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

[Tes La Ferrari]

What the hell is an "internal" model 3?

That’s a Model 3 inside a Boring Co. tunnel.

 

[StarFoxisDown!]

To be fair, we have heard of ramping of Solar and Energy for quite a while without any significant revenue contribution and I doubt we will with Q1 results either. FSD revenue may start getting recognized but we also have carbon tax credits that will be declining down the road.

I just think the comment @Mengy made shouldn't be dismissed. There is a pretty good argument to be made for the stock to be fairly valued at it's current price until earnings really start to lower the PE ratio. Which I absolutely believe will happen with Austin and Berlin coming online, but it isn't crazy to think Q1 earnings results will not result in a lot of stock movement. We could be at a wait and see approach until the end of the year. I don't think so and I hope not, but I will not have shocked Pikachu face if it is the case.

So no, Mengy said "few years" which I'm sorry, not trying be an *ss, but should be dismissed. Also just to point out, EV credit revenue is actually going to increase given the news about VW paying Tesla for credits in China. But let's do some math here. This is without factoring more FSD percentage wise revenue and/or subscription model and not factoring in the fact that Tesla's ASP and margins will improve in multiple ways once EV infrastructure is passed. Let's also not factor in Energy because margins/profits will improve greatly as they scale, but so far scaling Energy has been unpredictable

Q1 and Q2 2020 were tiny profits and EPS for Tesla due to Covid. The current 12 month trailing P/E is 1036. If Tesla reports numbers along the lines of what @The Accountant is estimating, Q1 will likely be near 400% earnings growth. If Tesla does about 215-220k deliveries (which is more than doable at this point), earnings will likely be up 500% or more in Q2. That means the P/E is going to be cut almost in half by Q2, so down to the 500 P/E level. Given delivery rates will likely be above 250k by Q3, the P/E is going to drop again by another 25%. Rinse and repeat for Q4. Q4 might actually see a larger earnings percentage increase due to the one time items that hit margins/earnings in Q4 2020. So just by Tesla maintaining it's current business structure, the P/E reduction throughout 2021 will be dramatic if the stock doesn't not go higher.

Now factor in recognition of FSD/Subscription model and the ASP/Margins going higher from EV Infrastructure plan. Its not hard to see that Tesla's P/E could be under 100 after Q4 2021 earnings if the stock price stayed where it's at today.

 

[Artful Dodger]

If I was a CEO of another automaker Waymo I'd be weeping right now, I'd want to throw in the towel.

FTFY.

Cheers!

 

[pz1975]

I have a bunch of sold $640 and $650 puts and $700 calls so this hovering around $675 is creating a nice, stress-free Friday. I have been slowly accumulating 2023 LEAPS using the proceeds of these weekly trades.

 

[StarFoxisDown!]

Woah there, hold the pitchforks!!! I didn't say I thought we would trade flat for a few years, I personally think we'll be over $1K by years end.

However, as a long term investor I must acknowledge the possibility that we could trade flat for awhile now.

In this market anything is possible, and as a responsible investor I must admit Tesla's current P/E is high for its revenues. That's not stopping me from holding long nor buying more shares, but it would be irresponsible of me to discount all possibilities for the near future and simply assume we'll be going up very soon. I never thought we'd hit $900 in January either but we did, I was wrong. My mistakes can go both directions though...

Hey I'm just going by what I quoted lol

Not trying to grill ya on that, sorry if it came off that way. If I sometimes come off a certain way, it's trying to dispel theory that feels has a narrative because ya know.....during these times of downward pressure on TSLA, the care bears sure seem to come out to pose valuation concerns

Tesla's P/E is pretty much the last bit of FUD bears can hold on to and 2021 with no covid now is going to destroy that argument. Even if the stock goes up to 1,000 by Dec, it won't be able to keep pace with the reduction in Tesla's P/E due to earnings growth.

 

[corduroy]

I have a bunch of sold $640 and $650 puts and $700 calls so this hovering around $675 is creating a nice, stress-free Friday. I have been slowly accumulating 2023 LEAPS using the proceeds of these weekly trades.

That's a pretty aggressive strangle, glad it's working out for you. I've got one with much wider strikes that I expect to expire with no drama today.

 

[Ameliorate]

Woah there, hold the pitchforks!!! I didn't say I thought we would trade flat for a few years, I personally think we'll be over $1K by years end.

However, as a long term investor I must acknowledge the possibility that we could trade flat for awhile now.

In this market anything is possible, and as a responsible investor I must admit Tesla's current P/E is high for its revenues. That's not stopping me from holding long nor buying more shares, but it would be irresponsible of me to discount all possibilities for the near future and simply assume we'll be going up very soon. I never thought we'd hit $900 in January either but we did, I was wrong. My mistakes can go both directions though...

