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

[Dutchie]

NO! God help me Father, for I have had murderous thoughts against those who repeatedly say stupid things.

For a company that is growing at 3-5% per year, a 20 PE is acceptable. For a company that is growing at 50% per year, with no end in sight of that growth, a PE of 20 would be ludicrously low. Indeed most growth companies (the ones that are smaller and can grow at even 70% growth YoY), they have infinite PEs since they don't make any profit (negative earnings). Amazon was like that as an early public company, so was Apple, Microsoft, Google, etc. Investors invest in these companies, even though they are losing money every year because they expect them to grow really fast and eventually start making huge profits, like Apple.

When a company has basically taken over its market (like Apple and Microsoft), there is much less growth ahead of it and what then matters is how much profit it is making and thus PE is a good measure.

Tesla is still in hyper growth mode. It could very well be a bargain at a PE of 120 still.

In this market nobody cares about PE or PS ratios anymore. Everybody sell, sell, and sell

 

[SebastienBonny]

I believe a 60 P/E ratio is quite normal on a business expecting to show 50% year over year growth for several coming years

I'd rather look at the PEG-value (which should be 1 or lower).
At current P/E ratio of 60, we're at a PEG-value of 1.25 (P/E divided by growth = 50).
That's the way a growth stock should be valued IMO.

With a FY22 EPS (Q1 + Q2 + Q3 + estimated EPS for Q4 of 1.26) of 4.14 we are currently at a P/E ratio of approximately 44 and a PEG-value of 0.88.
I won't even look at the estimated EPS and P/E for 23, that would take us to the conclusion we are way undervalued at this time.

So, yeah, P/E of 60 is quite ok for 50% growth.

 

[EVMeister]

If he can fix this dumbster fire than he can truly fix anything and is the greatest engineer of all time.

Was that misspelling intended? If so congratulations, I love it.

 

[JusRelax]

I'd rather look at the PEG-value (which should be 1 or lower).
At current P/E ratio of 60, we're at a PEG-value of 1.25 (P/E divided by growth = 50).
That's the way a growth stock should be valued IMO.

With a FY22 EPS (Q1 + Q2 + Q3 + estimated EPS for Q4 of 1.26) of 4.14 we are currently at a P/E ratio of approximately 44 and a PEG-value of 0.88.
I won't even look at the estimated EPS and P/E for 23, that would take us to the conclusion we are way undervalued at this time.

So, yeah, P/E of 60 is quite ok for 50% growth.

The "G" in the PEG ratio represents projected earnings growth, not "vehicle deliveries growth" or "revenue growth". For now (and for at least a couple years), earnings should grow much quicker than revenue and/or vehicle deliveries. I don't know Tesla's earnings growth rate off the top of my head (I think it's currently much closer to 300%, not 50%!), but I believe @Gigapress may have a usable earnings growth rate in one of his posts on his substack.

EDIT: I just pulled up Net Income for Q3 2021 compared to Q3 2022, here are the numbers:

Q32021: $1.62 Billion
Q32022: $3.29 Billion

Thus, the current earnings growth rate is 3.29/1.62 - 100% = 103%. Normally, I wouldn't expect such a high growth to continue into the future; however, Tesla's past year's difficulties with chip shortage, covid shutdowns, etc make it possible for Tesla to continue with such a high earnings rate for the next four quarters (i.e. - 3.29 * 2.03 = $6.67 Billion net income in Q3 2023).

 

[CorneliusXX]

To put into perspective how ridiculous the current SP is:

https://twitter.com/x/status/1590455245674795010

On a side note, I have been watching the Electrified videos over the last few months. Dillon does an excellent job chatting through the daily goings on around Tesla and TSLA. I'd put his channel at #2 behind Robs.

There's a fair amount of overlap between the two, but Rob's videos have trended towards being more focused on the long term performance/outlook for Tesla first and the current events discussed each day usually are set in the context of how that plays into the long term narrative - While Dillons videos have a wider range of daily events covered in less detail.

Robs become a bit of an "elder statesman" (for lack of a better term) for Tesla IMO while Dillon is still in the young buck stage.

Anyway - I highly recommend both if you're short on time and don't have hours to spend trawling through TMC or other tesla news. Between the two you'll be covered for both the daily events and the longer term outlook.

 

[cricketman]

I'd rather look at the PEG-value (which should be 1 or lower).
At current P/E ratio of 60, we're at a PEG-value of 1.25 (P/E divided by growth = 50).
That's the way a growth stock should be valued IMO.

With a FY22 EPS (Q1 + Q2 + Q3 + estimated EPS for Q4 of 1.26) of 4.14 we are currently at a P/E ratio of approximately 44 and a PEG-value of 0.88.
I won't even look at the estimated EPS and P/E for 23, that would take us to the conclusion we are way undervalued at this time.

So, yeah, P/E of 60 is quite ok for 50% growth.

