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

[henchman24]

Met the resistance from the 17th... need to break through here.

 

[Drax7]

Understanding why Growth Companies have a higher P/E (Share Price divided by Earnings per Share)
A man walks into a unique gadget store and sees a money printing machine on sale for $20.
The store owner tells the customer that the machine prints a $1 bill once per year.
Not bad thinks the customer . . . ."that's a 5% return with a 20 year payback".
The customer then sees a second money printing machine but this one is priced at $100.
The customer asks the store owner, "What does this $100 machine print"?
The store owner responds, "it will print $1 today"
The customer is confused, Why is it priced at $100, I can just buy the $20 machine for that $1"?
"oh" said the store owner, "you didn't let me finish, . . it prints $1 today, $2 next year, $3 the year following and a dollar more in each successive year".

What p/e would you give to a company that discovers a cure for cancer but
it takes 3 years to reach market?

 

[Webeevdrivers]

We’ll at least some people are getting it. We took a tour of the Revelstoke Dam a few days ago. Maybe an hour and 15 minutes of great information. Anyway, one of the group made a comment about how many more Revelstoke dams BC would need if all the vehicles in the province go to electric. She calmly answered that that would be at least 20 years in the future as the transition would take a couple decades. Then she added that if tomorrow we woke up and every personal vehicle in the province magically became electric overnight then BC hydro already has the generating capacity today to deal with the load today. In addition there were other major hydro projects like “site c” still coming online in a few years and that some dams including Revelstoke have capacity for additional generating capacity. And she pointed to the 6th still capped water tube on the Revelstoke dam. You can see it in the picture behind Jarvis our model Y.

We are touring thru BC right now. People love seeing the trailer / tesla combo. Lots of questions. We charge mostly in campgrounds. Most of the campgrounds here are only 30 amp sites so 24 amp 120 volt max which is fine for overnight charging. We follow the “only one thing plugged into the post” rule. So either the EV or the RV but not both. That’s really the only thing the campground owners ask although we always ask them if there is a charging surcharge which we would be happy to pay. So far none.

It’s a rough life.

 

[OrthoSurg]

This looks more and more like a Bull run to me. Let the gamma squeeze happen

 

[Discoducky]

As I've said before I don't care about Twitter and don't think it's important so his involvement is a distraction to the actual mission. I don't think anyone would claim this is exactly a smooth transaction whatever the outcome, hence a cluster.

I'll happily explain to you why in the appropriate thread if you tag me. I think it is genius, but I'd rather it happen after 4680s start going to customers

 

[AudubonB]

I’m pretty sure Elon figured out how to land rockets vertically after finding Young Sheldon’s notes with the correct formulas. I think there was a 30 minute documentary covering that 2 or 3 years ago.

Moderator input: All see Mod post below, usu. on next page.

AND WITH THAT BREATH OF FRESH AIR this way Off Topic discussion, having generated far more heat than light, ends.

 

[TheTalkingMule]

This looks more and more like a Bull run to me. Let the gamma squeeze happen

We certainly have all the TSLA and macro factors lined up to commence quite a good bull run.

High earnings growth Tech stocks have been oversold.

Inflation looks to have peaked and IMO will come crashing down either this summer or after the elections if the powers behind it can keep up the charade.

Putin is not doing great, and though it may tilake some time, he'll likely be excited from Ukraine and oil will plummet.

Then I can't even list all the crazy TSLA positives between now and October.

 

[Gigapress]

The analyst, Pierre Ferragu during the Q1 earnings call estimated that Tesla would have about $400b to $500b in cash by 2030.

Pierre Ferragu: (46:24)
Great. I’d like to ask you some questions about free cashflow. . . . . .I did the math very quick and I see you guys sitting on four or maybe $500 billion of cash at the end of the decade. And I was wondering if it’s something you have given some thought about, what you mean to do with this cash?

Gary Black projects about $200b by 2026 and when you trend his numbers out you get to about $400b - $500b in 2030 as well.
My model has something north of $450B in 2030.

I have done projections for companies holding the most cash. If Tesla does not pay dividends or do buybacks, I project that Tesla will have the most cash than any other S&P500 company by 2027 (maybe by 2026):

View attachment 809384
2018 - 2021 - Actual Cash on Hand
2022 - 2027 - Cash on Hand Projections

Elon and Zach’s answer to Pierre’s question makes it sounds like they intend to spend most of that cash on CapEx for the foreseeable future and I’ve done some math showing how.

