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

[tivoboy]

S&P P/E sits at 29 today. Here's a chart of what historically the PE is vs the 10 year.
Historically P/E usually don't sit at 25+ for very long but usually sits around 20ish. Then again historically we don't have 10y bond trading at less than 2% very long either

I wouldn’t use this to find that smaller portion of the S&P that can clearly demand a relative higher PE than “the S&P”., but it’s certainly a good part of the exercise.

 

[Singuy]

And to those wondering how interest rate hikes affects Tesla even though Tesla has very low outstanding debt and are not looking to borrow lots of money in the future. This has to do with a shrinking of money supply. As rate goes up, those who are buying Teslas will see higher monthly payments because they are the ones borrowing money. This can results in less demand as all their other potential debt payments (like mortgage interest/CC interest) can go up, especially for those who are not on fixed interest rates but variable rates.

 

[ZeApelido]

Germany holding the Tesla Gigafactory hostage

 

[MC3OZ]

I'm going to riff because I think we're getting to the point a market reversal is possible:

Social dynamics wise: So, I’ve been paying attention to various dynamics about how people are responding to the pandemic … and especially now in year 3. Socially - Jan 6 2021 needs to be resolved and there’s going to be far reaching consequences. NBC news was running a report that there are now entire towns and districts that are literally “Trump” country where houses are painted patriotic colors and filled with trump signs. People have invested their and their families lives into Trumpism and they have guns. Further, there’s massive violent social unrest in practically every country around covid restrictions, inflation (due to gas price rises and trickle down effects from that), school instability, vaccinations, climate change, etc.

Climate Change wise: its becoming obvious this is a growing problem across society and battery factories are being built, but in order to transition the entire world over to renewable (Norway is almost there), its going to take over a billion cars in the worldwide fleet to be reconciled and replaced with whatever EV solution makes sense. That requires a ton of batteries where most factories are popping up over the next 7 years. Climate change is causing a lot of mental health issues and instability in regular living (compared to the old 10 year old bull market we were in). Personally, I think COVID is a part of climate change.

Market wise: the fed printed a ton of money and many people are retiring, who are incredibly capable, in order to spend more time with their families and friends rather than focus on society focus areas like climate change and health. We have a massive amount of workers, but there’s many that are leaving the job market or changing jobs out of dangerous and shitty jobs that no one wants to work. USA is based on immigrants routinely coming in to, eventually, make their way through generation(s) of their families to get better work. Unfortunately, things are changing a lot where many are just retiring because people made so much money in the markets. I think robotics is going to be necessary (mostly in agriculture and logistics) in order to supplant labor supply issues. Now, the significant amount of money in the markets and cash on hand right now are likely going to need to be moved to outside USA countries because that’s where the supply chain is at and people are incredibly tired. Wages are likely going to need to increase to stop the labor bleeding.

In general: I do think Starlink becoming available and more EVs (outside of Tesla) becoming available this year may usurp this trend (hopefully) as many more workers get access to the internet than before and can become better workers because they have so much better internet access and build up so many more businesses and knowledge workers quickly. Who knows what surprises lay in store though, no way to know how the environment is going to logjam logistics and change priorities in many, many people as the year progresses…and its going to be powerful alongside social unrest everywhere unless the unit economics of living a good life gets better for each individual/family on the planet soon (more $$, more infrastructure).

My 2 cents...

A key consideration is having the income streams and margins to fund expansion.

Tesla laid out a plan on Battery Day, 20 Million cars and 3 TWh by 2030.

IMO Tesla seems to have the income streams plus margins, and multiple paths to achieve that goal.

A key consideration is the capex efficiencies laid out on Battery Day, and the general efficiency of manufacturing.

Change can happen quickly when the capacity expansion is self-funding and efficient.

The pace is set by the fastest runner in the race.

I agree Tesla Bot could become an important product, if it leads to improved manufacturing efficiency and better margins.

And that is why Elon mentioned a UBI. We can't have the fastest runner slowed down the the pace of the plodders, when competing the race ASAP is important.

