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

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I’m pretty discouraged this year. But all I know is that it’ll get better for us, guys. I don’t know when or how, but this market and the market’s reaction to Tesla, it will get better…someday.
Something unique about Tesla. Any other company, facing massive demand, 2 new factories, production capacity increased by 80%, and having a massive government incentive windfall people would be over the moon. But Tesla..... "Discouraged".

Only Tesla
 
I think Elon is picturing himself as Hari Seldon from Isaac Asimov's Foundation series. He doesn't want Ukraine to cede land to Russia, but he sees it as the most likely result of peace negotiations. And he thought that by showing people the most likely outcome early, they could come to that conclusion sooner and avoid more loss of life.

But most people read his Tweet and assume that it's what Elon wants, rather than what he's predicting will be.

Of course Seldon learned the lesson Elon hasn't yet.... that when you present the masses with facts and rational thought, it tends NOT to convince them.

Hence why Seldon essentially had to trick everyone and set up a bunch of shady behind the scenes stuff to make the "less horrible" version of the future unfold.... "the people" were never gonna be rational enough to do that on their own.... (and even then he had strings on himself too)


Elon still thinks, like James Holden for most of The Expanse, that everyone is like him and if you just present facts and rational arguments people will change their minds and make the most intelligent and informed and reasonable decisions possible with that information. Most people just don't operate that way.
 
Reading the prior 2-3 pages of this thread provided a staggering amount of reasons my long-held distaste for Twitter is justified. That is NOT a platform for reasoned, informative deliberation, for disseminating important information or for any other productive purpose. Distancing oneself from it is the most appropriate way to demonstrate one's own maturity and ability to provide useful material to an otherwise dribble-starved world.

I hate how much TWTR resembles FB with all the crap that shows up. People I don't want to see keep diluting the value I desire. On my desktop five tweets show up right now, only one of them have I done anything to see. The rest is garbage.
 
I agree, but he can't possibly think that stepping in on Twitter with those tweets can make the situation better...
I mean, Twitter is an awful medium for debate, you can only discuss with short - so, less nuanced - statements. Plus he's doing a poll! If he's not trolling (and I don't think he is), this is naive at best.

We know the last thing Elon Musk is, is naive.

Therefore (by your reckoning), Musk must be trolling.

Big deal.

I was paid back on Friday from a personal loan I had made. The proceeds were $14,500 and when I saw I could only get 59 shares, I put in a limit order for 60 shares at $241.66. So, I'm now the proud owner of 60 more shares!

Thanks Elon!

Actually, I think the soft price was enabled by missing production numbers that were inflated after the Shanghai shutdown and the manipulators taking advantage of that fact. But if people want to credit Elon with it, I'm good with that too! ;-)
 
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Right, guess I'll step up and take a swing.

Elon has said he wants to ensure the future of consciousness (humanity) by making it multiplanetary. He is determined to achieve this, his life's work.
Tesla and SpaceX are means to an end, not the goal themselves.
He is an expert at developing and maintaining sophisticated supply chains producing state of the art products. The means of production are hostage to disruption.

I think Elon desperately wants 40 years more of stability out of the current civilization (he'll take more if he can get it).
Almost any price is worth paying in the present, to him, to assure the human race (consciousness) continues into the future. He is keeping his eye on the prize.

The precariousness of the present situation is a stark example of how thin the thread holding it all together really is.
We are so close, we just need some knuckleheads to quiet down and stop rocking the boat; then we will all get to where we need to go.
 
I agree. For those who think Elon is in the right, how would you feel if Elon decided we should hold a vote on what should happen with your extra bedroom, the front half of your living room, and your dog?
You can vote all day long, no skin off my nose. And just maybe someone will have a suggestion I like.

This doesn’t have to be about someone being right or wrong; it’s an opinion that’s also likely open to change under certain circumstances. Be those circumstances instead of riding high on a self-righteous steed.
 
It's pretty crazy to implement a fully autonomous self driving reality by the method Tesla's using. But there was no other way to do it fast, so we have 160k American nutjobs handling the beta program.

It's pretty crazy to think people who were raped and murdered in their homeland by a madman should negotiate with said madman. But when the only alternative starts sounding like nuclear war......maybe the idea needs to be introduced. Just to get people talking. Just to reiterate these things almost always end with negotiation.
 
