Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Knightshade]

This got me itching to do some very rough napkin math to ballpark a 2030 PT from two different angles.

Angle 1 - Revenue multiples using energy + auto TAMs

Assumptions:
- EVs are 100% of new car production in 2030

I can stop you right there.

There's not remotely enough batteries for that.

Even 50% would require the rest of the industry to magically accelerate battery development and planned production to keep pace with what Tesla has on the books by then (and note even at their accelerated pace Tesla themselves says they'll need to keep using battery supplier partners to reach 20-25% market share of new cars in 2030)

Several members appear to be under the impression that the number of TSLA shares required by S&P 500 Index funds could not be purchased in a single session, that this additional volume (about 115M shares) could not be produced by the Market.

Let's look at the Top Ten Volume Days for TSLA, with the highest volume days listed in descending order:

Their premise is that most shares traded on any day are the same shares moving back and forth by HFT/AI trading- not unique shares.

And this the "real" float on a given day of different individual shares is vastly lower than reported volume.

Note I didn't say this was a correct argument, but it's the one by which they can look at 200+ million volume and still conclude a 120 million buy was impossible.

Just as a point of reference.. the Alibaba backed startup has robotaxis being tested on the road now..

Self-driving robotaxis are taking off in China - CNN

Amazon backed Zoox has released their prototype as well..

Zoox unveils a self-driving car that could become Amazon’s first robotaxi

and of course there’s Waymo looking to carry passengers in self driving taxis in 2-3 years.

Self driving is a difficult problem to solve.. but there’s lots of competitors in this space.

Waymo has been carrying passengers in self driving taxis for a while now.

In one specific 50 sq mile area of AZ.


The problem with their solution (and the others you mention) are:

The vehicles are expensive as hell.

They are heavily reliant on extremely detailed up to date HD maps of a specific geo-fenced area.


If you're ok with those they work fine. But they're exceedingly crap at scaling up much.

Tesla solution is intended to be far more general- such that it not only can be done with vastly cheaper hardware, it will be able to work almost anywhere without constantly needing cm level HD maps that are always up to date.

Cyberpunk gets pulled from the digital store for being a buggy mess as of yesterday..

To be fair- only on the PS4. Which was trying to run a high-end-requirements-for-2020-hardware-game on a 2013 hardware console.

Game has been running great on my PC at 4k/Ultra/DLSS quality.... which I assume is the way Elon's been running it too.

 

[reardencode]

69M of that was at the cross. 69M < 120M

I'm surprised there's not more chatter/debate about this here today. Looks to me as though index funds feel they can get to nearly 120M by combining Friday's cross and Monday morning's opening cross. Any other speculations?

There were also something like 47m shares traded near the cross price AH.

 

[Knightshade]

69M of that was at the cross. 69M < 120M

I'm surprised there's not more chatter/debate about this here today. Looks to me as though index funds feel they can get to nearly 120M by combining Friday's cross and Monday morning's opening cross. Any other speculations?

Haven't we now seen posts claiming to show at least IVV and VOO already got all (or very near to all within a couple percent) of all the shares they needed on Friday?

 

[CyberDutchie]

When gathering information from various sources I try to keep in mind how the Tesla goal isn't profit. That is my goal, but Tesla's is the transition to sustainable energy. Anything that moves them toward that goal is fair game, and changes how one must evaluate them.

Well, I believe Elon realizes that making profit along the way is critical to reaching that goal faster. And, there is also that other goal of Elon, establishing civilization on Mars. While SpaceX is responsible for the realization of that goal, financially I think it’s also linked to Elon’s personal wealth and therefore, linked to Tesla profits.

 

[Knightshade]

Well, I believe Elon realizes that making profit along the way is critical to reaching that goal faster. And, there is also that other goal of Elon, establishing civilization on Mars. While it’s SpaceX for the realization of that goal, financially I think it’s also linked to Elon’s personal wealth and therefore, linked to Tesla profits.

Nope.

