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

[Musskiah]

I

@Zaddy Daddy

Using a graph of past prices does not convey a thing about future prices. MY prices will be on the rise in both Europe and US in weeks. This is a sign we are at a local bottom and near/at stabilization. I didn't mean to imply price cuts were only because of interest rates, so I agree with you the depth of the ruthless price cuts Tesla exacted on the competition was not commensurate with interest rates - it was in fact more of a a coup de grâce!

By stating "Tesla may be approaching a 'natural limit' " (this is their words from most recent earnings) I was aknowledging that Tesla expects less cost declines - I agree with you. As @unk45 has shared, cost declines are still expected to come from batteries, and I would add other commodities. This will not be insignificant.

You forgot to add Deferred Tesla Energy Revenue to your forecast. Tesla has already stated $1.05B of this Revenue will be realized in the next 12 months (2024). In 2025, this will be well over $2B and perhaps as much as $4B by my estimation - I don't really want to get into the math here, but it's plain to see this if you examine the difference in this Deferred Energy Revenue between 2022 and 2023. This Revenue alone will contribute nearly $1EPS (or more) ON TOP of the 2 Megapacktories. Your margins are low for Energy in 2025- I would put them at between 25-30%. Otherwise, I generally agree with your numbers. I stand by my CONSERVATIVE $2 FY2025 EPS forecast from Energy (Deferred and 2 Megapacktories combined). Larry Goldburg, though we may take his forecast with a grain of salt, makes a fairly compelling case for 2035 35% Energy Margins with $10B profit (FWIW 2024 Energy forecast is 25% margins with $4B profit). For those who missed it, here is the link again: Start at 9:30

I like your FSD assessment, that is reasonable, and probably rightly conservative. Of course, it is entirely possible we could be in for a monster suprise here!

Tesla targets 50k ramp in semis by EOY 2025. I think 20k in 2025 is reasonable with 15k coming in the second half. I think your margins are low as they will preferentially sell the $250k version along with, perhaps, premium upgrades as they always do. I can live with $0.40 EPS

I am glad we agree on Cybertruck, this means we have tested our theories with rigor from different perspectives and arrived at, perhaps, the most accurate conclusion of all.

Google Finance - Stock Market Prices, Real-time Quotes & Business News
Tesla Inc (TSLA) - Services and Other Revenue is at a current level of 8.319B, up from 6.091B one year ago. This is a change of 36.58% from one year ago. The growth is Supercharger revenue, in particular, comes from Tesla's growing fleet. Even if they ONLY add another 2M cars in 2024, that's another 2M paying customers to the network.

I really like your conclusion, IF you were to add in the Deferred Energy Revenue of $1 EPS, and then modify the arithmetic accordingly. One thing is certain, you and I both agree Tesla is currently undervalued: You think 56%, I think something closer to 100%.

On a personal note: @Zaddy Daddy I genuinely have always appreciated your analysis. You have helped me realize that, perhaps, it is not that you are a contrarian as much as I am an eternal optimist. Thank you for continuing to help me temper my assumptions.

Can't edit this post further. I just noticed the typo "Larry Goldberg...makes a compelling case for **2025** 35% TE Margins..."

 

[Musskiah]

TSLA had 96M shares short as of the end of Feb and Fintel reports another 24M short volume off-exchange dark pools.

The last time this many shares were shorted began April 2023, interestingly enough, with a very similar share price. As the stock rose through early July 2023, the short interest remained above 93M. **THIS IS WHEN BURNT HAIR BEGAN SHIPPING** Then, as the share price peaked and rolled over on July 14, 15M shares were covered through the end of July.

Subsequently, the stock has been shorted slowly back to nearly an ATH of 96M shares as of last report.

As others have pointed out, it's interesting when the maximum number of shares shorted tends to occur at the local minima share price. This is counterintuitive to what would seem to be the intelligent practice of selling short when the stock price is high to profit as it falls. Why short a stock near the bottom?

It is now typical for TSLA to have a short interest between $15B-25B. Interestingly, if you look at historical data, whenever short interest gets above $23B, some positions are closed to get the total short interest back under $20B.