Right, guess I'll step up and take a swing.

Elon has said he wants to ensure the future of consciousness (humanity) by making it multiplanetary. He is determined to achieve this, his life's work.
Tesla and SpaceX are means to an end, not the goal themselves.
He is an expert at developing and maintaining sophisticated supply chains producing state of the art products. The means of production are hostage to disruption.

I think Elon desperately wants 40 years more of stability out of the current civilization (he'll take more if he can get it).
Almost any price is worth paying in the present, to him, to assure the human race (consciousness) continues into the future. He is keeping his eye on the prize.

The precariousness of the present situation is a stark example of how thin the thread holding it all together really is.
We are so close, we just need some knuckleheads to quiet down and stop rocking the boat; then we will all get to where we need to go.
“eye on the prize” = stability. Stability is likely achieved by getting rid of Putin. One recipe for that is likely for Ukraine to win and Russians take him out. Or Chechens rebel and further weaken him.

Putin needs to go, or at least be confined, and best path for that is not to appease him in anyway, and even if it costs some more lives in the short term. More will be saved in the long term.
 
I know how Elon Musk must feel regarding his Crimea pronouncement. I took major grief here when I suggested that Crimea be designated as a demilitarized International Peace Park, patrolled by the UN. Historically, Crimea has always been a political flash point and although I personally think to it belongs to Ukraine, I don't see any military resolution in Crimea.
 
Wikipedia Link: Congress of Vienna

Excerpt:

In the 20th century, however, many historians came to admire the statesmen at the Congress, whose work prevented another widespread European war for nearly 100 years (1815–1914).
And then proceeded to have many wars over the following 100 years to make up for it. Not relevant Curt. These are different times and we’ve clearly shown as a species we’ve learned nothing.
 
This is not sustainable.
I just sold off ~15% of my remaining TSLA shares to cover yet another scary margin call and buy more call options.

I've said it before and I'll say it again: I expect a TSLA explosion in 2023 so large that it's bigger than any other inflation-adjusted, single-year market cap rise in the entire history of capitalism, and that's even if there's a recession and without material impact from the supposed leaps forward in FSD performance that the AI team has in store for us in the coming months.

Even with ridiculously low institutional analyst estimates of $5.85 non-GAAP EPS for 2023 (per Yahoo Finance) the 2023 P/E is now 42. For 2024 the average estimate is $7.09/share for a P/E of 34. Absurd.

My model still outputs a 2023 estimate 170% higher than theirs, with $16/share earnings as the maximum likelihood estimate. This hasn't changed much, so my post history can be reviewed for more details.

2023 Vehicle Unit Economics
I'm still projecting major gross margin expansion due simultaneous improvements on both revenue and cost.

$27k gross profit per car (43% gross margin) by Q4 '23 sounds crazy, but really it just boils down to two estimates:
  1. Revenue per car will rise by $6k from $56k in Q2 '22 up to $62k in Q4 '23.
  2. Cost per car will gradually revert to around the $34.5k-$36.5k range we had from Q1 '21 through Q1 '22
For revenue most of the bump I expect just because of the price increases from earlier in 2022. I think that we're mostly, if not completely, done with the 2021 price increases but I think the 2022 hikes hadn't hit much at all in Q2. Some of the revenue improvement expectation is coming from selling more Ys and Cybertrucks, and a small portion from FSD and insurance. There is substantial upside if demand growth continues to outpace supply growth and especially if FSD has amazing breakthroughs that tangibly improve the value proposition.

The car buying market still has immense potential demand waiting latent due to mere ignorance and lack of awareness about EVs and Teslas. Occasionally, exogenous events can trigger sudden, rapid social changes based on learning and sharing ideas. I think we already started to see this learning effect and consumer mindset shift in 2022 with fuel prices and the war, but the Vegas Loop isn't even scaled up yet and Cybertrucks still aren't shipping. For another example, see the steep decline in American religiosity immediately following the advent of mainstream internet usage and then again following the advent of mainstream social media usage. If even 10% of the population simultaneously changes their minds on wanting to buy Tesla cars, that's enough to overwhelm Tesla's near-term production capacity and drive prices up further. Remember, Las Vegas gets about 42 million visitors per year and a bunch of them are going to ride in Model Ys in the Vegas Loop as it expands in 2023 and 2024.

