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

[woodisgood]

This is not really true. Corporations can and do operate in manners which are not always profit maximizing and they have no legal obligation to profit maximize. Yes, some profits are required to keep the lights on, but they are not the "Reason Corporations Exist". Companies can operate in order to provide a service to the community or drive towards a specific goal with profits as a secondary goal.

New York Times has a good article on this.

Corporations Don't Have to Maximize Profits - NYTimes.com

www.nytimes.com

The word "Profit" does not occur in Tesla's mission statement a single time.

Tesla management and employees run the business off of that mission statement. Lots of people want to insert "become massively profitable", but that is a side-effect of growth, not an actual goal of the company.

This is so lost on many investors and why Tesla doesn’t compute for many of them. It is also why I don’t recommend any friends/family to make an investment in Tesla and also why I connect with and appreciate other Tesla HODLers so much.

 

[khill]

Elon has talked about being able to pull "demand levers" before, I don't doubt they try to tune demand to match production pretty closely.

My point that seems to be being missed is that price reduction is not always evidence of a demand issue. We've seen them cut prices for other reasons. Hence "correlation is not causation" applies here.

Finally I'll note that being able to tune demand when gross margins's are a multiple of what competing vehicles garner is pretty impressive.

If Tesla opted to cut prices to only provide a 2% gross margin, you'd have your backlog. But why do that?

Compared to other automakers, which have a PE of 5, Tesla has a PE of 50. This is because Tesla has a much higher profit margin, and is growing volume. If the profit margin keeps going down, it can’t justify a 10x higher PE multiple until profit margins are back to 20-25% again.

Stimulating demand by cutting prices shouldn’t be the only way to generate demand. Educating people that EVs are the way to go because they are just as affordable, are better in terms of safety, technology, and all the other things that make a Tesla such a no brainer. Outside of the Tesla bubble, the awareness is very low that a Tesla is the obvious choice over ICE vehicles. Cutting the prices alone doesn’t do this job.

 

[Captkerosene]

Well, I think that's pessimistic, don't you? Have you factored in the following milestones:

• Cybertruck starts mass production in 2024
• Megafactories in 2 regions reach 80 GWh/yr in 2024
• First Gen3 compact CUV delivered from MX by end of 2024

Do you really think FSD (or does that mean Robotaxi?) affects the Market before those milestones? And FSD before Bot?

Elon has made it clear that FSD/Bot are the big winners. He's just listening to Elon. Maybe we should too?

Reminds me of a legal argument a group of my pilot buddies were having. There was also a federal judge in the group who was keeping his mouth shut. Eventually, the judge spoke up with his (correct) legal interpretation. But, we quickly shut him down because hell ... we were pilots after all.

 

[Captkerosene]

This is not really true. Corporations can and do operate in manners which are not always profit maximizing and they have no legal obligation to profit maximize. Yes, some profits are required to keep the lights on, but they are not the "Reason Corporations Exist". Companies can operate in order to provide a service to the community or drive towards a specific goal with profits as a secondary goal.

New York Times has a good article on this.

 

[Hiline]

Yes, all of it.

We already have other automakers scaling EVs - China. Or did you forget them?

I don't know about you. I'd much rather Ford and GM succeeded and gave us quality, affordable EVs than we had to buy our EVs from China.

This is not really true. Corporations can and do operate in manners which are not always profit maximizing and they have no legal obligation to profit maximize. Yes, some profits are required to keep the lights on, but they are not the "Reason Corporations Exist". Companies can operate in order to provide a service to the community or drive towards a specific goal with profits as a secondary goal.

New York Times has a good article on this.

Corporations Don't Have to Maximize Profits - NYTimes.com

www.nytimes.com

The word "Profit" does not occur in Tesla's mission statement a single time.

Tesla management and employees run the business off of that mission statement. Lots of people want to insert "become massively profitable", but that is a side-effect of growth, not an actual goal of the company.

