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

[dl003]

It's not a matter of "when it's fair", it's a matter of how much people are willing to believe it will happen. This is why I consider TSLA under-valued right now. Because I think an exceptional outcome is much more likely than people are willing to pay for right now. But, if things keep going how they have been going, those people will never get a piece of this growing revenue stream.

Fairness has nothing to do with it.

The most important step in deciding what price is "fair" is valuation. Say you have a model based on P:E or P:S or w/e, depending on which method you think is the most predictive. I'm gonna do a very barebone P:E analysis for TSLA. Assuming 50% CAGR and 12% net margin and 40 P:E, here's what I have for 2021-2030. Numbers are in Billions. I can come up with future market cap for each year. But these are future market caps. We surely don't wanna wait till 2030 to say TSLA is worth $10T. There's no money to be made in that. So we have to pick a year that we're comfortable with. Say I'm very bullish on TSLA and I believe TSLA will continue to grow by 50% a year till 2026. Meanwhile, someone more conservative is going to say 2023 is all I'm willing to bet on. So if its value is going to be $2T in 2026, what value am I going to put on it now? To answer this, I need to use the Discount Rate. This DR is the minimum rate of return I'll accept for TSLA. Note that this is not the same as the insane return we've been seeing and expect to see going forward. Discount Rate is the bare minimum, considering the business risk profile. In other words, if TSLA is just another company, not the hidden gem we know, and it's only part of a diversified portfolio, what kind of return am I willing to accept putting money in it? Naturally, if I understand the business well, I'm gonna have higher risk tolerance than someone who is more bearish. The more risk tolerant I am, the lower the return I'm willing to accept. The lower the return, the higher the price I am willing to pay for the stock today. Even if we agree on the discount rate, the further out I choose to look, the higher the price I'm willing to pay. So price can go higher if someone is willing to look further out or accept higher risks or both, and vice versa.
This is why we on this forum keep saying $1400 is cheap while some ignorant Twitter bears don't even want to pay $400 for this stock. All they see is risks. All we see is opportunities.

Using 2026 and 10% discount rate, I get the current MC of $1273B
Using 2023 and 10% discount rate, I get the current MC of $502B
Using 2023 and 20% discount rate, I get the current MC of $422B
That's not even taking into consideration the valuation model. Imagine if a bear thinks TSLA has negative growth instead of 50% or that it loses money instead of having 12% net margin. The results will be vastly different.
"Fairness", therefore, is an illusion. One tiny change in the model can easily cut the PT in half or double it. Market sentiment, therefore, is everything. Is it a believer or a skeptic? How bullish is it? We don't know.

 

[SOULPEDL]

O.K. Thanks for the correction. I admit, I'm unfamiliar with the world of hybrids. But I'm sure that will be a great driving experience without electric assist for what I assume is a tiny gas engine.

If Ford doesn't figure out a quick fix there will still be lawsuits.

Maybe getting OT, but don't hybrids use the engine to charge the battery to move the car? But if it's using the generated power realtime, the the battery is less stresses?

 

[Tslynk67]

You know, if I had a PhD in Math, I'd probably go teach, or build rockets, or try to solve the gravitational singularity. Some people, instead, choose to manipulate TSLA for a living.

Because you'll make f-all money doing the others...

Ugh, volume disappeared and the MM's stepped-in!

 

[Krugerrand]

Who's up for a single TSLA purchase at a symbolic middle finger bargain basement price of $2103.45 today or tomorrow?

I'd suggest a "do not reduce order" placed at 14:31 EST, or, space them out to make it look like multiple "you're number one!" salutes.

Any takers?

Dude, that’s way too expensive. In two weeks I can buy the stock for a 5th of that cost.

