TSLA Market Action: 2018 Investor Roundtable

[Chartered321]

Valuation of TSLA: I promise I'll try to be objective here

According to the analysts consensus the KPIs are moving following an exponential funcion, as the M3 production, therefore the valuation for a company that grows with a CAGR of 40%+ in the next 2+ years it really depends on the executions an on the assumptions of each financial projections or model.
There's only one automotive company with the same EBIT margin today of what Tesla guided for the long term (24-25%) and it's Ferrari which has a CAGR for 2018-20 of roughly 6%.
The mass market car competition (Volkswagen, GM, Ford) has EBIT margins of 4% to 6% but is expected to have no growth in revenues for the foreseeable future (CAGR 2018-20= +-1%) and transition to electric would impact negatively to profitability according to how quick they'll decide to catch up with Tesla.

Given that "The Street" is not used to see whats behind 3+ years which is from 2021 onward, as of today the major evidence of expectations is based on 2020.

At this point, all things being equal (which includes no Gigafactories, successful execution of cars production, etc...), Tesla is expected to reach an EBIT margin of 10-12% with a P/E of 25-30x and an EV/EBITDA of 12-13x (vs Ferrari's P/E of 25x, EV/EBITDA of 14x).
Mass market guys have a P/E2020 of 8-9x and an EV/EBTDA2020 of 2x.

So the price as of today i.e. USD 305 means that in 2020E "The Street" is expecting the company to generate USD 10 to 12 (P/E of 25-30x), which is kind of expensive for a valuation that stops in 2020.

Therefore an evaluation of Tesla is a bit blind at the moment, it means that we are able on average to forecast 3 to 5 years max, and it's not safe/clever if you work with other people's money to change the way it is and it is always used to be.

 

[Johan]

Its cheap. Anytime a stock is below its 200 day moving average that stock is cheap. But also for TSLA, it's far below its "intrinsic value", which is the PV of projected 5 years of cash flow.

SimplyWall.St (free Reg req) does this calculation every night for every equity on NASDAQ. As of Aug 29, 2018 TSLA intrisic value is $534 per share, or 43% below the current SP of $305View attachment 330269

Nice and simple. And if we're going to talk about "intrinsic value" of TSLA we mustn't forget that at any given moment the high short interest is "artificially" depressing the stock price in the market, due to the inherent dynamics of short selling (i.e. an "artificially" generated sell pressure using borrowed shares). In other words if nothing else changed but the short interest approaching zero TSLA would trade at a significantly higher price - closer to its "intrinsic value". Now TSLA has had such a high short interest for so long that it's kind of "built in to the stock price" at this point, but it is highly abnormal compared with other stocks, including other growth and tech stocks.

 

[Matias]

Valuation of TSLA: I promise I'll try to be objective here

According to the analysts consensus the KPIs are moving following an exponential funcion, as the M3 production, therefore the valuation for a company that grows with a CAGR of 40%+ in the next 2+ years it really depends on the executions an on the assumptions of each financial projections or model.
There's only one automotive company with the same EBIT margin today of what Tesla guided for the long term (24-25%) and it's Ferrari which has a CAGR for 2018-20 of roughly 6%.
The mass market car competition (Volkswagen, GM, Ford) has EBIT margins of 4% to 6% but is expected to have no growth in revenues for the foreseeable future (CAGR 2018-20= +-1%) and transition to electric would impact negatively to profitability according to how quick they'll decide to catch up with Tesla.

Given that "The Street" is not used to see whats behind 3+ years which is from 2021 onward, as of today the major evidence of expectations is based on 2020.

At this point, all things being equal (which includes no Gigafactories, successful execution of cars production, etc...), Tesla is expected to reach an EBIT margin of 10-12% with a P/E of 25-30x and an EV/EBITDA of 12-13x (vs Ferrari's P/E of 25x, EV/EBITDA of 14x).
Mass market guys have a P/E2020 of 8-9x and an EV/EBTDA2020 of 2x.

