ZenRockGarden
Active Member
We're already far below what the actual financials merit. So arbitrary boundary of $100 should hold since deep pocket investors will accumulate near that level
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Tesla stock - how low will it go?
- Thread starter spon88
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WannabeOwner
Well-Known Member
Right ... <sigh>
Go on then, surprise me.
Tesla is making money exporting power from people's PowerWalls all around the globe. Houses in UK where DNO has not allowed any export still make Tesla money because they have negotiated that NOT DRAWING power, from the Grid, in times of grid-stress is pretty much as good as exporting some. That has a LONG way to go ... and is very scalable.
Sure it works, but the sales are tiny. That's only going one way, a lot of people want a roof that looks like slates not big glass panels.
And Tesla is selling all it can make, and ramping up ... and has lots of experience, and plenty of history of innovation. Bags of money, attract the best talent, and likely to then make plenty of creative breakthroughs.
Technology transfer. I expect that to surprise you in time, as will Twitter (if it stays afloat long enough). A huge audience to provide an "alternative services" too
Significantly cheaper and not making a profit, whereas Tesla have huge margins (for a car) and could ride out a price war easily.
The number of times I have heard of Tesla Killers and the competition catching up ... and yet I keep on being surprised at enhancements that get included in Tesla OTA updates, and how the legacy competitors keep managing to goof up - Chinese car companies may well be a threat.
Now on OTA 3.0. Last OTA was 18 months ago - I get an update from Tesla every week or two.. This one takes 8 hours to install - EIGHT HOURS - and using a process that makes even a Windows Update look shiite. Most brands have return-to-dealer for anything other than Infotainment updates. VW Software has been shitte for ages - remember when they had the cars built but not the software so they just parked the cars in fields for 6 months waiting for the software? VW is not going to solve that problem overnight ...
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Rooster6655
Active Member
Perspective:
Tesla market cap 350B
VW market cap 66B
EDF market cap 46B
Intel 105B
Total 217B
Teslas market cap is therefore 50% higher than a car manufacturer making over 10 million units a year plus a massive energy company which recently was the biggest electric producer in the world, and a chip company who also owns a self driving car division and are installed in over 100 million cars with an ever increasing degree of sophistication up to L4 development, all combined.
Even if you believe Tesla is more than a car company, are they really more than that lot?
Chuck in Vodafone at 20B for a global telecom company and you’ve still got change to buy a couple of twitters.
Tesla market cap 350B
VW market cap 66B
EDF market cap 46B
Intel 105B
Total 217B
Teslas market cap is therefore 50% higher than a car manufacturer making over 10 million units a year plus a massive energy company which recently was the biggest electric producer in the world, and a chip company who also owns a self driving car division and are installed in over 100 million cars with an ever increasing degree of sophistication up to L4 development, all combined.
Even if you believe Tesla is more than a car company, are they really more than that lot?
Chuck in Vodafone at 20B for a global telecom company and you’ve still got change to buy a couple of twitters.
While I love some bits of it, wish that others would be better, but with current developments from other manufacturers I have a reasonable doubt that in 4-5 years, when I will be in the market for a new car (hopefully) Tesla is still going to be an attractive option in both Value and tech wise.
I will evaluate options, that's for sure
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The value of Tesla is not in the cars that it’s cranking out now. The cars are the day job that finances the ‘side hustle’ investments in solar, battery and other technologies.
This (combined with the fact that people have been using Tesla stock for speculation) is why Tesla is worth more than the other car manufacturers.
Even if you assume the more ‘out there’ stuff they work on like the robotics doesn’t play out, 20 years from now Tesla are going to own battery production and solar tech. Where do you think the other manufacturers are going to go for their batteries? What do you think happens to the energy market when battery tech matures such that solar is enough for 90% of power needs?
VW aren’t even going to get mentioned in the same breath as Tesla.
Obviously none of this is certain to play out, that’s why investing in stocks has an element of gambling in it.
This (combined with the fact that people have been using Tesla stock for speculation) is why Tesla is worth more than the other car manufacturers.
Even if you assume the more ‘out there’ stuff they work on like the robotics doesn’t play out, 20 years from now Tesla are going to own battery production and solar tech. Where do you think the other manufacturers are going to go for their batteries? What do you think happens to the energy market when battery tech matures such that solar is enough for 90% of power needs?
VW aren’t even going to get mentioned in the same breath as Tesla.
