TSLA Expected Rate of Return

[daniel]

I was very happy when TSLA was a couple of hundred dollars. It was low enough that I felt no urge to sell, but high enough that I felt really good about buying at around $35. At $800 I'm thinking "Whaaa????" And now I'm unhappy I didn't unload 25% of my shares at $1,600.

But as I said, except for buying TSLA at $35 and SCTY (don't remember for how much because once the position is gone my brokerage doesn't show me my basis) I've never made a good decision on an individual issue. I'm very happy with my portfolio of mutual funds which are dull and boring and provide me with a very nice income.

 

[jhm]

Interesting.... That's quite a bit higher then your BFPT. $5k in 2025 is close to $1.5T market-cap in just under 4.5 years....

What makes you think this is possible?

So I've been following the Ludicrous LTPT, $7250 in early 2028. This is based on Elon hitting his comp plan strongly with minimal share dilution. It's also consistent with the 50%/y revenue growth argument. If hit in this time frame, that implies BFPTs in the $4000s in 2025. Musk is making fast progress so I think he'll hit his target early, boosting 2025. Also FCF generation is strong suggesting minimal dilution going forward. Unfortunately, revenue growth has been weak for the last 6 quarters, compared with 50% target. Covids is a headwind, but Tesla gigafactory expansion is massive. So I think revenue growth will accelerate soon and make up for lost time.

I am still not giving much weight to FSD or Tesla Energy. These are wild cards that can greatly assist reneue growth. I suspect the FSD could be fueling some of the bullishness of late.

Even so I still have a hard time understanding how recent prices are sustainable. It still fells like too much to soon. I think much of it revolve around ringing the cash register with 4 months of profitability. And this is ties in with S&P inclusion. I have become critical of the inclusion hype. It the think retail investors fail to appreciate just how well institutional investors can trade huge orders without moving the public market. So the whole effect is imagined to be bigger that it will be. And I believe this is priced into the stock several times over. ER Q2 was substantially overpriced going in and S&P could likely go the same way. That is the stock price could fall substantially in the days that follow inclusion. Indeed the history of TSLA trading is littered with hyped events where anticipated good news is deliver, and still the stock price falls the day after. So Tesla does an awesome job growing as a company and delivering positive news, but the strong bias is that good news is over anticipated. So we'll get there in the long run, but it's a wild ride.

 

[Ocelot]

SEDG is my second largest position. I've been accumulating it for several year. Up until recently, it was the better performer for me than Tesla. Years ago I was in First Solar and other module makers. I have generally lost interest in module makers. It has suffered from brutally low prices for for commodity panels. I was hoping that higher efficiency modules would take off (I still have some SPWR), but lower cost per Watt seems to beat higher Watts per square meter. What's fascinating here is that not all segments of the solar supply chain is going to be profitable enough to pay off inspite of massive volume growth. When some components become super cheap, it can stimulate demand for other components supporting higher margins. Right now the trend in solar systems is to match a high ratio of solar modules (DC) to inverter and interchange capacity (AC). Essentially they are oversupplying inverters to smooth out power generation through the day. At the edges, power prices are higher and module capacity is cheap. Batteries will also soak up the surplus DC power. But at the heart is the inverter. Systems are designed to optimize the utilization of the inverter. If you store most of the solar DC power directly to battery. Then the same inverter can serve both the solar module and the battery. Thus, an inverter could be utilized at a 50% to 100% capacity factor. "Baseload" (around the clock) solar is coming. Both batteries and inverters are winning components in this development, thanks to super cheap modules.

...well seemingly missed that boat. thanks for the heads up nonetheless.

 

[adiggs]

retail investors fail to appreciate just how well institutional investors can trade huge orders without moving the public market.

I hadn't really thought about this before but rereading your post it occurs to me - for every buyer there is a seller; for every seller there is a buyer.

I know (and wish it weren't true) that the really big buyers / sellers can move the shares without moving the markets. But that's orthogonal.

For an institutional buyer that wants a big slug of TSLA, they're going to need to find an institutional seller of TSLA that wants to get rid of a big slug of TSLA. Onesy - twosy -- sure. But a bunch of institutions getting out, so a bunch of other institutions can get in? That combination seems unlikely to me.