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

[UnknownSoldier]

Until the next new fad comes along and displaces them. In 2007 when the iPhone came out it was a radical, visionary product. And still a fine product-but lots of other companies make phones. Pretty much commodities now. Apple no longer has the visionary leadership of Steve Jobs, and IMO it shows. Also no real manufacturing strength since they outsource their production to contract manufacturers.

IMO that is the big difference with Tesla. They still have a visionary leader, are still coming up with truly revolutionary products (along with SpaceX) and they get it concerning manufacturing (and design for manufacturing) being just as critical as the product. Admittedly some personal bias from my time as a manufacturing engineer and tool/machine design. To go from no "volume" manufacturing experience to where they are now as the highest margin, most productive auto manufacturer on the planet, to say nothing of doing a far better job of manufacturing supply chains than companies with a century plus of experience is impressive for a company that has only been building volume for a decade.

This is actually relevant to Tesla, because Apple has built a brand with a high customer loyalty and this is something that Tesla is also doing, with what I believe will be similar results.

Report: Brand loyalty at an all-time high of 92% for Apple as Android brands take a dive - SellCell.com Blog

As a follow up to our 2019 Cell Phone Brand Loyalty Survey, SellCell have surveyed 5000 phone users to find out who are the most loyal smartphone users in 2021 %

www.sellcell.com

So you can see here that Apple has by far the highest brand loyalty in the phone business. 90-92% of Apple users will continue to buy Apple and this is fairly consistent on a yearly basis. Once you own Apple, you tend to stay with Apple at a high rate. Phones are indeed commodities which is why building brand loyalty is so important in the phone business, and Apple has done so with great success which is why they still rake in the lion's share of smartphone industry profits. It is estimated that Apple only sells 20% of the world's total annual sales of phones and yet claims 70% of the profits from the world's entire phone market.

Automobiles are also commodities. Lots of companies make cars. And yet Tesla is also building up a very high rate of customer loyalty, with similar reports of >90% of Tesla owners saying their next car will also be a Tesla. There are many reasons why this might be the case but it ultimately comes down to the fact that Tesla customers like their Teslas and want to keep buying them. Once you have established this level of brand loyalty, you have created probably the most powerful and enduring competitive moat that exists in any commodity business. More importantly, it becomes incredibly difficult for competitors to break through what I think of as a Wall of Mindshare, as a competitor you not only have to prove your product is BETTER than the market mindshare leader, you also have to prove that switching MEANINGFULLY BENEFITS the potential customer and therefore the benefits outweigh the annoyances associated with switching.

Despite rarely having the best technology, Apple retains it's users because on a fundamental level it's users are happy with what Apple offers and they like Apple's way of doing things. You'll note that the survey polls people who are planning on switching from Apple to Android why they are leaving and largest percentage of reason given is better technology on the other side. Which is generally true: Apple didn't start offering 120hz screen refresh rate until this year, Android has had at about 4 years for example. This is just a small example but over the years, competitors have constantly found new avenues of attack on Apple, like headphone jacks, screen notches, camera quality, and quality control issues. And yet Apple retains 90-92% of it's users, year in and year out.

How does this apply to Tesla? Let's consider the oft-cited example of CarPlay and Android Auto. Every other competitor in this commodity business of automobiles has generally signed on with Apple and Google to offer CarPlay and Android Auto. It's a meaningful feature that car buyers consistently state is important to them when selecting a new automobile. Tesla famously refuses to allow Apple and Google to control their platform, so CarPlay and Android Auto are not supported and likely never will be. And yet Tesla owners seem perfectly happy to overlook this and buy a new Tesla at a high rate of >90% repeat customers. Much like Apple, Tesla has built a powerful Wall of Mindshare. Tesla owners are happy with what Tesla offers and they like Tesla's way of doing things, and so while we hear the occasional grousing about CarPlay it's not causing a lot of Tesla owners to switch to another brand.

