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Ok - My Price to P/E Graph earlier had mistakes :-(

I've fixed it up and I've extended it back as far to July 1 2020, so we have a full 3 years of data in it now:

It will be interesting to see how the P/E ratio moves over this Q.

price-to-pe.png
 
I disagreed because you have posted completely incorrect information. Corporate compensation practices vary widely and often consider tax implication in compensation choices. To my knowledge some such seemingly bizarre choices as these exist for sound reasons:
1. Unlimited First class air travel for employee, spouse and dependents;
2. Unlimited personal use of corporate aircraft fro employee and family;
(Those two are not at all uncommon, usually for security reasons, but not exclusively so)
3. Company pay for all alcoholic beverages use in company-paid housing which also includes every single expense associated with the residence in question.
4. Providing company owned yacht for any purpose chose by employee.
5. this ignores some such benefits for lifetime upon retirement.
The list goes on. All these benefits and others like them can easily be described as profligate and outrageous. All of them are sometimes prudent choices. Some of us posting here have been beneficiaries of some of these benefits. Nearly all of us are likely to think they were either cheaper or less risky than would be alternatives. Some of those also are explicitly tax beneficial ways to provide compensation.

Obviously, you might want to think about what ids and is not "illegitimate" and why.
In conclusion, without a doubt it is common to abuse such benefits and/or use them in unwise ways.
Were such to be extended to Mr. Musk it would not necessarily be unwise, but I doubt he'd have the slightest interest in a yacht. I know of one such case in which the yacht in question (a really huge one >50 meters) is profit making for the corporate owner. If I know of one, surely there must be quite a few in similar financial status.

Legally speaking, you would be incorrect. All the compensation benefits you listed have practical maximums that could not be exceeded (like an all-you can eat buffet). However, if a board granted a CEO the right to buy whatever he/she wanted for their own use, in any quantity and at any time, it would be a dereliction of duty to the shareholders. It would be corporate corruption run amok and no amount of the Board claiming they didn't expect the CEO to actually use the rights that were granted him would be an excuse.

It's the boards job to set compensation. By granting the CEO whatever goods and services he/she wants, in any amount, is effectively shunning what is the boards responsibility and giving that responsibility to set compensation to the CEO, where it does not belong. It corrupts the entire corporate structure in fundamental ways that cannot be reasoned around. Your counterexamples are not valid counterexamples because they all limit the compensation to specific benefits that have practical limits, free booze, free airfare, etc. The board would enter deeply into the zone of malfeasance and dereliction of duty if they allowed the CEO to buy any yacht for his exclusive personal use at any price. The boards job is to set limits. They don't have to be defined down to the penny (as in your examples) but they do need to set the limit, not leave it up to the CEO. This is a fundamental principal that cannot be violated without violating shareholders legal rights to reasonable corporate governance. Words have meaning and boards must set compensation packages, not say "The compensation package is whatever the CEO wants it to be".

You may want to refresh your memory so you can see the statement I was taking issue with:

If I were the board, I would give a complete blank check for him to use Tesla resources and money anyway he likes including for his personal pursuits. And I will put that in the contract.
 
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I am not suggesting they'll do that, or are otherwise virtuous, but they are one I would not count out. They'll probably be the last oil and gas giant standing, for no other reason than that their extraction cost and environmental price are both the most favorable globally.
I'm highly doubtful it will play out this way for a number of reasons, not the least of which is the lack of environmental accountability or transparency in Saudi Arabia. You have no idea what's happening behind the scenes and what isn't reported, this goes way beyond emissions.

Do you know how Aramco keeps their costs so low? They employ borderline (or fully) slave labour. Talk to people who have estimated Oil & Gas projects in that part of the world, they don't even use equipment to excavate because they'll just ship in nameless migrant workers with shovels for pennies on the dollar. People die on these projects, and on offshore oil rigs around the middle east and African countries, and it's just part of business. These deaths again are often not reported because many of these people are undocumented migrants.

I worked with on guy who built a desalination plant for an oil facility out there. Prior to start up an inlet pump, the company dumped massive amounts of chlorine into the surrounding chunk of ocean to kill off aquatic life before it was sucked in. You don't hear about any of this stuff because there is zero obligation for them to report it and zero accountability, which is in stark contrast to some other much more responsible oil-producing countries. Lets not get into the other issues in the middle east, like the continued subjugation of females, people with differing religious beliefs, etc etc.