Yes I look at PEG ratios too

PEGs in good times "always" return to 1 (at least 1, maybe much higher), especially for companies with little debt

I predict $5bn profit for Q4 22, meaning $20bn annually. Divided by market cap of $580bn and 50% growth rate, this is a PEG ratio of 0.58 so Tesla is trading at a 42% discount of sensible levels, as long as you are prepared to hold until the economy and stock market is in better shape, and nothing happens during this period to negatively affect the PEG ratios (i.e. reduction in profits or growth rates).

From fundamentals, I expect $1,000 share price within 3 years, but this is a bullish perspective, and so the PEG ratio analysis is a good one to do on very sensible Warren Buffet-like terms to give some balance. Either way, the analysis says BUY BUY BUY

 

[SebastienBonny]

The "G" in the PEG ratio represents projected earnings growth, not "vehicle deliveries growth" or "revenue growth". For now (and for at least a couple years), earnings should grow much quicker than revenue and/or vehicle deliveries. I don't know Tesla's earnings growth rate off the top of my head (I think it's currently much closer to 300%, not 50%!), but I believe @Gigapress may have a usable earnings growth rate in one of his posts on his substack.

EDIT: I just pulled up Net Income for Q3 2021 compared to Q3 2022, here are the numbers:

Q32021: $1.62 Billion
Q32022: $3.29 Billion

Thus, the current earnings growth rate is 3.29/1.62 - 100% = 103%. Normally, I wouldn't expect such a high growth to continue into the future; however, Tesla's past year's difficulties with chip shortage, covid shutdowns, etc make it possible for Tesla to continue with such a high earnings rate for the next four quarters (i.e. - 3.29 * 2.03 = $6.67 Billion net income in Q3 2023).

Conclusion: 50 is conservative so we shouldn't go any lower .

 

[Thekiwi]

Tesla Daily coming through corroborating the 87.7K Shanghai production figure, saying that the CPCA gave the same number Reuters reported earlier today.

An interesting episode.

- Rob spends a fair bit of time specualting on possible lower profit margins in the short term (2023) from possible demand softness in China (which he thinks is one possibility given the two recent price cuts in quick succession, combined with higher production rate).

- Then he covers in detail a new bill that has popped up in congress that changes the EV tax credit bill significantly (Possibly to fix the issues the EU is complaing about): EV credit will be open to foreign made cars until 2026, and the made-in-US battery content requirement also disappears for a few years. Potentially opens the door for chinese made teslas being sold in USA if that option ends up making sense for Tesla.

 

[Matias]

I'd rather look at the PEG-value (which should be 1 or lower).
At current P/E ratio of 60, we're at a PEG-value of 1.25 (P/E divided by growth = 50).
That's the way a growth stock should be valued IMO.

With a FY22 EPS (Q1 + Q2 + Q3 + estimated EPS for Q4 of 1.26) of 4.14 we are currently at a P/E ratio of approximately 44 and a PEG-value of 0.88.
I won't even look at the estimated EPS and P/E for 23, that would take us to the conclusion we are way undervalued at this time.

So, yeah, P/E of 60 is quite ok for 50% growth.

This is my thinking also. I'm really close to buying TSLA again. I just need to see it stop falling first.

I sold my TSLA after first split at approximately current price.

 

[Todesbuckler]

PEG around 1 seems also to me like a fair (or even low) valuation of Tesla.
In my near-term financial model, I include PEG valuations based on YoY earnings growth and full-year non-GAAP EPS estimates.
This yields a share price of around 350$ with a rather cautious margin and growth assumption for 2023&2024.

Full model:

 

[MABMAB]

MMD
More Musk Dumping

 

[nativewolf]

Ross also admitted that he has no idea why Elon is/was selling in that podcast(assuming it's the one from today w Farzad, Alexandra, and Gary Black). He's as exasperated/exacerbated as the rest of us.

For now a mystery

 

[MABMAB]

An interesting episode.

- Rob spends a fair bit of time specualting on possible lower profit margins in the short term (2023) from possible demand softness in China (which he thinks is one possibility given the two recent price cuts in quick succession, combined with higher production rate).

- Then he covers in detail a new bill that has popped up in congress that changes the EV tax credit bill significantly (Possibly to fix the issues the EU is complaing about): EV credit will be open to foreign made cars until 2026, and the made-in-US battery content requirement also disappears for a few years. Potentially opens the door for chinese made teslas being sold in USA if that option ends up making sense for Tesla.

So basically if one has to put out content just make some shheeet up and stir the pot?
one Could really start a dudetube channel covering just the tsla specula lations

 

[mongo]

Tesla Daily coming through corroborating the 87.7K Shanghai production figure, saying that the CPCA gave the same number Reuters reported earlier today.

Relevant die to Elon selling.
Rob had a big error in the Twitter funding math.
The $7.1B 3rd party equity number already included the Saudi shares. So his estimate on Elon's potential shortfall is off by $1.9B .

