Maybe you should buy TSLA stock instead of a M3?

[Skotty]

I was kicking myself for not investing in 2008, although I had no money in 2008 and could barely afford food (on credit even), so there was that.

I'm in the same boat. I didn't really have the money to invest back then. I knew Tesla would probably do well, but I didn't know how well. So I only bought token amounts of stock. I should have drained retirement accounts on it or something, but that's all hindsight. Oh well.

I probably have 10 times more money I could invest now, but the stock is now 10 times more expensive, so meh. Plus my family currently has a conflict of interest that for the moment doesn't allow us to buy or sell any Tesla stock. I'll just sit on what I have.

 

[zenmaster]

As big a fan as I am of Tesla, I find it hard to recommend buying Tesla stock at this point. It may go higher, but I think it's a bit of a crap shoot at this point, and the buy in price is really high now. When I first bought Tesla stock, it was $30 a share. At that price, an investor could have bought 1000 shares for $30,000. That's a viable investment. But now, even if you could get the same return over again, the price for that 1000 share investment starts at $375,000. The time to invest was back then when it was < $100 / share. It's not nearly as attractive now. People might still make a lot of money on it, but it's I think not as guaranteed and there's a lot more initial investment cash on the line.

Are you kidding? I got a significant number of people disagreeing with my post that most BMW and Audi owners will not buy a Model 3.

Let's say there are roughly 60-100 million BMW and Audi owners, and let's classify "most" as just 50% of them.

If we go by forum sentiment, that means Tesla will sell over 50,000,000 Model 3's to just existing BMW and Audi owners alone. Never mind all other popular manufacturers such as Honda, Toyota, Mercedes, etc. BMW and Audi combined are only at most 15% of the car market.

OK. So 50,000,000 Model 3 sales would be forthcoming to Tesla from Audi and BMW owners alone. With an average sales price of $42,000, that's is $2,100,000,000,000. That's 2 trillion dollars for Tesla, right there.

Now tell me Tesla's stock price would not skyrocket?

 

[anticitizen13.7]

As big a fan as I am of Tesla, I find it hard to recommend buying Tesla stock at this point. It may go higher, but I think it's a bit of a crap shoot at this point, and the buy in price is really high now. When I first bought Tesla stock, it was $30 a share. At that price, an investor could have bought 1000 shares for $30,000. That's a viable investment. But now, even if you could get the same return over again, the price for that 1000 share investment starts at $375,000. The time to invest was back then when it was < $100 / share. It's not nearly as attractive now. People might still make a lot of money on it, but it's I think not as guaranteed and there's a lot more initial investment cash on the line.

The flip side is less risk. When TSLA traded at $30/share about 5 years ago, Model S production had barely begun, and there was much more uncertainty about Tesla's future than there is today. Anticipating the transition from Roadster to mass-production Model S and Model X required a huge leap of faith.

I would look at market cap rather than absolute # of shares. If I can buy 75-80 shares of TSLA for 30k, and the market cap goes from 63B to 630B, that's still going to be a 10x return (barring capital raises) even though the # of shares is small. Patience and time horizon are key. If people want quick gains like Spring/Summer 2013, probably not going to happen. 8-10 year horizon for maximum return may be more realistic.

 

[souslik]

Glad I couldn't afford a roadster in 2010 and therefore had to invest in TSLA at IPO day. Sad I sold most of the stock at prices way lower than where they are today.

 

[Skotty]

The flip side is less risk. When TSLA traded at $30/share about 5 years ago, Model S production had barely begun, and there was much more uncertainty about Tesla's future than there is today. Anticipating the transition from Roadster to mass-production Model S and Model X required a huge leap of faith.

I would look at market cap rather than absolute # of shares. If I can buy 75-80 shares of TSLA for 30k, and the market cap goes from 63B to 630B, that's still going to be a 10x return (barring capital raises) even though the # of shares is small. Patience and time horizon are key. If people want quick gains like Spring/Summer 2013, probably not going to happen. 8-10 year horizon for maximum return may be more realistic.

Hm.... interesting perspective. In my personal view, I was just as confident of Tesla back then as I am now. I was certain Model S would be a huge success. I was far less certain about Model X. I'm pretty confident in Model 3, but certainly no more so than I was about Model S.

 

[Skotty]

Are you kidding? I got a significant number of people disagreeing with my post that most BMW and Audi owners will not buy a Model 3.

Let's say there are roughly 60-100 million BMW and Audi owners, and let's classify "most" as just 50% of them.

If we go by forum sentiment, that means Tesla will sell over 50,000,000 Model 3's to just existing BMW and Audi owners alone. Never mind all other popular manufacturers such as Honda, Toyota, Mercedes, etc. BMW and Audi combined are only at most 15% of the car market.

