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

[traxila]

I don't get it. If you're not intending to sell for 5-10 years and you think the SP is going to $10k by then -- what exactly needs protecting??

Solid point. Guess I am being greedy. Want to know how to do something other than just ride the roller coaster.

So the only way in the end is to trade in and out expertly and somehow do better after paying half in taxes. Or trade expertly into the puts as the temporary slide occurs. And actually exit in timely fashion. Either way not very likely.

Maybe I should buy more? Funny, 1000 was my cutoff for buying but now that just looks remarkably dumb. Gotta love the stock market....

All is good. Thanks for response.

 

[PeterJA]

...So, I have caution that while I strongly believe in Tesla's long term value, I have grave concerns that the market in which stocks are valued will eventually realize that the long term potential is indeed years away, and reduce the price they're willing to pay accordingly. Are you willing to wait potentially a decade for the market to re-recognize the future potential?

The run-up and crash of AMZN that you mention occurred during the Dot-com bubble.

During the crash, many online shopping companies, such as Pets.com, Webvan, and Boo.com, as well as several communication companies, such as Worldcom, NorthPoint Communications, and Global Crossing, failed and shut down.
Dot-com bubble - Wikipedia​

I don't think that situation is analogous to TSLA. I suspect AMZN crashed in 2000 not because the market realized its longterm potential was years away, but because the market feared Amazon would go bankrupt like many other dot-coms.

Before TSLA's run-up this year, it was range-bound for ten years while the company was dramatically progressing. Its current price is out-of-line with ICE automakers that have no hope of Tesla's growth, but not with other high-growth tech companies. One could argue that the current price is mostly just catching up to a valuation in line with other tech companies.

 

[dl003]

https://twitter.com/elonmusk/status/1298827537645285376/photo/1 Another cryptic msg?
E'sP ... Good
Bank (Money) ... Poly (A lot)

 

[dc_h]

Is that an absolute unit of measurement?

It’s a unit alright!

 

[traxila]

With respect, I think you don't fully understand where this company is headed. You think you do, but you don't. For example, FSD is worth far more than 3x the current share price.

Well, I was putting that up for starters. Add a trillion to the market cap right off the mark. But happy to be corrected.

 

[smorgasbord]

So where exactly do you think we are on that chart? The top of 99? I think we are more in 1998. Nobody values FSD, Solar Roof, Autobidder, or the alien tech coming out of battery day.... The real value of Tesla. None of those are going to take 10 years to slap you in your face for their real value.

You say "Nobody values FSD.....," but many of those things are what has been quoted by Dan Ives and Philippe Houchois in their $2500 price targets, and certainly Cathie Wood talks about all of those all the time.

It's also worth nothing that even just a few years after the dot com bust, Amazon was widely recognized as the 800 lb gorilla in eCommerce, yet it took another 5 years and AWS for the stock price to really recover.

And, look, I recognize that the comparison isn't perfect. They are different companies in different businesses in different times. Nothing is going to map over perfectly. That doesn't mean TSLA isn't peaking now and may drop precipitously, and then take many years for the stock price to recover. And, as I said, this is a concern of mine. I'm not predicting it, I'm saying it could happen and there's ample precedent.

 

[StarFoxisDown!]

The distance from IPO does not affect the validity of my comparison. AMZN jumped not because it IPO's, it jumped because some people recognized its future potential and wrote about it and then lots of people jumped on that bandwagon, even as many others doubted the company. That's very similar to the situation with Tesla, except there was no AMZNQ back then, at least there was no social media for them to form.

And, I didn't leave out the part after 2009 - that's my whole point. There was a lost decade of AMZN's price, and I literally asked if you were willing to wait out a similar decade or thereabouts for TSLA. I guess you are. I'm not.

Yes it does affect the validity of your comparison. You're comparing a company that IPO'd at a market cap of 430 MILLION during it's first 5 years of trading. Of course the stock is going to be wildly volatile. The top that you pointed out that took 10 years to get back to was like a 2 billion market cap.

I don't think you're trying to intentionally mislead but to take the trading action of a company that starts at 430 million market cap and compare it's first 5 years a publicly traded company to a company that has been publicly traded for over 10 years now and has a market cap of 400 billion is misleading, at best. There are no similarities.....none.

 

[smorgasbord]

The counter-argument is TSLA already had its lost decade and it ended a few months ago.

That's speculation, not an argument.

Tesla didn't lose a decade the way I've described it, the way Amazon did, with a speculative future-looking stock price rise, followed by a large fall. At least, not yet.

 

[smorgasbord]

The run-up and crash of AMZN that you mention occurred during the Dot-com bubble.

During the crash, many online shopping companies, such as Pets.com, Webvan, and Boo.com, as well as several communication companies, such as Worldcom, NorthPoint Communications, and Global Crossing, failed and shut down.
Dot-com bubble - Wikipedia​

I don't think that situation is analogous to TSLA. I suspect AMZN crashed in 2000 not because the market realized its longterm potential was years away, but because the market feared Amazon would go bankrupt like many other dot-coms.