Elon explicitly said he expects to keep profits quite low, because that money better accelerates the mission going back into the company or making the products cheaper (and thus more available to more people).


Specifically-

We need to, you know, not go bankrupt, obviously, that’s important....But we’re not trying to be super profitable, either,” he said on the Q2 2020 call. Going on to say-

“I think just we want to be like slightly profitable and maximize growth and make the cars as affordable as possible,” he concluded.



Elon doesn't personally pocket profit after all. His wealth is from the value of his shares.


BTW based on the numbers he's previously given about the # of launches to set up a self sustaining city on Mars, and the expected cost of Starship construction and launches, he already has significantly more than enough wealth to personally fund that.... if we pretend the shares wouldn't lose value the moment he began to sell them anyway, or that he could get a 70 billion dollar loan against them without any impact either because that would be roughly the cost to build 1000 starships and have them each do 10 launches (one every 2 years for 20 years) which are the numbers he's given. Presumably the other 70+ billion he's got would more than cover paying for the cargo that'd go on said ships.

 

[Sudre]

69M of that was at the cross. 69M < 120M

I'm surprised there's not more chatter/debate about this here today. Looks to me as though index funds feel they can get to nearly 120M by combining Friday's cross and Monday morning's opening cross. Any other speculations?

If any fund wants to match the SP500 they have to buy in at 695 right?

MOST mornings there is a MMD and it should be pretty easy to pick up shares since it will probably get pushed below 695. We are under 695 as of Fridays AH close.... LOL... actually any potential purchase for the SP500 indexers might have to wait for the price to come up!

I know many have this to the moon idea about next week and that may be the case but as it stands right now there is going to be a heavy push to get this down to $630 (amazing that's where they tested pushing this Friday) because that was where the Calls ITM begin. THEY would like to at least push it down there to convince Call owners to sell back and pull in some Put buyers.

 

[ByeByeJohnny]

View attachment 619427
I was going to rate your post with a heart for a complete set, but decided best not to ruin the first straight 5-4-3-2-1-0 that I have ever seen.

Thanks, the pinnacle of my TMC career.

 

[M|S|M MYP]

Maybe I’ll check back after Q4 deliveries....when the board’s sentiment turns cheerful again . Cheer up y’all...2021 will be epic!

 

[Captkerosene]

Sorry, nobody with any money thinks as you do. Nobody on Wall St. believes in FSD as a technological reality or as any sort of business. Well, there's Cathie Wood and company, but they're an outlier in that regard. FSD is irrelevant to Tesla and TSLA until it's actually here and generating business with great margins and little or no risk right now. At the moment, it's irrelevant.

What you're describing is how not to make money through misdirected emotion. Just breathe slow and hold.

Elon agrees with me ... and he has some money. Take the number of cars sold with full autonomy times the price. I get 2 million times 100K or 200B pre-tax profit in 2023. You can plug in your own numbers but the model is from Elon.

Tesla is at 700B because we're currently generating business with great margins and little or no risk? Nope.

I waffle because I go from a 80% to a 20% (and back) chance of Robotaxi working. The Beta release has me at 80% again and holding my shares. It isn't emotion ... it's critical, thoughtful, dispassionate reasoning (and phrenology) that guides my investing. Watch the Emmet Peppers interview with Dave if you want a good example of that.

 

[steve3]

Just now, WSJ...may be a tailwind Monday, if voted on tomorrow & passes.

edit: link
Virus relief bill held up by GOP bid to limit Fed’s lending powers
Senate Democrats and Republicans have cleared a last remaining hurdle for a $900 billion pandemic-aid package.
Virus relief bill held up by GOP bid to limit Fed’s lending powers — The Wall Street Journal

 

[Bet TSLA]

Elon agrees with me ... and he has some money. Take the number of cars sold with full autonomy times the price. I get 2 million times 100K or 200B pre-tax profit in 2023. You can plug in your own numbers but the model is from Elon.

