We're essentially saying the same thing here. Both Nvidia and TSLA rallied based on oversold conditions.
The fundamental difference is Nvidia got valued for the AI effects and those were modeled into future earnings by practically every analyst out there...well before Nvidia had it's blowout quarter. Obviously analysts had to raise their future earnings estimates after that given the blowout quarter.
TSLA however has not had its future earning estimates raised. As I said before, there's no valuation given to FSD, Energy, Gen 3, Supercharger revenue, Insurance, and so on.
So to me the two companies are experiencing two very different rallies. Nvidia rallied first off of oversold conditions and then was given credit for all that future earnings growth and that's why it's 30% higher than it's previous ATH. Tesla hasn't been given any credit for it's future earnings drivers and that's why its rally is just because of oversold conditions and why it's still 35% below it's ATH
Eh I don't think TSLA is having its Nvidia moment at all.
This is just a rebound rally where Wall St is acknowledging they way oversold TSLA. While we may think it's clear as day to see the incoming revenue steams and what they will do to Tesla's earnings in future years as soon as 2024 and 2025, it's not nearly as clear to Wall St. Not anything like what happened with Nvidia where 6 months ago, the a catalyst emerged that clearly was going to affect Nvidia's earnings and Wall St recognized it and jumped in big time.
Wall Street schmall street. I do my own work:
Now that 2022 is over we can look back and calculate a (CK)non-GAAP PE for the year. Non-GAAP in that I make adjustments for changes in the value of assets held instead of looking only at earnings. An example of that would be that if you owned a $1M home that went up 100K in value. Your GAAP earnings were zero but your (CK)non-GAAP earnings would be 100K. Giving your house a (CK) PE of 10. Another example would be to look at the GAAP earnings of the Mona Lisa. The earnings are accrued over decades but only recognized on the sale. So, a PE of infinity and then almost zero. So much of our earnings at Tesla are not reflected in the profit and loss statement I think it makes GAAP near useless in determining the value of our shares.
So, here we go. My unofficial official earnings report for 2022:
- 10B. cash earnings.
- 100B. value of FSD. (based on 1T when done. We went from 70% to 80% complete.)
- 10B. Semi "start" of production.
- 10B. CT prep for mass production.
- 1B. value of work done to get lithium refinery going.
- 10B. Bot progress. Mostly in the form of real world AI.
- 5B. factory buildouts and improvements.
- 10B. Tesla Energy nearing ramp.
- 10B. skunkworks projects.
166B total of value created but not recognized.
Puts the current "real" PE at somewhere between two and three. Around eight at our highest valuation.
Someone earlier asked what they should tell their son who worried that Tesla was trending towards being a big car company that didn't reward its investors. My answer would be to go through all the progress Tesla made during the year in setting the stage for future earnings. Earnings that will be returned to shareholders in dividends, share repurchases or share price appreciation. (See BRK.A for an example.)
We need to get out of the 12 month Wall Street price target earnings modeling rut. Current profits only matter in that they help fund future innovation ... and we're way past having to worry about issues like that.
Bought more TSLA today.
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Now we can start to pencil in some numbers for 2023 ... and they're going to be big.
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