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

[wipster]

Says the one who also said 999 times was buying an island redoubt.

She could always find a mountain on an island...

 

[dl003]

Hes talking about deferred FSD revenue, not tax revenue. Are you saying that any deferred revenue never gets to be counted for the stock price?

Maybe theres a middle ground here. The TTM portion of that deferred revenue can be counted. Anything older than 12 months should be backed out

 

[Singuy]

Hes talking about deferred FSD revenue, not tax revenue. Are you saying that any deferred revenue never gets to be counted for the stock price?

OH deferred FSD revenue is material, as a higher percentage of reoccurring revenue from FSD subscription will be booked in the future. However I believe the stock run up for deferred FSD revenue+future profits will be priced days after FSD goes wide release, and not after earnings.

 

[StarFoxisDown!]

that depends on whether GAAP or non GAAP EPS will be used to calculate the internal PE ratio at each individual institution. In cases like this, I would think most of them will back it out from GAAP EPS as well

I don't think you're quite getting what I was talking about. Sure some funds that have P/E limitations might decide to back out certain items. No ones forcing them to buy Tesla just because the P/E goes below a certain level.

But for the fund managers that have been waiting to buy TSLA but are limited by P/E ratio limitations, the "official" P/E will drop thanks to Tesla recognizing the deferred revenue. It gives them an out to skirt around that limitation of their fund and because Tesla is growing it's earnings rapidly, they don't have to worry about the P/E multiple going back up on them. Except for in the case where the stock price skyrockets and pushes the P/E multiple. But I doubt they'd be complaining about having to sell their TSLA shares with big gains

 

[henchman24]

One time things might be backed out by analysts, but the fact is that it gets calculated into the P/E. This goes for the tax allowance as well. These two items will have big impacts on the P/E multiple of Tesla and will likely bring in new money from funds that have rules on P/E multiples.

If these were one time items for a company that's NOT growing earnings (especially at a rapid pace), then you'd have issues with the P/E going back up a year after these one time items are not calculated into the P/E anymore. Lucky for us, Tesla is growing earnings at a superb pace.

Not all ways of looking at and evaluating on P/E are the same. Firms with heavy focus on TTM and earnings history will suddenly show more interest in Tesla as their past earnings would be upgraded, but we are talking about the firms with 100-400 PTs now. Their PT raises (to say 550-600ish) are unlikely to spur heavy buying as they may just go from sell to holds. That will have some impact, but I wouldn't expect that to have a major impact on the share price. The impact is basically going to be having less bearish outlooks out there, but they might turn back to bearish if the stock goes to 1000 despite the better outlook.

Firms that are heavy on future P/E multiples and discounting back, they'll adjust out the one time, understand the upward impact of it on a quarterly basis, then project that on future earnings. I could easily see a .50 pop right off there for 2022 EPS... which should cause their price targets to go up by ~$35-50. As those are the big firms buying and holding Tesla now... i think that is where the impact is really coming from. A number of holds will go to buy in that process and cause upward pressure on the stock.

 

[StarFoxisDown!]

Not all ways of looking at and evaluating on P/E are the same. Firms with heavy focus on TTM and earnings history will suddenly show more interest in Tesla as their past earnings would be upgraded, but we are talking about the firms with 100-400 PTs now. Their PT raises (to say 550-600ish) are unlikely to spur heavy buying as they may just go from sell to holds. That will have some impact, but I wouldn't expect that to have a major impact on the share price. The impact is basically going to be having less bearish outlooks out there, but they might turn back to bearish if the stock goes to 1000 despite the better outlook.

Firms that are heavy on future P/E multiples and discounting back, they'll adjust out the one time, understand the upward impact of it on a quarterly basis, then project that on future earnings. I could easily see a .50 pop right off there for 2022 EPS... which should cause their price targets to go up by ~$35-50. As those are the big firms buying and holding Tesla now... i think that is where the impact is really coming from. A number of holds will go to buy in that process and cause upward pressure on the stock.

See my post above.

To add context to this. I personally know a fund manager who runs a fund that does have a P/E limitation on her fund since it's supposed to be a more conservative fund with less risk. She personally owns shares, but has been waiting on the P/E to drop to a level where she can start buying for her fund. She's very much looking forward to when Tesla recognizes the deferred revenue.

 

[Knightshade]

OH deferred FSD revenue is material, as a higher percentage of reoccurring revenue from FSD subscription will be booked in the future.

Pretty sure we already went over this and concluded 100 percent of subscription revenue will be recognized immediately.

Because unlike BUYING FSD, where Tesla still "owes" you something later, with the subscription you get whatever is available for the next month and they owe you nothing else at all- and it's non-refundable besides.

 

[Ohmster]

The 500 is a decent little ev now, plenty of kwh small car ideal for Europe, looks cute too.

I remember 4+ years back they were leasing this for something stupid like $79/month and the CEO said no way would he take that deal.

 

[henchman24]

See my post above.

The funds that are that rigid are unlikely to get a Tesla PE that works for them in conjunction with a low enough share price at that point. Growth funds are going to buy up Tesla as a 'cheap' ~60-70x 22 EPS stock here soon (or ongoing now with the current bump). They get a reason to bump up that 2022 EPS another 50ish cents, they'll have even more of a drive to push it up. This current area of 6-700 won't last when funds start projecting out 10+ 2022 EPS. Add more on top of that, they are going to drive the stock to 900-1000 if Q3 earnings are good. Even a full release of the deferred revenue (unlikely to have a full drop in one quarter), won't do enough for the P/E to get those funds in as the growth funds and retail are jumping in to continue to push it up. I simply don't think TTM P/E gets below 100 in the next 12-18 months. If the market is smart, it won't happen for a few years. There is too much growth runway here.