I have other reasons why I think Tesla is the Apple of cars but this is already enough of a novel for people here to read. But hopefully it sheds some light on just why Apple is so powerful and Apple customers tend to remain Apple customers for life, not to mention how important it is for Tesla to build this kind of power in the minds of consumers.

 

[MikeC]

I see Aunt Cathie sold TSLA and bought ROKU again today in her flagship fund.

I'm trying to give her the benefit of the doubt. Her analysis and her pound-the-table conviction on TSLA was a factor in me going most-in into TSLA. And I kinda understand her strategy to double down on beaten down stocks. But my patience is wearing thin. As strong as her conviction is on TSLA, I don't understand why she would lighten her holdings, especially since it's obvious to most of us that we are on the cusp of another run over the next year or more. Surely she has to see this also.

Smh and really kicking myself for having invested in her funds, thinking I was diversifying. Clearly a case of di-worse-ifying in this case. I would have been so much better off going all-in instead of most-in TSLA.

Interesting article on her from March: Ark Invest CEO Cathie Wood on everything from deflation to Elon Musk

Spoiler: Excerpts

Excerpts:

“She’s brought a lot of attention to the concept of innovation, which is great,” says a prominent venture capitalist. “But the difficulty she has is that she believes in stories. Sometimes you have to disassociate the story from the business model and the valuation.” A top executive at a multitrillion-dollar asset manager says: “She tells a whole story that’s almost impervious to facts.”

...

The bust made cautionary tales of fund managers such as Garrett Van Wagoner and Alberto Vilar, once hailed for their golden touch. “Cathie’s a boom or bust investor because she doesn’t disinvest or risk manage,” says Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management and Wood’s former boss at asset manager AllianceBernstein. “This is the challenge that she has had for her entire career.”

...

And then there’s Ark’s footprint in the marketplace. When it buys and sells positions in smaller, less frequently traded companies typical of the innovation space, Ark can have an outsized impact on their share price because these types of positions are less liquid than blue chips like Tesla and Zoom. (Across its ETFs, Ark owns stakes of more than 5 per cent in 37 companies, and owns more than 10 per cent of 18 of these companies, according to Morningstar.) “As Ark has been buying these small-cap companies, it has been pushing their share prices up,” says Dan Izzo, chief executive of GHCO, a registered market maker. “It’s a self-fulfilling prophecy on the way up.” Crucially, he notes, this works both ways. “If redemptions made Ark a forced seller of illiquid names then it could push down their share prices.” This could result in a downward spiral for Ark."

 

[Chunky Jr.]

And yet Apple retains 90-92% of it's users, year in and year out

Apple has a really sticky ecosystem with iCloud, iTunes, and the App Store. Once you're in and you have all your photos and media on there, it's painful to switch.

Tesla is in the process of creating a similarly sticky ecosystem.

 

[Buckminster]

Funny tidbit.

I checked in on my bull call spread that I thought I bought on tesla.

It turns out that the upper call portion never got sold. So I am now sitting on oure call options.

Made a bunch of money cause I was yoo lazy to check if my order was placed correctly

Yeah I got some of those special calls with the "-" sign. They went up loads so I sold them, but strangely they gave me even more for free! Gonna be a teslanaire soon if the SP keeps going up like this.

 

[Captkerosene]

Exxon Mobil and Chevron using the Russian invasion of Ukraine to their advantage to gouge joe public. Blood money. So sad.
View attachment 834392

$2,245.62 a second: ExxonMobil scores enormous profit on record gas prices

ExxonMobil and Chevron both reported record massive profits thanks to record gasoline prices during the quarter.

www.cnn.com

Can't wait until Tesla single handedly puts these miscreants out of business.

There seems to be a shortage of economic and industrial understanding on this board. The world ceases to exist almost overnight without oil - in six months we're all dead. High prices alone costs millions of lives per year. You can't make a Tesla without using a ton of oil (ex: it takes 8 gallons to produce a tire). Add that to steel, concrete, chemicals, fertilizer, plastics and hundreds of other products. It's like asking the sun to stop shining. How do you guys not understand this? Didn't Elon say we need more oil? Did you think he was joking? I got more bad news for you: when bot comes online and we go through another revolution in industrial productivity, the world will be using more oil ... not less. But, if it makes you feel good, go ahead and vilify the people who are keeping the lights on ... they don't really care what you think.

