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

[Cult Member]

Have to come back to the amazing Gigafactory Berlin-Brandenburg Factory Tour.
GA of the interior with the Structured Battery Pack looks like a cakewalk: Start with vent pipes and carpet, add center console and finally seats - you're done!
Every step is done outside the car.

 

[StrongGuy]

Yeah, but that’s Teslarati. If you go to the autonomous driving thread where new beta drivers are sharing their thoughts, it’s more of a mixed bag. I suspect at least part of that is nervousness due to being new to the system, but of the videos I’ve watched so far, I haven’t seen any significant steps forward with 10.2 yet.

This is why I'm very bearish on FSD. Elon keeps talking about a "global maximum" on what I assume to be some kind of probability density function.
Even if they do get there, there is no guarantee that the maximum be able to drive at an acceptable level for regular consumers and regulators.

 

[AMN]

This is why I'm very bearish on FSD. Elon keeps talking about a "global maximum" on what I assume to be some kind of probability density function.
Even if they do get there, there is no guarantee that the maximum be able to drive at an acceptable level for regular consumers and regulators.

It doesn't have to be 100% perfect. It just has to be good enough or better than a human. Not a tough target.

If you are having trouble wrapping your head around FSD and robotaxis, think about automotive insurance as a profit center to bridge the gap. Teslas with FSD will likely reduce at-fault rate dramatically. Likely eliminate it. What will a hundred bucks a month of high margin recurring cashflow do to this company's financials given its growing fleet size?

 

[StrongGuy]

Welcome
I did a 5 year outlook which is based solely on Auto and Energy (no Robotaxi, no AI).
Take a look here:

Tesla Valuation Based on 5 Year Outlook

I am going to break up my valuation work into 6 posts. Please refrain from responding until I have completed the 6 posts so as to keep a continuous string. Edit - Done posting - feel free to comment

teslamotorsclub.com

What most bears get wrong is they focus on the number of cars sold rather than profit and cash flow generated from the cars sold.
As Tesla expands, the manufacturing efficiencies and operating leverage generate a tremendous amount of profits and cash flow.
I have gotten some valid feedback on my 5 year outlook since posting it in July and have made some changes to the model (which I have not yet posted).
My new Outlook is still a work-in-progress, but the overall numbers still tell me this stock has significant upside. There is no other large cap stock with this amount of potential.

Thanks for this.
I'm okay with your production estimates and your gross margin %, though I'm not too confident about your sales figures. I do think Tesla will hit 5-6 million units annually by 2025 or 2026, but wouldn't the vast majority of those sales be with the lower-priced $25K sedan?
I would think that would cut your revenue by 1/2.
And if Steven Mark Ryan is correct about an $18K model, that would cut your revenue estimates by 2/3.
I'm not even sure if they would be able to maintain their 30% auto margins if they were selling mostly high-volume, low-priced vehicle (High worker wages in the west acts as floor for production costs), so there would be further downward pressure on their operating income and net income. Decreasing margins will also lead to dropping P/E ratio.

 

[traxila]

This is why I'm very bearish on FSD. Elon keeps talking about a "global maximum" on what I assume to be some kind of probability density function.
Even if they do get there, there is no guarantee that the maximum be able to drive at an acceptable level for regular consumers and regulators.

You are bearish on FSD as it does not exist yet. And yet it will someday. Whether it is two years away or ten years away, it will exist. Companies are scrambling and pouring money into developing FSD in order to be first in what will be an incredible achievement for human civilisation. Demonstration of true FSD will have the regulators melting away into the background as data drop after data drop shows there are people who should be dead but are still walking. The first mover here will have a tremendous advantage in trillion dollar markets. Linear thinkers need not apply.

So the question is, who do you bet on? If you think another company will get there first, then bet on it hard. For many reasons, I will make mine Tesla.

