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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
I guess enough people are asking Gary the same question, so Gary clarified. Reason given is that receiving 3-4% on the $19B cash does not compare favourably to the 20% IRR for the stock buyback. And his Oct timing is to give time for Moody and S&P to revise the rating prior to the buyback.
insaneoctane
Well-Known Member
Interesting. So, our P/E has been steadily declining (sans a few bumps) since November 2021.
Tho Elon wants more liquidity due to possible economic slow down or random China shut downs, he may not oppose to stock buy back announcements as it's a true protector of share price from short raids or macro dumps. The more buyback announcements, the less appealing it is for people to buy puts or shorts Tesla. For this reason Elon might do it since he hate shorts.
damonbrodie
Member
I created it in google sheets:
TSLA Share and PE Analysis
Trailing PE Trade Date,Share price,Q-4,Q-3,Q-2,Q-1,Current Q,EPS TTM,P/E,Q-1 - * 500,Q * 500 7/1/2020,$77.24,$0.05,$0.04,$0.01,$0.03,$0.09,$0.13,591.2,$16.67,$45.00 7/2/2020,$81.51,$0.05,$0.04,$0.01,$0.03,$0.09,$0.13,623.8,$16.67,$45.00 7/6/2020,$83.59,$0.05,$0.04,$0.01,$0.03,$0.09,$0.13,639.7,$...
StealthP3D
Well-Known Member
Gary Black has poor fundamental analysis compared to masters like Ron Barron and if he and his clients finds this little dip we've had the last several months troublesome, well, it's his own fault for taking on clients that don't understand reality and calling himself an investment advisor and/or fund manager. He's worse than a brokerage analyst and that's saying a lot.
Worse, he has fundamental misunderstandings about Tesla that run deep and wide. In short, he's an idiot. If you want proof, it's in the first Tweet above which makes absolutely no sense. Somehow, he thinks the F-150 Lightning launch is relevant to Tesla (and Twitter?). I get the feeling he thinks the fact that the Lightning launched before the Cybertruck is somehow a negative (as if they are each other's primary competition). I would argue the Lightning launch is completely irrelevant to Tesla's positioning in the market. How he thinks the Lightning matters to Tesla is beyond me.
I can't for the life of me figure out why any Tesla investors give two hoots about what he says.
Bet TSLA
Active Member
Yeah, I can just picture the panic at Tesla. "If we don't do a stock buyback soon, we might lose credibility on Wall St.!!!"
Gary Black is clueless.
If I remember correctly local elec. utilities have their rate and policies set by TVA. The State PSC has no jurisdiction. And TVA has little oversight. When I did my home solar project it had to be approved by TVA by within it's meager solar budget. I had to agree to sell it to TVA at a set rate and I couldn't get a building permit without a TVA contract. To make matters worse TVA sends out notices to those of us who have solar that we cannot toke credit for our solar investment publicly because TVA has given that credit to some other entity, probably a greenwash. Basically we have a monopoly unregulated federal agency that has complete control subject to Congress.
Artful Dodger
"Neko no me"
Indeed. Having a standing 'buy-back' policy would enable Tesla to take advantage of those frequent artificial/contrived dips in the SP (a few times per year). Thus, Tesla puts a floor on the SP, and may 'discourage' further monkey business going forward.
However, a continuous high SP works against some of Tesla's internal provisions for stock-based compensation (SBC), where employess are allowed to buy a certain amount of TSLA shares at a reduced price vs. the Market, but based on the lowest Market SP reached during the previous incentive period (2x per year, IIRC).
I think these two mechanisms can be made to work together. However, it does require that Shortzes continue to massively undervalue Tesla as a company (looking at egregious pink-buoy Craig Irwin/Roth Capital Partners). One of these parties will foot the bill, and that right shortly.
I like it. Make it so.
