General Discussion: 2018 Investor Roundtable

[NicoV]

Here is a quick back of the envelope 2019 income statement guess:

Model s+x: 100,000 cars @$100,000 @30% gross margin = $ 3.0 bln

Model 3 : 400,000 cars @ $48,000 @ 25% gross margin =. $ 4.8 bln

Total Gross margin: = $ 7.8 Bln

Less:

SGA. = $ 4.0 bln
R&D. = $ 1.6 bln
Interest. =$ .596 bln
Total expense = 6.196 Bln

Net profit. = $ 1.604 bln

Shares outstanding. = .166 bln

Eps. $ 9.6

P/E of 40 is the most I like to pay for a stock

Stock price forecast. $ 384

Any thoughts ?

You seem to value Tesla Energy at 0.
And the outlook of Roadster and Semi seems also to be valued at 0.
And the stuff we don’t know about yet is also valued at 0.
And a multiple of 40 may also be on the low side.
So I would consider your $384 on the low side.

 

[SteveG3]

Here is a quick back of the envelope 2019 income statement guess:

Model s+x: 100,000 cars @$100,000 @30% gross margin = $ 3.0 bln

Model 3 : 400,000 cars @ $48,000 @ 25% gross margin =. $ 4.8 bln

Total Gross margin: = $ 7.8 Bln

Less:

SGA. = $ 4.0 bln
R&D. = $ 1.6 bln
Interest. =$ .596 bln
Total expense = 6.196 Bln

Net profit. = $ 1.604 bln

Shares outstanding. = .166 bln

Eps. $ 9.6

P/E of 40 is the most I like to pay for a stock

Stock price forecast. $ 384

Any thoughts ?

What the financial media runs away from re while discussing Tesla is growth rates and PEG (price earnings to growth rate). Talking about valuations without discussing growth rates is like trying to fly an airplane with one wing. I strongly recommend reading up on PEG if you are hazy on it (a Peter Lynch favorite teaching point). Ironically it is the shorts who are making statements unhinged from investing fundamental analysis.

Tesla’s growth rate has been and will be for many years to come 50+%. Let’s call it 50%.

PEG for S&P 500 was 1.4 in January of this year (most recent source I found in 10 minutes of searching & likely pretty close to current).

One of Peter Lynch’s Top Metrics Shows Stocks Getting Cheaper

This means if Tesla had the average S&P 500 PEG applied to it, its PE would be 70 based on a projected 50% annual earnings growth rate.

We can discuss your back of a napkin $9.60 EPS, but if it is reasonable, price target for 2019 would be $672.

Just as disclosure, I value Tesla on 2026 earnings projections, but it is nice to see that quite likely 2019 EPS results, of course, much nearer to becoming evident, will likely both very strongly show that fundamentals support considerably HIGHER TSLA prices, and analysts have been extremely pessimistic re those 2019 earnings specifically and Tesla’s potential generally.

 

[Drax7]

Disruptive companies as Tesla, Netflix, Amazon can have p/e in the hundreds.

I just don’t like paying more than 40, though I am certain the market will value them
Way way higher. 384 is the most I would pay now.

 

[Drax7]

You seem to value Tesla Energy at 0.
And the outlook of Roadster and Semi seems also to be valued at 0.
And the stuff we don’t know about yet is also valued at 0.
And a multiple of 40 may also be on the low side.
So I would consider your $384 on the low side.

Don’t really have much data yet concerning energy Trying to keep it simple
And To get some sort of handle on the valuation.

 

[NicoV]

Disruptive companies as Tesla, Netflix, Amazon can have p/e in the hundreds.

I just don’t like paying more than 40, though I am certain the market will value them
Way way higher. 384 is the most I would pay now.

What is interesting is doing this back of an envelope calculation for Y2020.
Sales numbers for S an X will be the same, maybe slightly higher sales of Model 3 but not much since 2019 was already calculated at the 10K/week.
Sales of roadster and semi will probably be minimal.
So where will the growth in 2020 come from?

 

[SteveG3]

Disruptive companies as Tesla, Netflix, Amazon can have p/e in the hundreds.

I just don’t like paying more than 40, though I am certain the market will value them
Way way higher. 384 is the most I would pay now.

PEG allows for turning valuations of a wide swath of companies, with such different growth and earnings dynamics into a far far far more apples to apples comparison.