 

[StealthP3D]

Have you guys watched this? Just a goldmine of information, from brand loyalty, sale numbers, competition migration, how Tesla is destroying historical trends, and everything you need to know about this auto game. One gold nugget is that EV loyalty from luxury brand has gone down by 11%, meaning 11% of those who bought other EVs went to Tesla. 95% of household who bought a Tesla went back and bought another Tesla if they were to go for another car.

He brought in Taycan and EQS as examples of many people who owned the S went to them but not many came back, but did add the stipulation that it may be because of model refresh supply issue.

The guy from S&P has personal biases and have on occasion talks about Tesla quality issues and fatal accidents they need to correct. I had no idea people didn't die in other cars...

He also talks about how they model Tesla's marketshare going down to the 20%s, and that there will be an inflection point in which all of Tesla's fatal accidents and poor quality will catch up to them(his personal opinion). I believe these biases feed into why Tesla is not investment grade because most people has these biases.

Anyways, too much good hard data to summarize and every investor should watch this even though some of those personal bias things are hard to watch.

If I'm understanding the 'expert' correctly, he is telling us that Tesla does not have a demand problem?

Thanks, good to know and such a relief!

Seriously though, I really enjoyed watching those old car industry farts being amazed by the way this is all progressing. As if it were not obvious back in 2019. And, yes, seeing his misinformed self making a fool of himself (regarding Tesla's "accident problem") was rather telling about how many people must think the same thing. It did seem like he sincerely believed it was based in fact and would become a bigger problem in the future.

 

[Singuy]

Both Apple and Saudi Aramco each make about $100 billion net income per year these days. Tesla is approximately two or three years away from its first quarter with $100B annualized net income.

Apple is a closer comparison than Aramco. AAPL is trading today at a 26x price to earnings ratio, up from historically 10-20x prior to the pandemic. In 2024 Tesla will most likely still be growing 50%+ annually, in which case it should continue to command a P/E ratio much higher than AAPL's P/E. Let's say conservatively 50x for the forward P/E (not trailing twelve months, which would be significantly higher P/E because of the growth).

[ $100B earnings ] * [ 26 P/E ] = $2.6T market cap for Apple currently
[ $100B earnings ] * [ 50 P/E ] = $5T market cap for Tesla --> With 1.16B shares outstanding today, TSLA = $4300


Not professional investment or financial advice. Not advice of any kind.

100B earnings has what...500B of revenue? I seriously doubt Tesla can grow 250b revenue a year later.

 

[MC3OZ]

There seems to be a shortage of economic and industrial understanding on this board. The world ceases to exist almost overnight without oil - in six months we're all dead. High prices alone costs millions of lives per year. You can't make a Tesla without using a ton of oil (ex: it takes 8 gallons to produce a tire). Add that to steel, concrete, chemicals, fertilizer, plastics and hundreds of other products. It's like asking the sun to stop shining. How do you guys not understand this? Didn't Elon say we need more oil? Did you think he was joking? I got more bad news for you: when bot comes online and we go through another revolution in industrial productivity, the world will be using more oil ... not less. But, if it makes you feel good, go ahead and vilify the people who are keeping the lights on ... they don't really care what you think.

From memory 70% of oil company revenue comes from petrol and diesel.

We need to see how profitable the rest of the business is if EVs replace the bulk of that.

If the price of plastic made from oil increases, does that make plastics from other sources more viable?

No one knows exactly how this will play out, there are alternatives for many things on your list, but perhaps there are not yet alternatives for all of them.
Are the alternatives likely to be cheaper or more expensive? No one knows.

