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

[Mo City]

Seriously? Do I really have to mention Amazon who got to 500 billion market cap with crap margins?

Again, why are people ignoring future growth when determining value. Q3 will have greater than 50% QonQ. Q4 will likely have another 25% growth. 2021 revenue is going to grow above 50%. 2022 is has likely 40-50% growth. No company doing billions in sales every quarter is experiencing that type of growth.

Most of us in this thread are heavy TSLA longs. That doesn't mean we agree on every detail. I'm with you it is extremely doubtful TSLA falls to near $1000 unless something weird happens. At the same time, there is no doubt in my mind at least some of TSLA's appreciation beyond $1119 is due to the assumption of S&P inclusion (but not all of it).

 

[wtlloyd]

Waited yesterday for $1400 because it meant an extra share. So, today I spooked and went ahead at $1650.
Arrrgghhhh.

 

[jbcarioca]

Revenue growth at 50%/year with 20% margins going forward doesnt justify Tesla's market cap of 500 billion beyond. Look at all the super cap companies, none of them sit at 20% margin. This is manufacturing margins which gets trash multiples and why so many people think TSLA is overvalued. Software money needs to start flowing in and become significant in order to break 400-500 billion barriers or else Tesla is no better than a Toyota.

So currently Tesla has surpassed a manufacturing giant like Toyota means that high margin software is getting priced in as well as revenue growth if you think current share price is fundamental based and not some S&P play.

Have you looked at AAPL? I guess not.
How about margins from software sales from FSD to Autobidder? I guess not.
It is becoming a trifle stale to keep thinking about TSLA in pure manufacturing terms. Even there they are innovating in a way not seen before since Eli Whitney, Henry Ford and much less but still consequential The Toyota adoption of Deming and just-in-time plus continuous improvement.

It is sad to not understand how much energy there is between Tesla and SpaceX. The latter has >50% launch market share with no real competition even in sight. Tesla has been continuously revolutionizing too, but many fo us see just an auto company. Even sadder is ignoring Autobidder. Tesla obtains public utility access in the UK and the EU which is promptly ignored by most of us.

Even a cursory look at those things, plus the Octovalve and aluminum technology proves that TSLA is undervalued.

In this diatribe note I do not mention anything at all about batteries, motors or any of the things we talk about most.

Be acutely aware of volatility, to be sure, but the trajectory is upward.
Just remember these are the same people as those who've just recovered intact two rocket fairings. FWIW, they are the ones who gave us proprietary inconel in 2015 and proprietary aluminum in 2020. Materials advances by themselves justify a stunningly high valuation.

A handful of us shelled out $10,000 for that inconel even though it was sold as Ludicrous, and it was!

 

[dww12]

LOL. At $2,000/share, Tesla is more highly valued than all other automakers in the world. COMBINED.

Sounds about right to me. All the others are dead men walking. Because all Barns and Noble needed was a website to compete with Amazon, right? Other auto makers don’t even have a website yet.

 

[Nocturnal]

I assume your referencing this story:

Tesla at $300 billion is much smaller company than Apple, Amazon were at that stage, Morgan Stanley says

I thought he was dumb before, but this. This is really stupid. Surely he has been told that size doesn't matter right?

 

[Krugerrand]

FYI, SP fine before I entered dentist office, got teeth cleaned the old fashion way because that’s how they do it now, walk out of office a big drop in SP.

Today’s informative message: floss more and skip your dentist cleaning appointments until further notice.

 

[StarFoxisDown!]

Most of us in this thread are heavy TSLA longs. That doesn't mean we agree on every detail. I'm with you it is extremely doubtful TSLA falls to near $1000 unless something weird happens. At the same time, there is no doubt in my mind at least some of TSLA's appreciation beyond $1119 is due to the assumption of S&P inclusion (but not all of it).

Just to make it clear, I do agree that the run up for the last 400-500 pts is because of S&P inclusion, with some of it also being realization that Tesla can be profitable in the worst economic scenarios.

I'm simply stating that Q3 growth and earnings growth will be a big enough catalyst to hold the $2,000 level. Doesn't mean like it can't(and it likely will) drop a couple hundred points after S&P inclusion. But I don't think the drop after S&P will be bad at all and it will go higher very quickly

 

[Curt Renz]

Ah the good old lunch time drop, which happens every time except for the two times that it doesn't and the stock jumps up a ton in the past couple weeks. Just like all the other "expected" patterns. 50% of the time they work every time.

The drop coincided with the appearance on CNBC of long-time TSLA bull Joe Osha of JMP explaining his downgrading it to market perform. Long term he is still quite positive on TSLA, but for the now he suggests the run may start to quiet. This appears to have prompted some selling (perhaps manipulative) that likely triggered a cascade of stop limits of weak longs. Those weak longs would probably include sidelined sports bettors who have have become novice day traders; ripe pickings for the hedge funds.

Such selling would be welcomed by S&P 500 related index funds that may soon be forced to buy TSLA. Wall Street and the media may have been coordinating efforts today related to this need. Nevertheless, even they could be overwhelmed if the TSLA report is good tomorrow.

 

[Singuy]

The comparison to Amazon and AWS makes Tesla's position and future potential even more obvious. Amazon would have been unprofitable for many more years without AWS. Hell if you take away AWS today, Amazon would struggle to post a consistent profit since they invest heavily.

