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

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For no-one in particular …
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I have never seen a publicly traded company where the shareholders hoped that their CEO would get a lot of new daytime hobbies to distract him from leading the company and thus prove the company is "mature". You folks are nuts.
I think most who've followed and/or invested in Tesla would agree they've never seen a CEO of a publicly traded company quite like Elon Musk.
 
Some Numbers to Ponder
2021 Global Auto Sales: 67m vehicles​
2021 Tesla Auto Sales: 0.9m vehicles​
With only a 1.4% market share in 2021, Tesla generated $6B in profits and $5B in Free Cash Flow.​
Can you imagine what the numbers will be when they reach 8%-10% market share?​
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. . .and this is only auto sales. Huge numbers without Energy, without Robotaxis, without Optimus.​
Patience everyone. Nothing is going to stop Tesla's ascent . . .not the competition, not Bitcoin, not Twitter, not Covid, not the Fed.​
There will be some bumps but nothing stops TSLA.​
"Nothing's Gonna Stop Us Now"
Grace Slick, Starship​
 
tldr; Projecting out company guidance to 2026 gives absurdly high valuations in the eyes of wall street, so they ignore guidance and make up their own growth projections.

I believe several prople have used PEG wrongly as a means of determining a reasonable P/E and hence a reasonable share price in the furture.

Lets start with the definition of PEG, which is: Share Price / earnings per share over previous year / growth rate in %.
Or turning the equation around: Share Price = PEG * earnings per share over previous year * growth rate in %

For example, let's say you're analyzing a stock that is trading with a P/E ratio of 16. Suppose the company's earnings per share (EPS) have been and will continue to grow at 15% per year. By taking the P/E ratio (16) and dividing it by the growth rate (15), the PEG ratio is calculated as 1.07.

This only gives sensible results for companies that have been growing and which have been in profit for a few years. Then future growth can be estimated as the same as previous earnings growth (as it is in the example above). For a company that just turned a profit in the last year, hence has very high earnings growth in last year, future earnings growth expectations are needed, wrong (low) expectations of growth reduce both earnings and the growth rate %. This is compounded the more years into the future the PEG is forecast.

A PEG of below 1 is a buy indication, while a PEG of greater than 3 is a sell indication. Well run companies with a consistent history of growth should have a higher PEG as downside uncertanty is reduced. Tesla with its excellent products, great product roadmap, order backlog and good workers at all levels should be regarded as a well run company.

If we assume $14B in profit this year for Tesla with a 50% CAGR out to 2026, that’s $71B in profit in 2026 ( and 1 B shares - a bit low).

From this we can see that for PEG = 1 in 2026, $71B in profits and a 50% growth rate expected Share price = 1 * 71 * 50 = 3,550
And for a PEG of 3 the expected Share price is 3 * 71 * 50 = 10,650

The above assumes that growth continue to be 50% for a few years. If we assumed that the future growth after 2026 is lower then the expected share prices would be lower.

Guidance from Tesla is that growth will be above 50% (I think this is growth in revenue, not growth in earnings), and that the aim to reach 20M vehicles and 1.5TWh battery storage in 2030, which also implies a 50% growth in revenue until then. FSD, Robotaxi, TeslaBot and other products and services would increase the 50% growth time by many years.

A guidance of at least 50% revenue growth implies even higher earnings growth as Tesla becomes more efficient.

Say we take 60% revenue and 70% earnings growth long term, then that is $117B profit in 2026. This implies an expected share price between 8,190 (1 * 117 * 70) and 24,570 (3 * 117 * 70). If we discount back to year end 2022 at 12% this would give a target share price of between $5,200 and $15,600 !!!!!!
The vast difference in expected share price between 50% and 70% growth is an indication that it is not a good idea to project out so far.

If we just take the expected profit this year, we can project year end share price of between 700 (PEG=1, 50% growth) and 2100 (PEG=3, 50% growth) or if we take Tesla's guidance 980 (PEG=1, 70% growth) and 2,940 (PEG=3, 70% growth).

Wall Street seems to disregard company guidance and assume a reversion to the mean of "high growth" companies of 15% earnings growth per year by 2026, that allows them to project much lower earnings and with the lower growth rate have much lower expected share price in 2026, then can then discount back to give a share target price in the range of $1,300.

A reversion towards the mean does not seem likely for Tesla under 2028/2029 even if FSD, Robotaxi, TeslaBot and other products and services all fail. 70% earnings growth to 2026, then 15% would still give much higher target share price than analysts are predicting
 
The people who made the most money were the least skeptical about Elon Musk's claims and abilities. They didn't say "Oh, no, the stock is too high, Elon is overworked, no one man can do so much, I better sell it all."
There is a contradiction between what Elon said and what you say up here...
Those who were the least skeptical about Elon Musk's claims, would in fact have believed him when he said those exact words: "the stock is too high".
Which was BEFORE the big runup that sent the stock up something like 18x within a 12 month period.

