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

[CLK350]

Quite plausible, but Tesla‘s factory can still be caught in this political struggle cross fire.

In addition, the longer the Ukraine war goes, the more knock on effects against China will emerge. China imports lots of oil and food. While Chinese imported oil from Russia comes from Eastern Siberia, those facilities are going to start falling apart without the help of the major oil services firms which have all left Russia. In less than a year probably. Anyways, I sure am glad Berlin and Austin are coming online!

Actually - Xi Jinping has met Elon many times and gave him the honor reserved for Presidents meeting him at that special place - remember he joked "We can also give you a Green card any time .. " It's no coincidence Tesla Giga Shanghai was allowed to operate with workers staying onsite. Obviously the CCP leadership wasn't going to shoot itself in the feet. So I would give cross fire possibilities really low odds

China benefits from Tesla Shanghai big time - Elon was/ is consistent in his message/ mission. Too bad he hadn't have time to get a Giga Factory in Russia, would have covered all the bases. Putin too much out of touch, typical of dictators

 

[ZachF]

https://twitter.com/x/status/1542162525847953408

Might want to up that rate........significantly.

I don't trust Electrek's sources so I'm not about to get all giddy about it. But 2k/week from Austin + 1200/week from Berlin (now that it's 6 days a week) is in the ballpark of 40k per quarter and we're not even in Q3 yet.

Given further increases to production rate throughout Q3, I think at least 50k from Austin/Berlin with a upside to 75K is definitely possible.

So still on track for a Q3 P/D print of 420k.

My very rough pencil guesses for Q3 and Q4 are 400k and 500k.

 

[PKEllefsen]

Hmmmm. So your projections show the shares I purchased at $1,050 will stay underwater until 2024? Error. Does not compute.

If the the general marked is doing good, the PE will probably be higher (and thus also the share price). This is just what i would consider fair value in a flat marked.

 

[Cosmacelf]

Hey guys, with all all the recent speculation here about future Tesla stock price, PE ratios, etc., I thought it would be FUN to do something similar to what we did in the SpaceX forums and run a charity bet. The idea is we try to predict the month/year that TSLA closes at or above $1250. The bet winner gets to select a charity at that time that everyone participating in this charity bet will pinky swear they will donate $50 to. When I last participated in one of these bets (in the SpaceX forum), I lost and donated $50 to a cat rescue organization

This is meant to be FUN! So please take this in that spirit.

Charity Bet #1: When Will TSLA close above $1250 (Post-split $416.67)

This charity bet is meant to be FUN. You get to predict which month/year TSLA will close at or above $1250 $416.67 (post split). If your prediction wins, you get to select a charity at that time that everyone participating in this charity bet will pinky swear they will donate $50 to. When I last...

teslamotorsclub.com

 

[PKEllefsen]

When I worked on 5 year Strategic Plan forecasts at 3 large multi-national companies, we had a Likely Scenario, a Downside Scenario and then an Upside Scenario. Looking at @PKEllefsen 's numbers I would say the financials look like the Likely Scenario while the P/E multiples (38, 32 and 30 in 2023, 2024 and 2025, respectively) reflect a downside scenario.
Edit: my opinion of course.

The PE's for 2023 and 2024 are adjusted so you will have a stable increase in the share price up till 2025. I think 30 PE in 2025 is fair if the marked is relatively flat and Tesla's growth rate at this point is 30% and continues downwards to 20% the following years.

 

[henchman24]

PEs vary widely on the market appetite for risk. In risk averse environments, anything above 25-30 is frequently seen as very risky and 15-20 is a much more solid number. We're in one of those environments now. We also have times where the market is willing to pay 50-150 PE all over the place even some with good but not great growth. We saw that in 2020 and into 2021. Being steadfast into one PE for all markets simply doesn't work within short term movements.

With continual growth there tends to be a floor on PE ratios even in bad times, but Tesla is not to that floor yet... or even that close. That doesn't mean Tesla will drop to the floor or even close to it. It just means it will be impacted disproportionately by valuation changes due to market risk appetite. That's good and bad. When we start swapping over to accepting more risk, Tesla will be one of the stocks that gets gobbled up. When there is less appetite, we see compression.

Now long term in say ~7-8-9-10 years, Tesla likely has to fall into the 30s on PE. Even the highest growth stocks tend to end up there (or lower) over longer timeframes. The path from ~100 to ~30 isn't going to be a straight line. My own valuation model has a movement down to 75 (setup as 3 years from profitability) from in mid 23 with a short plateau (2 years), then to 50 over the course of a year with a longer plateau (4 years) before moving into the 35 range over ~2 years where it stabilizes there. I typically build with a long term Fed rate at 2.25% (higher lowers PEs market takes on). I think there is built in upside to this if market goes on a longer bull run and gains risk appetite (we've seen 50+ PEs hold for very long periods of time), but downside cycles that could accelerate compression (we might be in one now to 75).