 

[Artful Dodger]

Elon's getting spicy!

https://twitter.com/x/status/1553170788454465536

Elon Musk on Twitter: "Heatwave in Shortville [Hot Face]" / Twitter

Fun Fact: Elon arrived in N. America with $2K in his pocket (and a suitcase full of books). Today, he's worth about $271B. That's an average of about $21M per day since he was 17...

How you doing?

Cheers!

 

[Captkerosene]

I remember an Apple product I had that had me convinced that they were the leading edge and had a great future. I looked at them as an investment. I saw what the share price had done over the last year or two, and decided "too late, they've already been discovered and are overpriced". For that reason, I didn't buy. That was with an original Macintosh...in 1985.

I was slow with TSLA and didn't start really looking into the stock until early last year. Had the same thought when I looked at the price history. Fortunately didn't make the same mistake twice. I might be a slow learner sometimes, but can learn! More important-there are a lot more resources to research a stock/company now than there were 40 years ago.

<<I remember an Apple product I had that had me convinced that they were the leading edge and had a great future.>>

I thought of Apple as a "gadget" company. They made great gadgets. Lots of companies make great gadgets though and end up going out of business. What I was missing about Apple was the network they were building. Once they got you, they got you for life. Even if someone else makes better products it's not worth the effort to switch. That's one problem with Tesla, the network effect is not that strong. (I'm hoping autopilot provides it but I'm not sure about it.) If someone else builds a better car it's easy to switch. Grid battery, solar panels ... not much of a network effect. If the pace of innovation slows, Tesla is not safe. Any idiot could run Apple, Google or Amazon for the next ten years and they'll do fine. It's also why I like BTC.

Network Effect: The value of a network is the square of the number of people using it.

 

[Artful Dodger]

If only he would have waited 2 more days, his couch could have been $350k fuller.

Lol, you have to read the fine print. Drew didn't "just decide" to sell on Wed instead of Fri (he's not some daytrader).

SEC FORM 4

www.sec.gov

Explanation of Responses:

1. The transactions reported on this Form 4 were effected pursuant to a Rule 10b5-1 trading plan adopted by the reporting person on November 1, 2021.

 

[GOVA]

So you suggest I dump my 30mpg (when towing) plug in hybrid and get a truck or SUV that gets 20 mpg? You call that progress?

Please. Don’t.

 

[StealthP3D]

The loyalty factor for Tesla is really off the charts. I remember back to the night of the Model 3 announcement where reservations were insane. I posted here then that Tesla had just moved from a being a manufacturer or cars to a manufacturer of "cool". They had just entered the rarified air of entities like Apple and Starbucks' in terms of consumer mindshare.

It reminds me of a discussion I had with my stepson as he was about to go off to college for an engineering degree several years ago. At that time I tried to convince him to get a Windows-based PC over an Apple Macbook. I pointed out how how he would get more for his money with the Windows laptop, and specialized engineering software might be more available for a Windows machine, etc. Ultimately, he responded with "That might be true, but no one wants to be the only kid in class without a Mac". I conceded defeat...

There are other cars. There are other electric cars, and there are even other better (in a few areas) electric cars...but there is only one Tesla.

I think most people miss what really sets Tesla apart and what is the defining thing that will hand them the win when everyone is trying to "de-throne" Tesla. It's not that they are cool (even though they are currently considered somewhat cool), it's not that they are better (even though they are measurably and obviously better in the most common metrics). Those two things helped them get to where they are today without failing. But that's not what's important going forward because Tesla is reinventing the car industry. What's important is how much value they can offer the consumer. And most car buyers don't care about "cool". They do care about "better" but "good enough" wins if the price is right enough to make sense.

What's going to ensure Tesla's future success is not how much better they will be, it will be how much value they will offer. It will be Tesla's ability to offer a good quality car for far less money than any competitor while still bringing home the best margins in the industry. You can only do this if your cost to produce and deliver the car is far lower than the rest of the industry. I think the Chinese makers will be the closest to being able to offer the kind of value Tesla does, but close is no cigar and they will have other headwinds. The rest won't even come close for a bunch of reasons I'm not going to mention now.

