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

[StarFoxisDown!]

I think forward looking wallstreet doesn't care if they like Elon or not. They care more about how Elon is liked or disliked, and if his behavior is material in a positive or a negative way to future cash flow. So the court of public opinion kind of matters. There have been business that had to deal with massive shrinking revenues all due to a negative association with a brand by a key member. This is usually why CEOs or key members of businesses that the brand associate with usually doesn't take sides unless if taking sides benefits the business (IE, gun manufactures will definitely take the side of the Republicans).

The court of opinions definitely matters......until valuations get so cheap that they don't matter.

Which is why I said what I said about that scenario I listed

No one on Wall St is going to care about court of public opinion when a stock is doing earnings growth that's TRIPLE it's Forward PE.

I can't find a single example anywhere across Wall St where a stock's earnings YoY growth rate is triple its Forward PE. I would love for someone to show me an example where that level of irrationality and disconnect is happening.

 

[Words of HABIT]

POIDH = Pics or it didn't happen

SEC FORM 4

via SEC FIlings | Tesla Investor Relations

He sold 3,750 shares. He does this almost every month. Nothing out of the ordinary.

@BrownOuttaSpec , thanks for providing context about Zachary selling.
Here is more info (less clicks):

Zachary Kirkhorn Net Worth (2024) – wallmine.com

Zachary has made over <b>60 trades</b> of the Tesla Inc stock since 2019, according to the Form 4 filled with the SEC. Most recently he sold <b>3,750 units of TSLA stock worth $978,750 on 4 August 2023</b>.

wallmine.com

Mr. Kirkhorn TSLA stock SEC Form 4 insiders trading​

Zachary (CFO and Master of Coin, Tesla) has made over 49 trades of the Tesla Inc stock since 2019, according to the Form 4 filled with the SEC. Most recently he sold 3,750 units of TSLA stock worth $939,375 on 4 October 2022.

The largest trade he's ever made was exercising 16,870 units of Tesla Inc stock on 5 September 2022 worth over $4,062,465. On average, Zachary trades about 2,334 units every 24 days since 2019. As of 4 October 2022 he still owns at least 189,027 units of Tesla Inc. stock.

So Zachary sold 2% of his TSLA shares yesterday. @ShareLofty , does this look like someone who thinks Tesla is failing? If not, why did you post?

Heck, @Gigapress sold 15% of his TSLA shares yesterday. Now that one deserves attention and a caution never to buy on margin, and @Gigapress is one of the most prolific posters here on TMC. In fact, if I could only have two TMC posters to view, they would be @The Accountant and @Gigapress. @Gigapress moved from 1st to 2nd on my personal TMC ranking after that move.

Edit: Addressed original poster's concern.

 

[Singuy]

The court of opinions definitely matters......until valuations get so cheap that they don't matter.

Which is why I said what I said about that scenario I listed

No one on Wall St is going to care about court of public opinion when a stock is doing earnings growth that's TRIPLE it's Forward PE.

I can't find a single example anywhere across Wall St where a stock's earnings YoY growth rate is triple its Forward PE. I would love for someone to show me an example where that level of irrationality and disconnect is happening.

See the thing with Tesla is the forward PE is based on the guidance of 50% annual growth with margin expansions. This is why people calls it "priced to perfection" because it's not easy to hit a 50% annual growth rate with the current type of revenue the company already generates. So anything that wavers the confidence of that growth...which is literally anything (a minor covid shutdown has made the target difficult to reach for example) will see forward PE projections compress. The good thing is wallstreet kind of sucks at calculating Tesla's forward PE so we have that wiggle room of a surprise every earnings.

 

[MrMoo]

Thanks for that input.........that is not grounded in reality of what Wall St is.

If Tesla delivers 500k for Q4 or even 475k and reaffirms 2023 guidance of 50% growth and Tesla is at only 300/share with a Forward PE 30, no one on Wall St is going to say

"Nah I'm going to pass on a company growing their earnings at a rate that triple their Forward PE because I just don't like that Elon guy"

Wall St is driven by money. Simple as that. In this above scenario, even the dumbest fund manager knows they will make a killing by getting into TSLA at that valuation.

Sorry if there was a misunderstanding, I just mean at this point in time.

Of course if there was a catalyst then the algos and hedge fund managers would jump in at the chance to buy shares at the stock because they were wrong about it in early October. I Just mean right now with the twitter over hang and no catalysts to jump start the stock, we are going to see some under performance compared to the indexes until Mid October.

 

[StarFoxisDown!]

See the thing with Tesla is the forward PE is based on the guidance of 50% annual growth with margin expansions. This is why people calls it "priced to perfection" because it's not easy to hit a 50% annual growth rate with the current type of revenue the company already generates. So anything that wavers the confidence of that growth...which is literally anything (a minor covid shutdown has made the target difficult to reach for example) will see forward PE projections compress. The good thing is wallstreet kind of sucks at calculating Tesla's forward PE so we have that wiggle room of a surprise every earnings.

Except it's not priced for perfection at all. In fact the relation of earnings growth % and Forward PE are actually opposite of priced for perfection.

