larmor
Active Member
Moody's should give credit where credit is due...
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
One would think so, but apparently, no it is not. Moody's ratings (by their own words) are very subjective in nature.
TheTalkingMule
Distributed Energy Enthusiast
Was this meant as sarcasm? I'm checking out for the week, BPS I expected to close in May punted YET AGAIN. I expect a far better attitude from most of you by Tuesday!
I don't see @Curt Renz around, so I'll leave you with the appropriate song for the week:
RIP
You're likely going to get a number of disagrees not because of your comment that "Current share price is fair", it's the "We are lucky to have it". Your post leaves out a ton of context.
The Nasdaq has been in a bear market since March. As is always the case, growth/Nasdaq will lead the charge out of the bear market. Bear markets on average last 290 days. This bear market will likely end by Nov/Dec. We're already technically in a recession and in fact if the Fed's pause rates by end of the year which is a very likely outcome considering how much inflation/commodities are dropping in real time, it means that the"recession" to come has already happened. And like it's been shown many times in the past, the stock market recovers before the economy is fully out of a recession.
As for more TSLA specific analysis, no we aren't "lucky" to have a TTM P/E of 97 right now. It's a joke. Wall St/hedge funds/shorts/bears got insanely lucky that Q2 turned out the way it did. Tesla's TTM P/E and Forward P/E would be much lower if the Shanghai covid restrictions didn't happen in Q2. They know the TTM P/E isn't really 97 right now...just like we here know that. They know, just like we know here, that both TSLA's current TTM P/E and Forward P/E are going to but cut in half after Q4's earnings, which is only 4 months away.
Further, it's a joke for TSLA to have a lower TTM P/E than Amazon. In fact, when you look at PEG, the true testament to valuation, TSLA is cheaper than Amazon, Apple, Nvidia, Meta, and plenty of other names. It's just as cheap as Microsoft and only Google is cheaper on a PEG metric.
This is with analysts giving laughable earnings expectations for the remainder of this year and the next 4 years of earnings......which is how PEG is calcuated. So in reality, TSLA is much cheaper on a PEG ratio than Microsoft and Google.
So no..............TSLA isn't "lucky" to have the valuation it has today. If you want to try and say that the "bear market" discounts TSLA to the valuation it is today......well then you need to trim the valuation of all of the companies I listed by about 30-40%. THEN TSLA's current valuation is "fair"
Edit: Sorry bout all the typo's, had someone talking to me nonstop when I was writing this. Hence the 5 edit's I've had to do now
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Hey Troy and I actually agree on something
Woah, if they really hit 100K for September that would be incredible.
mars_or_bust
Member
KBF
Model X owner (formerly Cdn Signature Model S)
Fascinating how so many think that Tesla is merely an "automaker"... Even focusing only on the auto industry, they are both the maker (incl parts supplier), insurer and retailer (& repair, but that's supposed to be revenue neutral, so that doesn't matter as much). But I guess Tesla's Energy division somehow doesn't exist... Solar + Powerwall + Autobidder all exist right now...
So not sure whether Moody's is waiting for Semi or CT
*Edit: I forget to mention 'fuel supplier' - aka the Supercharging network.*
In other words, "We're creating a completely arbitrary excuse" - would be nice if they had the guts to set an actual metric that would make them chance the rating... And be forced to abide by it. At the same time, I'd be okay with Moody's losing all influence in the industry - an automated credit rating standard using consistent metrics would be far more useful for evaluating companies...
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Good idea, but I'd take it a step further. What Tesla calls "Models" appear to be called "Brands" at other automakers, e.g. GM has Chevrolet, Buick, Cadillac, etc. Perhaps Tesla's S, X, 3 & Y could be given full-word brand names. Then within each brand could be several models depending on how they are configured, as is done with other automakers. This may deconfuse Moody's.
Of course the real problem at Moody's may be that Tesla is not paying them to conduct credit rating reviews.
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Texas is the factory they built based on what they learned building Shanghai.
If Shanghai is cranking out 100k cars per month, I strongly suspect Giga Texas will be cranking out Model Ys at this rate in 2-3 years and Cybertrucks at this rate in 3-4 years.
Cybertruck is designed to be manufactured… maybe more. This scale of production is going to change the auto industry (again).
Nice then instead of a chevy/gm/Buick dealer we'd have S3XY dealersGood idea, but I'd take it a step further. What Tesla calls "Models" might be called "Brands" at other automakers, e.g. GM has Chevrolet, Buick, Cadillac, etc. Perhaps Tesla's S, X, 3 & Y could be given full-word brand names. Then within each brand could be several models depending on how they are configured, as is done with other automakers. This may deconfuse Moody's.
Of course the real problem at Moody's may be that Tesla is not paying them to conduct credit rating reviews.
