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

[TheTalkingMule]

PE ratio 99.81!

 

[DarkandStormy]

TTM PE ratio is now under 100, I believe.

 

[traxila]

Sorry I know you're not fear mongering, but that's fear mongering lol. Nasdaq isn't dropping another 30%, period. It's only 18% above back where it was in Feb 2020. Wiping out all of the gains from the pandemic. But wait.....tech earnings have materially gone up quite a bit from Feb 2020. So the Nasdaq would actually much much cheaper than it was back in Feb 2020.

Same dynamic with S&P. It's like 17% above it's Feb 2020 higher. But earnings has gone up way more than 17% over the past 2 years. So the S&P would be much much cheaper on a fundamental basis.

For the S&P and the Nasdaq to go down to those levels you're mentioning, it would mean the S&P's P/E ratios would be just as low, if not lower than the P/E it had during the financial crisis......one of the worst crisis and recessions( really depression) in history.

As for TSLA specific, I can definitely see the 600's. Possibly 500's. The China covid lockdowns (and Elon's twitter mess) really happened at the absolute worst time for the stock. The stock is been weak against the macro's day after day now, regularly down 3-4X it's BETA and not even up 2X it's beta on the up days. It's trading about as weak as it gets right now. And what's worse is that there's zero positive catalyst coming up and plenty of FUD material until we get Q2 P/D numbers. Everyone better buckle up unfortunately


Nasdaq is now down 29% from it's peak, it's not far off from that 37% peak to trough decline.

The S&P is 18% but.........most of that is has been the fact that Apple/Microsoft are only down 19% and 22%. So both of those companies would have to roll over for the S&P to even get to a 30% drop.

I figured that people might not be happy with me, but I was there for 2000 and 2008, and the FED then didn't have any issues with 'runaway' inflation so that it would have to hike into the teeth of a dropping market.

In 2000 the QQQs were over 100 and met their bottom a couple of years later in the 20s. Took a decade and a half to break 100 again.

In 2008 SPY went down from over 150 to bottom out in the 70s.

And now we have this self created mess of the FED balance sheet as well that is being flushed to the tune of trillions of dollars with quantitative tightening.

Ask yourself if I had predicted TSLA at 750 today when it was at trading at 1200, how you would have reacted? Especially if I told you how the first quarter 2022 went.

I am fear mongering a bit here. But I do not want people getting taken out altogether. WS traders can feed in both directions. Their only allegiance lies in crushing retail.

I am optimistic right now that the economy is strong and the labor market is great for workers. This obviously must continue for none of what I am writing here to be possible.

Uncertainty is the rule right now. The big question that no one can answer: How high must interest rates go before the back of inflation but not the back of the economy is broken? I personally think that three to four percent is a slam dunk. But what if we are looking at six to seven percent? Fifty basis point hikes again and again all the way into the middle of 2023. What does the equity market look like at that point?

Don't want to upset anyone here. I am fully invested in TSLA, and that is not changing, but I am lucky enough to have almost zero margin. I think TSLA is a great buy here. But it was at 900 as well. A descent to much lower will not happen tomorrow or next week, but bear markets can last a long time. They just have not recently.

And if we bottom and scream up from here you can look at me as a contrarian indicator. I am OK with that.

EDIT: One thing I do find encouraging today is that GOOG is flat and was positive almost all day long. This tells me the WS is beginning to try to pick out obvious winners and is actually looking at business models. Either that or a 90 billion dollar share buyback is a helluva thing lol.

 

[GOVA]

I would not be surprised to see 400 before this is all over. Not saying we will. But... if SPY drops another 20% can't see the NAZ not following suit with another 30% and TSLA does have a higher BETA. Blah.

So, you are saying there is another chance @ $420? Deal.

 

[ZachF]

Nikola (NKLA) now down over 90% from its ATH in 2020.

…It only has the last 10% to go until it reaches fair value!

 

[ZachF]

How on god’s green creation is Wal Mart only down 1% with a PE over 30 and 0 growth?

 

[Ogre]

...I am fully invested in TSLA, and that is not changing, but I am lucky enough to have almost zero margin. I think TSLA is a great buy here. But it was at 900 as well. A descent to much lower will not happen tomorrow or next week, but bear markets can last a long time. They just have not recently.

And if we bottom and scream up from here you can look at me as a contrarian indicator. I am OK with that.

As I was reading your post I kept formulating a reply in my head. But I hit this bit and see where you are going here.

Not a great time for short term trades or big margin plays.

 

[StarFoxisDown!]

PE is now like 29x next year’s earnings…

Well look on the bright side..........TSLA's trading action going forward AFTER Q2's P/D and Earnings becomes extremely predictable if the stock is still at these levels or even lower than this. For once, finally, Tesla's growth in terms of revenue and especially earnings, will force the stock higher......a la.....Apple over the past decade.

