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

[betstarship]

I feel so much better about humanity after watching that all-in interview.

 

[StarFoxisDown!]

You are glossing over the fact that Apple’s PE ratio in 2010/2011 was already pricing it like it was either never going to grow, or that it was going to go out of business. It doubled its net income between 2011 & 2015, yet its PE ratio continually touched 10x - it was an insane disconnect from reality.

Apples annual net income increased from $14 Billion in 2010 to $102 Billion today, an annual decade long CAGR of almost 20%. Yet it didn’t trade over a PE ratio of 20x consistently until 2020.

I'm not saying that Apple's P/E ratio was logical or fair. It wasn't. Especially 2008-2011. There was clear disconnect between 2009 and 2011 with the stock. Also, coincidentally that was the 2008 financial crisis. The worst crisis since the great depression.

But what I'm saying is after that, Apple growth did slow tremendously when it came to net income. I mean you're talking 41 billion in 2012 and just 57 billion 8 years later. That's why it's P/E was so low in the years following the financial crisis - 2012-2019.

 

[henchman24]

On the bright side… bickering here about going lower is typically a bullish sign.

 

[JustMe]

Your own chart shows that the market rebounded while the Fed's continued to reduce their balance sheet. In fact the market was already back up to it's high's before the Fed's even reached the end of their reduction of their balance sheet.

Also, no the market can't just determine that Tesla's P/E will go from 30 to 15 in a vaccum.........if Tesla's continues posting 50% revenue growth/80-100% earnings growth. I think people way overgeneralize in that if the markets down this much or is in a bear market, no stock can have a high P/E ratio. But that's simply not true, as I pointed out in the post about Apple, they had years of flat earnings growth and a few negative earnings growth. Their lowest P/E ratio years corresponded to the years of flat earnings or declining earnings.

Nvidia's P/E during the 2010's was around 15-20 in it's lowest P/E ratio years of the 2010's. Wanna guess Nvidia's earnings for those years? Flat......In fact flat earnings year after year after year. So the low P/E was in direct relation to that. Once their earnings started to show growth again, their P/E jumped back up into the 30's, then the 40's, then the 50's. So there's direct relation to the P/E given to a company and it's actual earnings growth, Irregardless of whether the market is in a bear market or not

I don’t disagree but right now the perceived risks to that growth are high. Lockdown in Shanghai leading to >90% drop in local sales, reports of extreme rise in raw material costs eating into margins, seemingly unrelenting supply chain issues, and now a lot of talk of recession on the way.

I expect in the next Tesla earnings call, they will project quiet confidence and reaffirm positive guidance. But in the meantime, a lot of folks are making worst case scenario assumptions and jumping ship.

As someone pointed out, most analysts are so far sticking with their TSLA price targets. But a lot of people seem to have lost faith in those projections.

We need some solid good news to restore confidence

 

[Thekiwi]

I'm not saying that Apple's P/E ratio was logical or fair. It wasn't. Especially 2008-2011. There was clear disconnect between 2009 and 2011 with the stock. Also, coincidentally that was the 2008 financial crisis. The worst crisis since the great depression.

But what I'm saying is after that, Apple growth did slow tremendously when it came to net income. I mean you're talking 41 billion in 2012 and just 57 billion 8 years later. That's why it's P/E was so low in the years following the financial crisis - 2012-2019.

You are cherry picking data there and ignoring multiple consecutive high growth years ($37 Billion in 2013 to $53 Billion in 2015 for instance) where the PE ratio was still dropping to 10x or less. That is the irrational reality that can happen for even high growth stocks like Tesla.

casual observers lacking context on historical earnings are the same with every company, not just tesla.

I can look at those decade of Apple earnings and tell you the underlying reasons (new country rollouts, product release date movements between financial years, missed but corrected product trends, geographic market irregularity caused by form factors, the US dollar strength/weakness impact on earnings, the change in taxations policy in 2019, the product mix shifting from hardware to services and impact on margins etc) - but for 99% of investors seeing those figures they would have no idea and just look at that trend in a simplistic manner.

Well, the same thing can happen with Tesla, an uninformed investor 6 months from now will see slowdown in sequential growth pop up on the historical chart this quarter and not know that GigaShanghai was severely impacted by covid lockdowns, Berlin & Austin were only just starting their product ramps etc. They will also not know how large the impact of the CEO stock compensation was in previous periods, or how strong the underlying unit growth and margins were for the last several years by just looking at net income levels and not understanding operating leverage.

 

[Prunesquallor]

It moved sideways with lots of drama for most of 2017-2019, then it just shot upward one day, and continued on to more than 10x.