Tesla at scale will be decently profitable without Autonomy. Don't get me wrong, Tesla doesn't become a trillion dollar company without at least some sort of value in Autonomy. But just through Tesla's dominance in Auto and Energy and the margin when they are at scaled of 1-2 million cars a year will result in enough for a 600-700 billion market cap.

Part of the reason I'm so excited for Q3 earnings is we finally get to see Tesla's earnings power, including margin expansion, at a new level of scale. We haven't been able to clearly see that earnings growth potential(though it's hidden there if you look at Q1's 2020 earnings in comparison to say Q2 2019 earnings and it might become more obvious in Q2 2020 earnings even though Tesla was shut down for half the quarter)

Without AWS Amazon's valuation will go head to head with Walmart which is a far cry from their current valuation. And unlike Amazon, it's hard to build a model around Tesla software because most of it comes from a promise vs actual earnings of any significance today.

Anyways, I'm leaning more of a S&P play for our current sp and not fundamentals but happy to be wrong. Can't wait till 2021 so we can were Tesla really sits.

 

[CorneliusXX]

What I've noticed is that Tesla cuts prices as a pre-emptive measure, typically when they have increased production substantially. They wisely keep their products production constrained (while continuing to make as many as physically possible). If they didn't have enough margin to do this profitably they would do what other auto makers do, which is to shut down production and lay people off. The fact that Tesla has room to cut prices and keep production going full steam ahead points to their superior margins.

When Tesla wants to juice demand at the end of the quarter to clear out the delivery channels as cleanly as possible they use incentives in the referral program. But make no mistake, we cannot discuss Tesla's "lead" over other manufacturers without discussing price, margins and Tesla's ability to cut prices while remaining profitable. Because even crappy, outdated cars will sell well if you mark the price low enough. The room to cut prices is a integral component of a manufacturers "lead" over the competition.

I guess the question is what are they trying to pre-empt. If margins are less than their stated goal of c.30% it is likely demand driven, otherwise supply driven.

 

[Sudre]

NO ONE is buying PUTs. They have to get this price down to try and convince suckers to buy PUTs so they can balance their equation. It appears to me THEY are pushing as hard as they can. I believe they will fail. Does anyone have any good reporters THEY can call to get another negative headline out there?
Heck. I'd like to sell some more PUTs too! LOL

Quick ELON say something about the Pandemic!

God help us if the ER is not a good one tho.

 

[Todd Burch]

FYI, SP fine before I entered dentist office, got teeth cleaned the old fashion way because that’s how they do it now, walk out of office a big drop in SP.

Today’s informative message: floss more and skip your dentist cleaning appointments until further notice.

You could combine the dental visit with the proctologist visit, and get your butt flossed. (String bikini?) The affect on the share price should cancel out.

 

[StarFoxisDown!]

Without AWS Amazon's valuation will go head to head with Walmart which is a far cry from their current valuation. And unlike Amazon, it's hard to build a model around Tesla software because most of it comes from a promise vs actual earnings of any significance today.

Anyways, I'm leaning more of a S&P play for our current sp and not fundamentals but happy to be wrong. Can't wait till 2021 so we can were Tesla really sits.

Yeah I think that is where we view things differently. I 100% think most of Amazon's value from 500 billion to a trillion dollar company was from them executing on their Ecommerce business and becoming a monopoly in that sector. I do not think AWS margins would have made that much a difference. Would Amazon only be a trillion instead of 1.45 trillion? Sure. But I do not think AWS changed or altered the fundamental reason you invested in Amazon. AWS was however a big cop-out for analysts who missed out on the big Amazon rally of 5 years and gave them a "valid" reason to give dramatically higher price targets after big runs....Sound familiar?

 

[S3XY]

In for another 10 during today's flash sale at $1575

 

[Unpilot]

One has to look at Adam J's report like a five year old's picture.... "Aww that's a cute picture ...what is it a giraffe..or maybe a monkey?"

 

[UnknownSoldier]

Looks like someone's trying to get a discount.

The gap is filling in on this push down though.

 

[jbcarioca]

Without AWS Amazon's valuation will go head to head with Walmart which is a far cry from their current valuation. And unlike Amazon, it's hard to build a model around Tesla software because most of it comes from a promise vs actual earnings of any significance today.

Anyways, I'm leaning more of a S&P play for our current sp and not fundamentals but happy to be wrong. Can't wait till 2021 so we can were Tesla really sits.

Sorry to say you really missed the point. AMZN has competitive advantage because fo software. AWS works because of software, AMZN logistics works for the same reason. Without unprecedented predictive analytics better than anywhere else their entire business would fail.
In no respect are they equatable to Walmart, nor will the market see it that way.

Misunderstanding the sources of competitive advantage for FANG generates misunderstanding of Tesla and SpaceX.

It boggles my mind how so many of us cannot understand the very company about which we are normally so enthused. Not understanding the advantages makes us blind to the risks. There are a fair number fo those too.

 

[EcoBruin]

FUD coming in full steam right now for final attempts before ER. GLJ is a known fudster.

 

[berryja]

A handful of us shelled out $10,000 for that inconel even though it was sold as Ludicrous, and it was!

Love the inconel every time I drive the car!

 

[Curt Renz]

FUD coming in full steam right now for final attempts before ER. GLJ is a known fudster.

View attachment 567182

GLJ is long time TSLA bear Gordon Johnson with the $87 TSLA price target. Here he is on CNBC 22 days ago when TSLA was at $965: