if it’s a lose situation for you, cut losses and use the money on an appreciating asset (not tsla per say). A car is not an investment, I don’t see any robotaxi thing happening for a while nor would I send my car out to do it. You sound like you are developing a good financial sense. It’s what let you get this car and it will let you get another if you listen to it and build wealth intelligently. As another said, I would not get financial advice on a car forum. You will find people who like cars or at least this car. See previous statement about cars being reverse investments. Just my .02

You get me, you really do. This is closer to my situation. While I adore my P3D-, I just don't drive enough with the pandemic and given my work-from-home status generally (pre-pandemic). I agree that the robotaxi thing won't happen for a while and I wouldn't loan out my car for this even if it was working now. That's the last thing I would do with my car given how obsessive I am about keeping it nice. I don't trust people enough for that, haha.

Since I have access to my girlfriend's M3, I could put some money into TSLA, still drive a nice Model 3 LR AWD and basically my life wouldn't change much, but I'd have a better position in TSLA for my 10 year time horizon. What's happened in the last few months is that I'm thinking more like an investor as I delve into this world, and I'm starting to look at a much broader future.

In my view, Tesla is just getting started. There will be stock price corrections and volatility and MMs doing their thing, but I'm in it for the long haul.

 

[Spacep0d]

I can’t help but feel that not only is Tesla’s current success already priced-in but also a lot of future success as well. I’m looking at a medium term pullback, especially if the entire market moves that way sometime next year. Looks bubbly.

if there is a pullback or a dip, I would def buy and maybe you want to be ready for that. however the current price seems a bit much at the moment.

I would invest in real estate in a growing region or some other asset than the stock market right now.

Is this not the case with every stock? However, the meteoric rise of TSLA was not because the future was priced in. The future (to many investors or would-be investors) was 'uncertain' at times, especially when Tesla was weeks away from bankruptcy in 2018. There's a lot priced-in to TSLA today, but things will change as they hit peak production with all factories open, even more deliveries, more EV credits sold, continuing to emerge as a utility or energy company, and expanding their insurance arm outside of California. I see massive growth ahead. For the long-term, I'd like to improve my position now if I can. So, that's why I'm thinking about this opportunity to shake loose some dry powder.

 

[Spacep0d]

"All that you hear is opinion", mine is I wish I had kept the '99 Dodge van 3 more years and put the $60K into the stock. I would be able to buy outright and have lots left. < Hindsight.

A friend invested 120K a bit over a year ago when it was in the 300's, Yeah, do the math. I was wringing my hands thinking "it's awfully expensive." 4 months ago I cashed in a 35k life insurance policy and bought at 1,500 a share (I was thinking exactly the same thing - "It's awfully expensive.") I am at 90.48% return now.

Look man, I'm a retired blue-collar and not smart enough to play the market, but I have followed this company for the better part of a decade which is the only reason I invested.
My opinion of the company and its potential is positive. My advice is to research, and follow your heart.

Yep, this. What seems expensive now won't seem like much in 10 years, which is my time horizon (and not just mine, haha). I follow ARK too! I've been following them pretty closely since the stock was at $400 pre-split, and I was telling everyone to buy because I could see the obvious unmet demand and customer satisfaction (despite some initial quality growing-pains). I also experienced a Tesla for the first time and was gobsmacked by how good it was, and I already knew the Supercharger was Tesla's killer app. This alone gives Tesla an enormous advantage over ALL other EV manufacturers in the States especially.

But yes, this is how I'm thinking. I could sell the car, invest and keep some liquid for home improvements, and buy a car much later when I have a greater need to drive. And, since my girlfriend bought her own Tesla, I can still drive one anytime I want as long as she doesn't need it. Win-win right?

 

[Spacep0d]

1. If you're not going to use your car you should sell it
2. Invest the money in something, but spread the risk out. Tesla has already mooned. It might moon again, but there will be a dip. Checkout M1 Finance and buy a pie that meets your investment criteria there.
3. Get an e-bike. A long range something from RadCity.

TSLA has a long way to go still, but I'm keeping a 10-year time horizon. I'm not trying to make a quick buck with TSLA.

That's what I was thinking though. Where is my money best spent?

There's something to be said for having 'scratched the itch' which I've done, and my purchase influenced my girlfriend to get one of her own. I could use hers as much as I want for quick errands and we've been together 23 years (this January) so it's not like a volatile relationship. We also own a home together. No kids.

