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

[ripper88]

IMO, it doesn’t make sense to most people. But, we have an administration hell bent to continue making the markets reach new highs going into reelection.
As much as people hate on Trump, to be frank, without him the market would not be where it is right now IMHO. So, at least people should give him credit for that since their portfolios would be lighter otherwise. And, I’m sure there’s many across the spectrum who will trade personal opinion for a bigger bank account. Not a Trump voter myself but this is the way i see it.

Edit: this post probably belongs in Market Politics. Wutev’s.

No. It's not Trump, it's the Federal Reserve making the V shaped recovery possible. He is going to try and take credit for it of course.

 

[elasalle]

Cant help but think we are in phase 2 of the diagram below ... bear market rally ... I am still long and strong TSLA but i think there is Macro pain ahead .
I think we might see some TSLA buying opportunities in the months ahead ... falling tide impacts all boats... i am prepping for this selling some weak long term positions

What actions did the FED take in prior Bear market?
was Economy coming to a standstill the reason for prior Bear Market?

 

[StarFoxisDown!]

So why growth in 30%-40% range now and not 50% or more? It looks like Tesla has been throttling capex to get to positive FCF. See Q1 2020 investor letter. Why?

I'm trying to be conservative here

I'm saying 30-40% growth as a baseline. Like Tesla would really have to have some big screw ups along the way to not post 30-40% growth in Year 2, 3, 4, and 5(starting from today and considering year 1 from now to be close to 100% growth)

If Tesla continues to execute the business and expansion as well as they have been over the past year, 50% growth in Years 2 through 5 are definitely likely

 

[vikings123]

Cant help but think we are in phase 2 of the diagram below ... bear market rally ... I am still long and strong TSLA but i think there is Macro pain ahead .
I think we might see some TSLA buying opportunities in the months ahead ... falling tide impacts all boats... i am prepping for this selling some weak long term positions

Yeah that's not the case anymore. You might see weakness in TSLA due to Q2 earnings but I doubt you will see a big dip that is macro related. Somebody posted this NASDAQ chart on my twitter feed today. V recovery FTW. QQQ is nearly at ATH.

 

[Curt Renz]

So why growth in 30%-40% range now and not 50% or more? It looks like Tesla has been throttling capex to get to positive FCF. See Q1 2020 investor letter. Why?

Interestingly, TSLA today was up a seemingly mild 0.16%. However when compounded over 252 trading days in a year, that would amount to a 50% gain.

 

[Right_Said_Fred]

Has Fox always been positive about Tesla or did they recently change their tune?

Is Elon Musk's Tesla a $1,200 stock? | Fox Business

Tesla Model 3 becomes best-selling car in California, first electric to top the list

 

[StarFoxisDown!]

Yeah that's not the case anymore. You might see weakness in TSLA due to Q2 earnings but I doubt you will see a big dip that is macro related. Somebody posted this NASDAQ chart on my twitter feed today. V recovery FTW. QQQ is nearly at ATH.

View attachment 547721

I'm still rolling with the bullish gang that thinks Q2 numbers will surprise, especially Model Y production

 

[Zaxxon]

Cement mixer trucks arriving in Grüneheide in this latest video by Tobias Lindh:

Whoever had 6/3/20 in the pool for the day that Giga Berlin got solidly underway, you're a winner. This video is the first where things are really rolling at scale. Wonderful to see.

 

[Mokuzai]

Any idea what's going on with SOLO today? Not seeing any news.

 

[Thekiwi]

Has Fox always been positive about Tesla or did they recently change their tune?

Is Elon Musk's Tesla a $1,200 stock? | Fox Business

Tesla Model 3 becomes best-selling car in California, first electric to top the list

Definitely a recent conversion - I want to say it’s perhaps a result of Elon’s CV reactions (Which Fox viewers would likely be more sympathetic too) and recent SpaceX/NASA success, along with prominent Democratic politicians voicing increasing anti-silicon Valley/billionaire rhetoric.

It’s an amusing realignment given Tesla’s mission statement to transition off a carbon economy.

 

[woodisgood]

Cant help but think we are in phase 2 of the diagram below ... bear market rally ... I am still long and strong TSLA but i think there is Macro pain ahead .
I think we might see some TSLA buying opportunities in the months ahead ... falling tide impacts all boats... i am prepping for this selling some weak long term positions

If Phase 1 doesn’t look anything like the previous bear markets, why should Phase 3?

