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

[RobDickinson]

I think any company should be looking for ways to put themselves out of business, because if they dont someone else will.

some industries like cars have a very tall and wide gate but its still just a gate.

 

[Singuy]

All Eyes Are on Tesla's Upcoming Q3 Earnings Release and Its Free Cash Flow

In the year ahead, TSLA stock could rise more than 60% if it reaches 33% sales gains,10% FCF margins and a 0.5% FCF yield.

investorplace.com

Can someone tell me if this is actually a thing? I always thought FCF is just too random for Tesla to use as any kind of metric for valuation calculation purposes.

 

[Skipdd]

I think any company should be looking for ways to put themselves out of business, because if they dont someone else will.

some industries like cars have a very tall and wide gate but its still just a gate.

Agreed. I think that is a central tenet to the model that Elon has created within Tesla. It’s a mix of the agile processes that were highlighted in the Joe Justice video + a clear mission and the ongoing management leadership. It is a thing of beauty.

As an aside, I bought my first Tesla because I thought it would be fun to be a part of a new innovation and it was cool looking, good for the planet and fun. As I’ve now journeyed to the center of the business and am watching how the dough ( ) is made, I have had my second epiphany. A little later to the party than some, but in time to still have a great ride.

 

[ammulder]

All Eyes Are on Tesla's Upcoming Q3 Earnings Release and Its Free Cash Flow

In the year ahead, TSLA stock could rise more than 60% if it reaches 33% sales gains,10% FCF margins and a 0.5% FCF yield.

investorplace.com

Can someone tell me if this is actually a thing? I always thought FCF is just too random for Tesla to use as any kind of metric for valuation calculation purposes.

We already know Free Cash Flow is going to be impacted by whatever bond buyback they did early in Q3, right? I didn't see anything suggesting they would use some kind of "adjusted FCF" to account for stuff like that. Plus the shift between FSD-up-front vs. FSD-subscription impacts short-term FCF even if subscriptions are going to be more lucrative long-term. The idea of judging Tesla on their free cash flow seems a little absurd.

 

[Featsbeyond50]

Are you new around here? Because that's only 10% higher than last Spring. But you have my permission to ask the same question in 3 or 4 more years.

I was thinking about this on my drive home. Our last parabolic peak was 900. For a business growing at >50%, wouldn't it be reasonable for the next parabolic peak to be 50% higher? Any speculation about parabolic peaks is probably futile because they're pretty irrational but there is a logic to it. And that logic takes us to 1350. I'm not greedy though, I'll be content with 1200.

 

[Singuy]

I don't think bond repayment affects FCF but just cash on hand right?

 

[ammulder]

I don't think bond repayment affects FCF but just cash on hand right?

Could be. I was figuring if they spent the money this quarter it would be reflected in the cash flow for this quarter, but perhaps that's not correct.

 

[ifish]

if you are looking to part with shares, i wouldn't do it all at once.

I'm going for $2000 then selling just enough to recoup my initial investment

 

[Cattledog]

I'm going for $2000 then selling just enough to recoup my initial investment

So, 50 shares?

 

[Words of HABIT]

Kelly Evans: The lure of Tesla — CNBC

As you've probably noticed, I've been a bit obsessed with the energy and EV transition lately since it suddenly seems to be happening at an accelerating pace.

apple.news

CNBC's Kelly Evans: "The lure of Tesla", trending on Apple News.
Pretty basic take. People are beginning to take notice of Tesla as a better choice. The choice.

Tesla is still an enigma to most. Of all my family and friends I am aware of only one that has a Tesla and two that invest in TSLA. Many of my friends are car buffs and ironically they will be the last to "get BEV", the ones that idolized their ICE cars during their youth. It is a tough pill to swallow when the their world gets turned upside down. It requires a whole new way of thinking.

 

[JimS]

I was thinking about this on my drive home. Our last parabolic peak was 900. For a business growing at >50%, wouldn't it be reasonable for the next parabolic peak to be 50% higher? Any speculation about parabolic peaks is probably futile because they're pretty irrational but there is a logic to it. And that logic takes us to 1350. I'm not greedy though, I'll be content with 1200.

1200 is my trigger to feel wealthy enough to buy a Model S, (Blue with white interior, stealth wrap). No, I won’t trade in my Model 3, I love it too much. No, I won’t sell any of my TSLA, 1200 is still much lower than it’s true value!

 

[st_lopes]

All Eyes Are on Tesla's Upcoming Q3 Earnings Release and Its Free Cash Flow

In the year ahead, TSLA stock could rise more than 60% if it reaches 33% sales gains,10% FCF margins and a 0.5% FCF yield.

investorplace.com

Can someone tell me if this is actually a thing? I always thought FCF is just too random for Tesla to use as any kind of metric for valuation calculation purposes.

Using FCF yield is one way to try to value growth stocks, particularly where not generating net operating margins (due to high depreciation for instance or other non cash expenses like stock based comp). It’s fickle though, because FCF is calculated as cash flow from operations less capital investments.