BTW, your assertion that TSLA will be banking over 100 bill per year in profits but will be assigned a 5 to 8 PE is simply not credible unless you also assert that the markets in general will be crushed across the board and that PE contraction will occur for all companies at a high level, including all the tech darlings of the markets today.

 

[HG Wells]

We will cross 800 again today.
Will it stay above 800 ?

Inquiring minds want to know !

EDIT: Come on baby. Daddy needs a new Island.

 

[Artful Dodger]

Only 180K TSLA shares traded Pre-market:

TSLA Pre-Market Quotes​

Data last updated Oct 11, 2021 09:30 AM ET.
This page will resume updating on Oct 12, 2021 04:00 AM ET.

Consolidated Last Sale	$785.81 +0.32 (+0.04%)
Pre-Market Volume	180,197
Pre-Market High	$788 (09:28:50 AM)
Pre-Market Low	$783 (08:08:32 AM)

Cheers to the Longs!

 

[elasalle]

We will cross 800 again today.
Will it stay above 800 ?

Inquiring minds want to know !

I'm happy if it establishes a $100+ low watermark per Q.

So $700 after Q2, $800 after Q3. So shoots up over $850 but never goes below $800

 

[Right_Said_Fred]

I've removed many posts in which our newest member is being nailed to the pillory on the suspicion of being a care bear or troll. That is not how we operate. Everyone has the right to ask questions, even if they are critical. Public branding is uncalled for at this time. If moderators suspect that someone has no pure intentions, they will take action.

I like the many constructive and insightful responses that were also given. They reinforce once again the notion that we are investing in the right company.

 

[Artful Dodger]

Incoming Zen:

LFP batteries will make Elon the real Ironman.

Until now, he was becoming Jefferson*
*(the dude on the Nickel)

 

[mongo]

Thanks for this.
I'm okay with your production estimates and your gross margin %, though I'm not too confident about your sales figures. I do think Tesla will hit 5-6 million units annually by 2025 or 2026, but wouldn't the vast majority of those sales be with the lower-priced $25K sedan?
I would think that would cut your revenue by 1/2.
And if Steven Mark Ryan is correct about an $18K model, that would cut your revenue estimates by 2/3.
I'm not even sure if they would be able to maintain their 30% auto margins if they were selling mostly high-volume, low-priced vehicle (High worker wages in the west acts as floor for production costs), so there would be further downward pressure on their operating income and net income. Decreasing margins will also lead to dropping P/E ratio.

Lower cost Model is not confirmed by Tesla, nor have factory line builds been started for it. It may be FSD taxi with $$$ revenue .
2021 is on track to be >800k in just 3/Y
2022: Berlin is built for 500k Y, same with Austin, Fremont expanding
By 2025: >3 million Y/3 with currently in progress factories.
Plus Cybertruck (500k+? )
Plus S/X (100k)
Plus Semi (???)
Plus Roadster (?)

 

[H Mak]

There we go!

I'll keep my mouth shut in future

 

[st_lopes]

Assuming that Tesla will maintain a 30% gross margin and ASP of $35,000.
Gross profit will be $210 billion. Maybe profit margin will be 15%, which is outstanding for a mass-market auto company leading to a net income of $105 Billion.
I think the company would stop growing then, and so P/E ratio will be something modest like 5-8.

I'm just having trouble justifying Tesla's valuation if Tesla doesn't solve FSD.

Spend some time unpacking the volume of optionality Tesla has in growing in to its valuations. FSD is just one of a dozen. It’s entirely capable of growing in to its valuation on car sales alone. Your assumption that by dropping prices they will drop margins is the primary fallacy. Rewatch battery day video. Watch The Limiting Factor. That is the primary secret sauce to unlocking vehicle margins.

It’s not FSD. FSD is an unlock to a multi trillion valuation that even nobody here can really model out. ARKK has tried. Even their “failure” bear models shows $T valuations.