It's a pretty irrelevant metric for a company who just turned profitable no? Any company in that situation is near infinite P/E. P/E seems fine for a company who has been profitable for a decade.

Much better off looking at projected revenue or any other marker IMO.
Won't stop some people from trading based on P/E but they wont be riding the next TSLA wave higher and that's their loss. It's just awesome to see where this company is headed and how great execution continues to be even in the face of challenges presented in the world today.

 

[Mengy]

Tesla's P/E is pretty much the last bit of FUD bears can hold on to and 2021 with no covid now is going to destroy that argument. Even if the stock goes up to 1,000 by Dec, it won't be able to keep pace with the reduction in Tesla's P/E due to earnings growth.

Sure, and for a lot of people the large scary P/E is enough to keep them away from TSLA.

However, historically growth companies always have high P/E's early in their life. Both Apple and Amazon did, look where they are today. Tesla will follow a similar trajectory both in SP and P/E, and this is why the current P/E doesn't scare me one bit. In fact I feel Tesla has a ton more upside than either Apple or Amazon did at this point in their stories.

Tesla's own growth will whittle that P/E down all by itself. Probably faster than we realize today. But none of us own crystal balls so we can't be absolutely certain of that.

 

[lafrisbee]

let's go back to earlier today "news."
+35k vehicles registered in March out of Shanghai!?
So I would not be too far off in believing they will make 110k for Q2?
And how many from Fremont?
For a total of ????k.
There has to be a "2" at the beginning of that if Fremont just repeats the exact same numbers?

 

[Artful Dodger]

Any good books out there shining a light on the world of market making and showing actual cases with actual documentation of stock positions?

Naked short selling - Regulation SHO | Wikipedia

(PDF) Naked Short Sales and Fails to Deliver: An Overview of Clearing and Settlement Procedures for Stock Trades in the US | researchgate.net

Boni – Page 2 – Licensed to Steal | stopnakedshortselling.org

Naked Short Selling: The Truth Is Much Worse Than You Have Been Told | OilPrice.com

 

[StarFoxisDown!]

let's go back to earlier today "news."
+35k vehicles registered in March out of Shanghai!?
So I would not be too far off in believing they will make 110k for Q2?
And how many from Fremont?
For a total of ????k.
There has to be a "2" at the beginning of that if Fremont just repeats the exact same numbers?

Pretty much 220k with no S/X. 235k with 15k S/X. Discount 5-7% for down days. Comes out to 218-220k. The one wild card being S/X.

Should be a monster quarter

 

[T@oo]

One of my fav utubers gives dishy some love.

 

[Tslynk67]

What say you O wise closing price gurus?

682? 679? ....or mule friendly 701?

Same as I said the other day $677.50, or less precisely, >675<680

 

[Mengy]

let's go back to earlier today "news."
+35k vehicles registered in March out of Shanghai!?
So I would not be too far off in believing they will make 110k for Q2?
And how many from Fremont?
For a total of ????k.
There has to be a "2" at the beginning of that if Fremont just repeats the exact same numbers?

Yeah, I think 200,000+ for Q2 is a certainty at this point. Maybe even quite a bit over 200K.

 

[Unpilot]

NADAQ green....QQQ green...TSLA red.
Seems right?

 

[insaneoctane]

Mandatory FSD. Another salespoint. Tesla could even sell a ticket for Los Angeles-Las Vegas, or wherever for $20, for those that don't own or subscribe to FSD. It would already be downloaded to the car so would only take a press of a button.

Sure is convenient and opportunistic for Tesla that all vehicles built since 2019(?) have FSD hardware...

DUDE! You win my prize giveaway for most imaginative post in a week! I got I need to do but I have to spend some time giving you props and adding to your idea....
Two ways...first directly into your idea. The tour can be so intense once it is fleshed out... you could set your FSD to go "Full tour" and just turn it loose in an area. The screen could give 3-D photos inside the buildings, or photos of construction, or overlay old photos over current ones. If you sync your phone to it you could hold it up in the direction that the building or event happened and it could give a visual(movie or still) over the actually location...even 360. Even sound.
Also, Tesla could do a "tourist" feature for wherever the car goes. if you are coming up to a famous place it can read selected articles to you about it just before you get there, And then play out what happened when you drive through the area.
You could set the preferences for "History" or something as specific as The Movie "Taxi Driver" when in NYC.
Set it to History of the West and ,Driving through Texas you could be going down the Interstate and your Tesla could tell you, "See that ridge off to the right at 1.5 km. That ridge was a landmark on the Chisholm Trail where cattlemen knew to turn towards the morning Sun and in three days they would be in Laredo. In 2 minutes and 20 seconds we will be directly over where this interstate and The Chisholm trail bisect."