Equity Investor	Aggregate Equity Commitment
A.M. Management & Consulting	$25,000,000
AH Capital Management, L.L.C. (a16z)	$400,000,000
Aliya Capital Partners LLC	$360,000,000
BAMCO, Inc. (Baron)	$100,000,000
Binance	$500,000,000
Brookfield	$250,000,000
DFJ Growth IV Partners, LLC	$100,000,000
Fidelity Management & Research Company LLC	$316,139,386
Honeycomb Asset Management LP	$5,000,000
Key Wealth Advisors LLC	$30,000,000
Lawrence J. Ellison Revocable Trust	$1,000,000,000
Litani Ventures	$25,000,000
Qatar Holding LLC	$375,000,000
Sequoia Capital Fund, L.P.	$800,000,000
Strauss Capital LLC	$150,000,000
Tresser Blvd 402 LLC (Cartenna)	$8,500,000
VyCapital	$700,000,000
Witkoff Capital	$100,000,000
		$5,244,639,386
Equity Investor	Aggregate Equity Commitment
HRH Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud (Kingdom)	34,948,975 shares
	@$54.20	$1,894,234,445
	Total		$7,138,873,831
	plus Jack	$1,000,000,000
			$8,138,873,831

https://www.sec.gov/Archives/edgar/data/1418091/000110465922056055/tm2214608d1_ex-m.htm

 

[Max Plaid]

As @The Accountant set a precedent, I'll share my tweet rather than retyping... Incoming EU MXP!!

https://twitter.com/x/status/1590663411171749888

 

[NicoV]

As @The Accountant set a precedent, I'll share my tweet rather than retyping... Incoming EU MXP!!

https://twitter.com/x/status/1590663411171749888

Do you take reservations for test rides? Tesla will initially have only 2 demo cars in Belgium (for 5 service centers).

 

[sandervl]

As @The Accountant set a precedent, I'll share my tweet rather than retyping... Incoming EU MXP!!

Same here (incoming EU MX Plaid). Apparently I will get the Model X meant for Elon (VIN X69420).

 

[Artful Dodger]

So why did he sell? He's not done either it looks like ..it's a lot of coin.

To me TSLA looks like a screaming buy and I never got the fascination with Twatter so....I guess I don't know a lot. I'm curious as to the motives for selling.

If you were looking at ~$50B in income taxes, and could get ~57% off your tax bill assisted by 5:1 selling leverage by shortzes/hedgies, what would you do? Then, include share buybacks on the cheap. Enough treasury shares in Tesla's larder to cover all employee and Officer SBC (ex-CEO) for the rest of the decade.

Funny thing about Retail investors, they're fed a constant stream of dogdoo: "any SP spike is a bubble that has to burst", but "any SP trough is an abysmal bottom" from which there can be no return (and pay no nevermind to the fundamentals behind the curtain). Solution? Apply critical thinking skills to the main stream narrative. Surprising results emerge. That's how you run with the big dawgs.

For long investors, be aware: "This too shall pass". Tesla will be in a stronger place afterward. Few players in this market are as well positioned to benefit from the current setup. I trust Tesla's management team to do well for the company, and the mission.

 

[MABMAB]

When product demand truly “softens” they will pull new product levers (next gen) or offer new options (y suspension) to ratchet demand some more. they also alter pr

If you were looking at ~$50B in income taxes, and could get ~57% off your tax bill assisted by 5:1 selling leverage by shortzes/hedgies, what would you do? Then, include share buybacks on the cheap. Enough treasury shares in Tesla's larder to cover all employee and Officer SBC (ex-CEO) for the rest of the decade.

Funny thing about Retail investors, they're fed a constant stream of dogdoo: "any SP spike is a bubble that has to burst", but "any SP trough is an abysmal bottom" from which there can be no return (and pay no nevermind to the fundamentals behind the curtain). Solution? Apply critical thinking skills to the main stream narrative. Surprising results emerge. That's how you run with the big dawgs.

For long investors, be aware: "This too shall pass". Tesla will be in a stronger place afterward. Few players in this market are as well positioned to benefit from the current setup. I trust Tesla's management team to do well for the company, and the mission.

Did you put out such wariness and serenity when the price was MUCh higher?

 

[StarFoxisDown!]

An interesting episode.

- Rob spends a fair bit of time specualting on possible lower profit margins in the short term (2023) from possible demand softness in China (which he thinks is one possibility given the two recent price cuts in quick succession, combined with higher production rate).

- Then he covers in detail a new bill that has popped up in congress that changes the EV tax credit bill significantly (Possibly to fix the issues the EU is complaing about): EV credit will be open to foreign made cars until 2026, and the made-in-US battery content requirement also disappears for a few years. Potentially opens the door for chinese made teslas being sold in USA if that option ends up making sense for Tesla.

The new bill has zero chance of being successful now that Republicans will control the House. There's zero Congress can do.

As for margins, Shanghai running at actual full production for an entire quarter would make up the difference even if they have to drop prices again. That's because of depreciation/amortization in the factory. The factory essentially running at half of it's capacity for the quarter, like it did in Q2 and Q3, drops gross margin considerably.