 

[ZachF]

The most important step in deciding what price is "fair". Say you have a model based on P:E or P:S or w/e, depending on which method you think is the most predictive. I'm gonna do a very barebone P:E analysis for TSLA. Assuming 50% CAGR and 12% net margin and 40 P:E, here's what I have for 2021-2030. Numbers are in Billions. I can come up with future market cap for each year. But these are future market caps. We surely don't wanna wait till 2030 to say TSLA is worth $10T. There's no money to be made in that. So we have to pick a year that we're comfortable with. Say I'm very bullish on TSLA and I believe TSLA will continue to grow by 50% a year till 2026. Meanwhile, someone more conservative is going to say 2023 is all I'm willing to bet on. So if its value is going to be $2T in 2026, what value am I going to put on it now? To answer this, I need to use the Discount Rate. This DR is the minimum rate of return I'll accept for TSLA. Note that this is not the same as the insane return we've been seeing and expect to see going forward. Discount Rate is the bare minimum, considering the business risk profile. In other words, if TSLA is just another company, not a hidden gem we know, and it's only part of a diversified portfolio, what kind of return am I willing to accept putting money in it? Naturally, if I understand the business well, I'm gonna have higher risk tolerance than someone who is more bearish. The more risk tolerant I am, the lower the return I'm willing to accept. The lower the return, the higher the price I am willing to pay for the stock today. Even if we agree on the discount rate, the further out I choose to look, the higher the price I'm willing to pay. So price can go higher if someone is willing to look further out or accept higher risks or both, and vice versa.
This is why we on this forum keep saying $1400 is cheap while some ignorant Twitter bears don't even want to pay $400 for this stock. All they see is risks. All we see is opportunities.
View attachment 575891
Using 2026 and 10% discount rate, I get the current MC of $1273B
Using 2023 and 10% discount rate, I get the current MC of $502B
Using 2023 and 20% discount rate, I get the current MC of $422B
That's not even taking into consideration the valuation model. Imagine if a bear thinks TSLA has negative growth instead of 50% or that it loses money instead of having 12% net margin. The results will be vastly different.
"Fairness", therefore, is an illusion. One tiny change in the model can easily cut the PT in half or double it. Market sentiment, therefore, is everything. Is it a believer or a skeptic? How bullish is it? We don't know.

Im a big bull, but unless we have a bout of hyperinflation Tesla isn't going to have $2t in revenue by 2030. That's almost the entire economy of France. The entire globe's automotive revenue is about $2.x trillion, and ~$1.5 trillion for the entire world's oil production.

 

[dl003]

Im a big bull, but unless we have a bout of hyperinflation Tesla isn't going to have $2t in revenue by 2030. That's almost the entire economy of France. The entire globe's automotive revenue is about $2.x trillion, and ~$1.5 trillion for the entire world's oil production.

$2T in market cap from $427B in revenue It's just a quick exhibit with ballpark parameters plugged in to demonstrate a point.

 

[Lessmog]

View attachment 575838

So, the new backronym for FORD is "fire on road, disabled" ?

 

[jerry33]

Maybe getting OT, but don't hybrids use the engine to charge the battery to move the car? But if it's using the generated power realtime, the the battery is less stresses?

Depends on the type of hybrid. Most can drive on engine only, but the choice is not up to the driver.

 

[M|S|M MYP]

I think everyone here has overlooked one major thing when purchasing a tesla, it is actually an asset and not a liability

 

[Cherry Wine]

Tesla Vehicles Hold Their Value Incredibly Well. Here’s Why.

Consider a midrange 2015 Model S. In the used car market, it’s priced at about 54% of its original retail price, according to industry data providers Kelly Blue Book and Autotrader. A higher-end Model S is priced at about 46% of its original selling price.

Autotrader and Kelly Blue Book are both owned by Cox Automotive and are have extensive, national databases of both wholesale and retail used car transactions.

Is half of original value after five years good? It’s excellent. Cars, roughly speaking, lose up to about 50% to 60% of their value over the first five years of ownership according to data provided to Barron’s by Edmunds. But over five years, the average large luxury car—similar to a Model S—loses around 70% of its value. Tesla is doing better than average and much better than its competition.


For instance, a 2015 BMW 750i priced with options making it roughly equivalent to a 2015 Model S had only about 25% of its original value left. The BMW 750i seems to be doing a little worse than the category average and worse than its stiffest competition.

There are more examples of strong Tesla residual values.

Looking at sport-utility vehicles, a one-year-old 2019 Tesla Model X is valued at roughly 90% of its original retail price, according Kelly Blue Book. A 2019 Audi etron is valued at about 80%, depending on mileage. Barron’s used the 2019 model year, which was the first model year of Audi’s electric SUV. The average gasoline-powered, luxury SUV loses between 20% and 30% of its value over its first year of ownership, according to Kelly Blue Book.