 

[jhm]

I very much agree with @StarFoxisDown! 's sentiment.

Tesla already has 172.5k quarterly production capacity installed today in the form of:

• 22.5k S+X
• 100k Fremont 3+Y
• 50k MiC 3

Once Fremont production recovers from COVID-19, which is perhaps as soon as Q3, but most likely going to be Q4, Tesla will deliver close to 200k vehicles in a single quarter. The resulting financials, margins, revenues, and profit will be much higher than what the market is currently expecting.

Here are the models from my recent blog post, My TSLA Investment Strategy:

Bear
View attachment 547407

Bull
View attachment 547408

Compare these numbers to the Wall Street and Estimize numbers:

Revenue
View attachment 547413
Non-GAAP EPS
View attachment 547412

The purple line is the average of my numbers, but even my bear numbers are higher than what the most optimistic Wall Street analyst is expecting, let alone the average Wall Street analyst.

You can also see that I'm not the only one who is expecting the next few quarters to be above expectation. Estimize is also predicting significantly higher numbers than Wall Street for the next four quarters.

I think $1,200 to $1,500 in 12 months from now is quite a conservative guess, especially with S&P 500 inclusion on track to happen between now and then, and I think $2,000+ is very realistic.

Another data point is AMZN's SP. Amazon's EPS in Q1'20 was $5,09, which is pretty much exactly my bear case for Tesla for Q4'20. Amazon has achieved higher EPS in the past ($6.59 in Q4'20 and $7.24 in Q1'19 to name a few), but nonetheless AMZN's SP is around $2,500 with a soon to be very similar EPS as Tesla.

Small cave-at to all of this are the recent price reductions. My models are from before those, so that could lead to slightly lower margins, etc.

Where are you getting you're capex figures? In Q1 2020 capex was $455M, 7.6% of revenue, but you're supposing 15.9%. Tesla could be underinvesting relative to the revenue growth you are anticipating.

You might also want to check your FCF calculation against what Tesla has reported in the shareholder letter.

 

[EinSV]

So why growth in 30%-40% range now and not 50% or more? It looks like Tesla has been throttling capex to get to positive FCF. See Q1 2020 investor letter. Why?

People have been saying that for the past couple years but Tesla has been aggressively reducing CapEx/unit capacity throughout that period. Model Y and Model 3 in China have much less CapEx/car than Model 3 Fremont/GF1. That is a long-term trend that will, if anything, accelerate with Cybertruck.

Basically Wright's law applies to capital expenditures just like other expenses/costs.

 

[Curt Renz]

Has Fox always been positive about Tesla or did they recently change their tune?

Is Elon Musk's Tesla a $1,200 stock? | Fox Business

Tesla Model 3 becomes best-selling car in California, first electric to top the list

Well the father of a Tesla director is the founder and principle owner of the parent company of Fox News.

Fox may realize that Tesla is becoming a mammoth company, and hope one day it will advertise heavily. Perhaps they'd like to be first to the feeding trough.

This may have gotten the ball rolling last week:

 

[ZeApelido]

 

[Thekiwi]

It is primarily,but not exclusively, to sell into the 2.2M-2.5M vehicles per year UK Automotive car market behind a 10% tariff wall.

If you are British would you rather have a British built Tesla or Audi/Mercedes/BMW/Alfa Romeo/DS etc for 10% more?

The only premium competition for Tesla behind that tariff wall would be Jaguar Land Rover.

I think you are right, definitely fits the Occam’s razor answer as well. Considering all the products Tesla has now and in the near future across auto/energy/other, it makes sense for there to be a factory of some type in the “sub-major” UK market. Would be interesting to see a production line for this sized market that could produce multiple vehicle models on one line (I know there are some ICE car plants that can do this IIRC).

The fact the UK is RHD also removes a minor irritant for the Berlin Factory, and perhaps provides a potential export focus for a UK factory if domestic demand is lighter initially as the UK plant could handle some or all global RHD production, which is actually a fairly big list of countries (RHD are countries in blue):

Also worth noting that the British government is desperate right now - not only from its poor CV situation, but also from impending hit from The actual Brexit withdrawal. Elon might be able to get some quite good incentives at this precise moment.