So, an entity in “full growth” mode may not have much FCF as it keeps pouring more money in to assets to generate future cash flows. That said, Tesla is doing that AND still generating FCF.

Could be. I was figuring if they spent the money this quarter it would be reflected in the cash flow for this quarter, but perhaps that's not correct.

Long term debt repayment is ignored for FCF.

What Is the Formula for Calculating Free Cash Flow?

The free cash flow (FCF) formula calculates the amount of cash left after a company pays operating expenses and capital expenditures. Learn how to calculate it.

www.investopedia.com

That said, the FCF levels being generated now are going to result in A LOT more coverage in whether Tesla will ever pay dividends or start buybacks. Hoarding cash won’t be well received by institutional investors.

 

[TheTalkingMule]

I was thinking about this on my drive home. Our last parabolic peak was 900. For a business growing at >50%, wouldn't it be reasonable for the next parabolic peak to be 50% higher? Any speculation about parabolic peaks is probably futile because they're pretty irrational but there is a logic to it. And that logic takes us to 1350. I'm not greedy though, I'll be content with 1200.

That's around where I see us going in this little window of 3Q and 4Q numbers, $1350. I had thought more conservatively at first, maybe 850 then 1000. But logically TSLA needed to go a further extreme one way or the other. That seems to be how Wall Street wants it.

If it's either "too low" or "too high" they can make the most money on a daily and weekly basis. In this instance, clearly it's shooting higher due to lack of available shares, so I think the safe bet is much higher.

Sitting at $600, it was easy to draw a line to $6B in earnings and a near term 100 PE ratio. Hard to argue that's way too high for a company growing 70-100%. Once we cross the $1T valuation, the real arguments can start about what Tesla is worth. That's how they like it. Confusing.

 

[Drax7]

I don't think bond repayment affects FCF but just cash on hand right?

FCF not diminished by stock buybacks, I presume it would be the same for debt buybacks.

 

[ninpb]

I'm exiting tomorrow everyone...It has been a great ride with y'all but this tweet just swayed me and i am totally spooked now

View attachment 723067

As Ford Authority reported earlier this year, the Ford Mustang Mach-E will be manufactured by Changan Ford – a 50:50 joint venture between Changan Automobile and Ford Motor Company – in China for local customers, as opposed to the Ford Cuautitlan Assembly Plant in Mexico, which produces the Mach-E for North America and Europe.

https://fordauthority.com/2021/07/ford-building-out-dedicated-mustang-mach-e-stores-in-china/

Is Tesla still the only wholly owned car company in China? Isn't Ford worried their partner is going to steal the Blue Cruise technology?!

 

[PeterJA]

I know a TSLA investor that sells leap calls once year and lives off the proceeds. Never having to have the shares called away. NOT investment advice and obviously far OTM leaps. (sooner or later he will get those shares called away but at a huge price)

Interesting. But I'd say the time for that method is over, because the "huge price" is not huge enough.

The farthest OTM calls you can sell now are Jan 2024 1600c for $90. I could live for a year on the proceeds from selling 5 of those ($45k). But by Jan 2024, I expect the share price to be at least double the strike price, so I would miss out on gains of at least $1600 x 500 shares = $800,000. No thanks.

Tesla's growth is starting up the steep part of the S-curve now, and TSLA is likely to reflect it.

 

[Singuy]

Using FCF yield is one way to try to value growth stocks, particularly where not generating net operating margins (due to high depreciation for instance or other non cash expenses like stock based comp). It’s fickle though, because FCF is calculated as cash flow from operations less capital investments.

So, an entity in “full growth” mode may not have much FCF as it keeps pouring more money in to assets to generate future cash flows. That said, Tesla is doing that AND still generating FCF.


Long term debt repayment is ignored for FCF.

What Is the Formula for Calculating Free Cash Flow?

The free cash flow (FCF) formula calculates the amount of cash left after a company pays operating expenses and capital expenditures. Learn how to calculate it.

www.investopedia.com

That said, the FCF levels being generated now are going to result in A LOT more coverage in whether Tesla will ever pay dividends or start buybacks. Hoarding cash won’t be well received by institutional investors.

Institutional investors seems to love Apple being a cash hoarder no?

 

[StealthP3D]

Trying to think of some clever, subtle way to ask you two not-so-stealthy 'cousins' to take your non-investment argument elsewhere - we've heard it all before.
("stealth" = "stealth", get it?? awww )

Well, you failed!

 

[MP3Mike]

Confirmation from Tesla that a CCS1 adapter is coming to North America "soon":

https://twitter.com/x/status/1450287469849497600

Note: In South Korea it says it is only for the Model 3 and Model Y at this time. (S&X will probably need a retrofit like they did in Europe. Of course I suspect that older Model 3s will need one as well.)

 

[lafrisbee]

My solid sell TSLA price is 2x whatever it is when the question is asked.
I know because when I first bought TSLA I had a plan...when it doubles I am out...then when it doubled I decided the first phase of that plan worked very well... and pretty soon I will be on phase IV of the doubling plan.