Fun Fact: Tesla was the first stock to EVER have short interest surpass $20B, then it was the first to surpass $30B after S&P inclusion! That was obviously untenable, and some short sellers got their arses handed to them. Let's take a stroll down memory lane with S3 Partners (remember those days of Ihor updating his Twitter account weekly?) back in Jul 2020 when TSLA passed the historic $20B short interest mark for the first time in NYSE history Tesla Shorts to Amass First-Ever $20 Billion Bet Against a Stock

 

[EVWatcher]

TSLA had 96M shares short as of the end of Feb and Fintel reports another 24M short volume off-exchange dark pools.

The last time this many shares were shorted began April 2023, interestingly enough, with a very similar share price. As the stock rose through early July 2023, the short interest remained above 93M. **THIS IS WHEN BURNT HAIR BEGAN SHIPPING** Then, as the share price peaked and rolled over on July 14, 15M shares were covered through the end of July.

Subsequently, the stock has been shorted slowly back to nearly an ATH of 96M shares as of last report.

As others have pointed out, it's interesting when the maximum number of shares shorted tends to occur at the local minima share price. This is counterintuitive to what would seem to be the intelligent practice of selling short when the stock price is high to profit as it falls. Why short a stock near the bottom?

It is now typical for TSLA to have a short interest between $15B-25B. Interestingly, if you look at historical data, whenever short interest gets above $23B, some positions are closed to get the total short interest back under $20B.

Fun Fact: Tesla was the first stock to EVER have short interest surpass $20B, then it was the first to surpass $30B after S&P inclusion! That was obviously untenable, and some short sellers got their arses handed to them. Let's take a stroll down memory lane with S3 Partners (remember those days of Ihor updating his Twitter account weekly?) back in Jul 2020 when TSLA passed the historic $20B short interest mark for the first time in NYSE history Tesla Shorts to Amass First-Ever $20 Billion Bet Against a Stock

Long term im still very bullish on Tesla but when deliveries and production gets published in 2 weeks I feel like it’s unlikely the stock doesn’t get clobbered. Things looked bad before the Berlin shutdown.

 

[advocate8]

Damnit you Ninja'd my entire post. My sheep had maybe wandered into my neighbors and they are city folks easily scared by man eating sheep. Not sure why they are bothersome but there you go, I called them home and came in to finish my post. You had already written it.

Wait. A Wolf keeps sheep?

 

[hobbes]

Now I understand why Tesla uses the LG packs here in Europe, at around 800 km on my rental Model 3 I can say the average speeds here ignoring paid highways are so low, all at 90 km/h or lower

Even the 72 kWh usable pack is giving 500 to 700 km of range, 130 Wh/km | 208 Wh/mi

Some drives I did were at 95 Wh/km | 152 Wh/mi, which also is 6.6 mi/kWh, mind blowing, my off road electric mountainboard does 14 Wh/km

And this on 19” non aero wheels and 10°C to 18°C weather

Let me guess, you’re not in Germany ? France probably.. Europe is not as homogenous as it may seem from the US point of view but I admit Germany is the outlier with regard to driving speed on the freeway

 

[Thekiwi]

Linear extrapolation is not your friend.

Not sure what that non-sequitur reply has to do with the “boy who cried wolf” situation we have with the overly bullish FSD YouTubers.

Years of unquestioning flattery and hours of YouTube videos praising every single beta point release as giant leaps in Tesla’s goal of achieving FSD (when usually the changes are minor or sometimes even setbacks), means when we actually do see big leaps forward (like what may be currently happening), no one on Wall Street or in mainstream media takes anything these guys say seriously.

 

[M|S|M MYP]

Lots of positive chatter on FSD V 12.3, hopefully it is as good as they say.

 

[MC3OZ]

Long term im still very bullish on Tesla but when deliveries and production gets published in 2 weeks I feel like it’s unlikely the stock doesn’t get clobbered. Things looked bad before the Berlin shutdown.

I haven't noticed any of the following:-

• Lower production volumes at factories, except for scheduled shutdowns.
• An extreme "end of quarter push" with price reductions.
• Staff layoffs, or a decision to deliberately reduce factory production levels.

If there any any build up of inventory Tesla seem ok with that. And if production has been lower than expected, that doesn't seem to be inducing any panic.