1664828422501.png


The cost side mainly accounts for temporary impacts in Q2 from Shanghai shutdowns, the war in Ukraine, and new factories entering the low rate initial production phase, which appear to be the main reasons why cost per car jumped up almost $5k QoQ. The cost estimate also now accounts for the US tax credit of $45/kWh for battery manufacturing, which impacts the global cost average by $1.4k per car if the average battery capacity is 80 kWh and 35-40% of Tesla's production is allocated to the USA. I am conservatively not counting any impact from the 10% US tax credit for critical battery minerals. (Last year 33% of Tesla's global production was sold in America but that was without Giga Austin and without the tax benefits incentivizing Tesla to sell American-made vehicles in the domestic market.) So, on cost I'm basically just modeling for a regression to the mean as the dust settles from the mid-2022 craziness, with all the cost improvements combining to cancel out the effect of inflation.

I have more detailed justifications for these projections in my post history.

2023 Volume
2.8M vehicles
0.64 Fre​
1.3 Sha​
0.45 Ber​
0.42 Tex​

  • Fremont made about 136k in Q2 (544k annualized). 650k is the nominal capacity according to the Q2 update deck (100k SX, 550k 3Y), but I don't believe that number any more than I believe ">750,000" for Shanghai and ">250,000" for Berlin and Austin. 640k in 2023 would be moderate growth, projected based on 110k SX and 530k 3Y, with run rates in Q4 '23 slightly exceeding the nominal capacity.

  • Shanghai is already around 1.1M annualized run rate today, so 1.3M for 2023 isn't much growth compared to past growth. Giga Shanghai could do much better than this, maybe even producing as much as 1.5M in 2023 if they manage 50% growth in run rate from ~1.2M at the beginning of the year to 1.8M by December. I'm also keeping this lower due to the possibility of another government shutdown artificially affecting production.

  • Berlin and Texas numbers equate to 2023 averages of 8.7k and 8.1k cars per week respectively. They're still supposed to be at 5k per week by the end of this year. Shanghai hit 5k per week in Oct '20 and twelve months later got to 12k per week in Sep '21. Berlin and Austin should go substantially faster than Shanghai did (as Tesla leadership has directly guided), but there's also uncertainty about all the new technology like 4680s and also macroeconomic uncertainty around supply chain and especially the war situation in Europe, so I think it's a fair balance to just project these plants slightly exceeding the speed of Shanghai.

Macros!!! Scary! Fed! Ukraine! Credit Suisse Collapsing! UK Pound Collapsing! Global Recession!
How low can the TSLA P/E ratio realistically get? TSLA now is quite different from TSLA in the 2014-2019 doldrums, because now Tesla has tangible earnings and free cash flow, plus they've demonstrated they can mass-produce cars successfully so there's less execution risk.

Roughly, I think there's a 99.9% probability that TSLA will maintain a current P/E greater than 25, equivalent to a 1/25 = 4% dividend yield. For comparison, right now the S&P 500 is trading at a trailing-twelve-month P/E of 19 and it frequently exceeds 25, like it did last year for example. I think this puts a floor on the TSLA trading range even in a Great Depression 2.0 scenario, and that floor will step up quarter after quarter after quarter as the earnings keep rising.

At today's share price of $243, the P/E based on my Q4 '23 $5.08 earnings estimate would be merely 12. If it were 25 at that time, TSLA would be trading at ~$510. At a more realistic 70 P/E, TSLA would be at $1420. At 100--which TSLA's current P/E was above at this time last year--TSLA would exceed $2000.

Even if my Q4 '23 EPS estimate ends up being 2x too high, such that Tesla actually earns $2.54/share (equal to ~$37B annualized net income) and TSLA has a current P/E of 25 at that time, TSLA would still end up at $254 (5% higher than today), and obviously earnings would still be growing so the share price would quickly increase from there going into '24 and '25 as earnings double and double again.