I don't imagine being asked to commute until well into 2021 and even then my job is inherently work-from-home other than some face time here and there. I could re-asses then and lease something. Lots of options. I'm just trying to see the big picture and ask myself what my 10 years future self would have wanted.

 

[Spacep0d]

Yeah ... with some small print:

1. Covid is not forever; it fact it can probably measured in a few more months
2. That other car is not his

I don't assume COVID to be forever, but I think money invested now in TSLA is better than money invested later. Or, I could be 'ready' and buy the correction/dip.

Other car wouldn't be mine, but my girlfriend and I are going on 23 years in our relationship so effectively I have use of it for the foreseeable future. We also live together and own this home together. I do think this arrangement wouldn't be ideal if we didn't live together or weren't stable. Of course if things change I'd have to reassess, but I don't anticipate that anytime soon.

I would still have a Tesla, but it's a matter of deferring that ownership or keeping things as they are.

 

[kbecks13]

That will certainly lead to bubbles, but I suggest you consider investing based on longer horizon valuation estimates. At a minimum, it will help you live life rather than stare at the daily stock chart. And you are a lot more likely to like the result in a decade or so.

I do consider longer term valuation and this is my point - no one can show me a DCF model for Tesla 10 years from now that shows why they are worth a $500B+ market cap. You have to have some incredible assumptions about number of cars sold and profit per unit to arrive at that large of a valuation, which is substantially larger than any automaker has ever been.

However, the meteoric rise of TSLA was not because the future was priced in.

What seems expensive now won't seem like much in 10 years,

I understand this sentiment and realize i'm repeating myself, but how do you know that the future isn't priced in and how do you decide what TSLA should be worth in 10 years? You're thesis is that they will be significantly larger than the $500B company that they are today which is already assuming massive increases in revenue and profit.

For example, TSLA has a price/sales ratio of 15-20 whereas peers (Ford, Toyota, GM) are closer to 0.5. This means that Tesla is already valued 30x times more than peers on a revenue basis AKA people have already factored in massive future growth for the company. These sorts of ratios are off the charts with TSLA because people are waiting for future growth and now its just a question of what is a fair price - which is very hard to accurately determine as evidenced by this thread

 

[Spacep0d]

I do consider longer term valuation and this is my point - no one can show me a DCF model for Tesla 10 years from now that shows why they are worth a $500B+ market cap. You have to have some incredible assumptions about number of cars sold and profit per unit to arrive at that large of a valuation, which is substantially larger than any automaker has ever been.


I understand this sentiment and realize i'm repeating myself, but how do you know that the future isn't priced in and how do you decide what TSLA should be worth in 10 years? You're thesis is that they will be significantly larger than the $500B company that they are today which is already assuming massive increases in revenue and profit.

For example, TSLA has a price/sales ratio of 15-20 whereas peers (Ford, Toyota, GM) are closer to 0.5. This means that Tesla is already valued 30x times more than peers on a revenue basis AKA people have already factored in massive future growth for the company. These sorts of ratios are off the charts with TSLA because people are waiting for future growth and now its just a question of what is a fair price - which is very hard to accurately determine as evidenced by this thread

Anyone could have said the future was priced in when the stock was at $400 pre-split. I knew it had tons of growth in it. Why was I correct about this where so many got it wrong? It's because it's never been about revenue so much as unrealized potential with a real market and pent-up demand. Amazon wasn't profitable in its formative years either (I remember) but look at them today. Savvy futurists would have predicted that Amazon was on to something, but those simply looking at revenue wouldn't understand the long-term plan.

I'm no stock expert but I have good understanding of human behavior and am reasonably adept at pattern-recognition. What I saw at $400 pre-split (when I first started paying attention to TSLA) was tremendous unmet demand and potential growth. I got it right, and we all know how the stocks performed to-date.

That said, I still believe Tesla's potential is unrealized, and demand is high. Costs are a little high which put Teslas out of reach for many, but Elon is working to fix that (25k hatchback, anyone?). Even the Supercharger network (Tesla's killer app) isn't fully-realized, which is ostensibly why they're installing more every day. Every new Supercharger=buyer and investor confidence. Every new Supercharger puts distance between Tesla's lead and 'competitors' who don't have a Supercharger network. Charging is the key to answering a primary objection for new EV adopters in this paradigm shift where ICE vehicles and their fueling infrastructure had a 135-year head start. A lot of people cannot charge at home or cannot charge beyond trickle-charging, so the Supercharger network cannot be overestimated.