Obviously none of this is certain to play out, that’s why investing in stocks has an element of gambling in it.
WannabeOwner
Well-Known Member
Ah, but isn't the stock market about whether you can make money on the shares?
You could invest for long term ... ideally you would like your money to do better than inflation, and I suppose with ISA tax benefits there is some comfort in that ... pension might be better still ... so either choose a risky stock or a safe one ... some of which will depend on age and risk-adversity ... decisions decisions ...
But for a volatile stock like Tesla buying on the way down and selling on the way up ought to make money ... but, absent the Midas touch to buy just-at-the-right-time, then just need enough money to buy ALL the way down !!
Intel are massively into AI including hardware design to make the compute perform, something Tesla are having to develop themselves because intel/Mobileye and Tesla won’t work together. It’s why we now have Ryzen based MCUs.
goRt
Active Member
The better way is looking at multiple of earnings (I don't have it to hand)
WannabeOwner
Well-Known Member
Tesla seems to be doing OK on that.
Buy a car sir. Now buy a monthly subscription to "Services". Buy a one-time upgrade to faster acceleration. Merc have a subscription for "Additional Acceleration" (and it aint cheap ...). Used to be when you sold a car that was it (the Dealer made money from servicing)
Buy a static battery for the house sir. Now I can sell you a nice little money-making arbitrage on exporting your power at peak times. And I can buy power cheap when in curtailment and dump it into the battery which you bought off me
Probably a whole raft more of such opportunities that could be dreamt up ... but legacy car companies have not been in that line of business, and history suggests that that sort of adaption is glacial in Mega Corps - with a few exceptions, like the IBM PC.
It is about risk, but I think there are some who look at the high tech stock and despite the warnings of past performance blah blah looked at great past growth and believed it to be real, bought in, fed the upward growth resulting in more buying. The classic bubble. Then it pops and the stock races down like we’re seeing this year across a number of stocks. Tesla appears inflated more than most, but Amazon are down 50%, Microsoft and apple also down a fair bit, and I don’t think those later stocks had the same degree of amateur investors clambering to buy.
I’m no stock pundit, but I remember the bubble bursting 20 years ago and it didn’t just bounce back, this doesn’t feel like a blip due to a dodgy musk tweet that will be forgotten tomorrow, it feels more engrained. I could just as readily believe the stock will drop to $30 as I can it bouncing back to $140. There’s plenty talking it up, almost universally because they simply loyal to the brand or have skin in the game and are hurting, not necessarily against their initial investment, but against the riches they thought they’d made when the price was 3-4x higher but they didnt cash out. Plentry of Tesla directors sold big chunks of stock when it was near the top, they knew it was inflated, Musk even said so, yet some still try to tell you the current price is too cheap,
goRt
Active Member
Michael "the big short" Burry says this bubble's much wider than just Tesla and we're in a "tracker bubble"
As the major indecies start to turn, then passive herd followers will start to sell precipitating a massive collapse
Bet against him if you dare
ZenRockGarden
Active Member
Name any of these companies who are experiencing 50% year over year growth?
ZenRockGarden
Active Member
Is Tesla more than a car company?
Well... um... there's their entire battery-making enterprise. And Grid Storage. The Solar power Unit. The best charging infrastructure in the entire world. The AI research and Dojo training unit. The robotics unit...
should I go on?
Elon is acting like the total asbergers a-hole that he can often be. This has no direct bearing on what Tesla is as a company other than the reputation of it's leader which yes is trash right now. Steve Jobs was an a-hole, and is also dead. Apple thrived without him.
The thing you have to remember about anyone who gives out stock advice is that they
Doesn’t guarantee that he’s wrong, but I wouldn’t bet the farm on him being right either.
Edit:
Hmm. I think we should add ‘a stopped clock is right twice a day’ to the list of relevant sayings too.
Burry initiated short position(s) on Tesla before or around early December 2020, according to a now-deleted tweet[24][25] and likely added to his short positions[26][27]after the market cap of Tesla surpassed that of Facebook. Burry predicted Tesla stock would collapse like the housing bubble,[27] saying that "my last Big Short got bigger and Bigger and BIGGER" and taunted Tesla bulls to 'enjoy it while it lasts.'[26] In May 2021, it was reported that he held puts on over 800,000 shares of Tesla.[28] In October 2021, after a 100% rise in Tesla's stock value, he revealed he was no longer shorting it.