I think Saudi Arabia is little better than Russia, and nobody scrutinized Russia's energy industry until they went after Ukraine. If you ask me, it might just be a matter of time before the same happens to other countries who have been, currently are, and likely will be engaged in more things that civilized nations should not be engaged in and that will bring increased scrutiny.
 
Do you disagree with my assessment - and vociferous gasp in one of this thread's prior avatars around 2014 when...Deepak Ahuja, I believe it was....revealed that Tesla did not hedge its currency exposure? Already by then Tesla was no bit player of smaller transactions.
...
Right now with no effort to be complete there are at least 14 minor currencies with clear TSLA imbalance, plus Renminbi, Mexican Peso, US$, and Euro which have major consequence continuously. This year and next year several more will adds Tesla expands distribution and sourcing.

When the risk was limited I can understand why hedging might not have been worthwhile.
Now it is becoming both material and predicable. Thus, I find it highly unlikely that they could at a minimum be selling forward some of those minor currency incomes. It might be more difficult to balance the Euro and Renminbi, but the Apple approach of large long exposures managed with long borrowings and forward sales could be and probably is the least complex way to reduce uncontrolled exchange fluctuations. Another AAPL choice to to seek sourcing from such countries. That one is the old fashioned exchange control trick for airlines and hotels. It still works, just need a bit of creativity.

Some of the currencies they are now encountering fairly scream for such solutions.
 
Since it's the weekend...


Looks like Elon has identified a new risk for Tesla: volcano hell.:eek:

I wonder if we'll see it called out explicitly in the 2022Q2 10-Q, or just leave it lumped in with all the others.😀

The last 10-Q says:
Our operations could be adversely affected by events outside of our control, such as natural disasters, wars or health epidemics.
We may be impacted by natural disasters, wars, health epidemics, weather conditions, the long-term effects of climate change, power outages or other events outside of our control. For example, our Fremont Factory and Gigafactory Nevada are located in seismically active regions in Northern California and Nevada, and our Gigafactory Shanghai is located in a flood-prone area. Moreover, the area in which our Gigafactory Texas is located experienced severe winter storms in the first quarter of 2021 that had a widespread impact on utilities and transportation. If major disasters such as earthquakes, floods or other climate-related events occur, or our information system or communication breaks down or operates improperly, our headquarters and production facilities may be seriously damaged, or we may have to stop or delay production and shipment of our products. In addition, the global COVID-19 pandemic has impacted economic markets, manufacturing operations, supply chains, employment and consumer behavior in nearly every geographic region and industry across the world, and we have been, and may in the future be, adversely affected as a result. Also, the broader consequences in the current conflict between Russia and Ukraine, which may include further embargoes, regional instability and geopolitical shifts; airspace bans relating to certain routes, or strategic decisions to alter certain routes; and potential retaliatory action by the Russian government against companies, and the extent of the conflict on our business and operating results cannot be predicted. We may incur expenses or delays relating to such events outside of our control, which could have a material adverse impact on our business, operating results and financial condition.
 
Gary has added point # 5 to his Tesla catalysts: Buyback in October.

I find Gary to be very conservative; so this prediction of a buyback in October is a bit out of character.
My thinking is that Tesla would not entertain a buyback for a few years. Perhaps in early 2025 when cash on hand exceeds $80b.

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Screen Shot 2022-07-23 at 10.29.45 AM.png


His beating the drum for buybacks seems to me like financial engineering merely to boost the stock price, and doesn't seem to be in tune with the Tesla mission.
Gary Black is extremely motivated for the stock price to rise.
He is responsible for not just himself, but all his fund owners.


Aside from that I have to say that for me, it was refreshing to have him say, "maybe some are maxxed out on buying and don't have an income stream to be buying at this time."

There has been very good discussion here on both buybacks, and buying more stock when it dips below all time highs.


Thank-you to all those of you who provide intelligent and informative information/discussion on this board.
And also thank you to the moderators.
 
Does this mean it’s still possible we could be at a PE ratio of 150 by end of year?
I'm not caught up on recent posts and I sense there could be some jest with this comment that I'm missing, but I will give my opinion at face value:

In my opinion, no chance. We won't have a chance at a 150 until the market as a whole is back into Bull territory, and the bull market is mature enough for valuations to start getting frothy again. I think that will take at least into next year. Until then, I'm hoping for share price increase based on earnings, while the PE stays between 50 and 100.
 