When the public realises a transition to clean energy and transport is vital, they are going to admire companies that are helping to achieve that transition. That kind of public admiration and respect can't be won with advertising. My impression is most people I meet under the age of 18 already respect and admire Tesla. Most of them would love to drive a Tesla.

 

[MrMoo]

I'm seeing things on reddit like once Q4 earnings are calculated we are at 150 P/E (Trailing) and We could potentially make more net profit than AMZN this year. Are these just delusions / hopium. Does anyone have prelim Q4 and yearly estimates they can link or refer me to? Thanks

 

[MC3OZ]

Getting the factory open is just the first battle in this war.

The next one I predict will be Tesla fighting the German unions and keeping them at bay as much as legally possible. Like @Chunky Jr. I will be pleasantly surprised if we see any deliveries from Berlin in the first half of this year.

IMO many posters here are overly negative and impatient about FSD and Berlin GF.

Both are not easy tasks to complete, there are frustrations, unexpected delays and problems.

But both a very important and when they are working/operating, hindsight will reveal that the destination fully justifies the difficult journey.

 

[The Accountant]

I'm seeing things on reddit like once Q4 earnings are calculated we are at 150 P/E (Trailing) and We could potentially make more net profit than AMZN this year. Are these just delusions / hopium. Does anyone have prelim Q4 and yearly estimates they can link or refer me to? Thanks

You'll find my Q4 estimates here and a few post down from here you will find the annual numbers:

Near-future quarterly financial projections

The S/X refresh gave us a unique insight in Q1/Q2 into the strength of Tesla's main business which is the 3/Y and exactly how profitable they are and can be in the future......BUT......S/X back at full production of 25k/quarter with these new price levels will have an outsized impact on earnings...

teslamotorsclub.com

 

[Hock1]

Just looking at TSLA today the PE ratio dropped by 34. So there's 1 data point.

All. Please stop with the PE ratio. It is a meaningless metric when dealing with a mega-high growth company. Accepting the fact that most mainstream are clueless, do any of them talk about a PE ratio when it comes to valuing TSLA? C'mon, man.

 

[Singuy]

I'm seeing things on reddit like once Q4 earnings are calculated we are at 150 P/E (Trailing) and We could potentially make more net profit than AMZN this year. Are these just delusions / hopium. Does anyone have prelim Q4 and yearly estimates they can link or refer me to? Thanks

Def not making more net income than amazon for the year. However Tesla is expected to make more than Amazon's net income this Q. There might be some massive restructuring cost going on with Amazon because their earnings are severely depressed last Q and also expected this Q. EPS is 3.75 according to analyst for Q4 which translate to ~ 1.9 billion of net income. Tesla will definitely beat this number this Q.

 

[ZachF]

No one is going to want to build in Germany if this keeps up.

Being perfectly honest, I was surprised when Elon did…

If it was in Czechia it would probably already have started production 5 months ago.

I’m sure it’ll be awesome when it finally starts though.

 

[BornToFly]

Consensus EPS is rising on my Finance feed. Now $2.09. Hopefully they don't raise it to the point that Tesla has a "miss" on earnings in a few weeks.... "Tesla misses on earnings despite unexpected production/delivery beat...."

 

[ZachF]

Def not making more net income than amazon for the year. However Tesla is expected to make more than Amazon's net income this Q. There might be some massive restructuring cost going on with Amazon because their earnings are severely depressed last Q and also expected this Q. EPS is 3.75 according to analyst for Q4 which translate to ~ 1.9 billion of net income. Tesla will definitely beat this number this Q.

Amazon is going to continue to have to increase labor costs (wages) because it’s not mathematically possible for their turnover rate to continue. I don’t think it’s a one time thing.

 

[Big Time]

Again...... reiterating how to kill a dragon. Cut its head off....big pike...... town square.....

 

[Singuy]

Amazon is going to continue to have to increase labor costs (wages) because it’s not mathematically possible for their turnover rate to continue. I don’t think it’s a one time thing.

They say it's a short term problem, but who knows and it may be something that can drag on(which wouldn't be too kind to their stock and the QQQ).