What you said is perfectly compatible with what I said specifically about corporations. Why don't you name me one corporation that exists without profits or without the promise of profits somewhere in the future?

Regarding maximizing shareholder value as the sole purpose of a corporation is a view propagated by Harvard Business School back in the 90s and drove short-term profit maximization at the cost of jobs and the environment. What I think the correct approach is is to generate profit while taking into account other stakeholders: employees, community, etc. A corporation doesn't need to, and should not, maximize profit at the expense of everything else. Shareholders are not the only stakeholders of a corporation. But at the end of the day corporations exist to make profits. You have non-profit organizations to provide services without making money.

 

[M|S|M MYP]

You have non-profit organizations to provide services without making money.

This is the intention of non-profit organizations on paper, in reality, somewhat different.

 

[Knightshade]

Why don't you name me one corporation that exists without profits or without the promise of profits somewhere in the future?

There's entire sections of the tax code devoted to them

Federal Tax Obligations of Non-Profit Corporations | Internal Revenue Service

Federal Tax Obligations of Non-Profit Corporations

www.irs.gov

#pedantry

 

[ggr]

Careful there. It'll end up in the Mr. Moo retirement charity for sure. That said, I hoped y'all wouldn't make me do this, but please let's stop:
View attachment 932651 View attachment 932652 View attachment 932653
-Thank-kew.

Edit- I hope our highly valued MODS will wind this up by:
1- prohibiting further discussions about this bet,
2- Prohibiting further bets across TMC forums.

Mod: I agree. --ggr

 

[Singuy]

Oh no .... I hope there is something else to propel the price up rather than FSD.

BTW, talking about FSD, here is a comparison to the main competitor from a well known TSLA analyst we all like.

https://twitter.com/x/status/1643032816462987264

ps :

I too hope Tesla does something with enhanced maps (what the tweet here refers to as AV map). Basically more metadata with map which is crowdsourced. Tesla seems to be already adding more metadata according to @verygreen - but don't know whether it is crowdsourced.

https://twitter.com/x/status/1643032819336183811

FSD will still be valued more than Mobile Eye because Mobile Eye doesn't make cars. There are a lot of hands in the cookie jar for that sweet net profit so this tech cost a lot of money when it gets to the consumer's hand. BMW will need to pay $$$$ for Mobile Eye's Supervision, which means the customer will need to pay $$$$$ to get it. And if Mobile Eye wants robotaxi money from BMW by giving them the hardware/software for free, BMW will need to take a cut as their cars will be blamed for any crashes. So Mobile Eye ends up getting $ from BMW over time.

Tesla just needs to worry about one customer, and that's Tesla.

 

[wipster]

Isn’t Stellantis already in really deep do-do?

I think it’ll be different this time.

Do we really think the US Govt. will bail out Fiat? I think not. GM and Ford perhaps, but not the newest rendition of Chrysler. Quite a bit different than the 80's and the K Car...

 

[EVNow]

FSD will still be valued more than Mobile Eye because Mobile Eye doesn't make cars. There are a lot of hands in the cookie jar for that sweet net profit so this tech cost a lot of money when it gets to the consumer's hand. BMW will need to pay $$$$ for Mobile Eye's Supervision, which means the customer will need to pay $$$$$ to get it. And if Mobile Eye wants robotaxi money from BMW by giving them the hardware/software for free, BMW will need to take a cut as their cars will be blamed for any crashes. So Mobile Eye ends up getting $ from BMW over time.

That is right - infact the reason a lot of OEMs are NOT buying from MobilEye. Basically everyone realizes Autonomy is a very fat margin business and don't want to be dependent on someone else, who could get all the fat margin and leave them just crumbs.

Though, I'm surprised even Lucid didn't go with MobilEye.

But MobilEye is still a competitor to Tesla because they can supply the tech to other OEMs who will compete with Tesla. Also, MobilEye is the one, IMO, with credible tech to compete with Tesla on Autonomy.