Abandoning the S and X would allow breathing room to other high end
EVs to survive and adopt Tesla’s master plan 1 .

Some people like large luxury vehicles, anyhow what does Elon drive?
I'd be surprised if Elon would abandon a market segment to allow other manufacturers to survive. Doing so would require his confidence they they could execute well enough and I doubt he has that. Also, I think he's probably not real pleased with most the other OEMs.
 
(Regarding @Bet TSLA's #...344):

For what appears to be forever, the boilerplate "Risks" page in 10-Qs seem to be dedicated to numbing the eyes and brains of their readers, whilst truly assessing exactly nothing.

HOWEVER -

(and the likelihood of the following occurring is far less than that volcanoseismotsunami Armageddon that statistically is bound to happen between now and the next Big Bang)....

they COULD be made useful were it required that a company show a disinterested assessment of ITS exposure to this, that, and the other risk as compared to competitor A's, B's, C's....ZZZ's such exposure; or an S&P500 (etc) overall risk. Now, THAT would make for worthwhile reading.

Actuarial risk, as it were.
 
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Weekend OT:

Took the family from Virginia to Quebec (about an hour north of Ottawa). The range on the Plaid (with 19” wheels) has been a real boon, its 396 mile range is actually way more useful and flexible than my old P100D’s 310 mile range. It makes a huge difference. I can’t charge at the cabin (too far from the nearest electrical outlet) so I need the charge to last through 2 weeks of random errands to get drinking water from the well or supplies from the general store. There are some slow chargers around, but I haven’t had to waste my time at them yet.

Speaking of charging speeds, on the drive up, the car was maxing out over 1,000 miles per hour at times at the newer superchargers. With two kids and a dog, at no point during the entire trip were we waiting for the car to finish charging - it was ALWAYS ready to go before we were. Dog Mode has come in handy a few times as well.

A few interesting features have surfaced on the trip. For example, the dash display automatically converts KPH speed limit signs to mph for you, so the signs on the visualization say “Speed Limit 62 Mph” when it’s 100kph.

Oh yeah and there’s a dude with a crotch rocket somewhere in Quebec who has a newly-acquired awe for the literally unbeatable acceleration of the Plaid at any speed. ;)

Anyway, just wanna say this is easily the best family sedan ever built and I hope Tesla never stops making them.


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This post is a prime example of why I don't block people.;)
 
View attachment 831959

His beating the drum for buybacks seems to me like financial engineering merely to boost the stock price, and doesn't seem to be in tune with the Tesla mission.
Gary Black is extremely motivated for the stock price to rise.
He is responsible for not just himself, but all his fund owners.


Aside from that I have to say that for me, it was refreshing to have him say, "maybe some are maxxed out on buying and don't have an income stream to be buying at this time."

There has been very good discussion here on both buybacks, and buying more stock when it dips below all time highs.


Thank-you to all those of you who provide intelligent and informative information/discussion on this board.
And also thank you to the moderators.


Thumbs up for what I suspect is the first mention of the great noodly appendaged one.

About time for a voice of reason!
 
THAT is the classic and appropriate use of - gasp! - derivatives. In these cases, a company will buy forward or sell forward one of the currencies in question: either its home unit or the overseas one. The duration will be the time for the transaction to be effected. So if a US-based company is buying an engineered product from Europe, to be delivered (or, more specifically, to be paid for) in 12 months, the way you ==>hedge!<== against the uncertainty of what the $/Euro exchange rate will be at that time is to buy forward Euros, or conceivably sell forward $s, also for that 12-month period. The corresponding action occurs if one expects to be selling one’s own product in a non-home currency location.
Very straightforward, very efficient, very safe, very inexpensive, very responsible. The Medicis did it, the Hanseatic League did it, the Lombards did it, and I have a vague recollection the Akkadians and Sumerians did it but I was a kid then and not paying close attention.


The question related to BTC.
 
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Their extraction costs are low because they have a pool of essentially slave laborers and a fully compliant society. But you gotta remember that compliance comes at a steep cost.

Next time Brent goes below $50 for a 6-9 month period, that may well unravel. People dramatically underestimate how tenuous the royal family's hold is on power there. Today it is absolute and it seems MBS can do anything he likes. The moment society wakes up to crude demand having peaked....the clock starts ticking.