Before TSLA's run-up this year, it was range-bound for ten years while the company was dramatically progressing. Its current price is out-of-line with ICE automakers that have no hope of Tesla's growth, but not with other high-growth tech companies. One could argue that the current price is mostly just catching up to a valuation in line with other tech companies.

1) The dot com bust was a macro-event that affected lots of companies. It's possible that we may face a similar black-swan macro-event as well. Mr. Market's mentality will likely be similar - stop loss orders will domino, people will lock in gains, etc.

2) I'd honestly like to see what other high-growth companies you'd compare Tesla with. I do agree Tesla is more like a tech company than an automaker, but even with Tesla Energy, Tesla still has to build and deliver hardware. Tesla is also one of the top ten companies in the country by market cap. So, are you going to pick Nividia or Salesforce, or are you going to pick small software-only companies like Zoom, Fastly, Crowdstriket, Coupa?

I don't think any company can be compared to Tesla. And I agree that supports a high valuation.

Again, I'm mostly pointing out that Mr. Market does not value a company for what it will do in ten years, it mostly looks a year, sometimes 2 if the analyst really wants to be "long term."

 

[PeterJA]

Well, I was putting that up for starters. Add a trillion to the market cap right off the mark. But happy to be corrected.

@FrankSG 's detailed model (in his blog that I linked) estimates much more than one trillion. I haven't tried to verify all his numbers, but trust him since he seems highly intelligent, knowledgable, thorough and careful.

 

[gabeincal]

Perhaps the FSD rewrite is at a phase where they require more data? That would be great news IMHO. If so, we'll see more evidence in the next couple weeks.

 

[Yoona]

What happens if you go over your RRSP/PRPP deduction limit? - Canada.ca

You also have a filing obligation to declare the over contribution. Not filing it adds 5% plus 1% per month in late filing penalties.

So 12% tax, plus 17% late filing fee (calculated on tax amount), plus 5% interest on both. Blends to about a 15% annual penalty of the over-contribution amount.

Nice thing is you’re only required to withdraw the over contribution and not any gains attributable to that contribution. Other nice thing is that the bank should not withhold any amounts on your withdrawal of an excess contribution (assuming you file the right paperwork). Otherwise they do withhold up to 30% Federally (more in Quebec).

Also suggest double checking the exact timing of your contributions. You may not actually be over your limit if some of your contributions were made in the first 60 days of the next calendar year. This is based on how the over contribution test doesn’t actually align with your deductible contributions (it’s an off calendar year for reporting, but calendar year for over contribution test). Refer here for how the mechanics of the over contribution are calculated: RRSPs and Other Registered Plans for Retirement - Canada.ca

I generally tell clients to withdraw the excess contribution because paying 12% tax plus interest is ridiculous when you can get a loan at much lower interest rates elsewhere... but this is not advice

Looks like I need to take care of this ASAP. Thank you so much for your help...

 

[smorgasbord]

Yes it does affect the validity of your comparison. You're comparing a company that IPO'd at a market cap of 430 MILLION during it's first 5 years of trading. Of course the stock is going to be wildly volatile. The top that you pointed out that took 10 years to get back to was like a 2 billion market cap.

I don't think you're trying to intentionally mislead but to take the trading action of a company that starts at 430 million market cap and compare it's first 5 years a publicly traded company to a company that has been publicly traded for over 10 years now and has a market cap of 400 billion is misleading, at best. There are no similarities.....none.

You're taking this way too literally. My comparison is with a high tech company with a very promising future that some people recognized and wrote about and the stock price greatly accelerated because of that future promise. Then the *sugar* hit the fan and a black swan macro-event took it and other companies down multiple pegs. The company itself kept executing well, but it took a decade and whole new line of business for the price to recover to its previous high.

Whether that's Amazon shooting up in 1999 early 2000, and the dot-com bust, and then dominating eCommerce but taking AWS for the stock price to finally reach its ATH, or Tesla in 2020 and say a Covid-crash and then dominating automobiles but taking Energy for the stock price to finally re-reach its ATH, the comparison is valid.

Are you saying that there's no possibility that Mr. Market will take TSLA down 50% or more in the next 18 months? When else has Mr. Market valued a stock for its 10 year potential and kept that valuation intact during that decade? Ever?

 

[Krugerrand]

Solid point. Guess I am being greedy. Want to know how to do something other than just ride the roller coaster.

So the only way in the end is to trade in and out expertly and somehow do better after paying half in taxes. Or trade expertly into the puts as the temporary slide occurs. And actually exit in timely fashion. Either way not very likely.

Maybe I should buy more? Funny, 1000 was my cutoff for buying but now that just looks remarkably dumb. Gotta love the stock market....

All is good. Thanks for response.

