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

[Mike Smith]

I'm pretty sure FSD sneak preview is just a video of what FSD will look like.

But...

It will include both an early access release date (probably just a month - hopefully January), and a warning to buy now before the price goes up again.

 

[FrankSG]

Pretty good video, I agreed with most of it. He made a point about being an emotional bull driven by hope if you think the stock price will be 3500 by 2023. But I want to explore (non-emotionally) if that is possible. Based on just 20% car margins and ramp up to a few million units per year, it would never be that high, but if you take into account FSD how will that effect the 2023 share price?

Let's take Elon's aggressive timelines at his word and say FSD feature complete about now in dev, rolling out to prod early Q1. Let's give 1-2 years from now to get FSD to a point where it can drive without human supervision. I think this is close to how Elon thinks the timelines can work for FSD. So before 2023 you might get FSD. Now if a car can drive itself, then it can make 30K a year as a robotaxi, thereby making the value of the car something like 300K+. The car used to be worth 50K ASP and gave Tesla a margin of 20%, costing Tesla 40K to produce. It will still cost them 40K to produce, but the value of the car is 300K, but the profit per car will jump from 10K to 260K - 26 times. If you apply the same multiple to the share price it will jump from 404 to 10500 (1.8 trillion market cap). It seems crazy, but this is why FSD is such a wildcard with the Tesla share price. I think any good analysts need to spend a lot of effort considering Tesla's FSD efforts, because without this they are totally missing the biggest disruption aspect of Tesla.

Personally, I am not sure on the timing of FSD but from Elon it seems to be coming sooner than most investors realise, and it is going to change the industry more than most investors realise. Also, I think Tesla is in a much better position than other companies for FSD than investors give them credit for. Just like their other tech, I think they are several years ahead in solving the FSD problem. Considering the valuation of companies like Waymo, Uber, MobilEye/Intel, Tesla's FSD efforts are clearly not factored into the share price. Essentially most big Wall Street investors do not believe Elon will be able to make FSD happen, and do not think Tesla is leading the FSD race. I personally think Tesla's FSD efforts should add another 100B to the share price currently, adjusted over time as they make or don't make progress towards FSD. The first company to release FSD should be valued over 1 trillion.

I agree that $3500 by 2023 isn't that far fetched. I recently posted this model based on these assumptions in the near-future quarterly financial projections thread, which projects ~6B$ yearly EBIT run rate by Q4'20, and ~8-9B$ yearly EBIT run rate by Q4'21. @EVNow also posted this model that projects the exact same ~6B yearly EBIT run rate by Q4'20. (Geniuses think alike )

These models aren't even that outrageously bullish if you look at them more closely. Both of us are fairly conservative in Solar Roof ramp-up. Neither of us has any SEMI production in our model. And I don't have any Cybertruck production in my model in 2021 either.

Applying a 30x EBIT multiple to these numbers would put TSLA at around $1000 in just 1-2 years. And let me remind you that Amazon is sitting at an 80x EBIT multiple and is growing at a rate much slower than TSLA is. Tesla is looking like it might 2-3x their revenue in the next two years. That's more than a 50% YoY growth rate compared to Amazon's 24%.

So with continued growth from 2021 to 2023, significant FSD progress, and/or a higher EBIT multiple, $3500 in 2023 is optimistic, but definitely not delusional. Honestly, I often feel like some of my projections based on my financial models are more bullish than the supposedly delusional investors who are randomly throwing out numbers they heard from ARK. When I talk about a $10.000+ SP by 2030, I feel like many people are very skeptical about that, but if Tesla Network is successful, I think $10.000 is probably quite conservative based on the numbers.

 

[Bet TSLA]

Regarding the FSD "sneak peek" that Elon announced. Read his words. We've heard this sort of thing from him before. He really, really wants to deliver something before the end of the year. So something will be delivered to a few people with the FSD hardware. It will be almost nothing at all meaningful, but it will be something. Nobody will be impressed. There will be a few "almost ready for sure now" tweets before it finally goes wider some time in February. Maybe. It still won't impress anybody because it won't be anything like "feature complete" or real FSD, but it will be something newer and better. And it will mean that people who paid for FSD are starting to see something for their money. Some time around the end of Q2 we'll finally see a release of city driving, but highly restricted and working pretty poorly. It will slowly improve over the next couple of years. Eventually it will be pretty much what people are hoping for next week.

All right, that's what it will be like if it goes the way it has before. Possibly this time will be different, but anybody counting on that is a fool. I would love to see a step change in capability with new hardware and software, but I don't expect to see anywhere near enough to be anything more than a better Level 3. But here's hoping....

 

[Fact Checking]

I'm pretty sure FSD sneak preview is just a video of what FSD will look like.

Elon's latest tweet suggests it's more than just a video:

Elon Musk on Twitter

This very much looks like the real deal - perhaps with a 'turn by turn acknowledgement' required from the driver, like Navigate on Autopilot was introduced?

If Tesla indeed releases FSD in Q4 then that is going to have ... absolutely insane impact on Q4 profits and margins. I still think they'll do that in Q1.

I'm still trying to be cautiously pessimistic, but it's getting harder with every passing day.

(Absolutely, utterly, maximally not advice: short squeeze peaks tend to be very sharp.)

 

[cyclingthealps]

Dutch paper yesterday.

"It looks like they are selling Hamburgers"

 

[Mike Smith]

Elon's latest tweet suggests it's more than just a video:

Elon Musk on Twitter
View attachment 490543​

This very much looks like the real deal - perhaps with a 'turn by turn acknowledgement' required from the driver, like Navigate on Autopilot was introduced?