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Tesla's total sales in 2021 were around $53.8 bn.
Of that, $2.8bn dollars was related to energy generation and storage. China alone spent $41bn on solar in the first 6 months of this year. So Tesla not exactly "owning" solar tech is it?
The remainder is related to vehicles and related services. The market in 2021 assumed that their 50% growth rate for both vehicle demand AND vehicle production would continue. What has become clear this year is that demand has substantially softened, and that Tesla is now at risk of having overcapacity. That dawned on Elon Musk and his brother, who sold huge amounts of share at the very peak of the share price.
Tesla buys-in batteries for the vast majority of its vehicles. So other car companies are in effect in the same place as Tesla - some are manufacturing, at small scale, but buy-in from Panasonic, Samsung, CATL etc. The thought that battery tech is somehow the sole preserve of Tesla is quite frankly laughable.
"None of it certain to play out" is just about the only thing I agree with there.
Postscript edit: The person who has made the most from speculation with Tesla stock is - Elon Musk. Promises that the company would deliver FSD, robotaxis, $30,000 a year income by letting your Tesla become a taxi - none of which based on reality, and statements made merely to pump up the share price.
There was me thinking that he sold stock because like most billionaires his money is in investments (ie Tesla) and he made an insane late night binge purchase of Twitter, but no, it was probably part of a financial master plan to take money out of his wildly successful company, plough it in to one which had no inherent value in the first place AND then drive said company in to the ground with impressive vigour.
The resulting drop in stock price is largely caused by Musk selling his stock (and the inference that he's losing it and taken his eye off Tesla). He didn't sell at the peak, he created the peak.
Now they do. I said in 20 years. Day job vs side hussle, remember.
They've got production challenges with the new cells, but they had those with the 3 and the Y production lines too. Not only did they resolve those but their decision to do things differently compared to the established way of doing things has now meant that their competition literally cannot make vehicles as cheaply as Tesla does. Maybe they won't achieve the same thing with batteries, but maybe they will.
You clearly don't like him, which is fine, not sure I do either, but this is a very slanted presentation of the facts. Speculating on stock is buying and selling it purely to ride changes in value. Delivering massive growth in a company you own, THEN receiving hugely favourable stock options as part of your executive compensation agreement is not speculation.
Being optimistic about timelines, even excessively so, is not fraud (this seems to be implied above). All of the examples you've listed above rely on FSD (they're 3 sides of the same technology). That's a technology that does not exist today and certainly didn't exist several years ago when those sorts of claims were first being made, it's not really surprising that the timelines haven't played out accurately. I think it's fair to have a grievance with the fact that Tesla sold features they can't currently build to customers (and that's far from the only example of crappy customer service from Tesla), but I don't think it's fair to blame them for the fact that the technology turns out to be harder than expected.
In my opinion, the share price will cut in half from where it is now. Will be a bumpy ride as always, but it will get there fairly soon, and possibly half again within another year
That’s based on the car business only
There are robot considerations, energy, batteries etc but there is no real trend to put a value on these so there is room for upward momentum should something amazing come out of that. Whether you want to put money on it is a different matter. Its called investing when you buy shares but in reality, its not to dissimilar to gambling, if those particular items are part of your investment thesis. Nobody on the bear side or bull side can say with any certainty how those things will pan out so its simply a matter of opinion. Nothing more, nothing less. If you have a level of confidence in those things, then maybe you want to put some cash into it. Its not for me but I do understand the attraction
But back to the car business. Growth is pretty much done in the main markets now, with the option to increase growth at the expense of margins, by price cuts. I should add at this point that back in Feb, I created a thread about the SR MY coming to UK and people thought I was out of my mind predicting that. I also predicted that in the space of a year, we would see a MY at less than £50k and true enough, Tesla sold brand new MY’s this month on their inventory page at less than £50k. There are more price cuts to come by the way, I’m quite confident in that
I say this partly due to my day job as someone who forecasts a lot, as well as an understanding of market saturation points and things like that.
Let me give you an example. I invent a pill that you take just once in your life, and it means you will never ever get cancer. If I can make and sell this pill for £1, my market saturation will be many billions of people. However, if I can make and sell this pill for £1,000,000, I hit market saturation point much faster. I can’t sell billions of these pills at £1m. Its an extreme example of market saturation but it should be pretty obvious the point I’m illustrating.
