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Sure. Pick your largest tech companies Apple, Facebook, etc. and look at their P/E ratios. They are all in the low-mid double digits despite earning $billions. If Tesla had a $1/share annual profit in 2018 after two profitable quarters we could see a P/E ratio in the mid-hundreds (300-400). Once that becomes comparable to huge companies like the big techs people would realize how overvalued Tesla would be AT THAT POINT IN TIME. Those analysts who see the same thing see a pullback to the high $100's to low $200's, and then a growth in SP again from there tied to the P/E ratio at a more balanced rate. I do not see Tesla ever being compared to other automakers who all have single-digit to very low double-digit ratios. My gang also sees more dilution ahead pulling down the SP before the long ramp up. That is when we plan to go long. Linking to a measuring stick, so to speak, should also end the violent swings in share price. That should send short sellers off to other stocks to plunder.
The best analogy I can give is shifting from first to second gear in a car (with a manual transmission). A brief drop in RPM before the next gear propels the car forward at a higher speed but lower RPM, getting back to that high RPM again at a faster speed.
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Fact Checking
Well-Known Member
I don't think Tesla has control over them, but it also probably doesn't matter much in practice for two reasons:
Firstly, the totality of resale value guarantees only represent about $139m in value for the next year:
"Subsequent to June 30, 2016, this program is available only in certain international markets. Resale value guarantees available for exercise within the 12 months following June 30, 2018 totaled $139.3 million in value."
... and that would be direct sales and third party leases.
Secondly, the vast majority of resale value guarantees expire without being exercised:
"Through 2017, we only had an insignificant number of customers who exercised their resale value guarantees and returned their vehicles to us. Based on current market demand for our vehicles, we estimate the resale prices for our vehicles will continue to be above our resale value guarantee amounts."
I.e. the current approx $674m of resale value guarantee liabilities on the balance sheet are listed at 100% per GAAP, but in reality represent an effective liability of less than 5% of that.
I.e. Tesla is applying inventory reduction measures that BMW and Volkswagen is performing too at the end of their quarters, which carmakers do in part to recognize more revenue, but also to gain a margin-leveraged cash flow advantage from reducing inventory at the end of the quarter.
Here's a graph showing how BMW does end of quarter inventory management, the fluctuation is significant, BMW sales volume goes up by about 30% before quarter end, most likely due to inventory push measures by dealers.
Tesla has much higher gross margins than other carmakers so the cash flow advantage from managing inventory at the end of quarters is even bigger. Them doing this could have a potential upside for Q3 cash flow.
Fact Checking
Well-Known Member
Actually:
- third quarter delivery numbers are about three trading weeks away
- Q3 financials are about 8 trading weeks away, not 9
Dear shorts: tick-tock ...
Fact Checking
Well-Known Member
This kind of broken math and tortured logic is the latest fixation shorts/bears have over at SA, and I have a hard time deciding whether it's amusingly naive or just plain out ridiculous wishful thinking. Probably both.
Are you really trying to make the argument that if Tesla made exactly $0 EPS then the forward P/E ratio would go to infinity and people would invest based on that? That people are unable to see just 2-3 more quarters into the future when making valuations? 2-3 more years? 2-3 more decades?
The fact is:
- Current EPS is burdened by temporary expenses of the massive +500% manufacturing capacity expansion, which one-time costs are fading out. While positive EPS obviously matters psychologically, the real deal that drives valuation is free cash flow after the Model 3 ramp-up. Even at 4k/week Model 3 output Tesla has a cash generation ability of 1 billion dollars per quarter - which is $4b annual and thus a low P/E ratio of around 12. If that cash generation ability gets confirmed by Q3 financials then fair valuation with historic long-term fair P/E values of 15-20 would be somewhere around $350-$470.
- But it gets better: once the current Model 3 related capex payments start phasing out early next year, cash flow improves to around $1.5b/quarter, even at comparatively low ~6k/week Model 3 production rates. That corresponds to annual cash generation of $6b, which maps to a fair $TSLA value of about $530-$705 per share.
- But it gets even better: at 10k/week Model 3 output Tesla will be generating over of $8b of cash annually, which maps to a fair value of over $700-$941 per share.