So the price as of today i.e. USD 305 means that in 2020E "The Street" is expecting the company to generate USD 10 to 12 (P/E of 25-30x), which is kind of expensive for a valuation that stops in 2020.

Therefore an evaluation of Tesla is a bit blind at the moment, it means that we are able on average to forecast 3 to 5 years max, and it's not safe/clever if you work with other people's money to change the way it is and it is always used to be.

FYI we have this thread. q2-q4 2018 financial projections

Perhaps you could take a look on it and give your opinion

 

[Unpilot]

Hey hey. All 2 of my followers get inundated with positive Elon/Tesla stuff every day. I’m doing my part!

Two!? I'm not sure why I am replying to such an unknown tweeter person since I have five! ..yes five! Followers.

 

[Thekiwi]

Is this too simplistic a chart to describe to people why Tesla is about to turn profitable? I was going for as simple as possible.

 

[Reciprocity]

Ok, but why don't we organize ourselves better? I mean, I basically follow Elon, Option_Sniper and just recently added The electric roadtrip (papafox), Fred Lambert and Vincent.... So I just have the same level of confirmation bias on twitter that I have here.... and even if I would like to spread fact around Twitter I would waste a lot of time just to find what is useful to counter.

May I suggest :
1.) make a thread for this
2.) use the specific thread to spot FUDsters
3.) Then coordinate conterFUD

Example :
-Somebody spot an article/tweeter guy spreading false narrative about parking lots full of ''unsold'' M3.
- Said somebody flag the article/tweeter guy on the ''SPOT AND COUNTER FUD thread''
- Then we can all go to the said account and post THOUSANDS Of Cars Sitting On Lots Unsold!! | CleanTechnica <----Not a rickroll (geez that felt soooo good)

We could also use the said created thread to drop easy to use counterFUD links to make the operations more efficient.

In the last weeks/months (bassically since spring) I must not be the only one remarking that even here we've been attacked by fudster that always spread the same assertions. and I am not the one who started to say that we, Tesla and Elon are the target of an organized group that is trying to take TSLA down. BUT I've come to think that if this is a fight and that the enemy is organized, we should too!

So then, we could discuss in this thread about things like : did you also realized that we had an all time high in the end of june 2017 and that in june 2018, price rose in like 3 weeks from about/slightly under 300 to about 370? That we had a down (year bottom) in dec 2016 just like we had a down dec 2017? That SP rosed in first half of both sept 2016 and sept 2017 and felt sharply in the end of those two months of different years?That those movements are based on total different events but seem to be related into a cyclical price movement? ( ok, I know I'm a bit vague here but felt I should add market action content)

Edit : switched the 2016 and 2017 years regarding the year bottom (was in 2016)

Great idea, but the point is to use 10% of your time on Twitter instead of TMC, not to create another TMC time sink.

Just search for $tsla and respond to 10 tweets with facts and humor. Follow and retweet anyone who likes or retweets your post. Takes 20 minutes a day max. One person can't make much of a difference but a 1000 would.

 

[dondy]

Elon has OCD when it comes to setting the record straight, which is why he was bullied as a kid. His attitude hasn’t changed much since, so his behavior is giving shorts ammo to bully shareholders. He needs to show the same restraint as Jeff Bezos, Mark Zuck.. in the past his tweets were worth millions, now they’re causing the company to lose money. He’s clearly getting baited into a tweeter war, responding to a nobody and causing shareholders pain is not the quality of a CEO. You’re better than that.

Compare advertisement budgets of these companies. This will give you all necessary information. None of these "leaders" ever was attacked in similar way as Musk.
Zuckerberg from early beginning was selling his company as "data mine". Facebook was from the beginning advertised as collector of people personal data and the means of monetizing it.
You won't find proper journalist investigations on it because there is no money in doing it.
Amazon was from the start growing by eating undercutting their concurrents and paying immense amounts of money to mass media for positive coverage. "Person of the year" in 1999. lol.
You won't find proper journalist investigations on it because there is no money in doing it.