That same spring being pulled down then is being pulled down now.

I guess we’ll know a spike is imminent when someone here pulls a Neroden.

OK , I'm out. See you suckers later. ELON, uh Bitcoin, Twitter. Too much. Taking my earnings and buying a Mach-E. And an e-Hummer to tow it with.



/s

 

[Prunesquallor]

He sold all his baller homes for his own reasons though. Spealking of mansions, Franz just bought a huuuge one.

Yeah. Dont think he’s moving to Austin soon.

 

[CLK350]

Only 86 Y/day current run rate in Berlin so far, according to teslamag‘s own sources (I think they’re reliable). More details in the article (use google translate)
...

Here's the Google translation, saving you a couple clicks

My comments:
- short term glitches won't matter past 1Q2023, especially when 4680's will be ramping up (note Semi ordering page got live a few days ago)
- HUGE benefits anyway from Tesla Berlin even tho it isn't performing at production levels: doesn't matter since electronic parts are a bottleneck, AND this lets Giga Berlin engineers, esp. the Grohman engineers (manufacturing specialist firm bought by Tesla) refine all aspects of battery and body construction - these get incorporated into Tesla's Austin (and Shanghai) Gigafactories.

Exklusiv: Deutsche Tesla-Fabrik bei 86 Model Y pro Tag, deutliche Steigerung ab Juli geplant

Die deutsche Tesla-Fabrik produziert derzeit erst 86 Model Y pro Tag, erfuhr teslamag.de. Nach einer Pause im Juli sollen es viel mehr werden

teslamag-de.translate.goog

Exclusive: German Tesla factory at 86 Model Ys per day, significant increase planned from July​

May 16, 2022 | 10 comments

Image: Tesla (body construction in German gigafactory)

The ramp-up of production in Tesla's German Gigafactory in Grünheide near Berlin is only making moderate progress. This is based on information from two well-informed sources that reached teslamag.de in the past week. According to this, only 86 Model Y Performance are currently produced in the German factory per day, and the work at the individual stations takes about twice as long instead of the planned 90 seconds. The vehicles then also have to be intensively revised. However, local production of drives is scheduled to start in June, and a significantly increased pace is planned from the second half of July.

German Tesla launch slower than China​

The new Tesla factories in Germany and in the US state of Texas would increase production faster than those in China, CEO Elon Musk said in late April. At the beginning, the ramp-up always looks slow, but then it enters an exponential phase. But at least the German factory is currently lagging behind the Chinese in their early days. For February 2020 as the second month of the Tesla Gigafactory in China, a good 3900 Model 3s were reported to have been produced. For those in Grünheide, which officially started at the end of March, with 86 Model Ys per day and 21 working days in May, there would only be about half in the second full month.

On the one hand quality and on the other hand personnel problems seem to contribute to the German gap to China. For example, Model Ys produced in Grünheide are currently not driven straight to the collection areas on the Gigafactory site, but are initially parked in a cordoned-off area of the factory. There is rework to fix ill-fitting sheet metal, paint defects or scratches. In addition, Tesla is not progressing quickly enough in the search for personnel: teslamag.de was told that there is currently a lack of employees for the commissioning of a second line in the Gigafactory. Brandenburg's Economics Minister recently mentioned a current level of a good 4,000 employees in the German Tesla factory and a second shift from the next quarter.
....... (see link for complete translation)

 

[Zero CO2]

You are glossing over the fact that Apple’s PE ratio in 2010/2011 was already pricing it like it was either never going to grow, or that it was going to go out of business. It doubled its net income between 2011 & 2015, yet its PE ratio continually touched 10x - it was an insane disconnect from reality.

Apples annual net income increased from $14 Billion in 2010 to $102 Billion today, an annual decade long CAGR of almost 20%. Yet it didn’t trade over a PE ratio of 20x consistently until 2020.

At least TSLA , even at its current price level, is currently priced for a large amount of earnings growth, albeit much less growth than we here expect.

IIRC there was a lot of FUD about Apple during this period .. in fact from the release of the iphone... the FUD was extreme ... and it worked IMO
Fight the FUD ... don't fight the FED!

 

[UnknownSoldier]

Wish he had done his homework before jumping in.

To be fair to him, most people expect public filings to be honest and accurate to the best of the company's ability and knowledge. Elon was expecting this. But now he's finding out otherwise, and even more to the point, he's finding it hard to get real answers when he asks. He really is starting to sound skeptical the deal will be done, even when asked point blank is the deal on or no, he dithered and refused to answer concretely. I hope and pray he walks away, for the good of Tesla investors and his other companies investors and also humanity. He's too important to be wasted on >80% bots on a social media platform when we are busy warming the Earth beyond our ability to inhabit it.