OK. So 50,000,000 Model 3 sales would be forthcoming to Tesla from Audi and BMW owners alone. With an average sales price of $42,000, that's is $2,100,000,000,000. That's 2 trillion dollars for Tesla, right there.

Now tell me Tesla's stock price would not skyrocket?

Not saying I don't think they have a positive future. I'm pretty sure they do. It's just that it costs a lot more per share now, and some of the Model 3 success may already be reflected in the current price. That said, I think the 3 will be a success that raises the price and it will likely be bolstered by Tesla Energy as well, but if I were to guess, I don't see it going above $500 a share. Even that would still be a big increase, at $125 increase per share at $375 per share buy in price, but that still pales in comparison to say a $325 increase per share at $50 per share buy in price that someone could have capitalized on back when the S first rolled out.

I could be wrong. Maybe it will go to $1,000,000 a share and Tesla will take off like a Falcon 9. I certainly wouldn't complain, since I have some stock. But my personal bet is a top end of $500 with things going reasonably well the next couple of years (things going reasonably well is part of my prediction; not plaid well, just in the light speed to ridiculous range).

 

[mhan00]

Investing in the past is easy because you have perfect information since you know exactly what happens. Too bad it isn't applicable to investing in the present where the future is uncertain and information is imperfect You might as well lament not picking the winning lottery numbers last week, which would have been a far more lucrative return.

 

[eyespii]

The irony is that if everyone who bought a roadster instead bought stock, there'd be no roadsters. And then there'd be no stock.

 

[jonnyg]

I can't drive TSLA stock to work or take any road trips in it though.

 

[zenmaster]

Not saying I don't think they have a positive future. I'm pretty sure they do. It's just that it costs a lot more per share now, and some of the Model 3 success may already be reflected in the current price. That said, I think the 3 will be a success that raises the price and it will likely be bolstered by Tesla Energy as well, but if I were to guess, I don't see it going above $500 a share. Even that would still be a big increase, at $125 increase per share at $375 per share buy in price, but that still pales in comparison to say a $325 increase per share at $50 per share buy in price that someone could have capitalized on back when the S first rolled out.

I could be wrong. Maybe it will go to $1,000,000 a share and Tesla will take off like a Falcon 9. I certainly wouldn't complain, since I have some stock. But my personal bet is a top end of $500 with things going reasonably well the next couple of years (things going reasonably well is part of my prediction; not plaid well, just in the light speed to ridiculous range).

Agreed. Could also more than double in that time depending on lowering production costs, ramping production successfully, and increased worldwide demand. Lots of if's though.

 

[anticitizen13.7]

Not saying I don't think they have a positive future. I'm pretty sure they do. It's just that it costs a lot more per share now, and some of the Model 3 success may already be reflected in the current price. That said, I think the 3 will be a success that raises the price and it will likely be bolstered by Tesla Energy as well, but if I were to guess, I don't see it going above $500 a share. Even that would still be a big increase, at $125 increase per share at $375 per share buy in price, but that still pales in comparison to say a $325 increase per share at $50 per share buy in price that someone could have capitalized on back when the S first rolled out.

I could be wrong. Maybe it will go to $1,000,000 a share and Tesla will take off like a Falcon 9. I certainly wouldn't complain, since I have some stock. But my personal bet is a top end of $500 with things going reasonably well the next couple of years (things going reasonably well is part of my prediction; not plaid well, just in the light speed to ridiculous range).

I am generally skeptical of future modeling, so keep that in mind for my "fuzzy" prediction.

Anticipation of future where Tesla is producing and selling 1M cars/year by 2020:
100k Model S/X @ 100k ASP = 10B
900k Model 3/Y @ 45k ASP = 40.5B
Tesla Energy = ? For simplicity I'll guess 5B.

Annual revenue of 55.5B, net margin of 10%, or 5.55B, times 20 = 111B market cap. 111/62 = 1.8x today's share price, upside of up to $675/share. (Barring capital raise dilution).

I would agree that today's price reflects confidence that Tesla will get Model 3 up to production quickly and in volume. If Tesla delivers the goods, the market may inch towards that next level of $675 as Tesla shows progress on Model Y and other revenue generating programs.

It's a bet. If you think Tesla can make good on Model 3 and market participants take that as a sign that Model Y and 1M units/year is likely to succeed, then buy TSLA today. If the 3 production and delivery falters, share price will suffer until confidence restored.

This does not take into account macro conditions which could upset the whole scenario.

As always, I will say again like broken record: (1) no investment is guaranteed (2) invest in an individual stock only what you can afford to lose. Never bet your retirement on a gamble!