The biggest cash sink starts when Tesla begins effectively buying their own production of cars, batteries, and solar instead of selling it externally.

Elon Musk: (47:05)
…That seems like a lot of cash. I don’t know. We’ll try to do something useful with it. [inaudible 00:47:31] that’s for sure.

Zach Kirkhorn: (47:36)
I think we have to take this one step at a time. We have investments that are happening right now to get Austin and Berlin up and running. And then as Elon mentioned, installing capacity for robotaxi production. And there’s some decisions that, as Elon alluded to, just to share in the future about and what the economic model looks like for robotaxing. And so the way Elon and I have discussed this is-

Elon Musk: (48:13)
Sorry. Maybe just, yeah … Yeah, everyone just mute if you’re …

Zach Kirkhorn: (48:19)
Yeah. So our focus is to get to the point where robotaxis are on the road, Optimus is in use, get the economic model for that dialed in, and then evaluate the size of cashflows at that point and make decisions then as to what’s next.

If the taxi costs $30k to make and has a $30k payback per year, then that’s an amazing ROI with an expected cash flow stream worth about $200k. But even so, the monthly profit is only $2.5k. It takes a year to make back the money spent on manufacturing. As the saying goes, you gotta spend money to make money.

If for example in steady state conditions they make 100k robotaxis per month it’ll be a monthly manufacturing cost of $3B or $36B invested in year one. Profits from that linearly growing fleet would have been 0.5 * $2.5k * 1.2M cars * 12 months = $18B. So with linear growth you’d need $36B - $18B = $18B in free cash to make up the gap until positive cash flow begins in Month 13.

With exponential growth, the lag effect is somewhat stronger. To hold things equal, let’s imagine they still spend $36B making 1.2M cars in Year 1 but they did it with exponential growth at 80% annualized or 5% month over month. That scenario is more realistic for the production ramp and is shown in the table below.

Note:

• 19 months until positive monthly cash flow when the fleet profits finally eclipse manufacturing costs from growing the fleet
• 32 months for the program to break even on total cumulative earnings
• Maximum of $23B of working capital required cumulatively before reaching positive earnings on Month 19

Spoiler

Month	Production (K)	Manufacturing Cost ($B)	Fleet Size, Cumulative (K)	Fare Profit ($B)	Net Cash Flow ($B)	Running Cumulative Cash Flow Summation at End of Month ($B)
1	75	$ (2.25)	38	$ 0.09	$ (2.16)	$ (2.16)
2	79	$ (2.36)	114	$ 0.29	$ (2.08)	$ (4.23)
3	83	$ (2.48)	195	$ 0.49	$ (1.99)	$ (6.23)
4	87	$ (2.60)	280	$ 0.70	$ (1.91)	$ (8.13)
5	91	$ (2.73)	369	$ 0.92	$ (1.81)	$ (9.94)
6	96	$ (2.87)	462	$ 1.16	$ (1.72)	$ (11.66)
7	101	$ (3.02)	560	$ 1.40	$ (1.61)	$ (13.27)
8	106	$ (3.17)	663	$ 1.66	$ (1.51)	$ (14.78)
9	111	$ (3.32)	772	$ 1.93	$ (1.40)	$ (16.18)
10	116	$ (3.49)	885	$ 2.21	$ (1.28)	$ (17.45)
11	122	$ (3.67)	1004	$ 2.51	$ (1.15)	$ (18.61)
12	128	$ (3.85)	1130	$ 2.82	$ (1.02)	$ (19.63)
13	135	$ (4.04)	1261	$ 3.15	$ (0.89)	$ (20.52)
14	141	$ (4.24)	1399	$ 3.50	$ (0.74)	$ (21.26)
15	148	$ (4.45)	1544	$ 3.86	$ (0.59)	$ (21.86)
16	156	$ (4.68)	1696	$ 4.24	$ (0.44)	$ (22.30)
17	164	$ (4.91)	1856	$ 4.64	$ (0.27)	$ (22.57)
18	172	$ (5.16)	2024	$ 5.06	$ (0.10)	$ (22.66)
19	180	$ (5.41)	2200	$ 5.50	$ 0.09	$ (22.58)
20	190	$ (5.69)	2385	$ 5.96	$ 0.28	$ (22.30)
21	199	$ (5.97)	2579	$ 6.45	$ 0.48	$ (21.82)
22	209	$ (6.27)	2783	$ 6.96	$ 0.69	$ (21.13)
23	219	$ (6.58)	2998	$ 7.49	$ 0.91	$ (20.22)
24	230	$ (6.91)	3222	$ 8.06	$ 1.15	$ (19.07)
25	242	$ (7.26)	3459	$ 8.65	$ 1.39	$ (17.68)
26	254	$ (7.62)	3707	$ 9.27	$ 1.65	$ (16.04)
27	267	$ (8.00)	3967	$ 9.92	$ 1.92	$ (14.12)
28	280	$ (8.40)	4240	$ 10.60	$ 2.20	$ (11.92)
29	294	$ (8.82)	4527	$ 11.32	$ 2.50	$ (9.42)
30	309	$ (9.26)	4829	$ 12.07	$ 2.81	$ (6.61)
31	324	$ (9.72)	5145	$ 12.86	$ 3.14	$ (3.47)
32	340	$ (10.21)	5477	$ 13.69	$ 3.48	$ 0.01