You will find plenty of aggressive lies about Tesla, SpaceX and Musk in mass-media and social networks. If you think that this happens because of "tweets" you delusional.

 

[lklundin]

If I would do VIN scrambling in dynamic manner, I would procure VINs in sufficiently big chunks and draw VINs randomly from them, adding smaller VIN bits as necessary "noise" in the process.
just saying.

Yes, but Tesla does not need to obfuscate their production numbers (that would only cause speculation as to what they may be trying to hide...). Also, their current VIN scheme makes it nice and easy to state at which stage of the production ramp your Model 3 was made.

 

[SO16]

Several years of investor here. I remember we had lows in the 140 after Elon bought more at 175, which was several years ago. As recent as March of this year, we had SP in the 250ish. None of those time were as stressful as the last couple of weeks.

I feel when we struggled during those times, we were in the same trench and fighting for the same mission, which is to rid the planet of the fossil fuel. I passionately argued with my relatives, friends and classmates about what Tesla was trying to achieve and see the bright financial future, albeit with expected high risk.

But with Elon's behavior recently, I feel the mission has been lost to some unnecessary noise and its hard to hold on to what I, what we, and what Tesla is suppose to believe in.

And from his behavior, it's more like ego gets the way instead of a man in financial stress. He certainly has the freedom to do what he likes, but he is also the CEO of a embattled company, with a mission larger than most people can fathom, not even Jeff Bezos or Mark Zuch..

Unfortunately, I am also thinking about lighting up on the stock. But we will see...

As far as I know, Bezos and Zuck haven’t actually tried to help people in a dire emergency with time constraints either. People on here are disappointed with how Elon has been reacting. I think Elon is much more disappointed with people in how they reacted to him and SpaceX engineers trying to help. Does it give Elon a pass? Of course not. But To compare Bezos and Zuck to Musk isn’t really a fair comparison. Their industries are disruptive, sure. But not even close to the same as what Elon’s are. And therefore Elon has to deal with much more FUD in comparison.

 

[HG Wells]

Remember, almost every time this thread gets depressed the stock springs forward.

 

[lklundin]

As far as I know, Bezos and Zuck haven’t actually tried to help people in a dire emergency with time constraints either.

On the contrary, Mark Zuckerberg is a total sociopath, so when Puerto Rico was devastated by the hurricane (you know, the one that prompted Elon Musk to install solar panels and power packs there), the genius of Facebook took the opportunity to promote one more of his useless gadgets:

Mark Zuckerberg 'tours' flooded Puerto Rico in bizarre virtual reality promo

Not that I was ever in doubt, but I am so happy not to ever have had the slightest affiliation with FB.

 

[Pras]

Relief that no shitpost tonight. Hopefully some brake on the stock slide. Elon seems to heed the call, just that he is a little itchy now and then! Just human.

 

[Reciprocity]

You want an example of what we are up against. Read this tweet and the replies:

Reuters Top News on Twitter

Main stream media are putting these parking lot truthers on a pedestal as champions and heroes. One guy is a rabid misogynist and personally attacks bulls in DMs, but the Reuters writer has been trolling twitter saying she is in the "Market" for Tesla inside info so she can continue to write these terrible articles. This while youall wonder why the stock is down 10 days in a row. One major reason is that Fudsters spread false narratives that the media picks up and lately has been quoting these same fudsters like they are facts. This crap gets clicks so the media is very happy to push it. I mean, there is no one to correct the record. One parking lot truther finds 2 days worth of production on a logistics/shipping lot and they claim Tesla is not selling cars, they are just building them to make production goals then stashing them. Now this is stupid, I know that, you know that, but the press is reporting it likes its facts and people are commenting how these images are making them get a second mortgage to short Tesla. Without anyone to counter this crap, its only going to get worse. Think of it like Bitcoin, only you are on the other side of the trade as it goes to 20k. Its becoming in vogue to bash Tesla and have people like Chanos and MBS on CNBC. We have Gali and the Loup Ventures guy.