People need to stop thinking this is a popularity contest. When every car brand offers nearly the same amount of value, as has often been the case over many decades, then, yes, what's more stylish or has more cachet can determine the winners. That's been true for much of the auto industries existence, you have to go back to Ford and their Model T to find an analogy of what I'm talking about. Or maybe the VW Beetle but let's look at the Model T. It was not the most popular car in the world because it was so cool, it was because it offered so much value. Ford could make it in high volumes for far less than any competitor. There were bigger cars, there were more luxurious cars, there were more powerful cars, some of them you could even order in the color of your choice. The Model T only came in black; it was not cool (everyone had one), it was the opposite of powerful and luxurious, and yet it rose to 60% market share. That's because it could be produced and sold at a low cost. It was practical and reliable. Henry Ford was making money hand over fist while other carmakers struggled to break even.

This is the path Tesla is on. Yes, there is only one Tesla, but it's not because they are "cool", it's because they know how to make practical cars in high volume and at ever declining prices. The current situation of rising prices is a temporary condition caused by a shortage of cars and commodity inflation. As an investor I like that Tesla's ace in the hole is not "cool" factor, it's that they will be able to offer the best value in the industry (they already can as recent earnings have proven). I know it's possible to make a lot of money by investing in fashion or in fads, but both are too fickle for me to consider as good investments. There is no certainty in it. What Tesla is doing has more certainty and more staying power, two things I value highly in an investment.

 

[CorneliusXX]

That is the biggest bright spot of this dark bill. The same dynamic plays out in terms of the impact of new laws in various countries that outlaw the sale of ICE cars at some future date. It provides confidence to miners and refiners of EV critical minerals to expand production and I do think that's very helpful. The faster the industry can scale; the faster Tesla can grow production without being forced into mining/refining themselves.

If governments really wanted to speed the transition, they would focus on incentives for EV raw materials producers and battery manufacturers. But these companies have little political clout compared to automakers. These "green" bills are not really about speeding the transition, they are political pork that is disguised enough to be able to celebrate as accomplishments when they pass rather than being vilified as pork.

I agree, well designed laws are probably the ultimate incentive. The ultra low emissions zone in London looks to be quite effective and think every city with an air pollution problem should introduce one - it's expensive enough to effectively be a ban on high use of ICE vehicles while still providing an avenue for ICE to be used where there is no reasonable replacement (e.g. delivery trucks - which aren't produced in high enough volumes yet). The number of EVs I'm seeing in the centre of the city has skyrocketed in the last few years.

RE pork: the subsidies for PHEVs are pretty terrible but that may just be the cost of Manchin's vote. It's great to see Rob leading the charge to try and get this part of the legislation amended (his suggestions sound very reasonable and practical IMO), however if this bill was a take it or leave it situation I'd probably take it. Technology progression of EV's will make the PHEV credit pretty useless over time anyway.

 

[Sancho]

Of all the “stuff” I own, by far the most joy I get from using them are the cars from Tesla and the gadgets from Apple.

Apple’s network stickiness is real, but overstated. I stay with Apple because I love their products and associated services. There’s nothing else on my radar that tempts me more. It’s not like I really see something better from Samsung, but it’s too burdensome to switch.

Tesla will keep winning because of a company-wide commitment to quality and innovation in every aspect of what they do.

 

[CorneliusXX]

No more trading from my phone.

I was drinking a beer on a boat on Lake Tahoe. I decided to sell $870 covered calls expiring today.

Except I accidentally bought $870 calls (OTM when bought). Closed those out for a 5x return.

I’m an idiot, but at least I just paid for this vacation.

Funny tidbit.

I checked in on my bull call spread that I thought I bought on tesla.

It turns out that the upper call portion never got sold. So I am now sitting on oure call options.

Made a bunch of money cause I was yoo lazy to check if my order was placed correctly

Yeah I got some of those special calls with the "-" sign. They went up loads so I sold them, but strangely they gave me even more for free! Gonna be a teslanaire soon if the SP keeps going up like this.