I don't see any scenario where the Saudis are casually and efficiently pumping crude in 2030. Why and how would OPEC even exist by then? Without OPEC, it's every gal for herself. The market will certainly be flooded with supply for a multi-year period at some point between 2024 and 2029. And that's all she wrote IMO.

Gonna be ugly.

The moment the western world lifts the sanctions on Russia so that Russia can pay for reparations for Ukraine may well be the beginning of the end of the oil era. It could make oil and natural gas prices collapse, and with, the petro-states.
 
This is the large question for valuation and will likely be market dependent....

This thought process [predicted P/E] is entirely reliant on the macro environment....

During the past four months, TSLA has been punished along with other tech stocks because of macro worries (inflation, recession, war, pandemic). @henchman24 has argued that TSLA was punished less than the Nasdaq in the past two months (since May 24), and the two charts have certainly diverged widely in the past two days.

I wonder if this divergence is the start of TSLA being much less affected by macros, as the market wakes up to the fact that Tesla is not like other tech companies. Nonstop FUD and anti-Tesla corruption will likely continue, but Tesla's advantages are getting harder to deny:
  • nearly zero debt
  • gigantic demand
  • gigantic Total Addressable Markets
  • gigantic growth rate
  • growing margins
  • huge technological leads
  • diverse and proliferating income streams
Unlike other companies, Tesla is largely invulnerable to inflation and recession, because of its low debt and pricing power. It is less dependent on a single business than Google or Meta, and it has much more room to grow than Apple or Microsoft. Rising fossil fuel prices are a tailwind, not a headwind like for Amazon. New factories and design centers on three continents make Tesla less vulnerable to regional virus outbreaks.

TSLA is the safest haven I know in these uncertain times, and maybe the market is starting to agree.
 
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I just saw a Barron's segment with Jack Hough where he stated that he expects by the end of this decade, 4 companies will be delivering free cash flow of over $100B annually:
  1. Aramco (Saudi oil company)
  2. Apple
  3. Microsoft
  4. Amazon
My forecast has Tesla achieving annual free cash flow of over $100B in 2028.

I don't blame Mr. Hough for leaving out Tesla. Tesla has a short track record when it comes to its financial success . . .only 3 years. Unless you follow Tesla to the level many of us do on this site, it is difficult to believe that this success is sustainable throughout the decade.

Today, Tesla does not get the respect it deserves but I think this will change by the time we get to the back half of 2023 when Tesla's profits and free cash flow are too huge to ignore.
Google already generates 70 billion Fcf while Amazon practically nothing.
another worthless barons article.
 
Since it's the weekend...


Looks like Elon has identified a new risk for Tesla: volcano hell.:eek:

I wonder if we'll see it called out explicitly in the 2022Q2 10-Q, or just leave it lumped in with all the others.😀

The last 10-Q says:
Our operations could be adversely affected by events outside of our control, such as natural disasters, wars or health epidemics.
We may be impacted by natural disasters, wars, health epidemics, weather conditions, the long-term effects of climate change, power outages or other events outside of our control. For example, our Fremont Factory and Gigafactory Nevada are located in seismically active regions in Northern California and Nevada, and our Gigafactory Shanghai is located in a flood-prone area. Moreover, the area in which our Gigafactory Texas is located experienced severe winter storms in the first quarter of 2021 that had a widespread impact on utilities and transportation. If major disasters such as earthquakes, floods or other climate-related events occur, or our information system or communication breaks down or operates improperly, our headquarters and production facilities may be seriously damaged, or we may have to stop or delay production and shipment of our products. In addition, the global COVID-19 pandemic has impacted economic markets, manufacturing operations, supply chains, employment and consumer behavior in nearly every geographic region and industry across the world, and we have been, and may in the future be, adversely affected as a result. Also, the broader consequences in the current conflict between Russia and Ukraine, which may include further embargoes, regional instability and geopolitical shifts; airspace bans relating to certain routes, or strategic decisions to alter certain routes; and potential retaliatory action by the Russian government against companies, and the extent of the conflict on our business and operating results cannot be predicted. We may incur expenses or delays relating to such events outside of our control, which could have a material adverse impact on our business, operating results and financial condition.
The Decade Volcanoes are not imaginary and most people who live near one have learned to accept that at some point their entire city will be destroyed like Pompeii famously once was.

 
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