There are other rides at the amusement park. Never understood, though, why anyone would want to try and make themselves puke.

 

[S3XY]

He’s trying to tell us something!

https://twitter.com/elonmusk/status/1298827537645285376?s=21

/s

I find this post that Elon replied to much more interesting.

Most of Scottish Wikipedia Written By American in Mangled English


Of the ones I've read this is my favorite:

Louis de Rouvroy, Duke o Saint-Simon

 

[PeterJA]

...2) I'd honestly like to see what other high-growth companies you'd compare Tesla with. I do agree Tesla is more like a tech company than an automaker, but even with Tesla Energy, Tesla still has to build and deliver hardware....

I'd compare with Apple -- a hardware maker creating an ecosystem for its software -- but Tesla's addressable markets are much larger than Apple's.

Again, I'm mostly pointing out that Mr. Market does not value a company for what it will do in ten years, it mostly looks a year, sometimes 2 if the analyst really wants to be "long term."

ARK's price targets are for 5 years ahead. I believe their credibility is increasing with Mr Market.

 

[electrichapp]

1) The dot com bust was a macro-event that affects lots of companies. It's possible that we may face a similar black-swan macro-event as well. Mr. Market's mentality will likely be similar - stop loss orders will domino, people will lock in gains, etc.

2) I'd honestly like to see what other high-growth companies you'd compare Tesla with. I do agree Tesla is more like a tech company than an automaker, but even with Tesla Energy, Tesla still has to build and deliver hardware. Tesla is also one of the top ten companies in the country by market cap. So, are you going to pick Nividia or Salesforce, or are you going to pick small software-only companies like Zoom, Fastly, Crowdstriket, Coupa?

I don't think any company can be compared to Tesla. And I agree that supports a high valuation.

Again, I'm mostly pointing out that Mr. Market does not value a company for what it will do in ten years, it mostly looks a year, sometimes 2 if the analyst really wants to be "long term."

As far as i'm concerned 400B is 2021 market cap
Projected 2021 deliveries: 800k, ASP:50k, REV:40B, GM: 20%, EARNING:8B, CAGR: 50%, PEG: 1, SP=8Bx50=400B

 

[StarFoxisDown!]

You're taking this way too literally. My comparison is with a high tech company with a very promising future that some people recognized and wrote about and the stock price greatly accelerated because of that future promise. Then the *sugar* hit the fan and a black swan macro-event took it and other companies down multiple pegs. The company itself kept executing well, but it took a decade and whole new line of business for the price to recover to its previous high.

Whether that's Amazon shooting up in 1999 early 2000, and the dot-com bust, and then dominating eCommerce but taking AWS for the stock price to finally reach its ATH, or Tesla in 2020 and say a Covid-crash and then dominating automobiles but taking Energy for the stock price to finally re-reach its ATH, the comparison is valid.

Are you saying that there's no possibility that Mr. Market will take TSLA down 50% or more in the next 18 months? When else has Mr. Market valued a stock for its 10 year potential and kept that valuation intact during that decade? Ever?

You literally posted a chart of a stock going up and the losing 90% of it's value and then stated it took 10 yrs to recover to that level and insinuated that it's possible it'll happen with Tesla. So no, I do not think the scenario you posted has any chance of happening. There are so many things wrong with your comparison that I'm just giving up on this conversation. This is pointless. I feel for anyone that invests with that sort of thought process/mentality.

Everyone here knows there's a chance the stock could sell off after a big rally. I don't think anyone's under the illusion that this price level is a guaranteed floor for the stock from here on out. But I chose to do my investing based on what the company is doing.....not what you posted.

 

[smorgasbord]

I'd compare with Apple -- a hardware maker creating an ecosystem for its software -- but Tesla's addressable markets are much larger than Apple's.
ARK's price targets are for 5 years ahead. I believe their credibility is increasing with Mr Market.

Was Apple ever as richly valued as Tesla is today? For years AAPL shareholders have complained the market doesn't have a high enough multiple.

As far as i'm concerned 400B is 2021 market cap
Projected 2021 deliveries: 800k, ASP:50k, REV:40B, GM: 20%, EARNING:8B, CAGR: 50%, PEG: 1, SP=8Bx50=400B

You can't multiply Gross Margin by total Revenue to get to Earnings. There are other expenses to be paid out that are not counted in GM.

 

[smorgasbord]

...no, I do not think the scenario you posted has any chance of happening. There are so many things wrong with your comparison that I'm just giving up on this conversation. This is pointless. I feel for anyone that invests with that sort of thought process/mentality.

Everyone here knows there's a chance the stock could sell off after a big rally. I don't think anyone's under the illusion that this price level is a guaranteed floor for the stock from here on out. But I chose to do my investing based on what the company is doing.....not what you posted.

Thanks for going on the record that TSLA will not suffer another steep decline.

As for the "feel for anyone" veiled insult, you should stop taking this so personally.