JRP3
Hyperactive Member
Hopefully in the next debate Obama can correct Mr. Romney with the facts about Tesla's success. A good point to make that a few failures are inevitable when pushing new technologies but the successes are worth it.
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TSLA Investor Discussions
- Thread starter Fr23shjive
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The President's stock is down , but still given about 70% chance of winning.
http://iemweb.biz.uiowa.edu/graphs/graph_Pres12_WTA.cfm
http://iemweb.biz.uiowa.edu/graphs/graph_Pres12_WTA.cfm
contaygious
Active Member
Zzzz...
Member
End of 2016? When they will be mass producing Gen III model, provided it would have good gross margins. Plus Model S & X would still sells good. With smaller SUV then X on horizon/soon to be launched.
Before that they will have to invest heavily into development of X, then expand/retool factory and supply chain for X. Then make even bigger investments into Gen III.
If Tesla sticks with the mission to accelerate the electric revolution, they will never rake in profits. All money will go into R&D or infrastructure projects. They have the Gen III platform and the worldwilde rollout of Supercharger network on their hands as the next thing. When Elon is done with cars, he might start development of electric planes and hyperloop system.
Tesla will never just make cars with 25% gross margin and pour the money over the shareholders. The remarkable thing will be a sustained R&D budget that grows along with the company and will exceed the efforts of major competitors perhaps in 2017.
CapitalistOppressor
Active Member
Wow. Talk about a opening the door to mass speculation. I guess I can throw out a WAG backed up by made up numbers
Current market cap is ~$3bln. At a P/E of 10 that would imply ~$300mil/year in earnings (which do not exist yet). I suspect that Tesla needs to sell something close to ~20k/units per year to make that kind of scratch. Because 20k/units is Tesla's current yearly goal that is acts to support the stock at $30/share, at least to the extent that investors expect the company to be able to produce and sell that many cars.
However, it also looks like profit might increase rapidly the more cars they build above that number. To get to $100/share you probably need to make a yearly profit of ~$1bln. If 20k units pays the bills and gets you $300mil, and if you get to pocket your ~25% margin on every car after that it looks like you need to sell ~35,000 $80,000 cars to make ~$700,000,000 in profit. So that works out to ~55,000 units/year.
I feel comfortable with Tesla's estimate of ~20k units in 2013, and 30k in 2014 should be possible based on natural growth and the addition of the Model X. After that its harder to predict.
By the end of 2014 we should see the SuperCharger network substantially built out and maybe 40 more retail stores. Current stores are maybe selling 2-3 cars (reservations) per day, per store. If you assume 70 operational stores that could support between 50-77k cars based on current performance. So based solely on that, and before factoring in the Gen3 rollout you could see ~$1bln in profits in 2015.
There are capital costs for expanding capacity to support Gen3. The current factory can presumably build ~60k Gen2 (MS, MX) vehicles working around the clock. Gen3 will likely need extra capacity. Those investments will reduce profits, but it would likely be discounted by the market because they are one time investments. Plus, if Tesla is visibly executing in 2013 and 2014 it will likely come to be seen as the growth stock that it is. It's entirely possible you could see euphoric prices that bump the price above ~$100/share in 2014 as investors start to realize what it means to be a shiny new, high margin car manufacturer.
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I actually agree that Tesla wont send their profits back the their investors as dividends. But those investments you mention will raise the price of the stock. That is basically exactly what it means to be a "growth" company, except that in this case Tesla will be investing to change the world.
contaygious
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Zzzz...
Member
Speaking of P/E... Qualcomm for example have P/E over 20 for ages. And have market capitalization bigger then Nissan and Daimler combined. Why invest into Qualcomm instead of Nissan or Daimler or even Intel? All three not just well established and profitable companies but they have P/E less then 10! But the way market see it, Qualcomm have HUGE potential for future grows. And because of that potential P/E could be on unsustainable level.
My point, it is not really required for Tesla to produce big enough profits to get P/E to around 10. Even half or 1/3 of those profits might be good enough to drive price of shares to $100/share level... As long as market would believe that Tesla have a potential for enormous grow. P/E could be well in the 20-30 range when $100 price will be reached.
mitch672
Active Member
Finally a positive article on SA about Tesla: Why Tesla Has It Right And GM, Ford And Nissan Have It Wrong - Seeking Alpha
CapitalistOppressor
Active Member
I totally agree. I used 10 P/E because its conservative. Once a company is on a growth path you'd expect the P/E to go higher because you need to price in future growth.
gg_got_a_tesla
Model S: VIN 65513, Model 3: VIN 1913
mitch672
Active Member
If Tesla is able to become cash flow positive in November or December what is everyone's thoughts on what that will do to the stock? I would assume if all other indicators (incoming reservations, no recalls, more positive reviews) remain strong that the cash flow positive moment could be the potential turning point for the stock that we have all been anxiously awaiting. Would love to hear other investors thoughts on this.
Blake
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http://rumors.automobilemag.com/feature-flick-tesla-model-s-out-drags-bmw-m5-175305.html
Blake
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http://rumors.automobilemag.com/feature-flick-tesla-model-s-out-drags-bmw-m5-175305.html
A combination of (a) cash-flow positive, (b) solid ramp-up in deliveries, and (c) continuing increases in reservation rates will make an enormous difference in the stock value. Point (a) alone won't be as powerful; it has to be seen as sustainable.
I think until we see documented cash flows in consecutive quarterly statements, and even more so, showing profit in consecutive quarters, we will see blips in the stock price, but nothing like the breakout I think most hope for. Also, as stated on this thread recently, Tesla is so young in the game, they will be putting so much of their cash and profits back into R&D and production for upcoming (Model X) and future (Gen III and on) projects, I would expect a gradual valuation increase over YEARS as opposed to months or quarters.
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Exactly.
CapitalistOppressor
Active Member
+1
For me at least, cash flow positive just means they aren't drawing down cash reserves. It's nice because they aren't in imminent danger of insolvency but a non-factor in terms of return on capital. The key issue for the next 6-10 months is production rate. After that monthly sales rate is the final (and most important) leg of the stool that Tesla needs to turn to profitability going forward.
Edit: Production rate+Gross margin actually. It doesn't help to build more cars if you don't get your margin where you need it to be.
JRP3
Hyperactive Member
A good piece about TSLA on the Fools: http://www.fool.com/investing/general/2012/10/09/the-most-misunderstood-stock-on-the-nasdaq.aspx
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