dqd88
Member
Earnings multiple not appropriate; try rev multiple of 2.5-4x
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
- Status
Close but not quite. Tesla did not have to turn. They started in the BEV direction from day 1. All of the other OEM's together have over $500 billion invested in ICE factories and technologies, maybe more. They cannot scrap that overnight nor do they need to. Customers globally are not rushing to buy EVs yet. Sadly, I see a lot more new ICE cars (with temp tags) on the road each day than I do new EVs.
As we watched in Hong Kong, and Ontario, Canada, when the subsidies end so does the demand for EV's. I expect the same thing to happen here in the U.S. unless Congress makes a change to the FITC. So EVs are not able to stand on their own yet. But that day is coming and the OEM's will be there to join the collective movement or their demand will dry up.
Tesla, alone, cannot make it happen. For one they just will not have the resources or the infrastructure in time. To achieve the goal of global warming reversal (if even possible at this point) will take the global collective of automakers working together. This is not an "us vs: them" battle. Then we have the airlines, the railroads, and the ocean carriers to deal with who all burn massive amounts of fossil fuels. Geez.
That is the much, much, bigger picture...
Its a little bit like tesla. Revenues were UP for sure, R&D and SGA was DOWN though, ergo EPS up. Next quarter, probably not so much. I don't think they can keep R&D expense down for too long, it's not prudent. Therefore, I don't see EPS staying where it extrapolates out to ~12$ year, so take that down a couple notches, 7-9$ ish, give it a 35 multiple, we're basically RIGHT here at 315$.. well today, maybe not tomorrow.
Mmmmmm, 36" thick concrete highway/landing strip interstate upgrade......In WA we not only pay a yearly tax - we also got sales tax exemption (that works out to about 30 years of yearly tax)
The basic issue with road and other infrastructure is that gas taxes are woefully inadequate. The right public policy would be to heavily tax gas, like they do in rest of the world. This would help make upgrade our near "3rd world" infrastructure to more like the first world.
Revenue is irrelevant. What matters is how much FCF is generated and net profits are realized. If increased revenues do not improve FCF or profits what is the point?
With record Q3 revenues, if Tesla had not shown a profit and improved FCF the stock would have tanked. There is no doubt of that.
The Blue Owl
Endangerous Herbivore
On the flip side, when profits are there, revenue is very relevant. If aggressive revenue growth can be done profitably, a revenue-based valuation makes sense, while a P/E-based one does not.
See Amazon.
Esme Es Mejor
Member
This is market related because, umm...
I was on Twitter, scared that Elon would say something to tank the SP, and I saw this instead. Hilarious.
Product Haunt on Twitter
I was on Twitter, scared that Elon would say something to tank the SP, and I saw this instead. Hilarious.
Product Haunt on Twitter
EVNow
Well-Known Member
I don't know too many who would think of Vietnam war or prior to civil rights movement as "the good old days".
But the last 3 decades of neo-liberal consensus is collapsing. You see that in Brexit, multiple far right wing political victories in Europe & Asia - as well as the '16 Republican primary.
Reciprocity
Active Member
I have to say that I am surprised that Tesla does not have a better handle on the most basic of marketing segmentation and search. Given what they knew from S/X they should not have been surprised that people were trading in $25k cars in on $50k+ cars.
Here is the simplest of maths..
100k Model 3s sold over roughly he last year. If the entire market is split like S/X about 50/50 with the rest of the world, that would imply 200k is the market size for the $55k+ model 3s.
Now with MR out, if they can sell another 100k of those over the next 12 months (in addition to 100k of the above) that would imply that total market for $50k+ cars is roughly 400k WW.
BMW is actually 20% US and 80% WW so there could be tremendous markets overseas were the S/X was not as appealing as say a smaller sedan or CUV if you get my drift. But setting that aside for now, lets just focus on the elephant in the room.
2 years ago when Tesla launched the Model 3, they thought they would need to sell a $35k version to have enough demand. This was ridiculous given the information they had in hand as it relates to the customer profile or Model S and X customers. Basic market research would have pointed to the market size for $35k cars being in the millions world wide and with S taking 40% market share of its segment, its clear that the home run model 3 would take 30% at a minimum.