Tesla is at 700B because we're currently generating business with great margins and little or no risk? Nope.

I waffle because I go from a 80% to a 20% (and back) chance of Robotaxi working. The Beta release has me at 80% again and holding my shares. It isn't emotion ... it's critical, thoughtful, dispassionate reasoning (and phrenology) that guides my investing. Watch the Emmet Peppers interview with Dave if you want a good example of that.

You think Elon agrees with pinballing back and forth on how FSD is doing? I think all this shows is that you have no idea what Elon thinks.

"Tesla is at 700B because we're currently generating business with great margins and little or no risk? Nope."

Yes. If you don't believe that then get out of TSLA. If you don't think Wall St. now believes it then you haven't been paying attention to what the stock price has been doing. You're seriously asserting that maybe Wall St. doesn't believe in what Tesla is actually doing, but they do believe it's worth taking a flyer on what Tesla has promised many times but hasn't delivered? I take back my previous explanation of your apparent opinion -- you're simply insane.

The current valuation of the company comes from actual profitable and growing execution on the automotive business, and the beginnings of profitable execution and growth on the energy business. It emphatically does not come from hopes of execution on a business that nobody has ever seen make money and nobody knows whether it can happen.

 

[2daMoon]

Well, I believe Elon realizes that making profit along the way is critical to reaching that goal faster. And, there is also that other goal of Elon, establishing civilization on Mars. While SpaceX is responsible for the realization of that goal, financially I think it’s also linked to Elon’s personal wealth and therefore, linked to Tesla profits.

Thanks for that.

Turning a profit is crucial to any business. The point being made is how Tesla has consistently done more (production, R&D, spinoffs, immediate upgrades, etc.) for less because of their focus on getting the most from every aspect of their business. The results of this are aligned with their goals. They still are making stellar profit, and, put it back into the next wave of progress toward their mission goal.

Rather than funding golden parachutes, Union pensions, advertising, and supporting a dependency upon third parties for so many aspects of the business (dealer network, component suppliers, etc.) the way legacy comparisons spend their budgets,

 

[capster]

Several members appear to be under the impression that the number of TSLA shares required by S&P 500 Index funds could not be purchased in a single session, that this additional volume (about 115M shares) could not be produced by the Market.

Let's look at the Top Ten Volume Days for TSLA, with the highest volume days listed in descending order:

View attachment 619434

So we can clearly see that December 18, 2020 was NOT a record volume day for TSLA (in spite of it being a 'triple-witching' day in addition to S&P Index buyers' day).

Indeed, during the first week of February 2019, the 4-day average volume was 245,596,063 shares per day, which is 10.6% higher AVERAGE daily volume than occurred on December 18, 2020.

So (arguements by incredulity aside), it is entirely possible that S&P 500 Index funds have largely already acquired their required TSLA inventory for Monday morning. That does not mean that S&P 500 Benchmark funds have completed buying (likely foolish to try to 'crowd the trade' on Dec 18). Indeed, I expect steady buying interest from these funds, and not just on Monday or before Year End, but going forward steadily as TSLA continues to outperform the other 5 big names on the S&P list. Those benchmark funds that are 'light TSLA' will be 'light growth'.

Growth? Giga. Projection? Profit.

Cheers!

Since there is a clear incentive for information distortion to convince shareholders that the demand is satisfied and, so, possibly induce them to sell (not even remotely suggesting you, @Artful Dodger, are trying to do this) that it behooves us all to consider the data critically.

I doubt anyone thinks index funds could not have gotten enough shares.

It is rather that folks doubt that volume alone is proof that there were necessarily enough distinct and real shares being sold and that such shares that were available necessarily wound up being bought by index funds in sufficient quantities that the funds necessarily fulfilled their purchase requirements.

Maybe they did, maybe they didn’t.

Even if they did, we’d also need to know how many synthetic shares were manufactured to get a confident read on any remaining demand looking forward.