Therefore, making the biggest gains on Tesla did require some skepticism about his words!
 
If we assume $14B in profit this year for Tesla with a 50% CAGR out to 2026, that’s $71B in profit in 2026 ( and 1 B shares - a bit low).

LOL. I must be doing something wrong.
You arrive at $71B in profit for 2026 with math that fits into one sentence.
I develop a complicated model with about 75 inputs and I arrive at $70.5B in 2026 (rounds to $71B).
You're good !!

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I was on a 90 minute drive today using FSD Beta. This was not interstate. It was FSD Beta the whole way. I couldn't believe how long I went without disengagement. It handled everything beautifully, in many cases, better than a human.

I was thinking, I need to go and post about it on TMC. I need to say how I'm starting to view Robotaxi as more than a lottery ticket.

Just then, my car switched into a turn-only lane at 55 mph when I was supposed to be going straight. It wasn't dangerous, but had to disengage to get the car back onto the proper route.

Oh well, 10.12 is just a few days away.
 
There is a contradiction between what Elon said and what you say up here...
Those who were the least skeptical about Elon Musk's claims, would in fact have believed him when he said those exact words: "the stock is too high".
Which was BEFORE the big runup that sent the stock up something like 18x within a 12 month period.

Therefore, making the biggest gains on Tesla did require some skepticism about his words!
I thought that by "the stock is too high" Elon meant to say "let's split" ;-)
 
There is a contradiction between what Elon said and what you say up here...
Those who were the least skeptical about Elon Musk's claims, would in fact have believed him when he said those exact words: "the stock is too high".
Which was BEFORE the big runup that sent the stock up something like 18x within a 12 month period.

Therefore, making the biggest gains on Tesla did require some skepticism about his words!
Please provide a reference for that quote.

I know he's said "Tesla stock price is too high imo" before the split.
"Whoa … the stock is so high lol"
And has said that Tesla is priced based on future growth. And that the Hertz deal shouldn't have increased the stock price. But not an unquaified too high.
 
I was on a 90 minute drive today using FSD Beta. This was not interstate. It was FSD Beta the whole way. I couldn't believe how long I went without disengagement. It handled everything beautifully, in many cases, better than a human.

I was thinking, I need to go and post about it on TMC. I need to say how I'm starting to view Robotaxi as more than a lottery ticket.

Just then, my car switched into a turn-only lane at 55 mph when I was supposed to be going straight. It wasn't dangerous, but had to disengage to get the car back onto the proper route.

Oh well, 10.12 is just a few days away.
Maybe your car knew about something awesome down that road? Did you keep going?
 
I'm old enough to remember when people fretted about Elon spending too much time as CEO of two companies, then add on Boring and folks were trippin'!

Oh how far we've come!

Once you sit in a room with him going down the atomic level of physics first principles and your job depends on NOT flipping the idiot bit with him, you'll know that he has no issues with his decisions and neither should you. He is the canonical 'smartest person in the room' for the work that he is doing.

Quick story: He called all the eng managers, like 75ish of us, down to the Deer Creek presentation room in 2014, picked up a mic and told us we'd be bigger than Apple some day. Made me laugh back then, but I've been bought in since and believe that is going to happen when either Tesla solves FSD or when gross profit % exceeds Apple.
 
Can we also ask those constantly insisting that abdication-of-CEO-feduciary-duty-is-perfectly-ok also give it a rest? :) I'll chill on my end.

(In Italian accent) Be my teacher?

I mean I follow Elon Musk closely because the man has achieved so much in so many fields that he must have managed his time well, even given that he possesses alien level intelligence. For the last several pages of this thread, your confidence and absolute authority of scolding him wasting time on trivial things and slipping into serious conflict of interest trap indicate that I might have just followed the wrong person all those years. I just don't understand why I want to hover my mouse cursor onto this username @ZenRockGarden then click "More Options" then click "ignore"? I'm so confused, enlighten me, please, teacher? /s

For all seriousness, you should abstain yourself from posting anything further regarding this issue and give every reader a break.
 
Some Numbers to Ponder
2021 Global Auto Sales: 67m vehicles​
2021 Tesla Auto Sales: 0.9m vehicles​
With only a 1.4% market share in 2021, Tesla generated $6B in profits and $5B in Free Cash Flow.​
Can you imagine what the numbers will be when they reach 8%-10% market share?​
. . .and this is only auto sales. Huge numbers without Energy, without Robotaxis, without Optimus.​
Patience everyone. Nothing is going to stop Tesla's ascent . . .not the competition, not Bitcoin, not Twitter, not Covid, not the Fed.​
There will be some bumps but nothing stops TSLA.​
"Nothing's Gonna Stop Us Now"
Grace Slick, Starship​
@The Accountant, just this one post of yours made up for the past weeks of bickering by many others here on TMC. Posts like these keep me coming back to TMC. Thank you. We are very fortunate to have you post your knowledge here.