 

[StarFoxisDown!]

PE is the least interesting value though unless you're going all in on leaps banking on PE staying at least 60 PE isn't saying much of how they're actually performing (only how bullish people are for the next 5+ years).

Your logic doesn't make any sense.

According to my projections tesla is at their peak of their s-curve in 2021/2022. Their net income growth YoY for the following years are as follows: 2022 - 126%. 2023 - 110%. 2024 - 48,5%. 2025 29%. If we assume a somewhat following trend we can guess the growth rate will be going down towards 20% within the next following years. If we are to use the same PE as growth rate for 2025 (which is basically what i've used) 30 PE for 29% growth, then we cant have 110 PE for 2023, nor 48,5 PE which is the growth rate for the following year. With a PE of 50 in 2023 you would lose money


The fact that you're criticizing my PE for 2022 and 2023 doesn't make any sense. If you want to criticize my PE you at least need to do it for the 2025 numbers. And if the PE to growth ratio is the only thing you have a problem with then the 2025 numbers should be fine (as PE to growth is basically 1 to 1 for the 2025 projection). The problem with raising the PE by 20-50% for 2022 and 2023 is that you will lose money in 2025 if that PE is fine 2022 and 2023 PE right now is good as they are if the 2025 PE remains unchanged. The only PE worth discussing is 2025 as the growth rate is starting to stabilize at this point.

@The Accountant put my disagreement with your numbers in a much more simple way. We can just end this on you think Wall St is going to treat TSLA and it's P/E differently than practically every other stock out there...Sure Ok

Also this "According to my projections tesla is at their peak of their s-curve in 2021/2022. Their net income growth YoY for the following years are as follows: 2022 - 126%. 2023 - 110%. 2024 - 48,5%. 2025 29%" is grossly inaccurate. Tesla's net income/profits won't have the % growth from 2020 to 2021, but earnings will be 2X revenue growth for the next 2-3 years thanks to operational leverage due to ramp of Berlin/Austin and expansion of Shanghai/Fremont. Might want to go back through 2021's earnings to see how operating leverage greatly distorts profits per dollar of revenue when a Gigafactory has exited the initial ramp and is well into its volume ramp.

Also, large part of that % net income from 2020 to 2021 and then to 2022 is the hit from Elon's compensation plan going away. It greatly distorted net income % growth.

The PE's for 2023 and 2024 are adjusted so you will have a stable increase in the share price up till 2025. I think 30 PE in 2025 is fair if the marked is relatively flat and Tesla's growth rate at this point is 30% and continues downwards to 20% the following years.

So you think TSLA P/E will equal it's earnings growth rate while the vast majority of the stock market trades at P/E multiples 1.5-2X their growth rates. This is what this entire back n forth boils down to and you continually don't acknowledge it. So I'm ok ending the back n forth

 

[Artful Dodger]

I just gotta call this out.

This is a community. This isn't Twitter or some random place on the web. People develop reputations and credibility here. I consider myself "New", but you are wet behind the ears. It's ok to be new and not understand. It's not ok to be rude about other posters.

I didn't know Discoducky had experience with autonomous vehicles, but I do know that other members of the community would call him out on his bullshit if he made random claims like that. The thing that makes TMC a bit special is there are subject matter experts here. If you listen instead of shout and argue, you can learn a bunch.

It's ok to be skeptical and a bit contrarian. You just have to be careful about how you do it. This isn't the way.

Nominated for "Moderators' Choice: Posts of Particular Merit". Thank-you.

 

[The Accountant]

PE isn't saying much of how they're actually performing (only how bullish people are for the next 5+ years).

That's a solid point you're making. P/E in 2025 is not based on what the company has done from 2021 through 2025; it is based on what you think the company will do from 2026 to 2030 and beyond. It takes a bit of pixie dust to come up with projections out that far (where will the economy be? what new products will Tesla launch? new territories? where will the competition be?)

The roadmap was/is clear from 2021 to 2025 (new batteries, CyberTruck, Semi, new factories (maybe a Model 2/Z?), etc. We can model that.
The roadmap for 2026 - 2030 is more difficult but if I was a betting man (and I am), I would bet that the 2026-2030 period will be more exciting and lucrative than 2021-2025.