Then there is the Tesla Model 3. A 2017 used Model 3 can sell for up to 90% of its original value, according to Cox data provided to Barron’s. That’s, frankly, incredible. There has been little depreciation over its first three years of driving. The average midsize luxury car loses half of its value over the same span, according to Cox.

 

[CorneliusXX]

Sometimes I have a dream that I’m speaking but nobody can understand me because the words coming out of my mouth are gibberish.

On an unrelated note, I am going to Scotland on holiday soon.

 

[Joe F]

Dude, that’s way too expensive. In two weeks I can buy the stock for a 5th of that cost.

Yeah, but, it's chicken feed now for all of the self proclaimed Tesla millionaires here.

 

[M|S|M MYP]

Sometimes I have a dream that I’m speaking but nobody can understand me because the words coming out of my mouth are gibberish.

Def not a dream....hahaha....i do enjoy your posts FWIW.

 

[StarFoxisDown!]

As we get into the 2nd half of Aug and especially at the end of Aug, I'll be very curious to see what Wall St does about Q3 P/D estimates.

Do they purposely downplay the numbers and say only around 100-110k deliveries and risk being very very off or do they give more realistic estimates of 125-130k(still low but not embarrassingly off)

If they downplay, they risk causing another huge rally at the beginning of Oct....which will likely be a rally on top of S&P/Battery Day rally.

If they give fair estimates(even if they are still a bit low), they risk a rally leading into S&P/Battery Day Rally.

Their strategy of giving low quarterly numbers has backfired on them for the past few quarters because Tesla has beaten their estimates by a wide margin. Going into Q3, Tesla's production and deliveries are going to be such much higher than any other quarter in history that there's really no way they don't cause a rally. It'll just be interesting to see what rally they view as less damaging for them.

I don't think any analyst would have the balls to predict Q3 deliveries lower than 100k and risk being anywhere from 30-50% off

 

[Krugerrand]

Im a big bull, but unless we have a bout of hyperinflation Tesla isn't going to have $2t in revenue by 2030. That's almost the entire economy of France. The entire globe's automotive revenue is about $2.x trillion, and ~$1.5 trillion for the entire world's oil production.

Ye of little faith.

 

[M|S|M MYP]

As we get into the 2nd half of Aug and especially at the end of Aug, I'll be very curious to see what Wall St does about Q3 P/D estimates.

Do they purposely downplay the numbers and say only around 100-110k deliveries and risk being very very off or do they give more realistic estimates of 125-130k(still low but not embarrassingly off)

If they downplay, they risk causing another huge rally at the beginning of Oct....which will likely be a rally on top of S&P/Battery Day rally.

If they give fair estimates(even if they are still a bit low), they risk a rally leading into S&P/Battery Day Rally.

Their strategy of giving low quarterly numbers has backfired on them for the past few quarters because Tesla has beaten their estimates by a wide margin. Going into Q3, Tesla's production and deliveries are going to be such much higher than any other quarter in history that there's really no way they don't cause a rally. It'll just be interesting to see what rally they view as less damaging for them.

I don't think any analyst would have the balls to predict Q3 deliveries lower than 100k and risk being anywhere from 30-50% off

So what you're saying is we are gonna have a rally Not according to one of our favorite analysts:

https://twitter.com/i/status/1293912171017994243

 

[dl003]

So what you're saying is we are gonna have a rally Not according to one of our favorite analysts:

https://twitter.com/i/status/1293912171017994243

Jesus Christ, at least he's consistent and can do 3rd grade math. $18 PT post split.
Wait, did he upgrade TSLA by $3 for beating Q3 estimates? How generous.

 

[Krugerrand]

Yeah, but, it's chicken feed now for all of the self proclaimed Tesla millionaires here.

We didn’t get here by being frivolous with our money, though.

 

[Tes La Ferrari]

GM Files for E-Ray - electric Corvette trademark

Electric Corvette? GM files for 'E-Ray' trademark - Electrek

 

[woodisgood]

We didn’t get here by being frivolous with our money, though.

I do hope to see some frugality from you when you’re island-shopping.