There are massive valuation upsides, with short term valuation primarily depending on Tesla's ability to generate cash.
You trying to apply broken valuation math to an artificially low $1 EPS would probably earn you an 'F' in primary school already.
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Elon Musk just smoked the 420$ weed live on Joe Rogan and also made the following statement:
Joe: "What keeps you always allive at night?"
Musk :" Well you know, it is really hard staying alive as a car company".
The interview is just over now and I've fully watched it. What came to my attention is a from the start very stressed out and tired Elon Musk that does not like to laugh a lot like he used to do in the past. Furthermore, it seemed to me like Joe was speaking a lot of the time as Elon is just giving short answers as he is probably thinking about other stuff on his mind that is stressing him. I do think the whole interview is a positive for Elon as a person (his characteristics) to remain on the ground and remain "human" and an average person. However, from an investors standpoint, I do not see any positives in this interview rather than even more potential attack points that will come up today (smoking weed, hard to stay alive as a car company, stressed out Elon etc.).
Just my honest opinion.
Joe: "What keeps you always allive at night?"
Musk :" Well you know, it is really hard staying alive as a car company".
The interview is just over now and I've fully watched it. What came to my attention is a from the start very stressed out and tired Elon Musk that does not like to laugh a lot like he used to do in the past. Furthermore, it seemed to me like Joe was speaking a lot of the time as Elon is just giving short answers as he is probably thinking about other stuff on his mind that is stressing him. I do think the whole interview is a positive for Elon as a person (his characteristics) to remain on the ground and remain "human" and an average person. However, from an investors standpoint, I do not see any positives in this interview rather than even more potential attack points that will come up today (smoking weed, hard to stay alive as a car company, stressed out Elon etc.).
Just my honest opinion.
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ruralectric
Member
Whiskey, weed, knives, a sword, and not a flame thrower. What could go wrong?
A lot, A hell of a lot. But instead we got to see Elon's humanity. An awesome interview.
A lot, A hell of a lot. But instead we got to see Elon's humanity. An awesome interview.
Well the good news is Elon didn't say anything that could crash the stock tomorrow.
The bad news is, I dunno, I can't think of anything. I guess that itself is good these days.
Fun podcast overall, but damn did it run long. Over 3 hours.
The bad news is, I dunno, I can't think of anything. I guess that itself is good these days.
Fun podcast overall, but damn did it run long. Over 3 hours.
Just listened. Elon sounded good and sincere. Not sure these two points would be my takeaway. The man is no executive robot, very human which makes him very likeable.
Mike Smith
Active Member
Up to 283.30 in Germany.
Elon's and Tesla's brands among millennials will be significantly boosted by this interview. The problem was that a lot of them were starting to think he was an a-hole. That idea just got blown away.
Elon's and Tesla's brands among millennials will be significantly boosted by this interview. The problem was that a lot of them were starting to think he was an a-hole. That idea just got blown away.
Tomorrow’s headline will all be about Elon being drunk and high and isn’t stable.
Remember, there are still +32 million short shares of pain left. And I'd say it's likely they'll increase the shorting as soon as we start recovering...
And it's the smart shorts that have covered. It's the dumb ones that are left behind and that will join once the share price starts going up. So plenty of fun left, just don't despair...
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Mike Smith
Active Member
I do completely agree with you and I feel exactly the same way as you do. As I am a bull having currently a loss of 75'000$ sitting on 2'500 shares... I do not think I deserve this book loss and shorts making money from a 380$ drop to 280$.
hockeythug
Active Member
Either that and or a thermostat that can integrate with their other products. Would make sense to make a more energy efficient A/C system for solar power.
OK, we haven't proven that he's the source of *all* of the FUD, but he's been linked to Linette Lopez already, and he has a specific *history* of spreading FUD against companies he's attacking, *and* this lawsuit *itself* is essentially an attempt to spread FUD against Tesla (because he has no case against Tesla at all and an extremely weak, unprovable case against Musk), which means he's outed himself.
An air conditioner is just a heat pump. I don't really know how that can be made more efficient.
When I use the button I clarify why — EXCEPT for those who have proven they are trolling. Those of the troll ilk wouldn’t know what to do with an explanation anyway since they’d just ignore it or pivot to a new topic.
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