"Amazon CEO Andy Jassy said the company expects to take on “several billion dollars” of extra costs in its consumer business in the fourth quarter as a result of labor shortages, higher employee costs, global supply chain constraints and increased freight and shipping costs."

 

[bkp_duke]

IMO many posters here are overly negative and impatient about FSD and Berlin GF.

Both are not easy tasks to complete, there are frustrations, unexpected delays and problems.

But both a very important and when they are working/operating, hindsight will reveal that the destination fully justifies the difficult journey.

FSD is FSD.

But Berlin is UNNECESSARILY over-complicated. That's the root of the frustration.

And when people see that Austin broke ground like 6 months later than Berlin, but has a very good chance of deliveries starting before Berlin, I think there the complaints are legitimate.

 

[MrMoo]

You'll find my Q4 estimates here and a few post down from here you will find the annual numbers:

Near-future quarterly financial projections

The S/X refresh gave us a unique insight in Q1/Q2 into the strength of Tesla's main business which is the 3/Y and exactly how profitable they are and can be in the future......BUT......S/X back at full production of 25k/quarter with these new price levels will have an outsized impact on earnings...

teslamotorsclub.com

Thanks mate! This is exactly what I was looking for =)

Def not making more net income than amazon for the year. However Tesla is expected to make more than Amazon's net income this Q. There might be some massive restructuring cost going on with Amazon because their earnings are severely depressed last Q and also expected this Q. EPS is 3.75 according to analyst for Q4 which translate to ~ 1.9 billion of net income. Tesla will definitely beat this number this Q.

Sorry, that was my mistake! I typed year but meant quarter, there is no way we could of beaten them for the entire year.
Wow 1.9 this quarter? That does sound severely depressed considering their Q3 earnings. We'll have to wait and see how they go I guess. Full steam ahead for earnings season!

 

[UnknownSoldier]

The infamous Berlin Airport took 16 years to finish. Completed to that, Giga Berlin is moving at lightspeed. Have a little patience.

 

[ZachF]

FSD is FSD.

But Berlin is UNNECESSARILY over-complicated. That's the root of the frustration.

And when people see that Austin broke ground like 6 months later than Berlin, but has a very good chance of deliveries starting before Berlin, I think there the complaints are legitimate.

Austin is also like 2x larger too

 

[Skipdd]

A key consideration is having the income streams and margins to fund expansion.

Tesla laid out a plan on Battery Day, 20 Million cars and 3 TWh by 2030.

IMO Tesla seems to have the income streams plus margins, and multiple paths to achieve that goal.

A key consideration is the capex efficiencies laid out on Battery Day, and the general efficiency of manufacturing.

Change can happen quickly when the capacity expansion is self-funding and efficient.

The pace is set by the fastest runner in the race.

I agree Tesla Bot could become an important product, if it leads to improved manufacturing efficiency and better margins.

And that is why Elon mentioned a UBI. We can't have the fastest runner slowed down the the pace of the plodders, when competing the race ASAP is important.

When the public realises a transition to clean energy and transport is vital, they are going to admire companies that are helping to achieve that transition. That kind of public admiration and respect can't be won with advertising. My impression is most people I meet under the age of 18 already respect and admire Tesla. Most of them would love to drive a Tesla.

A proof point - I was just catching up with a friend who received his Model 3 (1st Tesla) in December to see how he liked the Holiday release and things in general. He mentioned that he took all 13 of his nieces and nephews for rides, AND let them drive it (very brave imo) and unsurprisingly they loved it. He let his brother-in-law who IIRC is a gearhead have 30 mins in it, and he said, “Best Christmas present ever.” So, I’d say you are on point.

 

[ZachF]

They say it's a short term problem, but who knows and it may be something that can drag on(which wouldn't be too kind to their stock and the QQQ).

"Amazon CEO Andy Jassy said the company expects to take on “several billion dollars” of extra costs in its consumer business in the fourth quarter as a result of labor shortages, higher employee costs, global supply chain constraints and increased freight and shipping costs."

I don’t think any of that is going away in 2022. Supply chain might get better but labor probably isn’t, especially for someone like Amazon with a poor reputation that many have already worked for and quit from.