I can hear the FUD articles being written as we speak. Tesla is only worth so much because drunk Elon stans don't know what, or even if, they're buying or selling.

 

[CorneliusXX]

Both Apple and Saudi Aramco each make about $100 billion net income per year these days. Tesla is approximately two or three years away from its first quarter with $100B annualized net income.

Apple is a closer comparison than Aramco. AAPL is trading today at a 26x price to earnings ratio, up from historically 10-20x prior to the pandemic. In 2024 Tesla will most likely still be growing 50%+ annually, in which case it should continue to command a P/E ratio much higher than AAPL's P/E. Let's say conservatively 50x for the forward P/E (not trailing twelve months, which would be significantly higher P/E because of the growth).

[ $100B earnings ] * [ 26 P/E ] = $2.6T market cap for Apple currently
[ $100B earnings ] * [ 50 P/E ] = $5T market cap for Tesla --> With 1.16B shares outstanding today, TSLA = $4300


Not professional investment or financial advice. Not advice of any kind.

I have my doubts Tesla will be trading at a PE that high once it's worth a few $T. There needs to be enough people who believe rapid growth will continue long enough to justify that ratio. There's plenty of people here that can see a path forward that justifies a high PE but I feel it will be difficult for the average Joe asset manager to believe it.

 

[jw934]

source of table: Cox Automotive Lowers Full Year New Vehicle Forecast, updated July 5, 2022

Source of the bar chart -

Chasing Tesla: There is No Catalog​

Published on JUL 27, 2022. I think this is another excellent article on how Tesla is superior to other OEM. Author used IBM contracting Intel for the chips and Microsoft for the OS as example of lesson learned on what is core competencies. ( funniest quote from the article - Meanwhile, Volkswagen believes that by throwing money at the problem, it will become “the second largest software company in Europe only after SAP” according to recently ousted CEO Herbert Diess.)

 

[petit_bateau]

I chatted with one of the posties a few days ago about her electric van, and with another this morning. The local Post Office (Royal Mail) depot has 35 vans serving a mixed town/village/rural area in a UK farming county (actually only one town, but a lot of cows). So far they've switched 30 of the 35 vans to BEVs and the remaining 5 will follow soon. The posties love them to bits.

The two particular BEV vans they are using on my rounds are the Peugeot e-Expert and the Mercedes eVito. In practical terms they say they are sufficient to do a 120-mile daily round with overnight charging at the depot. They have a mild preference for the Peugot but like them both. These are full-fat BEVs, not hybrids.

As soon as the Tesla Cybertruck is out, the absolute next product on the list for both Berlin and Shanghai needs to be a van offering.

eVito Electric Panel Van | Mercedes-Benz Vans UK

Move your business sustainably with the eVito Panel Van, with a max output of 85kW[4] and a 162 mile range[1]. Discover the eVito Panel Van and buy online today.

www.mercedes-benz.co.uk

PEUGEOT e-Expert & Expert | Compact electric van by PEUGEOT

Peugeot e-Expert: the electric utility vehicle that meets your professional needs, also available as a blueHDi Diesel engine with the Peugeot Expert

business.peugeot.co.uk

https://www.commercialfleet.org/new...oyal-mail-commits-to-3-000-more-electric-vans

British Royal Mail to procure 3,000 electric transporters | electrive.com

www.electrive.com

 

[TSLA Pilot]

And still, my 2020 order of a Model S Plaid lacks any ETA here in Norway. The last I heard of it was back in 2021 when they changed it to a plaid from a plaid+. No updates after that. I do not believe they lack demand.

And still, my 2020 order of a Model S Plaid lacks any ETA here in Norway. The last I heard of it was back in 2021 when they changed it to a plaid from a plaid+. No updates after that. I do not believe they lack demand.

Oh yeah, after the initial sales to fanbois in Europe, there will be a lack of demand as the Yoke/Joke will be even more unsafe on the many traffic circles in Europe.

I sincerely hope there is high level pushback by Tesla's EU leadership so as to replace it with a far more safe steering wheel with usable turn signals.