I'd say at least we have the makings of 3 brands. Tesla prime (SEXY), Cyber vehicles, Semis.Good idea, but I'd take it a step further. What Tesla calls "Models" appear to be called "Brands" at other automakers, e.g. GM has Chevrolet, Buick, Cadillac, etc. Perhaps Tesla's S, X, 3 & Y could be given full-word brand names. Then within each brand could be several models depending on how they are configured, as is done with other automakers. This may deconfuse Moody's.
Of course the real problem at Moody's may be that Tesla is not paying them to conduct credit rating reviews.
SageBrush
REJECT Fascism
Lot's of nice choices here
My take on the comment is that Elon is relatively focusing on manufacturing cost specifically rather than value or new technology. He knows very well that EV expansion is going to require lower prices. All market segments benefit from lower prices, but some more than others. I'd say the two most cost conscious are taxis and commercial vehicles. It would make my heart sing to see commercial vans transition to EV.
Gigapress
Trying to be less wrong
I’m currently projecting $10B GAAP net income in Q1. That is slightly more than Tesla’s current trailing twelve month income and more than triple Q1 ‘22 profits. A trailing twelve month P/E of 100 with earnings being mere months away from tripling is not fair; it’s nonsense. That tripling is just the beginning too, as Tesla will still be growing delivery volume furiously while shifting more and more focus on the highest-margin mass-market products, Y and Cybertruck. The earnings growth we are about to witness will either spark a gigantic TSLA rally or drag the P/E ratio from 100 to 50 to 25 to 10 over the next two years. I know which possibility I consider more likely, and that's why earlier this year I fully margined my portfolio and shifted about 30% of my position to calls for 2023 and 2024 that are mostly for $400 strike and up.
(Not advice but this is my real opinion and actual investment position.)
Here’s what I’m looking at for middle estimates for Q1 '23:
Total vehicle deliveries:
580k
Of which:
Fre: 150k
Sha: 287k*
Ber: 78k
Aus: 65k
*Chinese New Year holiday is in Q1
Average revenue per vehicle:
$62k
Average cost of goods sold per vehicle:
$40k
Average gross profit per vehicle:
$22k
Automotive gross profit:
$13.2B
Operating expenses:
$1.8B
Energy + Services & Other gross profit:
$400M
Fully diluted share count:
3.6B shares
GAAP Net Income: ~$10.4B
Per share $2.90
The most bullish part of my estimates here compared to what other analysts put out is the projection of $22k gross profit per car. That would be a ~$5k improvement from the first half of 2022, driven by an expected $6k increase in average revenue per car from Q2 and cost (minus estimated Q2 anomalies) holding steady at $40k per car.
So, even if the calculation is done again with the ridiculously pessimistic assumption that Tesla will have zero improvement on gross margin and thus will stay at the current ~$17k gross profit per car, the math then gives $7.6B net income and $2.10 per share, with annualized forward P/E ratio of 31 at the current TSLA price. That'd still be 130% YoY earning growth from Q1 '22.
As @The Accountant reminded us again today, there is a perfect storm set up for the next few quarters, because the growth of volume is multiplied with the growth of gross margin, and then the gross profit explosion will have a bunch more leverage as operating expenses become relatively tiny in comparison.
Ever since Q4 '20 when the refreshed S&X started their production ramp and Shanghai really took off, gross profit per car has been steadily rising. Q2 '22 was an anomaly due to Shanghai shutdowns, Berlin & Austin early-stage ramp inefficiency, line upgrades, foreign exchange bad luck, and logistics challenges created by the war in Ukraine. The overall trend is set to continue.
Likewise, the trend of operating leverage is going to continue. Every business has to hit a certain size to earn net income where gross profit exceeds fixed operating expenses. After almost two decades in business running negative cashflow, Tesla finally sustainably passed breakeven scale less than two years ago. Even in the first half of 2022, Tesla's operating expenses still burned up 40% of the gross profit. Simply selling more cars will drop this ratio down below 10% in the coming 2-3 years, and along with it, operating margin will start approaching 30%. This operating leverage effect means that between now and roughly 2025, Tesla's net income will grow much faster than gross profit and deliveries.
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ZachF
Active Member
Russia has now shut down Nord Stream indefinitely.
Seems like a virtual power plant should qualify as a broadening of product line. Plus existing model lines are so relentlessly improved that model years hardly count, it should be model months since there are more improvements per month than ICE per year IMO
So not sure whether Moody's is waiting for Semi or CT
I've been dying for Tesla Energy to take flight so that the narrative of Telsa being only a car company can finally die (or at least make anyone saying that still look like a QAnon level idiot).Seems like a virtual power plant should qualify as a broadening of product line. Plus existing model lines are so relentlessly improved that model years hardly count, it should be model months since there are more improvements per month than ICE per year IMO
Man when that quarter where the Tesla Megapack factory finally ramps to meaningful volume and thus turns into more than just material revenue/profits happens......it's going to feel so good.
SageBrush
REJECT Fascism
Riddle: how long does it take to transition from "Tesla is going BK !! " to "Tesla is too BIG !!. Break it up !!"
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