This is really shaping up to be far more potentially impactful than I initially imagined. A touring business within all Tesla vehicles. You could write the algorithms to work with FSD in all major tourist destinations. The narration could be integrated with the center screen. The narrator could be James Earl Jones, not a college kid trying to make extra cash. Perfect for the family in a post-COVID environment where cramming onto a tour bus has lost some of its appeal....Oh, and after you’ve built out DC, SF, Hollywood, etc, you could make tours for venues that would have NEVER made sense before with traditional capitally intensive tour model. The capital investment for a tour business based on this Tesla FSD model is potentially far less capital intensive because you could start WITHOUT any fleet, initially catering to Tesla owners, adding Tesla vehicles as popularity increases. No bus driver or narrator (they aren’t always the same) hourly salaries. I suspect those Tesla cost per mile and resale values would put your typical tour bus to shame. Three cost models: FSD Tesla owner (cheapest), non-FSD Tesla owner, non-Tesla owner (most expensive)...I LIKE IT!
~~~MOD: I'm not going to repeat my DebbieDowner posts - read my ones up- and down-post as to why we failed at just this. It MIGHT work with a car company other than Tesla, but that's of zero interest to us.~~~

 

[woodisgood]

NADAQ green....QQQ green...TSLA red.
Seems right?

Renewables/EVs/solar down modestly across the sector, most around 1-2%. So seems exactly right to me.

Other EV stocks such as NIO and FSR are doing worse.

 

[TheTalkingMule]

So no, Mengy said "few years" which I'm sorry, not trying be an *ss, but should be dismissed. Also just to point out, EV credit revenue is actually going to increase given the news about VW paying Tesla for credits in China. But let's do some math here. This is without factoring more FSD percentage wise revenue and/or subscription model and not factoring in the fact that Tesla's ASP and margins will improve in multiple ways once EV infrastructure is passed. Let's also not factor in Energy because margins/profits will improve greatly as they scale, but so far scaling Energy has been unpredictable

Q1 and Q2 2020 were tiny profits and EPS for Tesla due to Covid. The current 12 month trailing P/E is 1036. If Tesla reports numbers along the lines of what @The Accountant is estimating, Q1 will likely be near 400% earnings growth. If Tesla does about 215-220k deliveries (which is more than doable at this point), earnings will likely be up 500% or more in Q2. That means the P/E is going to be cut almost in half by Q2, so down to the 500 P/E level. Given delivery rates will likely be above 250k by Q3, the P/E is going to drop again by another 25%. Rinse and repeat for Q4. Q4 might actually see a larger earnings percentage increase due to the one time items that hit margins/earnings in Q4 2020. So just by Tesla maintaining it's current business structure, the P/E reduction throughout 2021 will be dramatic if the stock doesn't not go higher.

Now factor in recognition of FSD/Subscription model and the ASP/Margins going higher from EV Infrastructure plan. Its not hard to see that Tesla's P/E could be under 100 after Q4 2021 earnings if the stock price stayed where it's at today.

Thanks for this breakdown! I was gonna ask for it yesterday, but didn't want to hassle folks. Having some perspective on P/E is kind of the last unclear piece of the puzzle for me. If you're saying a scenario of 2021 going absurdly well puts us at 100/1.......that's a big deal for my sense of valuation.

There's no Energy in any of this! And IMO Energy will be more than Automotive by 2025ish.

So I guess people just don't think this growth will be maintained beyond 2023? That's laughable.

 

[insaneoctane]

For those who have explained the low SP following P/D numbers as due to MM being caught off guard....ok, that seems plausible, but it costs MM lots to move/keep the stock down to reposition, right? Why wouldn’t they do it, reposition, and get out- ready to profit? Why spend all the money to keep it down all week? It’s going to pop, it’s.....INEVITABILITY

 

[StarFoxisDown!]

For those who have explained the low SP following P/D numbers as due to MM being caught off guard....ok, that seems plausible, but it costs MM lots to move/keep the stock down to reposition, right? Why wouldn’t they do it, reposition, and get out- ready to profit? Why spend all the money to keep it down all week? It’s going to pop, it’s.....INEVITABILITY

My personal theory/view is that it's not just MM's that are not positioned for a TSLA rally, but Wall St in general. They could have placed bets on TSLA continuing to go down in bad numbers or maybe they weren't planning on buying into TSLA in any big way because they feared the numbers. Now they have to get out of other trades or come up with capital to position themselves for another leg up rally in Tesla's valuation.