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

[Dangerous Fish]

I think the market gave Tesla that value when Model S+X sales were strong.

For me, the biggest miss for Elon on the Q1 call was the cannibalization question. The Model 3 is clearly taking away market share from the Model S, and the current refresh is unlikely to be enough.

There are Model 3 owners who would have stretched their finances to buy the Model S, but didn't because the Model 3 exists.

I'm worried the Model Y has done the same thing to the Model X, too. There are buyers who would stretch their finances to buy a Model X but are now waiting for a Model Y.

Apple saw this with the iPhone 5C. That's why there isn't a 5C phone anymore.

I see Model Y and X owners being very different people myself.
I think Y may be taking a small amount of current demand away from 3.
I also think demand for all EVs in China should not be underestimated.
And we shouldn't forget the pickup is being worked on right now.

 

[Tslynk67]

This is Tesla stupidity at its finest. The CEO is personally reviewing every one in 10 invoices with the CFO taking a look at all of them, you brand gets a beating because it can't communicate, logistics are a shamble and all of your products are not rolling out due to production issues, yet this is A-OK? Spending salary to port game engines to a platform just because you can? No. I can't see it being anything else as Elon's personal little toy idea, everything else be damned.

I don’t think Elon will be checking many expenses, he’s just putting the fear of god into the employees...

 

[EVMeister]

The 4* rating for safety is rather misleading. I realise it’s because it hasn’t yet been tested by NCAP, but they could have at least referenced the testing from the US.

Agreed. I also disagree with their thoughts and rating on styling. Seemed to be primarily because it looks "normal" rather than a boldy designed weirdmobile. But it only looks like "any other car" to people who are unobservant. I can spot Model 3s and other Teslas a mile off. They're all distinctly but elegantly styled.

 

[Fact Checking]

There are Model 3 owners who would have stretched their finances to buy the Model S, but didn't because the Model 3 exists.

Many of those customers will buy a fully loaded or at minimum highly optioned AWD Model 3 instead, which generates more margin than a minimal ASP $75,000 Model S, even in absolute cash terms.

The problem in Q1 was not just the Model S/X one-off drop in sales due to demand pull-forward, but that Tesla couldn't make (and deliver) enough Model 3's to counter-balance it.

Inter-model cannibalization for manufacturers is typically a happy problem to have.

 

[WarpedOne]

The problem in Q1 was not just the Model S/X one-off drop in sales due to demand pull-forward, but that Tesla couldn't make (and deliver) enough Model 3's to counter-balance it.

These one-off problem quarters surely do pile up ...

 

[Zero CO2]

I think the market gave Tesla that value when Model S+X sales were strong.

For me, the biggest miss for Elon on the Q1 call was the cannibalization question. The Model 3 is clearly taking away market share from the Model S, and the current refresh is unlikely to be enough.

There are Model 3 owners who would have stretched their finances to buy the Model S, but didn't because the Model 3 exists.
that would be me(I would typically never justify such and expensive vehicle) ... 2 + years ago ... they did drop the ball with S and X refresh... still many growing pains but i think they will figure it out their mission is too important

 

[Ellec]

Any reading on Q2 Prod/Deliveries? Troy's spreadsheet doesn't show predictions anymore, unless im missing something?

84k VINS's registered this quarter; although that number doesn't map exactly to actual cars produced.

 

[smalltownguy]

Just a FYI,

All companies worst bear case is $10.

More exactly worst case is $0.

WTF is this *sugar*?

 

[mongo]

This post resonated with me as I am in a similar position. Unfortunately we all believed Elon. I love the guy, he’s incredible, but he just oversaw nearly a 50% drop in market cap. That is disastrous. I hope he learned his lesson. Nobody gives a *sugar* about robotaxis, people want TANGIBLE goals and actual execution.

If you think no one cares about autonomy, why don't you present data from this mythical parallel world where Tesla did not have Autonomy Day nor the round of capital raise that occured after it and tell us what the resulting stock price is?


Elon bought around 350, he also bought 20 million around the SEC result, and he just bought another 10 million worth. His entire compensation package is based on getting TSLA to multiples of $350 (non-diluted).

We are each responsible for our fiscal choices, not Elon who said during the Q1 2018 call:

So that really, the problem is like people get too focused on like what's happening in the space of a few weeks or a few months. This is -- it's an old maxim of investing, you should not be focused on short-term things. You should be focused on long-term things. We have no interest in satisfying the desires of day traders, like we couldn't care less. Please sell our stock and don't buy it.

I mean, I think that if people are concerned about volatility, they should definitely not buy our stock. I am not here to convince you to buy our stock. Do not buy it if volatility is scary. There you go.

Why did you not believe him then?

 

[uselesslogin]

Any reading on Q2 Prod/Deliveries? Troy's spreadsheet doesn't show predictions anymore, unless im missing something?

