When will Re-Rating of TSLA happen ? , FSD, BOTS, Federal credit for Tesla.
One of this need to happen over next few years, Majority of companies rarely have multiple home run, Google, yet to see home run on other bets, Apple beyond Iphone really hasn’t happened.
Federal Credit perhaps should not be in re-rating but with Tesla’s good margin, If it happens it will fall directly into bottom line.
For questions of the stock taking off, it is useful, or at least personally amusing for me, to use the rocketry concept of NET (no earlier than) dates. I don’t play with options, which is good, because this is all probably wrong:
Principles:
CapEx – NET 6 months before running in a steady state at capacity
To a surprising extent, the market does not value the implications of capital expenditure and R&D, until it comes into view on the horizon of the next two quarters.
Until then, traders and managed funds discount the value because of risks, and/or are engaged in pursuing other, nearer-term opportunities to invest in other companies.
This, of course, provides us with the opportunity to invest at lower prices for longer, until then.
P/E Ratio – NET the delivery numbers, and usually NET the earnings release, and sometimes 3 weeks later
It is easy for anyone here to go to this thread (
Tesla Valuation Based on 5 Year Outlook ) and see where the P/E of the company will go. However, most investors will tend to see this change only when analysts tell them (after deliveries come out), or when the P/E number changes on Yahoo Finance, after earnings.
Guidance – NET ever, until it turns into CapEx and P/E Ratio
The clear hints that Texas and Berlin-Brandenburg will aspire to produce 2 million cars each, annually, are not taken at face value. Tesla management are remarkably clear about what the company aspires to do, and remain focused on the mission. When they change course, they attempt to highlight this as clearly as possible, with Investor Days, Master Plans, and comments on earnings calls and at shareholder meetings. This information is “canon” to us in this thread, but almost meaningless to analysts, who need to justify their statements to institutional investors with other evidence: “Elon said so” is not good enough.
Time
Each year, the discount rate applied to future earnings is between 8-20%. As each year passes, we can expect the share price to rise by 8-20 percent as risk is retired.
Implications of these principles:
The current all-time high of just over $1200 is not an unreasonable valuation, considering only the next year or two of hardware sales. We can expect, I think, to jump back to these levels when the Q3 earnings come out in October.
In my own opinion, taking off beyond these levels (the re-rating you are asking about) will require either:
- Texas and Berlin-Brandenburg to demonstrate a weekly rate that goes beyond 1 million cars per year (I think this is the rate at which analysts will have to change their models), which I am guessing may be evident in the Q2 earning release next year in July/August.
- Software sales (i.e. FSD option) tracking higher, and being called out specifically by Tesla, I hope on the Q4 2022 Earnings call next January.