I’m not saying volume is meaningless; just that in and of itself (or even together with pricing), it is insufficient to draw conclusions about purchase completion by indexes.

Honestly, this seems like such a simple and obvious point, it’s hard to believe there’s disagreement.

I’ll stop beating what may be a dead horse

 

[MikeAtkinson]

What if Tesla also licenses the skateboards to go under the other manufacturer's body styles?

Tesla seems to be going away from skateboards to structural batteries using single piece castings specific to the model. They might be able to license those but it is harder than just a skateboard as the castings are integral to the vehicle rather than the skateboard on which the body sits.

 

[2daMoon]

Tesla seems to be going away from skateboards to structural batteries using single piece castings specific to the model. They might be able to license those but it is harder than just a skateboard as the castings are integral to the vehicle rather than the skateboard on which the body sits.

Who's to say what could happen on that front? The context is a ten year span. Any new model / iteration could easily be designed and brought to market in a couple of years.

There could also be yet another business branch for Tesla, providing the resources to help others build factories using Tesla's proven strategy and licensed technology. A supervisory role where Tesla essentially provides Tech Support for factory design and construction, for a fee.

 

[mars_or_bust]

If FSD is not possible, Tesla will fall 70% minimum. Tesla's valuation is dependent on them solving FSD.

Edit: LOL at the disagrees. Where am I wrong? If Tesla doesn't have FSD, then they're just another car company with a 6X PE ratio.

If you have been following the FSD Beta rollout, you would have realized that FSD is SOLVED. It works like magic. Sure, there are edge problems, but these rapidly decease with eeach upgrade (which are being done on almost a weekly basis). Now it really is just a march of 9s, and with dojo coming up soon, this march will turn into a sprint

Yes, Waymo may also get FSD soon, but in a fundameentally non-scalable manner - works only for heavily premapped cities, huge (unsurmountable?) problems in bad weather, not having own cars, much more expensive, higher power consumption, etc. And last, but not least: all those silly lidars sitcking out and rotating... while I love the Ghost Busters movie, I would NOT like to have to drive the ghostmobile

Game over.

 

[Captkerosene]

You think Elon agrees with pinballing back and forth on how FSD is doing? I think all this shows is that you have no idea what Elon thinks.

"Tesla is at 700B because we're currently generating business with great margins and little or no risk? Nope."

Yes. If you don't believe that then get out of TSLA. If you don't think Wall St. now believes it then you haven't been paying attention to what the stock price has been doing. You're seriously asserting that maybe Wall St. doesn't believe in what Tesla is actually doing, but they do believe it's worth taking a flyer on what Tesla has promised many times but hasn't delivered? I take back my previous explanation of your apparent opinion -- you're simply insane.

The current valuation of the company comes from actual profitable and growing execution on the automotive business, and the beginnings of profitable execution and growth on the energy business. It emphatically does not come from hopes of execution on a business that nobody has ever seen make money and nobody knows whether it can happen.

You think Elon agrees with pinballing back and forth on how FSD is doing? I think all this shows is that you have no idea what Elon thinks.

My changing opinion on autonomy was based on the evidence: Elon was missing deadlines and going through a major re-write. My own research led me to doubt that it could be done as well. I'm using Elon's model to value the company. It's based on Robotaxi. If you want the source for that I'll look it up but everybody here knows it's true.

Yes. If you don't believe that then get out of TSLA. If you don't think Wall St. now believes it then you haven't been paying attention to what the stock price has been doing.

I bought Tesla because Wall Street hated it ... but I thought that they would develop into a profitable company. They were in trouble when I bought them. That's where you get the big gains, before Wall Street figures it out.

You're seriously asserting that maybe Wall St. doesn't believe in what Tesla is actually doing, but they do believe it's worth taking a flyer on what Tesla has promised many times but hasn't delivered? I take back my previous explanation of your apparent opinion -- you're simply insane.

You've obviously never invested in early stage biotech. Binary outcomes: 10X or zero.