For comparison, look at the charts below to see how the market treated Microsoft, which hit $39B income in 2019 with much slower growth than Tesla has been showing. The P/E since then has stayed between 25 and 40, and it dragged the share price up with it as earnings kept growing. I want to emphasize how much slower Microsoft's earnings growth was compared to what Tesla is about to do. Microsoft doubled earnings in 3 years for a 25% CAGR. Not even in the same league as Tesla in the next several years.

1664825017881.png

Source

QuarterVehicle SalesRevenue per Vehicle excl ZEV creds, AverageCOGS per Vehicle, AverageGross Profit per Vehicle excl ZEV creds, AverageAuto Gross Margin excl ZEV credsZEV Credits Per Car, AverageOperating Expenses ($B)Expected Earnings Per Share (non-GAAP)P/E Based on TSLA at $243 and Annualized Quarterly Earnings
Q3 2022344$ 56.0$ (39.5)$ 16.529.5%$ 1.2$ (1.69)$ 1.2947
Q4 2022492$ 58.0$ (39.0)$ 19.032.8%$ 1.0$ (1.75)$ 2.2028
Q1 2023586$ 59.0$ (37.0)$ 22.037.3%$ 0.8$ (1.82)$ 3.0520
Q2 2023657$ 60.0$ (36.5)$ 23.539.2%$ 0.7$ (1.89)$ 3.6617
Q3 2023745$ 61.0$ (36.1)$ 24.940.9%$ 0.6$ (1.97)$ 4.3814
Q4 2023827$ 62.0$ (35.5)$ 26.542.7%$ 0.6$ (2.04)$ 5.0812

Is not investment advice, but is my real opinion. This could all be wrong.
 
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So, it will be interesting to see if Tesla continues the policy of letting people push the delivery window into the tax credit period or if they clamp down and require the order to be reset at the new higher price going forward.
I am in the same boat, and I suspect they will continue to let people delay because they will most likely deliver that car to someone who bought after the price increases, which will increase revenue for Q4.
 
“eye on the prize” = stability. Stability is likely achieved by getting rid of Putin. One recipe for that is likely for Ukraine to win and Russians take him out. Or Chechens rebel and further weaken him.

Putin needs to go, or at least be confined, and best path for that is not to appease him in anyway, and even if it costs some more lives in the short term. More will be saved in the long term.
Putin cannot lose. There's nothing in him that allows him to concede. Their military generals are not talking about de-escalation, but talking how they are too soft on the Ukrainians and that they must show strength. We see that Russians already see Ukrainians as shoe scum and are indifferent to killing innocent people and committing crimes unfit for humanity. Zero people up the chain of command is punishing Russian soldiers for misconduct. This is how you know they are highly likely to start cheating because they give zero Fs.

Also I understand conceding any land to Russia just encourages these type of behavior. So Russia has put the world in a tough spot.
 
What does that mean? You can’t hold because you need the money? You can’t hold because you over leveraged yourself? Or you can’t hold because WS has you scared?
None of your business. I love how all these long term TSLA holders (like me since 2013) preach to others who may have bought recently and may not be able to ride out the current environment. I realize I got lucky with my continued TSLA purchases over the years. Keep some perspective.
 
Of course Seldon learned the lesson Elon hasn't yet.... that when you present the masses with facts and rational thought, it tends NOT to convince them.

Hence why Seldon essentially had to trick everyone and set up a bunch of shady behind the scenes stuff to make the "less horrible" version of the future unfold.... "the people" were never gonna be rational enough to do that on their own.... (and even then he had strings on himself too)


Elon still thinks, like James Holden for most of The Expanse, that everyone is like him and if you just present facts and rational arguments people will change their minds and make the most intelligent and informed and reasonable decisions possible with that information. Most people just don't operate that way.
Nailed it.
Rivian Made 7363 Vehicles in Q3, delivered 6584. Stock up AH by 7%.
We need an angry "like".
 
No need to defend a manic depressive borderliner with partial self hate. The political desaster he created today will happily recall the SEC. His immaturity is poison to pension funds let alone the rest of shareholders.

Elon posts all kinds of dumb stuff on Twitter and always has.
The material impact on the long term value of Tesla is not significant.
In this case, he means well, but is getting information from pro-Russian sources.
I never expected Elon to be perfect, so I am not disappointed.
I would prefer that he stops posting on Twitter, but that doesn't look likely to ever happen.