So as long as someone has done their due diligence, has a timeframe past Q2, and expects the company's performance/growth to be what we expect here over the next couple of years, this becomes an extremely easy trade.........(I wish I had the confidence in Elon to not do something that wipes out a couple hundred billion off the market cap at any given moment because this is one of those times where the payout using LEAPS can be astronomical)

Devil's advocate: if market participants are forward looking and therefore worried that a recession will decrease company earnings in upcoming quarters, could we not expect to see P/Es compress even more, despite what earnings have done over the past two years? (This is not in reference to TSLA, but the market / tech as a whole.)

If Tesla's earnings growth and/or it's P/E was sky high (at least in the 200-300 range), I would be concerned. But even if the market wants to continue to say that P/E's across the board should compress, Tesla's earnings growth are going to offset that, in a massive way. Reminder that even with a $2 GAAP EPS for Q2, that's 100% growth YoY and will continue to compression TSLA's TTM P/E, even if the stock doesn't go down. Then Q3/Q4 will be massive P/E compression for the stock. So even if the market decides that Tesla's P/E should be 75 by the end of the year, that would mean TSLA would still be at 927/share at the end of the year.

 

[Tyler34]

Is rivian earnings after close going to drag us lower? Asking for a friend named Margin

 

[Ogre]

Does this price drop, if it becomes the new baseline for the next couple of quarters, affect the anticipated stock split?

I would expect Tesla's board to have shareholders vote on enough additional shares so they have a bit of a runway. Then when the board actually does the split they can make the SP hit whatever target value they want and have some dry powder for another split a year or two down the road without having to go back to the shareholders. So perhaps authorize enough shares for a 32:1 split. Then they could split 4:1 and have enough shares in the vault for 3 more 2:1 splits over the next 2-3 years. (Programmers like base 2...)

 

[traxila]

Well look on the bright side..........TSLA's trading action going forward AFTER Q2's P/D and Earnings becomes extremely predictable if the stock is still at these levels or even lower than this. For once, finally, Tesla's growth in terms of revenue and especially earnings, will force the stock higher......a la.....Apple over the past decade.

So as long as someone has done their due diligence, has a timeframe past Q2, and expects the company's performance/growth to be what we expect here over the next couple of years, this becomes an extremely easy trade.........(I wish I had the confidence in Elon to not do something that wipes out a couple hundred billion off the market cap at any given moment because this is one of those times where the payout using LEAPS can be astronomical)

If Tesla's earnings growth and/or it's P/E was sky high (at least in the 200-300 range), I would be concerned. But even if the market wants to continue to say that P/E's across the board should compress, Tesla's earnings growth are going to offset that, in a massive way. Reminder that even with a $2 GAAP EPS for Q2, that's 100% growth YoY and will continue to compression TSLA's TTM P/E, even if the stock doesn't go down. Then Q3/Q4 will be massive P/E compression for the stock. So even if the market decides that Tesla's P/E should be 75 by the end of the year, that would mean TSLA would still be at 927/share at the end of the year.

Just keep in mind in a recession WS and the MM will not be able (or refuse) to grasp that Tesla is being driven by a secular trend. They will treat TSLA like a cyclical and simply assume that their earnings and sales will be crushed along with the rest of the economy and car sector.

 

[BrownOuttaSpec]

Is rivian earnings after close going to drag us lower? Asking for a friend named Margin

Yes, their (RIVN) earnings are tonight with a estimated EPS of -1.44 and currently down 13.5% for the day. I hope that is being factored in and is dragging TSLA down today

 

[Todd Burch]

You would think Tesla's PE ratio would be less affected by this craziness, primarily because:

1. Tesla has almost no company debt, so rising interest rates don't materially increase their cost of doing business.

2. Tesla is flush with cash, so no need to go to the market to get loans that would be affected by interest rates.

3. Tesla has high margins, helping pad their cash reserves and giving them a buffer to decrease prices on their products if need be while still bringing in a healthy profit.

4. Tesla has a long order book, so an economic downturn would have limited to no negative effects on their effective (realistically buildable) demand.

5. Tesla is early in a huge growth cycle.

6. Tesla's main product in general (EVs) are in high demand (whether Teslas or not), and they are not something that you can easily flip a switch on and double or triple output.

7. We are in the middle of a "petroleum crisis", with high oil costs, and Tesla's products break customers free from that--increasing demand.

8. Tesla's products are generally aimed at higher earners, who tend to be less affected by economic downturns.

9. The world is looking for alternatives to Russian oil, where Tesla can play a massive part.

Looking at all of this, you'd think Tesla would be a massive safe-haven for a lot of investors. It seems so obvious that Tesla won't be affected by a lot of what's going on compared to other companies. Yet TSLA is sold more quickly than other stuff.

I've said it before, and I'll say it again. The market is full of morons, and they continue to do moronic things.