Priced for perfection means a stock has a Forward PE that greater than it's actual earnings growth because it's also factoring in future growth in the coming years as well. Tesla is in the opposite situation where it's actual earnings growth % is 2X (soon to be 3X) its Forward PE.

This is further illustrated by TSLA's PEG being just 1.15. Meanwhile Apple has a PEG of 2.5. Between these two companies, Apple is "priced to perfection" at double the amount that TSLA is. And these are based of 5 years projections by analysts who already factor in Tesla's growth slowing dramatically between 2023-2026. They're not estimating close to 50% earnings growth. They're more in the 15-20% ballpark YoY earnings growth. In reality, TSLA's PEG is well under 1.

So no TSLA today isn't priced for perfection. It wouldn't be priced for perfection even at 300-350/share. Just to get to the same valuation of "cheapness" as Apple, TSLA would need to double to 500/share.

Again, if you can point me to any stock out there on Wall St where a stock's actual earnings growth is triple it's Forward PE, I'd love to see it.

 

[Spacep0d]

But Elon's lack of skill in using social media does NOT equate to an inability to successfully lead Twitter. The two are not analogous.

Twitter is now and has been a dumpster fire. It can only get better under Elon, which is probably why he wanted to buy it in the first place. It's not about the money.

 

[Spacep0d]

He’s a highly functional Asperger who happened to create the most successful EV company of all time, the most successful rocket company of all time and he has a Twitter account. The reason he has proven all the naysayers wrong with his first 2 companies by doing whatever he thinks is right is also the reason he tweets whatever he thinks is right on Twitter.

Asperger's Syndrome is no longer recognized by the DSM-5—which is a very Asperger's thing to cite.

 

[OrthoSurg]

Asperger's Syndrome is no longer recognized by the DSM-5—which is a very Asperger's thing to cite.

Sorry I stopped to the DSM-IV

 

[ShareLofty]

So Zachary sold 2% of his TSLA shares yesterday. @ShareLofty , does this look like someone who thinks Tesla is failing? If not, why did you post?.

I posted it bc everyone was concerned EM sold to cover Twitter. I saw a Form 4 come in and posted the results.

 

[Gigapress]

PE slipping below 85 today and at $235 will be something below 70 in 2 weeks. Craziness!

Big banks now get to buy in at inclusion SP. Must be nice.

70 P/E is equivalent to 1/70 = 1.4% annual earnings yield.

The 85 TTM P/E ratio today came from GAAP earnings of $9.5B, or $2.77/share, which is more than 4x the previous (Q3 '20 - Q2 '21) TTM GAAP earnings of $0.64/share.

I project another almost 4x jump for the next four quarters (Q3 '22 - Q2 '23)

$36B GAAP income​

$9.80/share​

24 P/E ratio at $235/share​

This is based mainly on 2M vehicles delivered and 36.7% average auto gross margin over that period, and $3B from Energy & Services+Other.

That's a 9.8/235 = 4% yield, with more growth on the way. How long can this last? Will TSLA's multiple be less than the S&P 500's multiple by this time next year?

 

[Singuy]

Except it's not priced for perfection at all. In fact the relation of earnings growth % and Forward PE are actually opposite of priced for perfection.

Priced for perfection means a stock has a Forward PE that greater than it's actual earnings growth because it's also factoring in future growth in the coming years as well. Tesla is in the opposite situation where it's actual earnings growth % is 2X (soon to be 3X) its Forward PE.

This is further illustrated by TSLA's PEG being just 1.15. Meanwhile Apple has a PEG of 2.5. Between these two companies, Apple is "priced to perfection" at double the amount that TSLA is. And these are based of 5 years projections by analysts who already factor in Tesla's growth slowing dramatically between 2023-2026. They're not estimating close to 50% earnings growth. They're more in the 15-20% ballpark YoY earnings growth. In reality, TSLA's PEG is well under 1.

So no TSLA today isn't priced for perfection. It wouldn't be priced for perfection even at 300-350/share. Just to get to the same valuation of "cheapness" as Apple, TSLA would need to double to 500/share.

Again, if you can point me to any stock out there on Wall St where a stock's actual earnings growth is triple it's Forward PE, I'd love to see it.

Yeah and those same analysts are even doubting the growth projection in 2023-2026 when they see Tesla unable to hit short term guidance today. This is why a simple miss is very devastating for the stock as for any growth companies we have seen. Tesla needs to raise and beat, raise and beat, raise and beat quarter after quarter so the projections can be rosy vs dismal (especially during current macro conditions).

Everyone is trying to figure out where Tesla's PE will eventually compress to and the range is huge, hence the volatility of this stock. Low volatility stocks doesn't have to deal with that range of a target.

 

[Cattledog]

POIDH = Pics or it didn't happen

SEC FORM 4

via SEC FIlings | Tesla Investor Relations

He sold 3,750 shares. He does this almost every month. Nothing out of the ordinary.

Thanks, my quick searches yielded September sales, but I did not see yesterday. The added detail that he's selling regularly, probably to augment his meager Tesla salary, makes sense.