 

[adiggs]

No. It's not Trump, it's the Federal Reserve making the V shaped recovery possible. He is going to try and take credit for it of course.

(Not picking on you @ripper88 - just using your post as a jumping off point)

I see the v-shaped recovery in the stock market. I don't see the v-shaped recovery in the economy.

So that's what has me cautious (and still in cash, outside of TSLA). I am looking for evidence of the economy improving to match up with the stock market, or the stock market coming down to better match up with the economy. That's my choice of course, and it's more than a guess - it's what I'm doing with my portfolio (so I have $ in it).


An observation in another thread that was eye-opening for me; an economics thread, talking about MMT and other schools of economic thought. The observation is that no, there isn't inflation in our commonly used measure of inflation. The problem is that measure of inflation is a restricted view into the world - it focuses on 'core' stuff (energy, food, clothing, housing) for living. It doesn't include rare art, stock market, commodities, high tech, etc..

There is inflation going on in the world, and it's going on in the stock market right now (or at least, I agree with that observation). So it's possible that this time is different, and that the value of $1 of earnings per share is changing to a new baseline from what it's been historically. It's possible that the long term risk free rate of return is going to be ~0%.

I even subscribe to the notion that we're at the start of a pretty significant reset in our economy similar to the what we experienced in the late 1800s, early 1900s, with that wave of new technologies that so radically changed society and the economy. Cars, electricity, telegraph / telephone. We pretty much hit the trinity of the basis for economic activity (communication, energy, transportation).

I see the internet as being our new communication revolution, with it bringing us approximately zero marginal cost communication.

I see renewable energy bringing us approximately zero marginal cost energy (we've got a few decades for this to manifest, but the cost of energy in the economy is going to be falling steady during that period).

We don't yet have a comparable change in transportation starting, though lower energy cost will help, and autonomous vehicles might bring us approximately zero marginal cost ground transportation (due to the approximately zero marginal cost energy).

EDIT: And the combination of these things will bring about a period of good deflation - cost to get things done in the economy will come down, enabling new economic activity not previously available.


Anyway - back to the original point - maybe those historical measures of valuation and market health are going to revert to their historical values, and maybe they're establishing a new normal. I don't know of course, but I'm positioned assuming regression to something closer to the historical values.

 

[Artful Dodger]

Has Fox always been positive about Tesla or did they recently change their tune?

Is Elon Musk's Tesla a $1,200 stock? | Fox Business

Tesla Model 3 becomes best-selling car in California, first electric to top the list

Lol, you should ask over in 'Politics'

Cheers!

 

[MTL_HABS1909]

Anecdote from my BIL who had a run-of-the-mill Ford F-150 that just came off a 2 year lease in mid-April during the COVID-19 peak: The local dealership was pensive about making any sort of commitment during the turn-in and they were still trying to figure out how to WFH, seemed scared, and clueless. Since my BIL has a second car and neither he or his wife and family are driving anywhere for the foreseeable future, he figured he'd wait until the dealerships started getting desperate to get a new (or 2019) F-150 since he could easily get by for the next few months without it.

He said there has been a complete reversal over the last ~2 weeks with the various Ford dealerships. Now they won't even return his call or email, they're totally unwilling to budge or deal or negotiate - "The price is what it is. We can do 0% financing for 7 years, but it'll be at full MSRP. We barely have enough in-stock as it is, so this is our best offer." Since he's got nothing to lose, he called their bluff, and so far, they're sticking to it and have not engaged him for over a week.

We talked about it a bit and can't totally make sense of it, but there are articles that indicate the traditional auto dealers (or at least pickup trucks) are actually doing pretty good right now. It may have been the case that production dipped in concert with demand and both are on a rebound right now, with demand briefly outstripping supply, causing dealers to DGAF right now.

How this pertains to Tesla?
I think this is yet another check-mark in the "incredibly bullish" column. I realize light/medium-duty trucks are not cross-shopped with S/3/X/Y, but I think this bodes extremely well for the remainder of the year.

Be a good BIL and tell him to wait for Cybertruck

 

[Artful Dodger]

Any idea what's going on with SOLO today? Not seeing any news.

SOLO stock surges on USA expansion and chatter.