The whole “car company” vs. “tech company” discussion in the media re Tesla, while not meaningless, is largely a nothing burger when compared to PEG. It diverts from talking about growth rates and PEG (ie, fundamental stock analysis as championed by Peter Lynch). I suspect this is not an accident, as discussion of these bedrock stats of fundamental analysis would blow out of the water all the varieties of the short valuation false narratives 1) “everyone knows Tesla is overvalued,” 2) “it’s a cult stock... for true believers in Musk, there is no rational basis looking at fundamentals to own the stock,”
3) “you can’t value the darn thing” (Jim Cramer has been repeating that false narrative like an ad campaign for about 5 years).

 

[ValueAnalyst]

Here is a quick back of the envelope 2019 income statement guess:

Model s+x: 100,000 cars @$100,000 @30% gross margin = $ 3.0 bln

Model 3 : 400,000 cars @ $48,000 @ 25% gross margin =. $ 4.8 bln

Total Gross margin: = $ 7.8 Bln

Less:

SGA. = $ 4.0 bln
R&D. = $ 1.6 bln
Interest. =$ .596 bln
Total expense = 6.196 Bln

Net profit. = $ 1.604 bln

Shares outstanding. = .166 bln

Eps. $ 9.6

P/E of 40 is the most I like to pay for a stock

Stock price forecast. $ 384

Any thoughts ?

Are you assuming that the market agrees with the "most you'd like to pay for a stock?"

Double SG&A, after slashing 9% of workforce, and not grow S/X/3 beyond 10k/w? What are the 20,000 new people doing in 2019?

Finally, I must have missed the news... when did Tesla divest Energy?

 

[SteveG3]

In sum,

That dust that I said will soon settle came with Tesla going through walls, particularly this past year.

Quite soon, more than feeling smart of the strong soreness all over of having just gone through walls, we will be reaping the benefits of realizing the opening that’s here with having gone through those walls.

 

[Drax7]

Once Elon has model 3 humming at a high production rate and gross margin,
He will be announcing and implementing many new initiatives. Having earned credibility with
The market given Model 3s success, his pronouncements should carry lots of weight, and
magnify the valuation of the company.

Cramer has been yelling for 10 years, pay up to 2 times the PEG.
If the eps is 10, and the growth rate is 50% , then the p/e is 100,
And the value $1000. Never found this compelling. Let us just say
The Tesla’s p/e will be huge.
Disruption commands a huge p/e , especially given the addressable mkt.

 

[Drax7]

Are you assuming that the market agrees with the "most you'd like to pay for a stock?"

Double SG&A, after slashing 9% of its workforce, and not grow S/X/3 beyond 10k/w? What are the 20,000 new people doing in 2019?

Finally, I must have missed the news... when did Tesla divest Energy?

It’s Unlikely the market agrees with my views on valuation , and the eps is probably partly fiction.
However, I need a number , to anchor my belief, even though it might be partly fiction.

Years ago I heard marty Zweig mention that his analysis indicated not paying
More than 40 times earnings, hence using that as a benchmark.

 

[GaryW]

Disruptive companies as Tesla, Netflix, Amazon can have p/e in the hundreds.

I just don’t like paying more than 40, though I am certain the market will value them
Way way higher. 384 is the most I would pay now.

Doesn’t this go back farther? I remember MSFT being 80, something like 30 years ago. I just checked; it’s 70 right now. The stock price has ~quadrupled in the last 5 years.

 

[Drax7]

Doesn’t this go back farther? I remember MSFT being 80, something like 30 years ago. I just checked; it’s 70 right now. The stock price has ~quadrupled in the last 5 years.

My principle reason for being invested in tesla since early 2013, is based on the disruptive
Potential this firm has. Not the p/e mombo jumbo business, though occasionally I do need to
Anchor my beliefs to something tangible. $384 is maybe an intrinsic idea, given a one year time horizon,
and certainly not cast in stone, given the dynamic nature of the situation.
Once we cross the chasm, all bets are off.

 

[Boomer19]

My principle reason for being invested in tesla since early 2013, is based on the disruptive
Potential this firm has. Not the p/e mombo jumbo business, though occasionally I do need to
Anchor my beliefs to something tangible. $384 is maybe an intrinsic idea, given a one year time horizon,
and certainly not cast in stone, given the dynamic nature of the situation.
Once we cross the chasm, all bets are off.

same, close friend has been involved with it longer than i. he always talked about it (and showed me TMC posts) and i kinda just laughed about what a geek he was about it. then i rode in his ‘12 S when it arrived (and he only had the 75 RWD, not even the top model). i bought shares immediately. i’ve been adding as much as i could over the years. then stood in line 3/31/16 at 530am. read, then finally subscribed to tmc.
still anticipating arrival of my 3, along with some other close friends. giddy about it.