The current valuation of the company comes from actual profitable and growing execution on the automotive business ...

23X sales for a marginally profitable car maker? Now who's insane?

 

[Mo City]

If FSD is not possible, Tesla will fall 70% minimum. Tesla's valuation is dependent on them solving FSD.

Edit: LOL at the disagrees. Where am I wrong? If Tesla doesn't have FSD, then they're just another car company with a 6X PE ratio.

This post is so clueless I don't know where to begin and end.

If you actually believe TSLA's current valuation is based on solving autonomy, your understanding of both the company and the market perception of the company might be unsalvageable. Currently, the market doesn't give TSLA credit for autonomy other than the additional revenue of selling FSD for $10K per unit. When they begin offering a subscription option, that revenue will increase.

Regardless of full autonomy being solved, Tesla is in the process of completely overthrowing two industries, minimum: Automobile and energy. In the auto realm, full electric is the future and there is no competitor remotely close to being able to produce & sell EVs at scale, much less profitably. In a few years, Tesla will become the largest OEM with the largest profit margin. They are just beginning to get traction. There will be full blown domination and other OEMs will accuse Tesla of being monopolistic.

If robotaxis happens in 2-3 years, that will add (by itself) a min of $1T to the market cap. The profit and revenue potential is almost beyond imagination.

 

[Artful Dodger]

69M of that was at the cross. 69M < 120M

I'm surprised there's not more chatter/debate about this here today. Looks to me as though index funds feel they can get to nearly 120M by combining Friday's cross and Monday morning's opening cross. Any other speculations?

Yeah, I estimated the the volume at the closing cross was ~71 million (likely all those shares traded @ the NOCP of $695.00)

Do you have a data source that gives a exact number for the volume at the closing cross? TIA.

I think there was also significant "dark pool" trading after-hrs (~63M shares) with at least 18 large trades (anywhere from 11.6M to 800K shares) at between $680-672/share (VWAP of these large trades was $678.13).

So, it's possible that even some Benchmark funds picked up significant shares after-hrs on Friday, but I think those funds are less than about one-quarter into their buying program.

Overall, I see the after-hrs ending SP at $677 being quite close to the equilibrium for the amount of money that poured into TSLA stock on Friday, so I don't expect a dramatic or long-lasting correction now that the S&P 500 addition is at hand.

Cheers!

 

[wnorris]

Some random thoughts post S&P inclusion. Please note that I am often wrong on near term price movements so there is a guaranteed 50% chance the below is wrong.

I am seeing a lot of spilled ink on Twitter discussing if passive funds were able to fill their baskets. Fact Checking on Twitter is continuing the debate with Gary Black on whether there may be a ~12m shortfall.This misses the bigger question (IMO) as to how many actively managed S&P benchmarked (bm'd) funds own TSLA as of last week. Bloomberg noted a couple weeks ago that the number of these funds that held Tesla was at 10% of funds (21 of 215) with assets under management greater than $500M that own Tesla shares.

Now that we have the inclusion price of $695 locked-in the bm'd active manager has a mental TSLA target to work from. If the price opens on Monday below the inclusion price the manager could add and generate immediate alpha from the trade. She/he could also wait for a pull back, but why would they knowing that there are over a hundred other managers debating this very same question. The further the price of TSLA deviates from the $695 price the more incentive the bm'd manager has to buy (positive or negative).

What will soon complicate the issue is Tesla reporting significant jumps in production and deliveries in early January. If the price rises above the benchmarked $695 the active manager that does not hold TSLA or is underweight begins to lose alpha with the ominous thought of, "what if this continues higher".

I note all this as, to me, this is the biggest question mark remaining from the S&P inclusion event. My guess, and I noted it yesterday, is that we see some further price shenanigans early next week as active funds debate internally and some try to shape the price movement to their favor. High probability we have a lot of CNBC air time for Gordon and crew.

In the near term, beyond next week, my guess is that we start to drift higher as active managers reluctantly acquiesce and buy TSLA.