 

[bkp_duke]

Thanks, my quick searches yielded September sales, but I did not see yesterday. The added detail that he's selling regularly, probably to augment his meager Tesla salary, makes sense.

From a friend, that worked at Tesla and eventually made it to the VP level, Tesla expects their management to view stock and options as compensation. The W-2 pay is way below comparable for other senior management levels.

So, zero surprise that Zach regularly cashes out shares.

 

[Skryll]

From a friend, that worked at Tesla and eventually made it to the VP level, Tesla expects their management to view stock and options as compensation. The W-2 pay is way below comparable for other senior management levels.

So, zero surprise that Zach regularly cashes out shares.

To diworsify? Or an expensive hobby maybe...

 

[Cattledog]

To diworsify? Or an expensive hobby maybe...

Even after the crash of the last 90 days, real estate is 'spensive' in SV.

 

[The Accountant]

From a friend, that worked at Tesla and eventually made it to the VP level, Tesla expects their management to view stock and options as compensation. The W-2 pay is way below comparable for other senior management levels.

So, zero surprise that Zach regularly cashes out shares.

Clearly below comparable senior management.

Base Salary
$3.4m - Paul A. Jacobson, GM CFO
$3.1m - John T. Lawler, Ford CFO & Supply Chain
$0.3m - Zachary Kirkhorn, Tesla CFO and Master of Coin

 

[ZachF]

Except it's not priced for perfection at all. In fact the relation of earnings growth % and Forward PE are actually opposite of priced for perfection.

Priced for perfection means a stock has a Forward PE that greater than it's actual earnings growth because it's also factoring in future growth in the coming years as well. Tesla is in the opposite situation where it's actual earnings growth % is 2X (soon to be 3X) its Forward PE.

This is further illustrated by TSLA's PEG being just 1.15. Meanwhile Apple has a PEG of 2.5. Between these two companies, Apple is "priced to perfection" at double the amount that TSLA is. And these are based of 5 years projections by analysts who already factor in Tesla's growth slowing dramatically between 2023-2026. They're not estimating close to 50% earnings growth. They're more in the 15-20% ballpark YoY earnings growth. In reality, TSLA's PEG is well under 1.

So no TSLA today isn't priced for perfection. It wouldn't be priced for perfection even at 300-350/share. Just to get to the same valuation of "cheapness" as Apple, TSLA would need to double to 500/share.

Again, if you can point me to any stock out there on Wall St where a stock's actual earnings growth is triple it's Forward PE, I'd love to see it.

Tesla right now is priced at like 25-30x next year’s earnings… that’s not priced for perfection when it’s still growing at 50%.

It’s priced at 15-20x 2024 earnings.

Amazon will certainly make less money this year, next year, is burning cash and passed it’s growth phase but is still worth ~30% more…

 

[ZachF]

Even though it’s annoying that they list Giga Austin as TBD, there’s like 1 TWh of planned battery capacity now for North America:

https://twitter.com/x/status/1577413656941305858

 

[mjwojtukiewicz]

I dumped all my Tesla stock today. Twitter IS a dumpster fire. It's like every jerk in the world wants to show me his food or some dictator wants to spew lies. No control and the media eats it up. And his remarks about how Ukraine should remain neutral and people should vote who they want to join. He's an idiot. He learned nothing about his home country's sad history and he thinks he knows the difference between fascism and democracy. As soon as Ioniq 6 comes out my Tesla is for sale. He will be taking Tesla into the tank over a stupid app where anyone can say whatever they want. Dumbass. And FSD is still junk

 

[ZenRockGarden]

Hmm. I assume this means you don't like some of Elon's tweets and want them censored, or you disagree with Elon's stated position favoring free speech. Either way, you are (somewhat rudely) stating your opinion, not a fact.

Here's a fact that might cheer you up about your TSLA investment: Elon is a first-principles thinker. Such thinkers invent out-of-box solutions to challenges. For example, the challenge of air pollution from cars has another solution besides more emission controls: electric cars.

The challenge of Twitter bots, trolls, and socially destructive speech may have another solution besides more content moderation. If the Twitter app (or a new app that incorporates it) requires biometric identification before you post, then Twitter bots should be eliminated, Twitter trolls will have to use their real names, and Twitter sociopaths will risk more consequences for their hate speech. No more hiding behind aliases on Twitter. That is Elon's plan, according to @unk45, if I understood his/her post earlier today.

Elon's tweets have erred on the side of personal attacks, name calling, and generally making the planet a worse place - the opposite of his supposed mission to save humanity from itself. Elon talks about being a "free speech absolutist" but is perfectly happy to try and get people he disagrees with banned.

Since you don't seem to understand what I'm talking about, it's not about politics. Recall back to when he was offering some technical help to a rescue mission, and when his gear was not appropriate to the job he got ugly and personal enough to wind up in court. We don't need that kind of judgement in charge of "moderation" which is a difficult nuanced job requiring clear standards and a steady hand.

Meanwhile - back on topic: Recent drop in TSLA price looks like a buying opportunity since even with Elon distracted by his new adventure Tesla is set to see increased shipments on higher margins while it's competition is still raising prices.