Now let’s run it again but assume that the 80% production CAGR requires ongoing CapEx of $6B/year or $0.5B/month. We will assume Tesla gets ever more efficient with CapEx per unit of capacity as they have been for years, so we’ll keep it at the same level for the whole time.

Now we don’t start making positive cash flow until Month 22, need a maximum of $32B of investable cash, and break even overall at Month 36.

Spoiler

Month	Production (K)	Manufacturing Cost ($B)	Fleet Size, Cumulative (K)	Fare Profit ($B)	Manufacturing Expansion CapEx ($B)	Net Cash Flow ($B)	Running Cumulative Cash Flow Summation at End of Month ($B)
1	75	$ (2.25)	38	$ 0.09	$ (0.50)	$ (2.66)	$ (2.66)
2	79	$ (2.36)	114	$ 0.29	$ (0.50)	$ (2.58)	$ (5.23)
3	83	$ (2.48)	195	$ 0.49	$ (0.50)	$ (2.49)	$ (7.73)
4	87	$ (2.60)	280	$ 0.70	$ (0.50)	$ (2.41)	$ (10.13)
5	91	$ (2.73)	369	$ 0.92	$ (0.50)	$ (2.31)	$ (12.44)
6	96	$ (2.87)	462	$ 1.16	$ (0.50)	$ (2.22)	$ (14.66)
7	101	$ (3.02)	560	$ 1.40	$ (0.50)	$ (2.11)	$ (16.77)
8	106	$ (3.17)	663	$ 1.66	$ (0.50)	$ (2.01)	$ (18.78)
9	111	$ (3.32)	772	$ 1.93	$ (0.50)	$ (1.90)	$ (20.68)
10	116	$ (3.49)	885	$ 2.21	$ (0.50)	$ (1.78)	$ (22.45)
11	122	$ (3.67)	1004	$ 2.51	$ (0.50)	$ (1.65)	$ (24.11)
12	128	$ (3.85)	1130	$ 2.82	$ (0.50)	$ (1.52)	$ (25.63)
13	135	$ (4.04)	1261	$ 3.15	$ (0.50)	$ (1.39)	$ (27.02)
14	141	$ (4.24)	1399	$ 3.50	$ (0.50)	$ (1.24)	$ (28.26)
15	148	$ (4.45)	1544	$ 3.86	$ (0.50)	$ (1.09)	$ (29.36)
16	156	$ (4.68)	1696	$ 4.24	$ (0.50)	$ (0.94)	$ (30.30)
17	164	$ (4.91)	1856	$ 4.64	$ (0.50)	$ (0.77)	$ (31.07)
18	172	$ (5.16)	2024	$ 5.06	$ (0.50)	$ (0.60)	$ (31.66)
19	180	$ (5.41)	2200	$ 5.50	$ (0.50)	$ (0.41)	$ (32.08)
20	190	$ (5.69)	2385	$ 5.96	$ (0.50)	$ (0.22)	$ (32.30)
21	199	$ (5.97)	2579	$ 6.45	$ (0.50)	$ (0.02)	$ (32.32)
22	209	$ (6.27)	2783	$ 6.96	$ (0.50)	$ 0.19	$ (32.13)
23	219	$ (6.58)	2998	$ 7.49	$ (0.50)	$ 0.41	$ (31.72)
24	230	$ (6.91)	3222	$ 8.06	$ (0.50)	$ 0.65	$ (31.07)
25	242	$ (7.26)	3459	$ 8.65	$ (0.50)	$ 0.89	$ (30.18)
26	254	$ (7.62)	3707	$ 9.27	$ (0.50)	$ 1.15	$ (29.04)
27	267	$ (8.00)	3967	$ 9.92	$ (0.50)	$ 1.42	$ (27.62)
28	280	$ (8.40)	4240	$ 10.60	$ (0.50)	$ 1.70	$ (25.92)
29	294	$ (8.82)	4527	$ 11.32	$ (0.50)	$ 2.00	$ (23.92)
30	309	$ (9.26)	4829	$ 12.07	$ (0.50)	$ 2.31	$ (21.61)
31	324	$ (9.72)	5145	$ 12.86	$ (0.50)	$ 2.64	$ (18.97)
32	340	$ (10.21)	5477	$ 13.69	$ (0.50)	$ 2.98	$ (15.99)
33	357	$ (10.72)	5826	$ 14.57	$ (0.50)	$ 3.34	$ (12.65)
34	375	$ (11.26)	6192	$ 15.48	$ (0.50)	$ 3.72	$ (8.92)
35	394	$ (11.82)	6577	$ 16.44	$ (0.50)	$ 4.12	$ (4.80)
36	414	$ (12.41)	6981	$ 17.45	$ (0.50)	$ 4.54	$ (0.26)