 

[MikeC]

Just throwing this out for some historical perspective. I think this month is 10 years since I bought my first 100 shares (pre-spilt) for a little over $2000.

https://twitter.com/x/status/1422291111591256067

 

[RobDickinson]

I remember 4+ years back they were leasing this for something stupid like $79/month and the CEO said no way would he take that deal.

There is an all new 500 its nothing like the one made 4 years ago, it has a WLTP of 320km etc

 

[Singuy]

Pretty sure we already went over this and concluded 100 percent of subscription revenue will be recognized immediately.

Because unlike BUYING FSD, where Tesla still "owes" you something later, with the subscription you get whatever is available for the next month and they owe you nothing else at all- and it's non-refundable besides.

Good point, I can see how 100% of it should be recognized.

 

[StarFoxisDown!]

The funds that are that rigid are unlikely to get a Tesla PE that works for them in conjunction with a low enough share price at that point. Growth funds are going to buy up Tesla as a 'cheap' ~60-70x 22 EPS stock here soon (or ongoing now with the current bump). They get a reason to bump up that 2022 EPS another 50ish cents, they'll have even more of a drive to push it up. This current area of 6-700 won't last when funds start projecting out 10+ 2022 EPS. Add more on top of that, they are going to drive the stock to 900-1000 if Q3 earnings are good. Even a full release of the deferred revenue (unlikely to have a full drop in one quarter), won't do enough for the P/E to get those funds in as the growth funds and retail are jumping in to continue to push it up. I simply don't think TTM P/E gets below 100 in the next 12-18 months. If the market is smart, it won't happen for a few years. There is too much growth runway here.

Guys I'm not saying every fund out there with a P/E limitation will get a chance to get into TSLA thanks to these couple of big items of revenue recognition. Simply saying that there's many funds with different P/E limitations and I'm sure there's plenty of funds managers that are hoping Tesla recognizes these two items soon to bring down the P/E multiple so that they can get a chance to buy in..........now whether the share price cooperates with them is another issue. The fund manager I know is fully aware that the share price will likely take off too much, even with these one time items recognized, for her to be able to buy in.

I'm sure there's a lot of fund managers praying (unrealistically) that the P/E drops to the 200 level.

 

[FireMedic]

Guys I'm not saying every fund out there with a P/E limitation will get a chance to get into TSLA thanks to these couple of big items of revenue recognition. Simply saying that there's many funds with different P/E limitations and I'm sure there's plenty of funds managers that are hoping Tesla recognizes these two items soon to bring down the P/E multiple so that they can get a chance to buy in..........now whether the share price cooperates with them is another issue. The fund manager I know is fully aware that the share price will likely take off too much, even with these one time items recognized, for her to be able to buy in.

I'm sure there's a lot of fund managers praying (unrealistically) that the P/E drops to the 200 level.

Have we beaten this topic senseless yet?

Maybe we all just agree to disagree on something…

 

[dww12]

See my post above.

To add context to this. I personally know a fund manager who runs a fund that does have a P/E limitation on her fund since it's supposed to be a more conservative fund with less risk. She personally owns shares, but has been waiting on the P/E to drop to a level where she can start buying for her fund. She's very much looking forward to when Tesla recognizes the deferred revenue.

Thursday, the 29th was the first day I saw Yahoo/Apple show Tesla TTM PE in the 300s vs the 600s. Also the first day of the uptrend from earnings.

 

[ReddyLeaf]

She could always find a mountain on an island...

How about and island in an Island ?

 

[madodel]

That price includes significant sales tax etc. And its not really a type of car that works well in USA. Europe and European cities are different.

I can back that up as I just rented a Model 3 in Germany for a week. While small to me, trying to find a parking spot in Mannheim was something of a challenge at times. The hotel parking garage was challenging as well just driving from one level to another without scraping the sides or tearing off the side mirrors. Thank goodness for folding mirrors. By then end of the week I was able to make it through the garage without having to back up and reposition but I could never get my X in there. Lots of Fiats and Smart half a cars. Certainly some big cars but not sure where they park in the city.

 

[ammulder]

Just read an interesting tweet suggesting that if FSD Beta goes wide release in September, it releases a chunk of FSD deferred revenue and further boosts Q3 earnings.

Anybody know how big a chunk? Worth getting excited about?

From the most recent 10-Q (emphasis mine):

Deferred revenue is related to the access to our Supercharger network, internet connectivity, Full Self Driving (“FSD”) features and over-the-air software updates on automotive sales with and without resale value guarantee, which amounted to $2.13 billion and $1.93 billion as of June 30, 2021 and December 31, 2020, respectively.​

…​

Of the total deferred revenue on automotive sales with and without resale value guarantees as of June 30, 2021, we expect to recognize $1.32 billion of revenue in the next 12 months. The remaining balance will be recognized over the performance period which is generally the expected ownership life of the vehicle or the eight-year life of the vehicle.​

So note that the $1.3B is over the next year, not necessarily all the moment the FSD Beta is widely released. And the $2.13B total will keep growing over that time as well…

 

[jerry33]

Have we beaten this topic senseless yet?

Maybe we all just agree to disagree on something…

What!! In a Tesla forum. Is that allowed?

 

[nativewolf]

Yeah, any car that small is going to look cute. And that's not the class of car I'm suggesting shouldn't be included in the same category of EV sales as the other EV's that also replace gas cars.

The Fiat 500 retails for 23,000 pounds before incentives which is almost $32,000 dollars!

It has full EU safety features, crush zones, air bags, safety exit features, etc etc. The Chinese companies can surely make a comprable car but it won't be close to the price of a golf cart. Basically the cars you highlighted are glorified golf carts.