And we’re not even talking about energy, Dojo-aaS, licensing various technology components, robotics, HVAC, EVTOL, etc. Each of those segments have the potential to add $B (and some $T in their own right) to continued valuation.

Ok, this actually makes some sense.
I guess if robotaxis don't come, the FSD add-on would provide Tesla with a pretty significant boost to their margins if FSD continues improving.

Tesla's last quarterly report was really impressive at an 11% operating margin. I've read up on manufacturing innovations at Tesla to reduce costs (Like the Octovalve and Gigapresses), so how easy would it be for other companies to copy Tesla and achieve similar cost savings, which would then pressure Tesla to lower prices & margins?

Others have said it already. No OEM has shown any technological prowess in the EV space. Tear down after tear down keeps showing they still really don’t know what they’re doing. Will they eventually figure it out? Maybe. Will it be before their ICE factories bankrupt them? Maybe. Place your bets accordingly.

Bottom line, you are severely underestimating Tesla’s abilities to drive margins solely on vehicle sales. Their cost to produce batteries are just in the cusp of dropping 50% plus over the next couple years.

 

[Nocturnal]

No FSD for me yet. I was out of town with a family emergency so I couldn't drive around and game the system. Early response looks pretty good though.

I have to imagine competitors and larger investors are watching this closely, but then again they don't always seem particularly savvy.

 

[Artful Dodger]

If moderators suspect that someone has no pure intentions, they will take action.

Where do we report the 'Gullibulls'?

Cheers to the Longs!

 

[ammulder]

And if Steven Mark Ryan is correct about an $18K model, that would cut your revenue estimates by 2/3.

I haven't watched the video, but most people talking about an $18k car are talking about a car that Tesla sells in the US for $25.5k, but then the buyer collects a $7500 rebate from the proposed EV credit. That credit doesn't take revenue away from the manufacturer.

Don't forget that the average new car in the US costs $43k, so there's really not a reason to believe the majority of Tesla sales would be a $25k car, even if it existed. Not to mention as of last week, the company is aiming for the Model Y to be the best selling car in the world by revenue in 2022, and best by unit sales in 2023. Another good reason to believe the cost of the average Tesla isn't going to drop by 2/3.

Then, even if you think Robotaxis aren't a thing, you must appreciate that FSD is getting better as a driver-assist. There will be a certain number of FSD buyers (or more likely, subscribers) with a $25k car, which means nearly-all-profit software stands to be a proportionally bigger piece of the total Tesla revenue on a $25k car. That could make margins better (not worse) vs. the more expensive models. It depends on the FSD subscription rate, but as the software keeps improving, it's hard to imagine the take rate won't also improve.

 

[TheTalkingMule]

Max pain for Friday is currently $750. Praying to all dirties we can touch that this week and lever up.

Looks like $800/820 are the more rational walls. Banged off 800 once already this week.

 

[StarFoxisDown!]

And looks like we're already done for the week

My progression of reactions the moment it's clear at 7:02 am on the first day of the trading week that the stock isn't going higher for the rest of the week

 

[CaliBear1]

Ok, since the battle for 800 is raging, here are some key events from 800 A.D. to ponder:

800 - Wikipedia

en.m.wikipedia.org

800 onward!

I figured this was better than posting a photo of Olde English 800.

 

[Artful Dodger]

Max pain for Friday is currently $750. Praying to all dirties we can touch that this week and lever up.

Looks like $800/820 are the more rational walls. Banged off 800 once already this week.

My experimental "C-P Brkpt" metric as of 7:00 a.m. today points at $780 again, with "Call Walls" at 800 and at 810 (already sold off once at hitting 800)

REMINDER: "C-P Brkpt", or "Call minus Put Breakpoint", is an experimental attempt to capture the Options expiry price that may be preferred by Market Makers. It is not updated in real time (always at least 1-day stale), and there are many other actors in the Market bidding the SP up or down to their own benefit. Take this as just another piece of the puzzle, and... GLTA!

Cheers!