 

[verystandard]

Actually - Xi Jinping has met Elon many times and gave him the honor reserved for Presidents meeting him at that special place - remember he joked "We can also give you a Green card any time .. " It's no coincidence Tesla Giga Shanghai was allowed to operate with workers staying onsite. Obviously the CCP leadership wasn't going to shoot itself in the feet. So I would give cross fire possibilities really low odds

China benefits from Tesla Shanghai big time - Elon was/ is consistent in his message/ mission. Too bad he hadn't have time to get a Giga Factory in Russia, would have covered all the bases. Putin too much out of touch, typical of dictators

For correction: It is Premier Li Keqiang not Xi Jinping who mentioned about Chinese Green Card during Giga Shanghai Opening.

 

[henchman24]

The PE's for 2023 and 2024 are adjusted so you will have a stable increase in the share price up till 2025. I think 30 PE in 2025 is fair if the marked is relatively flat and Tesla's growth rate at this point is 30% and continues downwards to 20% the following years.

Earnings are growing (much) faster than 30% though and outside this quarter, they likely will for a while. For the TTM ending 3/31/21 EPS was 1.01. for the TTM 3/31/22 the EPS was 7.37. That's over 600%. Now I don't think we see anywhere close to 600% over the next 12 months, but 150% seems pretty likely.

Edit: corrected a typo.

 

[JimS]

I agree. I’ve put about 10,000 miles on my car since I got FSD last November and most of it has been with FSD enabled. I’ve covered 7 western states while avoiding interstates where possible, and lots of small towns. FSD has definitely gotten progressively better, with better speed control for curvature and visibility, smoother transitions between maneuvers, and better recognition of road geometry.

Here’s me going up and down Pikes Peak a couple of weeks ago (no safety-related interventions):

That video is now one of my very favorite YouTube videos. I cued it up on our living room TV when my wife came in. I told her she probably didn't want to watch this because it was over 30 minutes long. She asked what it was and I told her some idiot went up Pikes Peak on FSD Beta. She was hooked!

We had gone up Pikes Peak last year but the day we went the summit was closed due to paving of a parking lot so we were only able to go to Devil's Playground. We were anxious to see what the remaining portion was like. (Most of you are probably familiar with our trip if you checked out my thread: Western Road Trip in a Model 3, Part 6 of 17.) (Shameless plug.)

It was truly awesome and amazing how well your Tesla did, especially on the hairpin turns. Obviously the scarcity of guard rails did not affect FSD Beta like it affected me! Your video was such a life-like experience that we have no need to go to the summit on our next trip west. Wait, correction, my wife still wants to go to the summit so I guess it's Pike Peak or Bust! Now the only question is will we be crazy smart enough to use FSD Beta?

To those of you who don't want to watch a 30+ minute video, at least watch the trip up. Then maybe watch the trip down in double-time. (Oh, that's a scary thought.)

 

[dhanson865]

On the ground at Southampton. Tesla customer delivery area is open and active at 7:00 am London time. Model Y with hatch open can be seen along with a customer tent . I saw one customer drive off in the few minutes I was nearby. Car carriers were loading up in another lot. View attachment 822491View attachment 822492

why do they leave the hatch open on some cars and not others? Seems to be done in batches but a larger number of cars with hatch closed.

 

[Mengy]

The roadmap was/is clear from 2021 to 2025 (new batteries, CyberTruck, Semi, new factories (maybe a Model 2/Z?), etc. We can model that.
The roadmap for 2026 - 2030 is more difficult but if I was a betting man (and I am), I would bet that the 2026-2030 period will be more exciting and lucrative than 2021-2025.

Yeah, my own (conservative) model predicts crazy growth for Tesla financially during the 2026-2030 timeframe as economies of scale kick into gear at stupendous levels. And when I add any forecast for FSD / Robotaxis it gets truly insane, which is why I largely ignore it because it just seems stupid. And my rough modeling for anything from Optimus adds even more to the crazy 2026-2030 years.

I do largely agree with PKE in that I feel the next few years will see TSLA trading mostly sideways, even though it seems unlikely and illogical I still think it will. BUT Tesla's financials will eventually reach a point where it simply MUST go up sharply, and no amount of PE compression will be able to stop it. I feel that point is sometime between 2024-2026, when things really take off for Tesla.

Could happen sooner, I sure wouldn't mind it. I'm just not counting on it.

 

[PKEllefsen]

(Just so we're clear though. I'm a huge believer in FSD, and i think this will be somewhat priced into the share price. Tesla will probably always have a + 10-15 bonus in it's PE solely on the hope of the robotaxi network coming to fruition.)