This is generously assuming that the Tesla Network immediately hits the goal of $2.5k per month profit per vehicle from inception, and that Tesla continues to sell a bunch of their overall production to private owners instead of going 100% Robotaxi which would require more like $100B in total cash to do starting at expected 2024 run rates.

Then there’s virtual power plants. Tesla is quietly maturing Autobidder, partnering with major real estate developers, and registering as a utility in Texas and other jurisdictions. What if they make 10 GWh per quarter (Lathrop production) of Megapacks for themselves at $200/kWh? Another $2B per quarter CapEx. Now suppose they 10x solar deployments from today by ramping production and buying up supply from other manufacturers. 1 GW of solar per quarter at $1/W is $1B per quarter. Extreme scale for VPP development needs $3B per quarter at this rate. On top of this, maybe they’ll start buying existing solar and wind assets for in order to squeeze more value out of the with Autobidder and profit off the arbitrage while accelerating the phase-out of fossil fuel plants.

An upcoming Indonesian battery Terafactory could be another $1-2B per quarter too.

Investment opportunities will outpace cash generation for the foreseeable future.

 

[The Accountant]

What p/e would you give to a company that discovers a cure for cancer but
it takes 3 years to reach market?

You may be asking the right guy. I worked in the Oncology division of a large Pharma company.
Even with a cure for cancer, they are still 3 years out . . .meaning they are still in Phase 2 or Phase 3 of clinical trials.
I have seen many sure things die in Phase 3. So you would have to discount the P/E for that risk.

What is typically done is that you compute discounted cash flows out 10 years for this company assuming success and then apply a Probability of Success (PoS) to that number. If discounted cash flows amount to 2 Trillion dollars that would be the market cap with success. Then apply a 50% PoS (as an example) and now the market cap is $1 Trillion. Divide the $1 Trillion by the shares outstanding and you have your stock price.

 

[betstarship]

A report on ownership costs of EVs vs ICE by US State from a climate policy think tank (all non Teslas...):

https://energyinnovation.org/wp-content/uploads/2022/05/Most-Electric-Vehicles-Are-Cheaper-Off-The-Lot-Than-Gas-Cars.pdf

 

[GOVA]

Tesla will be hit hard at 745-750 to keep a breakout below 760.

Met the resistance from the 17th... need to break through here.

man, it is like listening to golf commentary...

