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

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April 26th we closed at $738 and proceeded to announce insane 1Q earnings. Then an insane 2Q with Tesla on track and coasting to something like 80-100% growth for 2021. Now 4 months later we're closing the Monday before Labor Day at $731. P/E ratio is around 350-400 with about 6-8 quarters worth of reporting 80-100% y-o-y growth clear as day on the horizon.

Seems completely rational and organic.
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headline news Remember The Charred Tesla Model X Left On The Frozen Lake? New Theft Allegations Paint A Clearer Picture



At the time the fire occurred, a user on the Tesla Motors Club forum who had witnessed it shared their story, as well as the image seen at the top of this post. Some respondents were skeptical of the supposed course of events — as forum users tend to be — and theorized possible insurance fraud. In this instance, they may have guessed right. Or, perhaps this particular Tesla just got extremelyunlucky during an ice fishing journey, and its demise had nothing to do with the fact this individual allegedly had a hard time flipping it.
 
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….This creates maximum shareholder value as it funds growth opportunities ===>instead of a large corporate tax bill<===. Of course, the money has to be productively invested but Elon has a very good history of that.
A heads-up: Remember that Senator Warren announced about 3 weeks ago that she was going to push hard for US corporations - most specifically the Big Boys - to be taxed on their so-called “Earnings Reported to Investors”, ie., book value profits, at a 7% rate for such profits over the first $100MM. This is effectively the same as the “real corporate profits tax” portion of her Presidential campaign.

I have zero opinion on whether such a proposal has legs either now or in the near years to come but I’d suggest we ignore such a possibility at our peril.
 
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Wait how does the Taycan become a full size car when its smaller internally than a model 3?
 
A heads-up: Remember that Senator Warren announced about 3 weeks ago that she was going to push hard for US corporations - most specifically the Big Boys - to be taxed on their so-called “Earnings Reported to Investors”, ie., book value profits, at a 7% rate for such profits over the first $100MM. This is effectively the same as the “real corporate profits tax” portion of her Presidential campaign.

I have zero opinion on whether such a proposal has legs either now or in the near years to come but I’d suggest we ignore such a possibility at our peril.
So does this mean that, every time FASB changes GAAP standards, it redefines taxable income for corporations? That would be weird to give such authority to a non-governmental organization.
 
I expect Tesla's gross auto margins to continue to surprise to the upside as volumes also increase but I take Elon at his word when he warned against huge bottom line profit in favor of re-investing the profits in faster growth and new initiatives. A climbing share price should result in the P/E ratio remaining very high. So, not much conceptual difference from what Amazon did. This creates maximum shareholder value as it funds growth opportunities instead of a large corporate tax bill. Of course, the money has to be productively invested but Elon has a very good history of that.
It would actually be rather difficult for Tesla to reduce profits in the near term while production of cells and cars are constrained (as there would be no point lowering cost of cars or energy products - it wouldn’t increase unit sales at all). Any cash they use for capex projects generally doesn’t impact Net Income either until those new assets start being depreciated.

Maybe one area they could use to reduce net income by operating at a loss would be to drop pricing on solar roofs well below cost (if they have excess production capacity) and employ thousands of salespeople/roofers/electricians to try and grab market share from traditional roofing companies. However the last 2 years has all been about reducing costs in this part of the business by drastically reducing sales force etc, so it would be a big 180 degree strategy shift.

Medium/long term, once Telsa has plenty of capacity to spare, after Austin & Berlin are fully built out ramped and the new $25k vehicle plants & 3TWs of cell production are online (wherever they end up being) - I think could definitely see Musk shift to that strategy of reducing profits to chase higher unit volumes to further the primary mission. But in the interim it’s going to be quite hard for Tesla to suppress its profits.

(I mean I guess Tesla could buy GM and/or Ford and shut down ICE production immediately and absorb huge losses for years as they convert all the iCE factories over to EVs & cell production).
 
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Wow, Cnet lives in an alternate universe where the Model S Plaid Plus (+) actually exists! Pass over whatever they are smokin'...
 
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Notice the fine print "Roadshow editors pick the products and services we write about. When you buy through our links, we may get a commission."
 
Notice the fine print "Roadshow editors pick the products and services we write about. When you buy through our links, we may get a commission."
I did a search for "Tesla" on the full list (linked from that page) because I knew it was going to be near the bottom. What I didn't expect is that "Tesla" was mentioned 35 times throughout the page. It was car after car comparing something or another to Tesla. Runner up, ya right...
 
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I just glimpsed through it. So the 3 is runner up to the Meh-E in mid-size category as it is too expensive. Yet it is also runner up to the Kona as ‘best’ affordable? And against the Ford they add FSD to the cost. Ugh.