84k VINS's registered this quarter; although that number doesn't map exactly to actual cars produced.

Troy tweeted his estimate is 74k deliveries across all models.

 

[Boomer19]

Someone this morning predicted Adam Jonas will be out with a note with a drop in price target. Sorry if this was already reported, but indeed he did, albeit only the bear case got dropped from $97 to $10. Their base case is maintained at $230, and the bull case maintained at $391.

Price Target $230

Our PT of $230 is comprised of 2 components: The first is a $185/share value of the core Tesla Auto business on a 13% WACC, 10x exit EBITDA and exit EBIT margins of 8.0%. The second component is our valuation of Tesla Mobility at $45/share (what the company has announced as 'Tesla Network') based on a DCF to 2030 and a 13% WACC. Our price target applies zero value for Tesla Energy and zero value for SCTY.

Bull $391

Same core auto business assumptions, but an 11% WACC and 12x exit EBITDA multiple, which supports a $278/share valuation for Tesla Auto. We add our base case assumptions for Tesla Mobility at a 10% WACC, implying $83 per share. Tesla Mobility valued at a DCF to 2030 with a 30% tax rate and terminal growth rate of 3%. We add $16 for Tesla Energy, our low-end case, assuming 15% of Gigafactory output sold to the power sector at a 15% margin. SCTY value of $14/share, equal to the value of shares issued for the acquisition.

Base $230

We believe Tesla should not be valued on near-term metrics or multiples like traditional OEMs. We use a DCF that extends to 2030 and captures the full maturation of the Model S, Model X (and top hat derivatives) as well as the ramp-up of the Model 3.

Bear $10

Our $10 bear case is bounded by 31% 2020 EV/Sales. We believe this EV/Sales ratio is fair given the combination of execution, economic and political risks facing Tesla’s 2020 revenues and a retrenchment in global auto share prices heading out of 1Q19 results. Our bear case also gives no discrete valuation for Tesla’s solar, energy, or autonomy assets.

$45 a share for tesla mobility
$0 a share for tesla energy

jonas is a cartoonish nitwit

 

[Leo9]

Seriously though.

Troy tweeted his estimate is 74k deliveries across all models.

That would be a huge miss...

 

[Ellec]

That would be a huge miss...

Actually he says they could hit 90k if they push hard. However he thinks Q3 will deliver less than Q2, but thinks they could still hit their yearly target if China comes online.

I guess 2019 is a write off, can't see the stock price recovering till 2020 now. Holding till 2030 so not an issue for me.

 

[stef]

That would be a huge miss...

Considering how market is pricing TSLA at the moment (bk any day)... who knows.

 

[Pras]

A lot of bears are expecting pullback to $180...maybe when they will cover. However with yesterday’s strong price action and macro staying neutral the $180 may not come ....or at least I am praying so!

 

[Pras]

The rated capacity of those ships is expressed in RT units (based on the 4m length of the 1966 Toyota Corona).

The Model 3 is 4.69m so a nominal ship's capacity of 6,200 is closer to 5,000, and even fewer if the manifest includes the longer Models S and X.

Thanks for clarifying. Even then 10-12 ships together is more than the demand we expect from EU and China.

Hoping to see at least 5k from Canada (new tax incentive) and 35k from US (was at 28k in Q1) and at least 40k row. So 80k total

The bear case will be 70k.

The bull case will be is row is near 45k and US + Canada is 45k (hard to pull this off but with SR+ we don’t know the demand size).

 

[Solar Aussie]

This stupid low prediction of share price is encouraging lower price just so that they can swoop on the rise later.... The cars are phenomenally good compared with others. In Australia we are all still waiting to order our Model 3s and when Tesla does long distance overseas deliveries of course it interrupts the normal delivery flow. I think that Morgan Stanley Jonas is just a typical bear talking down the value of the stock.. The other auto manufacturers are all cheering from side lines as their sales decline with the huge impact of European Carbon Tax...

 

[Pras]

Clear FUD by MS. I mean their bull case gives zero cred to FSD but the bear case suggests all the doomsday scenario.

At this point even if going private seems a ship already sailed, Elon not a bad time to buy some more TSLA stocks. Start a little, trade 5% in spacex for TSLA. Having a super majority of spacex (75% voting right) you should not be worried about dilution. (Assuming Elon is a lurker here).

 

[Zaxxon]

Well, while I enjoy the personal effect of dropping S/X pricing, it's not a good sign for a recovery of those models this quarter. If they were at their internal target they'd not be reducing prices. Especially this soon after updating the lineup late last month.

On the flip side, the cars are all the more enticing at these prices...

 

[LJS22]

TSLA has had zero chance of breathing the last two weeks. Everyday has been a new attack on their updated evaluation. It all feels very coordinated to bring the stock down.

But we’ll see. I guess now that worst case is $10 we won’t have to hear too many more predictions from MS.