You can spare 20 minutes a day to counter some of this vile crap.

 

[davecolene0606]

Not quitting Twitter, but there are so many things he can twit, Model 3, model Y, semi, roadster, China factory, solar panel, supercharging network and possible upgrade, automatic drive, Tesla energy, battery improvement..... Stay focused, stay on mission, yet having fun. That was what he did in the past, which thrilled a true believer like me and bring up the spirit of the general population.

This is what Elon said after the FH was launched "I like to do something that people can wake up in the morning and look up to and be proud of the humanity amid endless suffering and worry", which brought tears in my eye..

I like that Elon better, which is before his heart is hardened by the short sellers and seemingly the whole world running against him.

Hey this is exactly why you should hang in there. My guess is Elon is the same person. Obviously, he was effectively baited by some extreme sharp attacks. But remember, 3 weeks left, no where to go for entities that are financially leveraged against Tesla. If your upset about the guy in Thailand, “shove your capsule where the sun don’t shine” as a closer to shitting on an effort to assist, should have been where this spears were thrown initially, but instead rant against success prevailed.

Agreed, the course preffered to take is relentless positive messages. So from us as a group, encouragement to continue his past inspirational bent will be far better than screaming “shut up already”.

Delicate times, all stops have been pulled by ill wishers and we are down to character assassination with 3 batters on, top of the 9th with Gehrig on deck.

Fight FUD, Stay long

Fire Away!

 

[Pras]

You want an example of what we are up against. Read this tweet and the replies:

Reuters Top News on Twitter

Main stream media are putting these parking lot truthers on a pedestal as champions and heroes. One guy is a rabid misogynist and personally attacks bulls in DMs, but the Reuters writer has been trolling twitter saying she is in the "Market" for Tesla inside info so she can continue to write these terrible articles. This while youall wonder why the stock is down 10 days in a row. One major reason is that Fudsters spread false narratives that the media picks up and lately has been quoting these same fudsters like they are facts. This crap gets clicks so the media is very happy to push it. I mean, there is no one to correct the record. One parking lot truther finds 2 days worth of production on a logistics/shipping lot and they claim Tesla is not selling cars, they are just building them to make production goals then stashing them. Now this is stupid, I know that, you know that, but the press is reporting it likes its facts and people are commenting how these images are making them get a second mortgage to short Tesla. Without anyone to counter this crap, its only going to get worse. Think of it like Bitcoin, only you are on the other side of the trade as it goes to 20k. Its becoming in vogue to bash Tesla and have people like Chanos and MBS on CNBC. We have Gali and the Loup Ventures guy.

You can spare 20 minutes a day to counter some of this vile crap.

I respond to random tweets with some stupid FUD. People may think I am a paid promoter but I am a Tesla owner and really love the car. I just hope that there is a way to bring the point home that comment from an owner holds more value about the car than some random short.

 

[neroden]

I live in Mission San Jose which is about 10 min drive from TSLA factory in Fremont.

ASIL rating is a safety requirement that includes no fail and full redundancy. For level 4 and above you will need to be ASIL D certify. In addition, the cluster itself because of safety requirement should be a minimal of ASIL D- because it safety/mission critical. That LG panel based on the data sheet I have seen isn’t.

If you look at original press back early in the year. Elon was the one claiming his 2.0 equipped vehicle was capable of fully autonomy with only software upgrade. Then couple month ago finally admit that new main compute box is needed. While it’s free of charge- you really think this is free? The money for retrofit has to come from somewhere. To do this right, it’s not going to be $3000 premium that TSLA has already charged customer. The cost for this retrofit will cost Tesla more than $3k if the intention is taking the car to Waymo level of autonomy.

It doesn't really matter because nobody is going to get the *software* to level 4 autonomy before the cars are obsolete.

 

[neroden]

The entire self driving community has been over promising and under delivery for years.