 

[Singuy]

To be fair to him, most people expect public filings to be honest and accurate to the best of the company's ability and knowledge. Elon was expecting this. But now he's finding out otherwise, and even more to the point, he's finding it hard to get real answers when he asks. He really is starting to sound skeptical the deal will be done, even when asked point blank is the deal on or no, he dithered and refused to answer concretely. I hope and pray he walks away, for the good of Tesla investors and his other companies investors and also humanity. He's too important to be wasted on >80% bots on a social media platform when we are busy warming the Earth beyond our ability to inhabit it.

Man after that All-In interview, the probability of Elon buying Twitter went down the drain (unless he is picking it up $4.20). And I see Twitter stock dropping double digit percentages tomorrow with class action lawsuits coming. I am not sure if investors or Twitter will sue Elon or not but the most influential person on Earth just said Twitter has at least 20% bots but could be 50 or 80%? This alone just tanked twitter's ad revenue to a whole lot of nothing.

 

[Mengy]

We need some solid good news to restore confidence

Sadly I don't think we are going to get it until Q3. The market is trending down right now, and Q2 for Tesla is going to be an outlier due to the Shanghai lockdown.

 

[JustMe]

Sadly I don't think we are going to get it until Q3. The market is trending down right now, and Q2 for Tesla is going to be an outlier due to the Shanghai lockdown.

Well I would settle for Elon giving up on Twitter and buying back his shares.

 

[MrMoo]

Well I would settle for Elon giving up on Twitter and buying back his shares.

I don't think he'll ever buy back his shares. He has enough as it is and if he hypothetically gets out of twitter, he'll just hold the billions he has as cash for something else.

 

[StarFoxisDown!]

You are cherry picking data there and ignoring multiple consecutive high growth years ($37 Billion in 2013 to $53 Billion in 2015 for instance) where the PE ratio was still dropping to 10x or less. That is the irrational reality that can happen for even high growth stocks like Tesla.

casual observers lacking context on historical earnings are the same with every company, not just tesla.

I can look at those decade of Apple earnings and tell you the underlying reasons (new country rollouts, product release date movements between financial years, missed but corrected product trends, geographic market irregularity caused by form factors, the US dollar strength/weakness impact on earnings, the change in taxations policy in 2019, the product mix shifting from hardware to services and impact on margins etc) - but for 99% of investors seeing those figures they would have no idea and just look at that trend in a simplistic manner.

Well, the same thing can happen with Tesla, an uninformed investor 6 months from now will see slowdown in sequential growth pop up on the historical chart this quarter and not know that GigaShanghai was severely impacted by covid lockdowns, Berlin & Austin were only just starting their product ramps etc. They will also not know how large the impact of the CEO stock compensation was in previous periods, or how strong the underlying unit growth and margins were for the last several years by just looking at net income levels and not understanding operating leverage.

No I'm not really ignoring anything. I mean we're both cherry picking data to some degree haha.

I would argue going from 37 billion to 53 billion in two years is not THAT high of growth. That's roughly 20% growth per year. That's good. But that's not remarkable. And that's just for those years. There's also years mixed in there where growth is negative. The very next year after they hit 53 billion in net income, it dropped to 45 billion. When you have inconsistency like that, when you do have growth, it gets discounted.

Compare that to Tesla that is going to have well over 100% net income growth this year and next year and it's not really comparable. Yes Apple had an low P/E. Sometimes it was justified and some of the times it definitely wasn't. But comparing a company that had lumpy net income there for a 8 year stretch to a company that has none of the characteristics and have growth rates, both in terms of revenue and net income, that dwarf Apple's during the stretch isn't really a fair comparison.

 

[Singuy]

Heads up, the guy who created SARK ETF now created a 2x leverage Arkk ETF called Tark. Seems like he thinks the bottom is in at least for Arkk.

 

[ZeApelido]

The Apple Motors Forum is down the street on the left.

 

[Cosmacelf]

To be fair to him, most people expect public filings to be honest and accurate to the best of the company's ability and knowledge. Elon was expecting this. But now he's finding out otherwise, and even more to the point, he's finding it hard to get real answers when he asks.

It's this part that scares off any investor. If Twitter can't give simple answers to simple questions, then they are probably spouting BS. Similar to this entertaining Carl Icahn story:

 

[Cattledog]

OK , I'm out. See you suckers later. ELON, uh Bitcoin, Twitter. Too much. Taking my earnings and buying a Mach-E. And an e-Hummer to tow it with.



/s

We thank you for your service.

 

[2daMoon]

We thank you for your /service.

FTFY