Its for this very reason that back in Feb I predicted the MY SR would hit the UK and also I predicted the 1st price drop. There will be more, and its due to market saturation points. There is convergence in the different elements of saturation points when it comes to cars, and indeed, Tesla. Price is an obvious one. It doesn’t matter how good a car is, if someone can’t afford it, they won’t buy it. Just like the £1m pill that will save you from cancer. The other example, if someone wants a city car for their needs and is really uncomfortable trying to park a big car, it doesn’t matter how good the car is, they won’t buy it if it doesn’t fit their key wants.
So what you do, is you look at annual sales in each segment, then align that segment with different price bands, then look at who competes here and at what volume, and you then get a picture of how much penetration you can get into said market. That’s your market saturation point. There are over a dozen segments and within each segment, you have further segmentation via price bands. Even the SUV segment, its fractured heavily with large/medium/small SUV’s, plus the utility aspect, farm use/recreation/trailering etc.
When you understand this, then you can understand why VW and Toyota have scores of different models. They have almost full market penetration and they need so many different models as that’s what the customer demands. You can try and get a Passat driver into a VW Polo all you want, but the customer won’t have it, so VW have no choice but to build so many different types of vehicle.
Tesla has 4 vehicles, and just 2 at high volume. Cybertruck? Elon forecast 250k of those per year but no line of sight. If it ever does arrive, its not a huge volume seller regardless.
In summary, Tesla has hit market saturation point as of now and I can see a reversal of demand if prices remain as is. They will need to take a hit on margin to stimulate volume. Like I mentioned, I forecast the MY SR as well as the price cut here in the UK as it was clear to me this would happen. People need to consider that everyone who really wanted a MY has now got one, so the 2022 sales that we’ve seen across Europe won’t continue now that that demand has been met. Of course, people will buy more of them in 2023, that is certain but it’s really important to understand the uplift in volume in 2022 is driven hugely by a new model, as well as getting M3 owners into MY’s. That’s not sustainable volume.
Tesla have growth opportunities in other markets but you should note that the key markets of US/China/Europe have already been tapped. If you want to touch every zip code/post code on Earth, that’s gonna cost quite a lot of money. Economies of scale meant USA, Europe, China were the obvious markets to target but when you start entering smaller markets, each unit of sales is more costly due to smaller scale, which results in margin erosion.
So that’s where Tesla is right now. Take a profit hit to grow sales via pricing, enter smaller markets which again, impacts margin. The options aren’t very wonderful for a Tesla shareholder right now as no matter what, you either take a growth hit or you take a margin hit. All those 2025/2030 forecasts you see from the Tesla fans on twitter etc are build on sand I’m afraid. Even the highly respected Gary Black has it wrong. His 2025 forecast has Tesla absolutely miles past the market saturation point. The equivalent of me forecasting lawnmower sales to people that live in a flat. Its just not going to happen. You can get a little bit of movement across markets, but key fundamentals, like getting the Passat driver into a Polo – that’s just not going to happen in significant numbers.
If you’ve made it this far, you’ve done well. I wouldn’t dream of buying Tesla shares but I can see the attraction. I just don’t have the risk appetite. For those that do though, I wish you well, but please do so with an open mind and consider what I’ve suggested in this post. Like I mentioned, I forecast for a living and my 2022 UK forecast of the MY SR and price cuts turned out to be pretty accurate, despite people thinking my statements were absurd at the time.
‘But Tesla sell every car they can make!’ Turns out that’s not true. Market saturation points have forced Teslas hand, and will continue to do so.
That’s based on the car business only
There are robot considerations, energy, batteries etc but there is no real trend to put a value on these so there is room for upward momentum should something amazing come out of that. Whether you want to put money on it is a different matter. Its called investing when you buy shares but in reality, its not to dissimilar to gambling, if those particular items are part of your investment thesis. Nobody on the bear side or bull side can say with any certainty how those things will pan out so its simply a matter of opinion. Nothing more, nothing less. If you have a level of confidence in those things, then maybe you want to put some cash into it. Its not for me but I do understand the attraction
But back to the car business. Growth is pretty much done in the main markets now, with the option to increase growth at the expense of margins, by price cuts. I should add at this point that back in Feb, I created a thread about the SR MY coming to UK and people thought I was out of my mind predicting that. I also predicted that in the space of a year, we would see a MY at less than £50k and true enough, Tesla sold brand new MY’s this month on their inventory page at less than £50k. There are more price cuts to come by the way, I’m quite confident in that
I say this partly due to my day job as someone who forecasts a lot, as well as an understanding of market saturation points and things like that.