 

[betstarship]

You will get more traction if you add a few words there.

Starlink is an overall system. There won't be a Starlink system version 2 (each piece has it's own version numbers or not but the system is just a brand name).
Starlink ground stations don't need version numbers (it's a solved thing and you just scale them as needed)
Starlink user terminals (affectionately know as Dishy) have a version 2 but it isn't an order of magnitude more I/O.
Starlink satellites would have a 2.0 also and this is probably what you are asking about.

But if you don't understand the pieces just asking about Starlink 2.0 from the likes of Google or Rueters or the random person on this message board you are likely to get back an answer that has nothing to do with magnitudes of I/O.

I can't say where or when you'll get the rest of the information you want. I might dig something up when I get home or it may be there are no public details yet. But hopefully this post at least puts you in the right mindset to be wary of the phrase "starlink 2" as highly misunderstood and misrepresented because it needs more qualifiers.

One question to ask is if Starlink Satellite version X is Y times better does Dishy version 1 and Dishy version 2 gain any real world benefit from that or is that a business side only benefit? You have to realize when Elon talks about a benefit the benefit might not be for the consumer.

Philippines ok's Starlink

The Philippines gives green light to Starlink

The Philippines gives green light to Starlink

spacenews.com

 

[The Accountant]

You may be asking the right guy. I worked in the Oncology division of a large Pharma company.
Even with a cure for cancer, they are still 3 years out . . .meaning they are still in Phase 2 or Phase 3 of clinical trials.
I have seen many sure things die in Phase 3. So you would have to discount the P/E for that risk.

What is typically done is that you compute discounted cash flows out 10 years for this company assuming success and then apply a Probability of Success (PoS) to that number. If discounted cash flows amount to 2 Trillion dollars that would be the market cap with success. Then apply a 50% PoS (as an example) and now the market cap is $1 Trillion. Divide the $1 Trillion by the shares outstanding and you have your stock price.

@Drax7 - to better address your question. Let's assume the cure for cancer is successful in clinical trials but it will take 3 years to get all the social programs to approve payment around the globe. Even when the FDA and other regulatory bodies approve a drug, you still need to get the countries' health organization to approve reimbursement and that can take years. In this case PoS is practically 100% even though revenues will arrive over time. The P/E could be huge . . .maybe 300 or 400 depending on the opportunity and how far the competition is from developing a similar drug.

 

[growler23]

TSLA movements are heavily influenced by their massive options market.

The plan was clear. Crush the retail investors selling puts and put spreads, then run over the same people selling call spreads and covered calls.

MM's get three delicious things:

1) Money

2) Removing contract selling competition

3) Cheap shares from CC sellers

I think you are right. But they didn't get my money ... but I got a few more of someone's shares.
HODLing at least until 2025, acquiring when I can. At that point, I will reevaluate.

Also bought a little of the Baron's fund that includes roughly 5% SpaceX. Seemed the only way a small fry like me could get any of that (the same fund also holds roughly 17% Telsa). What SpaceX is doing is incredible. If they ever go public, my piddling share amount probably won't matter much monetarily, but boy will I have some pride in it. Again, if you haven't watched "Countdown" on Netflix, you owe it to yourself. SpaceX Inspiration(4) through the roof. Faith in our future: restored.

HODL through this folks. More wild swings will come from the oil underpinnings of our world - can't say enough how glad I am Tesla has a massive cash buffer and effectively 0 debt to get through the next few years.

Now ramp, my pretties, ramp!!!

 

[dgodfrey]

As I've said before I don't care about Twitter and don't think it's important so his involvement is a distraction to the actual mission. I don't think anyone would claim this is exactly a smooth transaction whatever the outcome, hence a cluster.

With all due respect as you've experienced a lot on this ride, just because you don't think it's important doesn't mean it isn't or won't be. And what's important to you may be different than what's important to others, especially Elon. He addressed this common concern by claiming it takes about 5% of his time so in his world, not much of a distraction if any. If you want to pick nits, he probably spends more time on pointless interviews that peel back nothing new and have little to no impact on the share price.
It could also be argued that the global stir the Twitter acquisition has caused has brought much more attention to Tesla. Not all good maybe but even bad press has its merits.