Since the 1950s. So about 60 years of overpromising and underdelivering. Part of the problem is that the stuff they promise simply isn't possible. There's an underlying failure to understand the actual nature of the problem they're trying to deal with. Cruise is the first company whose CEO seems to actually get what the difficult problems in the space *are*.

 

[humbaba]

IMHO, if Commodore had half the marketing ability that they had in engineering, they could have competed with Apple. I still occasionally run WinUAE on my laptop.

Comparing Tesla to Commodore is incredibly misleading. Commodore was convinced that the Amiga was inconsequential: it was purchased from a failed attempt to make a gaming console and they never put real resources behind it. What they considered the real market was their IMB clone. Gotta wonder who remembers what *that* was called.

This would be like if Tesla were an ICE manufacturer that bought an EV startup and then never gave them the resources to succeed. I would hope it is obvious why this is not like the reality of Tesla.

Further, the Amiga had a serious problem resulting from its console origins: it had no good upgrade path. It had been engineered to be a great (way over designed) gaming console. So over designed it worked with a little tweaking as a computer. But... all of that custom silicon was extremely tied to optimal performance and was not an extensible architecture. This imposed limitations that were not that bad at first, but became increasingly significant over the years.

There was a "patch" if you will from OCS to ECS but that was just a minor, incremental improvement. Commodore would not provide the resources to do much of anything. Eventually they came up with AGA which was a significant improvement. Unfortunately, by then the hardware was *behind* the rest of the computing world. And that was it, it never got any better. The IDE controller was old, slow and limited. The graphics were behind on performance and resolution. The audio was sub-par.

The closest thing to this for Tesla would be AP1 to AP2. But AP1 was not a first party solution, it was supplied. And it didn't become obsolete so much as Tesla realized it was insufficient. So they started work on AP2. And AP2, far from being behind outside technology, is at least on par if not ahead.

Tesla is not trying to coast on old technology, it is striving to innovate. Instead of ignoring R&D it has invested income into doing more.

If anything, the comparison to Commodore only illustrates that Tesla is on the path to success instead of circling a toilet boil of self-inflicted disaster.

 

[davecolene0606]

You want an example of what we are up against. Read this tweet and the replies:

Reuters Top News on Twitter

Main stream media are putting these parking lot truthers on a pedestal as champions and heroes. One guy is a rabid misogynist and personally attacks bulls in DMs, but the Reuters writer has been trolling twitter saying she is in the "Market" for Tesla inside info so she can continue to write these terrible articles. This while youall wonder why the stock is down 10 days in a row. One major reason is that Fudsters spread false narratives that the media picks up and lately has been quoting these same fudsters like they are facts. This crap gets clicks so the media is very happy to push it. I mean, there is no one to correct the record. One parking lot truther finds 2 days worth of production on a logistics/shipping lot and they claim Tesla is not selling cars, they are just building them to make production goals then stashing them. Now this is stupid, I know that, you know that, but the press is reporting it likes its facts and people are commenting how these images are making them get a second mortgage to short Tesla. Without anyone to counter this crap, its only going to get worse. Think of it like Bitcoin, only you are on the other side of the trade as it goes to 20k. Its becoming in vogue to bash Tesla and have people like Chanos and MBS on CNBC. We have Gali and the Loup Ventures guy.

You can spare 20 minutes a day to counter some of this vile crap.

Additionally, some of the hit parade of “care bear”, “empathic shorts” and others of similar ilk are proliferating their “Gee I care about your problem, maybe you should sell your car” on a lot of other threads right here on TMC!

They are an incessant scourge on unsuspecting new TESLA family members. So get out there and shut em down whilst welcoming our new family members

OK, back to today’s market moves.... /

Fire Away!

 

[neroden]

Or maybe he wants this guy in jail. If that guy is guilty, he should be investigated. I admit this is not the right method. But turning a blind eye to molestation isn’t exactly good either. What does that say about us?

The Thai government is not exactly known for enforcing laws against pedophilia (Edit: though it has been pointed out that the UK government will extradite for extraterritorial offenses)