TSLA Market Action: 2018 Investor Roundtable

[johnnybgood888]

good question. sincerely. and thanks for the acknowledgement.

I don't only use traditional metrics to judge them. I've stated repeatedly that this company is not worth it's current value with respect to traditional auto companies. it's worth much more than that.

but what I do is start with what it's worth in comparison... then extrapolate due to reasonable speculation.

starting with the latter, it hurts I know, but it looks like this:

TSLA has a current value when directly compared to it's sector of a $12B market cap. That's $70 PPS. That's a raw direct comparison to how virtually ALL auto companies currently trade.

Then I ask, are ALL auto companies currently trading lower than they should?... answer, no. it's a tough industry filled with large scale high volume competition. so, there's nothing that suggests there's some sort of massive mis-valuation of the existing industry.

Then I consider the qualitative value of speculation warranted for TSLA based on historical performance of growth targets... and I ask myself, is anything beyond double the current value warranted?

I have no reason to suggest so. Give me a reason... Space Man?... $60m in TE revs? Certainly not M3 success... Certainly not modest MS/MX growth...

so, my valuation based on current risk of continuous failed performance is zero more than double current value...

or $140 PPS.

and I'm absolutely certain that TSLA will not trade higher than its current PPS in 2020. they are currently "transforming" from a hyper growth company to a "traditional" auto company. where the PPS will either land between $75 and $100 or they'll show some sort of TE growth where they'll be able to maintain a greater than $125 PPS into the 2020s.

I appreciate posts like these from you because it does come across as well thought out from your side. I guess where we differ is on the valuation. I agree that TSLA is probably somewhat slightly overvalued based on their current financial picture, but I think you swing too far to the other side.

At $12B market cap, they are at about a P/S of 1, which is absolutely undervalue for a growing company, let alone a traditional auto company. We both know that we cannot use a P/E ratio to value TSLA as they will most likely not have a positive P/E for the foreseeable future (nor would they want to, if they want to continue a 50% growth rate). TSLA will most likely have trailing 12 months revenue close to $20B by the end of this year (based on my conservative guess of an average of 3500 M3/wk for the whole year), if not sometime early next, which gives a P/S of around 3 based on current market cap. By that point, their current share price to me is justified, especially if they are showing positive cash flow.

I think the true picture of TSLA lies somewhere between you and where some of the ultra bulls would like to see it. As a shareholder, I would love to see TSLA at $1000 per share, but I think the more realistic price would be around $450-500 when M3 ramps up to 5000/wk. That is about as far as I am comfortable predicting for the next 2 quarters. But as we have all seen, TSLA has a way of making predictions and the people who make them look silly over and over again whether the prediction is bullish or bearish. I'd be happy to have pie on my face if TSLA zooms past my numbers.

I think your thesis relies on your belief that Elon and co. will not be able to execute the ramp, or execute it in time before they run out of money, and that is definitely a possibility. If that is the case, they will have to tap the market for more cash and that will definitely dampen the share price some more, but I do believe that option will be available to them. I don't see a scenario where they run out of money and have no recourse.

 

[Chocochip]

Anyone know what the next support level would be? I'm trying to catch a falling / jumping knife here, as idiotic and regrettable that may be...

 

[uselesslogin]

I think there are two things working against TSLA. First, the fact that the production guidance sounds pretty uncertain. Second, I don't think this macro move is over quite yet. I'm also afraid of what comes below $300 and it only takes one more little market drop to get us there. Until Tesla starts executing there isn't much to defend the stock price.

 

[Nate the Great]

305 support (this is a guess).

This is also where I leverage up with 305 LEAPs Jan 17 2020.

 

[Starno]

I think there are two things working against TSLA. First, the fact that the production guidance sounds pretty uncertain. Second, I don't think this macro move is over quite yet. I'm also afraid of what comes below $300 and it only takes one more little market drop to get us there. Until Tesla starts executing there isn't much to defend the stock price.

What could save TSLA would be some deep pocket investors buying the dip.

And that's honestly the biggest issue I see with TSLA this past 12 months since the Tencent act. AMZN, FB etc. move thanks to the billions of dollars injected in them.

Elon doesn't seem to be convincing in the eyes of institutional. No one wants to invest more than a few dozens or hundreds of millions in Tesla ...