I've found that over the years, I still see visionary innovation coming out of Tesla and SpaceX that I credit mostly to Elon and by association and leadership, his company's HR. The point being, there may be a bigger picture in all this that is not readily apparent at least in my feeble mind. What he does with his money is none of my business and my observation shows a net benefit regardless of how rocky the acquisition seems. People that claim his attempts at promoting free speech by taking over a social platform rife with censorship is cause to sell their Tesla, TSLA, and abandon or avoid the marque are just looking for an excuse IMO. Their loss.

 

[Gigapress]

Weird thing happened today…

My broker seems to have offered me some kind of reverse margin call and let me buy TSLA shares to replace some of the ones I had been forced to sell on the way down. I bet if the price keeps rising they’ll let me buy back even more!

Meanwhile my LEAPS I’ve been buying on steep discounts are up 50% just since Monday and will explode my portfolio value to several times where it was a few months ago when TSLA was at $1200 once we return there and beyond.

Can someone help me understand? I thought getting even one margin call was supposed to be terrifying and reason to begin unleashing a stream of frantic complaining on the internet, but I’ve had margin calls almost daily for months and I keep getting excited about the opportunity for some reason. What am I doing wrong?

 

[hitchhiker]

We’ll at least some people are getting it. We took a tour of the Revelstoke Dam a few days ago. Maybe an hour and 15 minutes of great information. Anyway, one of the group made a comment about how many more Revelstoke dams BC would need if all the vehicles in the province go to electric. She calmly answered that that would be at least 20 years in the future as the transition would take a couple decades. Then she added that if tomorrow we woke up and every personal vehicle in the province magically became electric overnight then BC hydro already has the generating capacity today to deal with the load today. In addition there were other major hydro projects like “site c” still coming online in a few years and that some dams including Revelstoke have capacity for additional generating capacity. And she pointed to the 6th still capped water tube on the Revelstoke dam. You can see it in the picture behind Jarvis our model Y.

View attachment 809393

We are touring thru BC right now. People love seeing the trailer / tesla combo. Lots of questions. We charge mostly in campgrounds. Most of the campgrounds here are only 30 amp sites so 24 amp 120 volt max which is fine for overnight charging. We follow the “only one thing plugged into the post” rule. So either the EV or the RV but not both. That’s really the only thing the campground owners ask although we always ask them if there is a charging surcharge which we would be happy to pay. So far none.

It’s a rough life.

View attachment 809400


View attachment 809402

That's an awesome setup! What sort of mileage do you get with the trailer?

 

[FireMedic]

Elon and Zach’s answer to Pierre’s question makes it sounds like they intend to spend most of that cash on CapEx for the foreseeable future and I’ve done some math showing how.

The biggest cash sink starts when Tesla begins effectively buying their own production of cars, batteries, and solar instead of selling it externally.

Great post; thanks. I believe most TSLA investors would prefer that TSLA just stay the course, build cash, and spend efficiently. Buybacks are not a priority for this HODL’er.

My confidence is growing that Elon or some other big brain at Tesla has been taking the time to post on this forum. It has certainly bolstered my HODL’ing skills through all this recent noise.

Forgive me Gigapress if I’m outing you…hopefully I haven’t broken the first rule of fight club.

 

[Krugerrand]

speaking of cats ... that lovely avatar has been hanging around a long time now ... what will it take to update new ATH?... I miss the dog that showed up for a brief stint

I’m waiting for the individual who sent me that one, or someone else, to send me a new one that strikes my fancy, finicky self. And no, I will not accept dog ones unless the dog is in the mouth of the cat.

 

[Chunky Jr.]

More bullishness ...

Another Analyst Stays Bullish on Tesla Stock. That’s Helping to Fuel a 3-Day Rally. — Barron's

Tesla stock is trying to make it three up days in a row Friday after a brutal stretch for shares. A call from an analyst might help keep the streak alive. Tesla stock rose 4.9% Wednesday and 7.4% Thursday after dropping 38% this month coming into Wednesday trading. Shares were up another 5.8%...

stocks.apple.com

In a report, Levy said the recent fall in Tesla stock is an attractive entry point. He doesn’t seem to believe that production problems caused by Covid lockdowns in Shanghai are long-term issues. He maintained his Buy rating and $1,125 price target.