If Tesla indeed releases FSD in Q4 then that is going to have ... absolutely insane impact on Q4 profits and margins. I still think they'll do that in Q1.

I'm still trying to be cautiously pessimistic, but it's getting harder with every passing day.

(Absolutely, utterly, maximally not advice: short squeeze peaks tend to be very sharp.)

I think he's referring to the Tesla holiday software update in that tweet, not FSD itself.

 

[Fact Checking]

I think he's referring to the Tesla holiday software update in that tweet, not FSD itself.

Yes, that's possible - although it's highly ambiguous in context.

 

[RobStark]

The Tesla Model 3's Aero Wheel Covers Improve Efficiency

 

[Mike Smith]

Yes, that's possible - although it's highly ambiguous in context.

Elon's tweet is actually a response, and reading it again it's actually pretty clear the guy was asking about early access to the holiday update.

Sorry to disappoint, I was super excited when I first saw that too.

 

[JustMe]

Folks, here’s a brief video of a load of Teslas being offloaded at the port in Amsterdam at night. 3704 cars were offloaded.
Roland Tameling | #HugeCarGuy on Twitter
That’s knocking on the door of $200M worth of car-go.

 

[Fact Checking]

Folks, here’s a brief video of a load of Teslas being offloaded at the port in Amsterdam at night. 3704 cars were offloaded.
Roland Tameling | #HugeCarGuy on Twitter
That’s knocking on the door of $200M worth of car-go.

Cool video about Tesla's RO-RO ship port unloading operation: they were unloading 6 Teslas in 60 seconds and had a pipeline set up of drivers being transported back to the ship where they could unload the next batch.

They are working in batches of 3 AFAICS: they had one 4-seat service car transporting 3 drivers back to the ship, who'd drive 3 Teslas out of the ship with the service car following them (empty). Once the 3 Teslas are parked at the pier the 3 drivers would hop into the service car and be transported back to the ship. Repeat this a thousand times to unload 3k Model 3's.

Even if the video is likely showing a 'peak' of two such batches, this seems like a pretty speedy and efficient unloading process.

Edit: Twitter says there are 3,704 Model 3's on RCC Europe.

 

[Artful Dodger]

Even if the video is likely showing a 'peak' of two such batches, this seems like a pretty speedy and efficient unloading process.

Sure, now just imagine the 'low hanging fruit' when FSD is trained specifically to RO-RO; once at SFO and once in Zeebrugge from the ship to the parking lot.

They should be collecting data to train the fleet now, like a baby antelop can knows how to walk minutes after its birth.

 

[JustMe]

Sure, now just imagine the 'low hanging fruit' when FSD is trained specifically to RO-RO; once at SFO and once in Zeebrugge from the ship to the parking lot.

They should be collecting data to train the fleet now, like a baby antelop can knows how to walk minutes after its birth.

Or eventually right to the customers home!

 

[Mike Smith]

Mahjong, cartoons coming to Tesla car screens in China next year

 

[Fact Checking]

Tesla employee just tweeted that Europe's first V3 Tesla SuperCharger went online earlier today in London, with 250 kW peak charging power:

Benjamin Scholtysik on Twitter

 

[Mike Smith]

Tesla China Takes In-Car Gaming to New Level With Tencent-Powered Online Multiplayer Titles

 

[CorneliusXX]

As someone who disagreed with how you borrowed money on margin to make the purchase, my congrats to you!

But unless you KNEW a force majeure event wouldn't occur or that you'd still have a job in case of a recession this year (there was significant fear of it due to the trade war at the time of your trade), what you did was batshit CRAZY! I would still vote disagree on you for that kind of recklessness! But fortune favors the bold ... sometimes.

What compounds the situation is that they clearly took the comment personally, which means they were letting emotions get involved in their investment.

Had things gone the other way they probably would have rode the investment into the ground instead of cutting losses as it was no longer a pure investment thesis.

I liked the comment as I also believed that Tesla was extremely undervalued at the time - making riskier investments more acceptable due to the higher potential payoff. But the investment still shouldn't be emotional.

 

[Thekiwi]

So, options day

Unless something apocalyptic happens, gazillions of puts expiring worthless and a LOT of call holders making serious money:

View attachment 490530

I don’t remember seeing essentially zero puts expiring in the money at current share price before at weekly expiration.

 

[Tslynk67]

I don’t remember seeing essentially zero puts expiring in the money at current share price before at weekly expiration.

I guess it has shot up so fast and there's no spare money with the bears to take out such positions

 

[Fact Checking]

As someone who disagreed with how you borrowed money on margin to make the purchase, my congrats to you!

But unless you KNEW a force majeure event wouldn't occur or that you'd still have a job in case of a recession this year (there was significant fear of it due to the trade war at the time of your trade), what you did was batshit CRAZY! I would still vote disagree on you for that kind of recklessness! But fortune favors the bold ... sometimes.

I never understood these kinds of very risky bets - the real way to leverage up, without risking years and years of debt, would have been long term call options. Those can be bought even at the expense of selling an existing underwater stock position. I.e. if you ran out of dry powder at $180 then conversion of stock position to call options offer a tool to leverage up, without the risk of life-threatening margin debt. (And in the U.S. margin debt can be literally life-threatening: should you lose your job and end up in debt, the lack of preventative health care or too expensive treatment can cost you your life.)

(Not advice: long term options are usually a bad idea near ATHs.)