You have posted numerous comments about Tesla being vastly undervalued, without mentioning specific long term profit expectations and what you think a fair market cap would be right now. Care to share what you think a fair market cap right now would be for the stock?
Sure, I'll try and break it down as best as I can for what I think makes sense and in a quick way without going deep into numbers. As we've all mentioned, there are multiple potential catalysts that could drastically change the valuation so I just leave those out of what I think the stock should be valued at because it's an unknown.
The simplest way I currently look at it is a fully matured Fremont and Shanghai by Q4 of this year, with no further added capacity (so no MIC Model 2), meaning S/X fully ramped back up at Fremont and Y fully ramped up at Shanghai will result in non-GAAP earnings of about $2-2.25 share for Q4, potentially as high as $2.50. That would take Tesla's forward P/E down from about 130 right now to 55-60........which is the same as Amazon. I don't see any reason to "discount" Q4 earnings at this point because there's very little risks in terms of them achieving it. And it's almost comical to say Amazon and Tesla should have the same forward P/E considering the growth that each company has ahead of it for the next 3-5 years.
So there's essentially my benchmark. With just Fremont and Shanghai fully matured, I get an idea of the earnings power. IF there was no Berlin/Austin on the horizon or they were 3 years away from mass production, I would say Tesla is fairly valued right now.
Now I look forward into the next year and there are 2 more gigafactories that will be coming online that will reach close to maturity by end of 2022. So I know the potential earnings power of those 2 gigafactories but I also know they will both have higher output and earnings potential than the combination of Fremont/Shanghai due to manufacturing improvements and techniques(Fremont being the big drag on earnings potential out of the Fremont/Shanghai combo). Austin especially seems to be geared towards 1 million annual production capacity. So I expect their matured earnings power to be more like $3-4 a share per quarter. Now since they're still a year and a half away to 2 years from reaching maturity in production, I discount that earnings potential by 50% to account for risks.
So when I add the impact of 50% of Berlin/Austin's earning potential to Fremont/Shanghai, my current fair value for Tesla is in the realm of 900-950/share. Every quarter that goes by and Berlin/Austin get closer to operational, I discount less of Berlin/Austin's earnings potential so my current fair value will continue to increase.
This is just based on Tesla's Automotive manufacturing, current margins, operating margins, earnings, etc.....Not factoring in the impending FSD/subscription service earnings potential, Energy growth, Semi production this year or next, etc....If you add all of those other things, I think you're looking at 1,100-1,200 fair value right now. If Tesla finally does release V9 as a wide release and the subscription model, that fair value number jumps quite a bit. But that again is just spitballing because there's so many unknowns with potential catalysts and when they will happen.