Let me give you an example. I invent a pill that you take just once in your life, and it means you will never ever get cancer. If I can make and sell this pill for £1, my market saturation will be many billions of people. However, if I can make and sell this pill for £1,000,000, I hit market saturation point much faster. I can’t sell billions of these pills at £1m. Its an extreme example of market saturation but it should be pretty obvious the point I’m illustrating.
Its for this very reason that back in Feb I predicted the MY SR would hit the UK and also I predicted the 1st price drop. There will be more, and its due to market saturation points. There is convergence in the different elements of saturation points when it comes to cars, and indeed, Tesla. Price is an obvious one. It doesn’t matter how good a car is, if someone can’t afford it, they won’t buy it. Just like the £1m pill that will save you from cancer. The other example, if someone wants a city car for their needs and is really uncomfortable trying to park a big car, it doesn’t matter how good the car is, they won’t buy it if it doesn’t fit their key wants.
So what you do, is you look at annual sales in each segment, then align that segment with different price bands, then look at who competes here and at what volume, and you then get a picture of how much penetration you can get into said market. That’s your market saturation point. There are over a dozen segments and within each segment, you have further segmentation via price bands. Even the SUV segment, its fractured heavily with large/medium/small SUV’s, plus the utility aspect, farm use/recreation/trailering etc.
When you understand this, then you can understand why VW and Toyota have scores of different models. They have almost full market penetration and they need so many different models as that’s what the customer demands. You can try and get a Passat driver into a VW Polo all you want, but the customer won’t have it, so VW have no choice but to build so many different types of vehicle.
Tesla has 4 vehicles, and just 2 at high volume. Cybertruck? Elon forecast 250k of those per year but no line of sight. If it ever does arrive, its not a huge volume seller regardless.
In summary, Tesla has hit market saturation point as of now and I can see a reversal of demand if prices remain as is. They will need to take a hit on margin to stimulate volume. Like I mentioned, I forecast the MY SR as well as the price cut here in the UK as it was clear to me this would happen. People need to consider that everyone who really wanted a MY has now got one, so the 2022 sales that we’ve seen across Europe won’t continue now that that demand has been met. Of course, people will buy more of them in 2023, that is certain but it’s really important to understand the uplift in volume in 2022 is driven hugely by a new model, as well as getting M3 owners into MY’s. That’s not sustainable volume.
Tesla have growth opportunities in other markets but you should note that the key markets of US/China/Europe have already been tapped. If you want to touch every zip code/post code on Earth, that’s gonna cost quite a lot of money. Economies of scale meant USA, Europe, China were the obvious markets to target but when you start entering smaller markets, each unit of sales is more costly due to smaller scale, which results in margin erosion.
So that’s where Tesla is right now. Take a profit hit to grow sales via pricing, enter smaller markets which again, impacts margin. The options aren’t very wonderful for a Tesla shareholder right now as no matter what, you either take a growth hit or you take a margin hit. All those 2025/2030 forecasts you see from the Tesla fans on twitter etc are build on sand I’m afraid. Even the highly respected Gary Black has it wrong. His 2025 forecast has Tesla absolutely miles past the market saturation point. The equivalent of me forecasting lawnmower sales to people that live in a flat. Its just not going to happen. You can get a little bit of movement across markets, but key fundamentals, like getting the Passat driver into a Polo – that’s just not going to happen in significant numbers.
If you’ve made it this far, you’ve done well. I wouldn’t dream of buying Tesla shares but I can see the attraction. I just don’t have the risk appetite. For those that do though, I wish you well, but please do so with an open mind and consider what I’ve suggested in this post. Like I mentioned, I forecast for a living and my 2022 UK forecast of the MY SR and price cuts turned out to be pretty accurate, despite people thinking my statements were absurd at the time.
‘But Tesla sell every car they can make!’ Turns out that’s not true. Market saturation points have forced Teslas hand, and will continue to do so.
Not just started, more like dragging their feet, VW shipped the ID3's knowing they weren't working correctly. They still have yet to get the software working, after the ID range launched over 2 years ago. Now they are raising the prices for the same design.
GM are a joke, they are partnering with LG again after the Bolt disaster.
Ford can't decide what they are doing.
The only credible competition to Tesla is , far eastern car makers not including the Japanese.
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