And that's just the cars. Tesla is a tech/energy company which happens to sell cars. They sell insurance too, and once they can sell insurance outside of California, this will mean a whole lot more income for Tesla and savings for Tesla owners. As a point sample, my girlfriend and I both have Tesla insurance for our Model 3s. Tesla charges $30 less for a Model 3 P3D- (with a robust policy) than State Farm wants for a 2018 LEAF S for a minimum-coverage policy.

Gigafactories Berlin and Austin will be complete soon enough, and other Gigafactories will be built. This will allow Tesla to address more unmet demand as well as producing new vehicles such as the new Cybertruck, which has 500,000+ pre-orders. That's a whole lot of pre-orders for something people haven't even driven yet or seen on the road (for the most part). A few lucky people have seen one at the unveiling or in L.A.. This tells me that consumer engagement is tremendously high despite no advertising from Tesla apart from some reveal events and online videos.

Tesla's competition lags far behind, and will for a while. If nothing else, nobody is going to be able to install their own equivalent of a Supercharger network for their cars if they remain proprietary, or unless a deal is struck with Tesla to allow cross-compatibility. This could happen and it's something Elon would probably go for, but right now Tesla has the best charging network in the U.S., hands-down. As a former LEAF owner, our DC-3 options weren't nearly as good, certainly weren't as numerous, and they seemed to have less uptime. Seeing 2/2 stalls occupied is rather disheartening. Tesla's Supercharger stations generally have enough stalls (barring some rare traffic bottlenecks) to satisfy demand and growth.

Tesla's vertical integration is also another key benefit, including their new battery tech and lithium mining operations.

I could go on, but Tesla's unrealized potential on top of their proven production track record (with a few bugs to work out, granted) remains tremendous. It may be hard to fathom, but there's a whole lot of growth left in TSLA over a 10 year time-horizon, and there should be less volatility in the future as well.

That's my $1.05. I may be wrong, but I'm willing to ̶b̶e̶t̶ invest on it.

 

[Tron 3]

I follow ARK too

Cathie Wood is a RockStar investor.
I think the major disconnect is that we're in the midst of technological disruption.
It also happened about a hundred years ago.

.

Things are changing. Within my life, it was science fiction to power transportation on sunlight.
Tesla has moats around it, you mention the supercharging network, that's one. There will come a day when those can also be powered by sunlight.

Steve Jobs recognized the potential of convergent technologies and combined many of them into a handset.
"It may be the greatest contribution of the innovator to realize the full potential of the known."

Here is another example withTesla energy. I'm interested to see Tesla influence the HVAC industry for residential and commercial as he did with automobiles and aerospace.

 

[Spacep0d]

Cathie Wood is a RockStar investor.
I think the major disconnect is that we're in the midst of technological disruption.
It also happened about a hundred years ago.

.

Things are changing. Within my life, it was science fiction to power transportation on sunlight.
Tesla has moats around it, you mention the supercharging network, that's one. There will come a day when those can also be powered by sunlight.

Steve Jobs recognized the potential of convergent technologies and combined many of them into a handset.
"It may be the greatest contribution of the innovator to realize the full potential of the known."

Here is another example withTesla energy. I'm interested to see Tesla influence the HVAC industry for residential and commercial as he did with automobiles and aerospace.

Hehe, great quote by Jobs! While I'm more of a PC guy, I recognize Jobs' genius (and some failings) but he got a whole lot right. I remember in 1995 lamenting the fact that PCs were beige. "WHY BEIGE?", my mind screamed. Why can't I buy one in non-beige? Short-sighted people didn't understand the need to have color options, but I knew. Back then, I would have my PC cases custom-painted black before you could just go and buy a black case.

When the iMac came out, a major reason for its appeal despite not being a stellar performer was the fact that it came in these juicy colors! People could finally choose their color; lime, strawberry, tangerine, grape, etc. I knew this was a master stroke, just like Jobs eliminating the floppy disk drive in favor of USB. It doesn't even matter that the iMac didn't exactly live up to its claims for power/speed so much as it had real visceral appeal, and they did it first for home computers on a large scale. Then, everyone copied them. It was hilarious....and that includes the name iMac. Gobs of companies and products appeared with that leading lowercase 'i'.