 

[ggr]

Doesn’t this go back farther? I remember MSFT being 80, something like 30 years ago. I just checked; it’s 70 right now. The stock price has ~quadrupled in the last 5 years.

I will assume that you just have faulty memory. The price as I type is $105.11, 5 years ago it was $31.40. 30 years ago (Aug 1, 1988) it was (split adjusted, presumably, I don't keep track of splits) $0.41. Anyway, I don't understand your point.

 

[Foghat]

Chanos had to publically deny on CNBC he has not paid for information on Tesla. This is what is needed. Have to have Chanos defensive.

Chanos then said Tesla is all sizzle, can’t deliver on promise. If the talking heads at CNBC had any real newsworthy curiosity, they would’ve then asked him about the technical/logistical breakdown analysis by Munro, and see how he reacted.

Thus far, they give him softball questions, no real testing of his theories/assumptions. His responses are always negative, which is not how a real analysis works. We all know in his “post truth” world that he lives in, if you say something enough to a large enough audience, people will start to believe you. The other thing you do, is always blame the target of doing exactly what you are doing.

He is exactly the embodiment of how the old media model game worked, but what he doesn’t really grasp is the next gen sees through this old game. The media game has changed significantly and he’s been about to grasp that yet, and will continue to be left “holding the bag” on good ol CNBC as he scratch his head on how his “expert” short plan backfired miserably.

 

[winfield100]

Doesn’t this go back farther? I remember MSFT being 80, something like 30 years ago. I just checked; it’s 70 right now. The stock price has ~quadrupled in the last 5 years.

did you forget the 288:1 stock splits................of MSFT (7, 2 for 1 and 2, 3 for 2)( Microsoft Corporation - MSFT - Get Stock Split History )

 

[Drax7]

Chanos had to publically deny on CNBC he has not paid for information on Tesla. This is what is needed. Have to have Chanos defensive.

Chanos then said Tesla is all sizzle, can’t deliver on promise. If the talking heads at CNBC had any real newsworthy curiosity, they would’ve then asked him about the technical/logistical breakdown analysis by Munro, and see how he reacted.

Thus far, they give him softball questions, no real testing of his theories/assumptions. His responses are always negative, which is not how a real analysis works. We all know in his “post truth” world that he lives in, if you say something enough to a large enough audience, people will start to believe you. The other thing you do, is always blame the target of doing exactly what you are doing.

He is exactly the embodiment of how the old media model game worked, but what he doesn’t really grasp is the next gen sees through this old game. The media game has changed significantly and he’s been about to grasp that yet, and will continue to be left “holding the bag” on good ol CNBC as he scratch his head on how his “expert” short plan backfired miserably.

He kept ranting about the bubble bursting in china for years and years on CNBC.
He sounded so confident and self assured .

 

[mrdoubleb]

What is interesting is doing this back of an envelope calculation for Y2020.
Sales numbers for S an X will be the same, maybe slightly higher sales of Model 3 but not much since 2019 was already calculated at the 10K/week.
Sales of roadster and semi will probably be minimal.
So where will the growth in 2020 come from?

Y would you even ask that?

Also GF 3 and even GF 4 will have some capacity online by then. Not sure if those would also produce S/X, or if those are better left in Fremont on lines already working at high efficiency But if some Model 3 and Model Y production is moved there (as much as needed in-region), Fremont would free up for the pickup.

 

[electracity]

What is interesting is doing this back of an envelope calculation for Y2020.
Sales numbers for S an X will be the same, maybe slightly higher sales of Model 3 but not much since 2019 was already calculated at the 10K/week.
Sales of roadster and semi will probably be minimal.
So where will the growth in 2020 come from?

The only possibility I see is the model Y built in Sparks. A car factory in Sparks requires the least investment from Tesla if the presses in Fremont can supply parts.
A greenfield factory in China is not producing cars in 2020.
There are empty car factories in the U.S. and other places. But all other locations have supply chain problems that is avoided if producing more model 3 and Y in either Fremont or Sparks.

 

[Doit]

I will assume that you just have faulty memory. The price as I type is $105.11, 5 years ago it was $31.40. 30 years ago (Aug 1, 1988) it was (split adjusted, presumably, I don't keep track of splits) $0.41. Anyway, I don't understand your point.

I believe GaryW ment p/e. By the #s you gave, MSFT has slightly tripled, not quadrupled.