 

[henchman24]

Is rivian earnings after close going to drag us lower? Asking for a friend named Margin

Call me crazy... they have a chance to beat.

 

[elasalle]

Does this price drop, if it becomes the new baseline for the next couple of quarters, affect the anticipated stock split?

1st step of split is just to get Share Holder permission - that will likely happen regardless of SP.
Doesn't make sense to do the split if the price is too low ...

So is Elon still paying like 54$ for TWTR shares or is he better off walking away with 1B fine ... TWTR at ~ $46 now

 

[ZachF]

ARK has now wiped out all of its gains since nov 2017…

 

[Todd Burch]

I would love for Elon to decide to pass on the Twitter deal and put the money back into TSLA

 

[StarFoxisDown!]

I figured that people might not be happy with me, but I was there for 2000 and 2008, and the FED then didn't have any issues with 'runaway' inflation so that it would have to hike into the teeth of a dropping market.

In 2000 the QQQs were over 100 and met their bottom a couple of years later in the 20s. Took a decade and a half to break 100 again.

In 2008 SPY went down from over 150 to bottom out in the 70s.

And now we have this self created mess of the FED balance sheet as well that is being flushed to the tune of trillions of dollars with quantitative tightening.

Ask yourself if I had predicted TSLA at 750 today when it was at trading at 1200, how you would have reacted? Especially if I told you how the first quarter 2022 went.

I am fear mongering a bit here. But I do not want people getting taken out altogether. WS traders can feed in both directions. Their only allegiance lies in crushing retail.

I am optimistic right now that the economy is strong and the labor market is great for workers. This obviously must continue for none of what I am writing here to be possible.

Uncertainty is the rule right now. The big question that no one can answer: How high must interest rates go before the back of inflation but not the back of the economy is broken? I personally think that three to four percent is a slam dunk. But what if we are looking at six to seven percent? Fifty basis point hikes again and again all the way into the middle of 2023. What does the equity market look like at that point?

Don't want to upset anyone here. I am fully invested in TSLA, and that is not changing, but I am lucky enough to have almost zero margin. I think TSLA is a great buy here. But it was at 900 as well. A descent to much lower will not happen tomorrow or next week, but bear markets can last a long time. They just have not recently.

And if we bottom and scream up from here you can look at me as a contrarian indicator. I am OK with that.

I get all that and I went through the dot.com bust and the 2008 financial crisis myself (though I had little to invest back in dot.com burst)

But neither of those events are even remotely close to the same things.

Dot.com bubble - astronomical tech valuations on hundreds of companies with no earnings at all. The S&P P/E back in that time was nearly 1.5X higher than the high point the S&P P/E got in early 2021 and we're already down to the bottom that the P/E got to for the S&P after the dot.com bust.

Financial crisis - The lowest the S&P P/E got was 14.87 and that was from the worst financial crisis in decades and I'm sorry, but the dynamics today are not anywhere close to the financial crisis. We're talking not even in the same city, much less the same neighborhood in terms of dynamics across the economy. And yet, the LOW for the P/E during that crisis was 14.87. The rest of the years, including during the panic of 2008/2009, the P/E for the S&P was 20.

 

[Cherry Wine]

You would think Tesla's PE ratio would be less affected by this craziness, primarily because:

1. Tesla has almost no company debt, so rising interest rates don't materially increase their cost of doing business.

2. Tesla is flush with cash, so no need to go to the market to get loans that would be affected by interest rates.

3. Tesla has high margins, helping pad their cash reserves and giving them a buffer to decrease prices on their products if need be while still bringing in a healthy profit.

4. Tesla has a long order book, so an economic downturn would have limited to no negative effects on their effective (realistically buildable) demand.

5. Tesla is early in a huge growth cycle.

6. Tesla's main product in general (EVs) are in high demand (whether Teslas or not), and they are not something that you can easily flip a switch on and double or triple output.

7. We are in the middle of a "petroleum crisis", with high oil costs, and Tesla's products break customers free from that--increasing demand.

8. Tesla's products are generally aimed at higher earners, who tend to be less affected by economic downturns.

9. The world is looking for alternatives to Russian oil, where Tesla can play a massive part.

Looking at all of this, you'd think Tesla would be a massive safe-haven for a lot of investors. It seems so obvious that Tesla won't be affected by a lot of what's going on compared to other companies. Yet TSLA is sold more quickly than other stuff.

I've said it before, and I'll say it again. The market is full of morons, and they continue to do moronic things.

If not for your last sentence, it would be so much more tempting to place a big leveraged bet right now. "Throwing the baby out with the bathwater" is definitely a thing.

 

[ZachF]

I would love for Elon to decide to pass on the Twitter deal and put the money back into TSLA

He could probably pay the fine, re submit a bid a $35/share or less (and win) and put a chunk back into TSLA if he wanted to at this point.