The elephant in the room is that Tesla cannot make enough cars to sell a $35k version, they can barely make enough for the $50k+ crowd. That might change a big with tax credits on the decline, but you must understand that people who can afford $40k cars, cant necessarily take advantage of a $7500 tax credit, so it will be closer to a year before the credit issues to even matter. Also those credits are US only, so there is a huge world out. A world that could be as much as 80% of the total potential, though they will need CUVs to fully realize that.
Tesla will sell some $35k next year, but I am guessing that they will only sell them to employees and day 1 line waiters with everyone else waiting till 2020 or later. They just cannot make enough cars fast enough to fulfill the demand so they MUST fill demand from the top down with an emphasis on higher margin configs. Its critical for the mission.
Last note for the weary,
I have been thinking about recession a bit and many have worries about what happens to a company like Tesla in a recession. My thought is that if your a company like Tesla that is growing extremely quickly and you have garnered all of 1% of the global market share for cars, you have no where to go but up. Even in a recession, people still buy cars, just less of them. Tesla is so overwhelmingly supply constrained, that they could be growing very quickly through a recession. In fact, Tesla could benefit from having access to more skilled labor as other companies layoff workers. Its a different story if Tesla already has 30% of the global market share in their segments, and they do for S/X in the US but not globally. There are still states in the US where it is illegal to buy a Tesla from a Tesla store, so those things could clear up in time for a recession as well as more and more overseas markets. At the end of the day, a recession will be painful for every one and every company, but I think Tesla is well positioned and they have a lot of fat they can cut to get lean while continuing to grow the organization as a whole. Here is to hoping that I am right.
Agree they don't NEED advertising, but what if $900M in deposits turned into $1.5B in the Jan Call? (And makes EM cry again over customer appreciation which is alone enough reason for me.) But it's not a typical ad that I see. More a Thank You + awareness of the problems facing the planet + how Tesla is working against all odds in hopes that we get there in time + a link to FAQs (to sponsor more ads). Promote the Tesla Mission with Energy (and all it's products) as just one part of the solution.... is where's I'd take it.
Or did you think the fight was already won?
Sheldon not needing a ride because of the new AI chip prototype with Tesla... that's really good.
I will argue that today the Model 3 can stand on its own merits as at its retail price--it can be favorably cross shopped against a 3-Series or an A4 when comparing the things buyers typically care about--the fact that it is electric is irrelevant--they is no price penalty. The same is not true for most EVs, Taking the Bolt as an example, if you ignore the EV drivetrain, it shops like a $20K Chevy. Consumers are not dumb so they need the enticement to level the playing field.
EVNow
Well-Known Member
It is too simplistic to assume continuous demand based on the first year.
Not just a quibble, "lower." China does a better job for labor than we give credit.
Esme Es Mejor
Member
Electricity is already taxed, just like gas is. Now, governments may need to direct more electricity tax toward road work, but there does not need to be a special tax on EVs. We are already being taxed on our fuel.
You have made an implicit assumption (that Tesla's profit will remain at $3/q for 4 quarters) which seems to be very debatable to me. You assume that earnings growth from this point goes from 50-100% per year to zero, instantly, now. I say "debatable" because this is an underhanded debating tactic, and not a presentation of a rational argument. You start by saying "some of the lower analyst valuations", as if this is someone else's argument, but then slipped by saying "as high as I see Tesla going". I believe you are getting close to the precipice of materially false information here.
Last edited:
Most often the placements are free of charge from OEM's in exchange for screen time and are coordinated with promotional campaigns and website advertising. In some cases, directors and producers will use their own cars (and get paid for the use as a prop rental). There are also companies that rent specialty "show" cars for filming.
So that Model X could well have been the director's personal ride.
dqd88
Member
Revenue is most relevant. It reflects market share. At this stage in the game it's about growth and market share. FCF is important, profit not so much. FCF and profit are the byproduct of demand, efficient production, delivery, good body design that scales well.
It's about demand and building capacity.
No analyst was expecting profit so it would not have tanked. OpEx is where everyone was shocked. They are still digesting it.
Shifting to investment in Tesla?
- Status
Similar threads
- Locked
- Locked
- Locked
- Poll