 

[Featsbeyond50]

This is so lost on many investors and why Tesla doesn’t compute for many of them. It is also why I don’t recommend any friends/family to make an investment in Tesla and also why I connect with and appreciate other Tesla HODLers so much.

I think it's clear Elon only cares about profit to the point where executing the mission is not hindered. Further, I think he actually wants the share price to stay low. Employees retiring early doesn't help the mission.

 

[M|S|M MYP]

I think it's clear Elon only cares about profit to the point where executing the mission is not hindered. Further, I think he actually wants the share price to stay low. Employees retiring early doesn't help the mission.

I somewhat agree with you, i would not complain if the SP was closer to $250 though

 

[oldTAVguy]

MM's have said "Thou shall not close above $165. So it shall be written so shall it be DONE." But this not manipulation right? Right? Hello...

 

[Ogre]

What you said is perfectly compatible with what I said specifically about corporations. Why don't you name me one corporation that exists without profits or without the promise of profits somewhere in the future?

Regarding maximizing shareholder value as the sole purpose of a corporation is a view propagated by Harvard Business School back in the 90s and drove short-term profit maximization at the cost of jobs and the environment. What I think the correct approach is is to generate profit while taking into account other stakeholders: employees, community, etc. A corporation doesn't need to, and should not, maximize profit at the expense of everything else. Shareholders are not the only stakeholders of a corporation. But at the end of the day corporations exist to make profits. You have non-profit organizations to provide services without making money.

You said profits are the reason corporations exist. Literally your phrase.

That is not true. Many corporations exist for reasons other than profits. Profits are a side-effect and a means to an end, not the reason they exist at all.

 

[Ogre]

This is the intention of non-profit organizations on paper, in reality, somewhat different.

They exist. Just few of them are super large or high profile.

 

[StarFoxisDown!]

MM's have said "Thou shall not close above $165. So it shall be written so shall it be DONE." But this not manipulation right? Right? Hello...

I wouldn’t be so quick to think MM’s are hindering the stock from past 165. Could just as much them supporting the stock from falling further avoid paying out puts.

 

[oldTAVguy]

I wouldn’t be so quick to think MM’s are hindering the stock from past 165. Could just as much them supporting the stock from falling further avoid paying out puts.

Still manipulation.

 

[Artful Dodger]

I wouldn’t be so quick to think MM’s are hindering the stock from past 165. Could just as much them supporting the stock from falling further avoid paying out puts.

TSLA hit exactly $165.00 as the intraday high at 1:00 p.m. ET. Capped there for 3 hrs, and over 7 million shares traded during the 4:00 o'clock minute. @oldTAVguy @Papafox

Meanwhile, QQQ (U.S. Tech macros) ran up 0.32% in the final 20 minutes of the session, and Closed at it's intraday high:

TL;dr it helps to look at actual events before confirming your own cognitive biases.

Cheers!

 

[deshkart]

Well, I think that's pessimistic, don't you? Have you factored in the following milestones:

• Cybertruck starts mass production in 2024
• Megafactories in 2 regions reach 80 GWh/yr in 2024
• First Gen3 compact CUV delivered from MX by end of 2024

Do you really think FSD (or does that mean Robotaxi?) affects the Market before those milestones? And FSD before Bot?

I do think Market will basically front run earnings from FSD which will dwarf all the above factors. FSD should become very compelling by 2024 - just in time with all the factors you have mentioned start to become significant as well. FSD is important primarily because market will be convinced that it will lead higher pricing power for Tesla rather than just the sales of hardware itself - the current price cuts show that on a hardware only play, margins are not guaranteed in the long term. Basically, Market will feel comfortable to rerate Tesla from an Auto maker to Apple like company with millions of installed hardware base and well defined revenue stream.

Also, by then Interest rates should be normalized - allowing SaaS ratios to expand to 15 to 20 X sales. Tesla should have 500 billion revenue by 2027, so I expect 7 to 10 trillion market cap by then. (My personal opinion LOL)