 

[MitchJi]

Was Grohmann even in play when that task was given out originally ?? Recall that there have been issues at Grohmann so even if the timeline is right for them to have been given the task they had to finish held contracts, then the union issues, the departure of the owner due to conflict with Tesla...

I agree with what you said. I want to add that it’s always easier to see the best solution on Monday morning.

I believe that Tesla did the M3 packs internally.

 

[gene]

Fairly soon we may get some analyst reports since the earning report. Hopefully with higher price guidnce.

 

[Zaxxon]

I believe that Tesla did the M3 packs internally.

No, they've stated on two calls now that the automated M3 pack assembly that's causing the current bottleneck was a contractor, not Tesla internal.

Also, I appreciate all the silent disagrees, Mitch, but it'd be nice if you took the time to quote and address rather than just handing them out. (eg, as I just did with your post.)

 

[supratachophobia]

The problem is that people don't think we'll reach 2500 Model 3/week in March, despite what was reported in the ER.

No way. That's next month. 3 months maybe, 6 definitely....

 

[Cobbler]

Isn't this Februari 2016 all over again? History will repeat itself! The Grohmann solution should be up and running in 2 months

 

[powertoold]

I don't think any positive Model 3 news has come from Tesla in the last 2 quarters

 

[Tslynk67]

Isn't this Februari 2016 all over again? History will repeat itself! The Grohmann solution should be up and running in 2 months

On a purely selfish note, I hope so, as then I can buy more when I get my tax-return end March. But for the well-being of others on this forum, I hope not, as some may be looking to cash-out soon. I guess that's the stock-market for you. And just remember you only lose if you sell at the wrong time.

Once the appropriate catalysts are there, though, I believe it will rise tremendously bigly, very fastly.

 

[Tslynk67]

Watch out, DOW and NASDAQ gone red...

 

[Waiting4M3]

Isn't this Februari 2016 all over again? History will repeat itself! The Grohmann solution should be up and running in 2 months

It already has, this is the MS ramp repeating itself. The market had no faith in Tesla building MS in 2012-2013 either. I don't see any reason it would be different this time.

 

[Starno]

Watch out, DOW and NASDAQ gone red...

And TSLA doing under 300?

 

[powertoold]

It already has, this is the MS ramp repeating itself. The market had no faith in Tesla building MS in 2012-2013 either. I don't see any reason it would be different this time.

It's like clockwork. On the recent conf call, Elon was once again saying, "We're going to make Model Y easier to manufacturer, not like the hell we're experiencing now."

We all thought Model 3 was designed to be easy to manufacture lol.

 

[MartinAustin]

I think the $280 support level isn't off the table. The ER is being regarded as a fail by most of the investment community, irrespective of what me or other bulls may feel... and a lot of the climb up to the $350 level was due in part to the appearance of Model 3 delivery accelerations - which took a harsh blow on Wednesday.

Feel pretty good about $280 as a floor, though, and it will simply return higher from there. If TSLA falls to that level we will see a lot more bullish coverage of the various business streams and how strong they are now compared to previous years, etc. - which is true

Publicity around Model Y could help over the next 3 months.

 

[JRP3]

We all thought Model 3 was designed to be easy to manufacture lol.

Compared to the X it probably is.

 

[MitchJi]

It's like clockwork. On the recent conf call, Elon was once again saying, "We're going to make Model Y easier to manufacturer, not like the hell we're experiencing now."

We all thought Model 3 was designed to be easy to manufacture lol.

Can’t you understand that it’s an iterative process.

 

[Paracelsus]

305 support (this is a guess).

This is also where I leverage up with 305 LEAPs Jan 17 2020.

Yes, 305/306 is where it was speculated that Tencent quit buying about a year ago. It double-bottomed there before running up to 380, and it has been a point of very large buying each time it was approached again.

Tencent was trading at about 27 when this support was first noticed. With their efforts to invest in high growth companies it seemed like a good buy at that time, but like @ggies07 I wanted my money in a company that was making a healthier planet instead of a faster Facebook page in China. Tencent broke 60 before the recent pullback. An opportunity missed for me with a conscious decision. It was hard to watch the daily Tencent run, but I have listened to every Quarterly call since 2012 Q4 and I felt very jazzed about this week’s call compared to all past calls. It left me feeling like my money is in the right place philosophically and from an investment perspective.