I had this same thought with hearing aids way before they came in colored shells. As a lifetime hearing-aid wearer (since I lost much of my hearing around age 2) these devices have only been available in 'flesh tone'. As I got older, I wondered why I couldn't order one in chrome plastic or neon green. I knew that manufacturers were trying to 'hide' the hearing aid, but wearing a hearing aid as a kid I knew there was no 'hiding' any hearing aid. Kids will notice and point it out, and it can become a source of ridicule in some situations. Why not just own it? 'Flesh-colored' hearing aids just look like floppy tumors anyway. Nobody is fooling anyone there.

I questioned this logic by comparing hearing aids (which manufacturers assumed we all wanted to hide) with eyeglasses.

"Does anyone try to make flesh-colored spectacle frames to 'hide' their glasses? NO! You have designers making these things. Why are hearing aids 'flesh tone' with no other options?"

I started writing to every company I could think of, asking them to just make hearing aids available in ANYTHING BUT BEIGE. Almost none of them 'got it'. One silly company offered monogramming, totally old skool and missing the point. It's not like we hearing aid wearers gather in large groups and throw our hearing aids in a basket or something. Monogramming might address the R/L issue for some, but color choices would be even better. I had other ideas that I included in my proposals too. It was shockingly difficult for people to understand why this made sense.

Eventually one company did it, and now they all do it. Why did it take so long? Sometimes a company just has to be bold enough to be first. Someone has to recognize the unmet demand and with a lot of humans this seems a surprisingly difficult task.

There's a similar irrationality in real estate sales. Almost no agent ever takes pictures of the GARAGE. I am painfully aware of this since we're in the market for a home upgrade. Why no garage pictures, yet there are plenty of pictures of that goofy chandelier and every single bathroom. Is the garage not part of a house purchase? There's no rational reason for it. Homes are expensive. They often come with garages. Most of us drive some kind of vehicle, and for some first-time home buyers that garage is a BIG DEAL, just like it is for anyone who wants to store anything, especially an EV with home-charging access. Not showing the garage is just the goofy and nonsensical status quo. People who never had a garage in their own home understand how big of a deal this is. For some, it's the biggest deal.

I wrote to one agent, bewildered at the dearth of garage pics and asked, why on Earth are there no garage pictures? He had no answer for me. He just explained the status quo and mentioned that I was the 'first' to ask about such a thing. OH REALLY? I don't think so, and that logic makes no sense anyway. Adding a few pictures costs almost nothing and puts one at a huge advantage over those shortsighted agents who don't take pictures of the garage for some reason. But what about buyers for whom a garage is an important consideration? Even better, give the dimensions of the garage along with information about the electrical panel and EV-charging viability.

I finally got him to agree with my side, and mentioned that if you just do this one thing it will give your listings an advantage. The problem is that almost every other agent is mindlessly repeating the same behavior...no garage pictures. Insanity. Sadly, it's easier to follow a nonsensical tradition than to be different and stand out, no matter how much sense it makes. So much is true for EV adoption and the low-hanging fruit of FUD.

This is why I love Tesla as an ICE disruptor, along with those who support them. It's easy to follow the herd. It's difficult to strike out on your own and be different, even when you get it right. This is why the Elon factor is so important. He's got great concepts, he's fearless, he understands engineering, and he can execute like no other.

 

[StealthP3D]

Define "too high". Many people say Tesla will be bigger and bigger in 10 years, but i'm not sure how you arrive at a target valuation. They already have a market cap larger than the biggest automakers and solar companies combined, so i personally wouldn't invest at these levels even though there is definitely some short term pressure.

I will probably be wrong, but i personally can't rationally determine a target market cap for TSLA that isn't much lower than where we're at today so i don't invest even though i absolutely love the car.

If you didn't invest in TSLA in 2019 when it was trading below $40 (split adjusted) last year then it just might be possible that you didn't think it was a good investment at that point in time as well.

My point is, there are lots of people who don't think it's a good idea to invest in Tesla and they are generally wrong. As far as valuing TSLA, it might be better to leave that to people who have a history of buying companies that rapidly appreciate.

 

[holmgang]

As far as valuing TSLA, it might be better to leave that to people who have a history of buying companies that rapidly appreciate.

And who are those people?

Not a lot of overlap in TSLA's top institutional investors (excluding megafunds State Street , Blackrock, Vanguard, etc) and those run the by the best known investors of all time (Simons, Dalio, Soros, Cohen, Griffin, Shaw, etc)