If prefer things this way around, when it is hard to guess what is really happening.

 

[unk45]

Let me guess, you’re not in Germany ? France probably.. Europe is not as homogenous as it may seem from the US point of view but I admit Germany is the outlier with regard to driving speed on the freeway

Even in ‘slow’ France Autoroutes are 130kph in nearly all areas. Urban Autostrada are often lower but most there are 130 kph too. For anybody passing from, say, Hamburg to, say, Amsterdam the transition from Germany to the Netherlands generates large revenue for the Netherlands. €2200 was my most recent one. BEV high speed range limitations thus far has kept me from repeating those experiences. Not so in Italy, approaching MLN in Model X I failed to pay enough speed limit attention.

US driving is, even in most wide open areas, ridiculous slow speeds compared with most of Europe. EU driving discipline even in Poland us far better than in any US area.

Tesla really needs larger battery capacity for most of Europe.

 

[Usain]

Not sure what that non-sequitur reply has to do with the “boy who cried wolf” situation we have with the overly bullish FSD YouTubers.

Years of unquestioning flattery and hours of YouTube videos praising every single beta point release as giant leaps in Tesla’s goal of achieving FSD (when usually the changes are minor or sometimes even setbacks), means when we actually do see big leaps forward (like what may be currently happening), no one on Wall Street or in mainstream media takes anything these guys say seriously.

It's true that Wall Street won't wake up to FSD for awhile.

And sure, there has been hype around other FSD releases. But anyone who has been following closely can tell that V12 is different.

V12 is the first release I've been truly bullish over. And I got bullish before the first video was ever posted. We could see that Tesla finally has the computing power to do full end-to-end. And now they've done it.

The early reviews are confirming exactly what I believed would happen. FSD is getting really good and it looks like the rate of improvement is going to accelerate due to the fact that it's easier to train on more video clips than to add more hand-written code.

Remember, Edison built 2,774 failed light bulbs before he got it right. These things take time. But once you've got it nailed, improvements can come fast.

 

[insaneoctane]

Let's see if this pencils out....we're in low 160s. Seems close to a bottom since 170 feels more likely than 150 to me. That means I should buy some more at 16X. If I do that, it's guaranteed to go to 150? My poor track record / lack of ability to time my TSLA buys sure has me spooked!

Maybe I wait until Q1 numbers or CC? Looking for any non-advice opinions!

 

[DarkandStormy]

Let's see if this pencils out....we're in low 160s. Seems close to a bottom since 170 feels more likely than 150 to me. That means I should buy some more at 16X. If I do that, it's guaranteed to go to 150? My poor track record / lack of ability to time my TSLA buys sure has me spooked!

Maybe I wait until Q1 numbers or CC? Looking for any non-advice opinions!

I would not base my investment decisions on "feelings" personally.

 

[insaneoctane]

I would not base my investment decisions on "feelings" personally.

Fair enough....but I'm feeling a little more bullish and I am going to pick up some more around where we're at, just looking for any angles for (likely) further downside that I always seem to miss. Don't feel compelled to participate if it's not your thing.

 

[capster]

Not sure what that non-sequitur reply has to do with the “boy who cried wolf” situation we have with the overly bullish FSD YouTubers.

Years of unquestioning flattery and hours of YouTube videos praising every single beta point release as giant leaps in Tesla’s goal of achieving FSD (when usually the changes are minor or sometimes even setbacks), means when we actually do see big leaps forward (like what may be currently happening), no one on Wall Street or in mainstream media takes anything these guys say seriously.

You mean years of pooh-poohing FSD or, at best (I’m looking at you @Mengy), perpetually damning with faint praise—Oh how wonderful whatever will be for Tesla, but never soon and never-ever now. Paraphrasing of course.

Wall Street will of course continue to publish all manner of farcical nonsense in their analysts’ reports and to have their mainstream media flacks disparage all things Tesla.

However, those on Wall Street who fail to grasp the significance of the step change 12.3 delivers and the further rapid improvements enabled by the compute power evidently in place, with more to come, will not survive much longer on the Street. They’ll be consumed by their erstwhile compatriots who do grasp the significance.

The press will of course continue to bay and howl for whoever provides their next nickel.