Cheers!
insaneoctane
Well-Known Member
Yes, but...I guess I'd need to know how big my cash warchest for a 1T and rapidly growing company needs to be, because I think Tesla is past capital raises. So after they fund their internal capital needs and have a big enough warchest, I think using some in the way Gary recommends makes sense to me...
Words of HABIT
Active Member
These CNBC business analysts are just some of many bad players that Tesla should be taking to court in defamation suits.
I don't think Insurance nor opening up the Superchargers would impact PE all that much, at least not until either has sizable revenue coming in from each, but that would be down the road. Same with Tesla energy in my opinion.
However, I do feel FSD hitting level 5 could increase the PE significantly simply due to the market implications such an event would portend for the future. That's the one thing Tesla could do which I think would grow the PE almost instantly.
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The Accountant
Active Member
It's one thing to get the Bitcoin/Free Cash Flow comment wrong . . . .I will give Andrew Sorkin (a communications major) the benefit of a doubt that he innocently does not understand the cash flow statement . . .BUT to call TSLA bulls sheeple is unforgiveable in my book. That was unnecessary. Does not sit well with me. If I am channel surfing and see Andrew on the screen, I will move on quickly to the next channel. Don't care for anything he has to say at this point.
I sympathize and agree with you feelings but this would be a terrible use of the company's resources because Tesla would lose. And how would it look if the headline is Tesla loses defamation suit. To much of the public that would confirm that the media is correct. Tesla would clearly lose because 1the defense would be no malice but simple mistake or 2 opinion not factual defamation and 3 no damages in fact the stock has gone up and Tesla could not show that it was damaged. While I agree with you viscerally it would do the company no good and would only enrich many lawyers.
It’s not about those things actually effecting PE or earnings in a big way in a mathematical sense.
When Tesla has those things flowing into earnings and can start showing material SAAS revenue, then TSLA will trade a higher PE because more future revenue will be valued as SAAS revenue, which is much higher margin.
It’s the difference in valuation between lower margin revenue and high margin revenue, hardware margin revenue vs software high margin revenue
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Ideally, yes, if the market allows it. My hunch is the MM's will do everything they can to hold the share price down from here on out, no matter how awesome Tesla becomes. And manipulating the PE is their best tool to do so by utilizing naked shorts and other stock manipulation tools they have.
It's just what I'm expecting to see play out over the next few years. We all have seen how much effort the MM's put into holding TSLA down, my gut feeling is that's not going to stop anytime soon...
damonbrodie
Member
I think this is why Elon says Tesla is "nothing" without FSD. While clearly Tesla is not "nothing", they will slowly just become a "car company" over time. (Let's ignore Solar/Energy for the moment). Of course they are a very well run car company and their profits and zero debt are very desirable.
The crazy P/E ratios of the past were because people were banking on the profits that we're now starting to see. Now that we're seeing the profits the P/E is adjusting to the new reality.
FSD, robotaxi and Bot are what will propel them into the stratosphere P/E wise. Personally I'm waiting for AI day 2 - Elon said on the earnings call that its going to be big.
I know it's unrealistic, but a large part of me thinks we'll see an actual Optimus Subprime walking around and doing simple tasks at AI Day #2. Probably wishful thinking on my part, but it's okay to dream big now and then...
Well, MM’s can’t control buying volume. And the reality is that if Tesla can prove their SAAS revenue model, it will bring in a ton of buying volume from the part of the market that gives high PE valuation for that high margin revenue.Ideally, yes, if the market allows it. My hunch is the MM's will do everything they can to hold the share price down from here on out, no matter how awesome Tesla becomes. And manipulating the PE is their best tool to do so by utilizing naked shorts and other stock manipulation tools they have.
It's just what I'm expecting to see play out over the next few years. We all have seen how much effort the MM's put into holding TSLA down, my gut feeling is that's not going to stop anytime soon...
That is the dynamic that will change when SAAS is proven out on a material scale if those items I listed come to fruition for Tesla
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