@The Accountant put it my disagreement with your numbers in a much more simple way. We can just end this on you think Wall St is going to treat TSLA and it's P/E differently than practically every other stock out there...Sure Ok

Also this "According to my projections tesla is at their peak of their s-curve in 2021/2022. Their net income growth YoY for the following years are as follows: 2022 - 126%. 2023 - 110%. 2024 - 48,5%. 2025 29%" is grossly inaccurate. Tesla's net income/profits won't have the % growth from 2020 to 2021, but earnings will be 2X revenue growth for the next 2-3 years thanks to operational leverage due to ramp of Berlin/Austin and expansion of Shanghai/Fremont. Might want to go back through 2021's earnings to see how operating leverage greatly distorts profits per dollar of revenue when a Gigafactory has exited the initial ramp and doing volume ramp.

Also, large part of that % net income from 2020 to 2021 and then to 2022 is the hit from Elon's compensation plan going away. It greatly distorted net income % growth.


So you think TSLA P/E will equal it's earnings growth rate while the vast majority of the stock market trades at P/E multiples 1.5-2X. This is what this entire back n forth boils down to and you continually don't acknowledge it. So I'm ok ending the back n forth

Well, marked prices are based on expectations of future earnings. If tesla growth has fallen from 110%, to 48,5% to 29,3%, it wouldn't surprise me if the marked is pricing in growth following the same trajectory going forward. Given this trajectory 20% growth rate is only a few years away, which would make tesla hit 1,5x of future net income growth. Maybe the PE could be a few points higher, but either way the PE would only be a few years away from 30. It's fine to disagree on the PE though, as long as we're discussing the numbers for 2025. I also think the PE's in general will stay lower for the following years compared to what we've seen the last 5+ years.

I guess i could raise 2025 PE to 35 while still being slightly on the conservative side. Here's an updates version then. I've also dialed down the dilution.

 

[PKEllefsen]

Yeah, my own (conservative) model predicts crazy growth for Tesla financially during the 2026-2030 timeframe as economies of scale kick into gear at stupendous levels. And when I add any forecast for FSD / Robotaxis it gets truly insane, which is why I largely ignore it because it just seems stupid. And my rough modeling for anything from Optimus adds even more to the crazy 2026-2030 years.

I do largely agree with PKE in that I feel the next few years will see TSLA trading mostly sideways, even though it seems unlikely and illogical I still think it will. BUT Tesla's financials will eventually reach a point where it simply MUST go up sharply, and no amount of PE compression will be able to stop it. I feel that point is sometime between 2024-2026, when things really take off for Tesla.

Could happen sooner, I sure wouldn't mind it. I'm just not counting on it.

True. That's why im buying leaps with 2 year expiry And if PE keeps compressing for 2 years, but tesla performs as expected, i will buy three times as many contracts in a year or two

 

[The Accountant]

Tesla was at $38 on May 22, 2019

They have endured:

Production Hell​

Logistics Hell​

Coronavirus breakout​

Delivery Slowdown due to Covid​

Fremont Lockdown​

Model S&X Refresh Delays​

Delta/Omicron variants​

Chip & Parts Shortages​

Lack of batteries and chips for Mega Packs/Power Walls​

Giga Berlin Construction Delays​

Inflation impacting source materials​

Federal Reserve rate hikes meant to dampen demand​

Shanghai Lockdown​

Austin 4680 delays​

Port Logistic Issues​

​

. . and yet they execute.

There will always be obstacles out there but I think in the future we will look back at this 3-4 year period and marvel at Tesla's innovation and perseverance.

 

[BrownOuttaSpec]

why do they leave the hatch open on some cars and not others? Seems to be done in batches but a larger number of cars with hatch closed.

Just a wild guess that I made up and very probably wrong (heck, I haven't even looked at the temps at the delivery location). The hatches are open on cars with a lower state of charge to keep them cool so the overheat protection (A/C) doesn't turn on or can't turn on (i.e. less than 20% SoC). Easier to identify and close at the end of the day if the customer doesn't pick up their car or the weather looks like it is going to rain than windows being down.

Or they need to put something in the trunk that wasn't there before like maybe the parcel shelf?

<Edited to add clarification and another hypothesis>

 

[mickificki]

I believe news of this is already out and discussed somewhat, but still good to know.

https://twitter.com/x/status/1542159548915613696

 

[unk45]

I just gotta call this out.

This is a community. This isn't Twitter or some random place on the web. People develop reputations and credibility here. I consider myself "New", but you are wet behind the ears. It's ok to be new and not understand. It's not ok to be rude about other posters.

I didn't know Discoducky had experience with autonomous vehicles, but I do know that other members of the community would call him out on his bullshit if he made random claims like that. The thing that makes TMC a bit special is there are subject matter experts here. If you listen instead of shout and argue, you can learn a bunch.

It's ok to be skeptical and a bit contrarian. You just have to be careful about how you do it. This isn't the way.

This may be one of the finest posts ever made in this forum!
corollary: it's always unwise to assume other people are equally ignorant to oneself.