 

[MC3OZ]

However, those on Wall Street who fail to grasp the significance of the step change 12.3 delivers and the further rapid improvements enabled by the compute power evidently in place, with more to come, will not survive much longer on the Street.

Wall Street (public commentary) has a very good rear view mirror, but a very dirty windscreen, that is why they spend so much time driving in reverse..

I suspect what is said in private to those who can afford good advice might be different...

 

[Knightshade]

I haven't noticed any of the following:-

• Lower production volumes at factories, except for scheduled shutdowns.

• 
  
  Tesla does not broadly publish production volumes at their factories.
  
  They occasionally include a specific tidbit (ie Berlin hit X production this specific week type things- or even more rare "fremont produced over X cars last year") but that's about it.
  
  So the only thing we have here is the actual registration and export data Troy tracks pretty accurately- suggesting a roughly flat Q1 2024 compared to Q1 2023 as far as deliveries (production may well by higher of course).... or "random guesses from drone flyovers"
  
  
  

  [*]An extreme "end of quarter push" with price reductions.

  
  Inventory cars are thousands off, plus free FSD transfer, plus free FUSC transfer, plus 10,000 free supercharger miles, plus free choice of interior or paint color, plus a pre-announced price increase after end of quarter.
  
  I guess it depends if that's "extreme" to you or not. But certainly looks like they're trying to pull some demand forward at least- and it's more than we've usually seen all piled up together at the end of any previous quarter I can think of-- usually it's ONE or maybe two of those- not all of em.

 

[MC3OZ]

• 
  
  Tesla does not broadly publish production volumes at their factories.
  
  They occasionally include a specific tidbit (ie Berlin hit X production this specific week type things- or even more rare "fremont produced over X cars last year") but that's about it.
  
  So the only thing we have here is the actual registration and export data Troy tracks pretty accurately- suggesting a roughly flat Q1 2024 compared to Q1 2023 as far as deliveries (production may well by higher of course).... or "random guesses from drone flyovers"
  
  
  
  
  Inventory cars are thousands off, plus free FSD transfer, plus free FUSC transfer, plus 10,000 free supercharger miles, plus free choice of interior or paint color, plus a pre-announced price increase after end of quarter.
  
  I guess it depends if that's "extreme" to you or not. But certainly looks like they're trying to pull some demand forward at least- and it's more than we've usually seen all piled up together at the end of any previous quarter I can think of-- usually it's ONE or maybe two of those- not all of em.

I've certainly seen much more extreme actions, including staff layoffs, in the past. (We do need to go back a few years in time, before the concept of "unwinding the wave")

'How do they expect to run without us?' Tesla accused of axing key staff to cut costs

Electric car firm slashed 7% of workforce this month and ex-employees say more experienced staff were targeted

www.theguardian.com

Electric car firm slashed 7% of workforce this month and ex-employees say more experienced staff were targeted

Some incentives to take delivery Q1 are not a surprise, and not that different to a "normal" Q1.

What I would call unusual is :- large reductions in the Q4 price in Q1. Most of the larger price reductions were done before the start of Q1.

I consider FSD transfer, supercharger miles transfer, paint color as minor additional incentives with little or no actual real additional cost. They do remove the chance of selling FSD to the new buyer which reduces margins, even though it does not add cost. Q1 is a good time to throw those levers.

In the US, the IRA is providing an additional layer of incentives...

There are also some refresh rumours around Model Y, Model S/X, that might be another slight drag on demand in a difficult Q1 quarter. And hence a reason why more incentives might be required.

 

[dhrivnak]

In the US, the IRA is providing an additional layer of incentives...

Except their #2 Model, the 3, lost the tax credit. That has to be a tail wind. One they can hopefully rectify at some point.

 

[Stretch2727]

I like it. Relatively inexpensive and effective.

https://twitter.com/x/status/1768487075844853767

 

[Knightshade]

Some incentives to take delivery Q1 are not a surprise, and not that different to a "normal" Q1.

In which previous Q1 did they stack at least 4 or 5 different incentives all at the same time?

Because to my memory the answer is "never" and this is, indeed, different from normal.

In the US, the IRA is providing an additional layer of incentives...

0 Model 3s qualify for IRA credits for buyers right now.... compared to last year when they all did.