Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[SOULPEDL]

Time in the market beats timing the market, yadayada

Not yadayada.... I've never heard that saying and never saw it posted here that I can recall. Very cool!

 

[Mengy]

If TSLA stays at 930/share through the end of the year, TTW P/E is definitely lower than 70. Probably more like under 50. People already forgetting that Q4's GAAP EPS should have been roughly $.50 higher due to Elons award tranches and Elon's options. Literally no way those two items of 340 million and 250 million repeat going forward since only 62 million left on Elon's award tranches. I'm leaving out the other one-time costs of 360 million due to recall/expedite because those could happen again, though I do not think they will.

So Tesla's Forward P/E is actually in the 70's right now......not the 90's as it's officially listed.

Yep, exactly. If we do go into a mini-recession due to the Fed increasing interest rates later this year to combat inflation (which is likely) my gut feeling is the market will pull back majorly for at least half a year or so, contracting PE's across the board. Including Tesla's, down to rates like the ones you cite above.

Long term the story is unchanged. If we hit a recession of any kind it will not last and the market will recover. Tesla would also survive any recession splendidly, much more so than it's competitors, so if we do hit a recession then on the other side of it TSLA literally explodes to the Moon. I just have this nagging feeling TSLA won't be lifting off this year, not quite yet.

Again, this is just my gut feeling, I'd be ecstatic to be very wrong about this of course! Either way my shares will go untouched for many, many years yet, so on a personal level none of it matters to me. Though if we do dip or remain flat I'll be going heavy into margin once that PE does (theoretically) contract.

 

[Nocturnal]

This is clearly the line of thinking Wall Street wants in our heads, I just don't see how it's physically possible.

For this to be true, Tesla would have to dramatically underperform for all of 2022 and guidance would have to be so bad that TSLA could logically hold an actual PE of about 70 this time next year.

In what world does the company universally acknowledged as the technological leader for the next decade have a 70 PE on the back end of 87% and (let's say) 55% growth? Let alone the 50 PE we'd have if they just meet the very conservative projections of TMC members?

In the past I think these periods where SP has been held down quarter after quarter was about trying to kill Tesla. Now that earnings are so clear, they just want your shares.

I'm torn on this one. I think I'll see how Q1 delivery numbers from China start looking before deciding. I got burned a bit by Q4 earnings so either way this year will be more conservative for me. (I say that now of course )

I am in the camp that believes inflation is mostly due to supply problems, and not money supply. The FED seems intent on pushing us into a recession, however brief. I also don't think that we will have much help from Congress/POTUS in terms of fiscal policy because they are all idiots.

CPI is a horrible measure for true inflation as well.

I wonder how many buyers are in my position.... We first ordered the Model X when it was revealed (2013/14?). We had a Leaf on lease at the time. The delivery of the X kept getting pushed back. We got into real trouble when Nissan would not extend our lease any longer. Finally took delivery in 2016. I ordered the Cybertruck the night of the reveal. I now have two on order. Based on the original schedule, I was supposed to be driving it right now. My current tow vehicle for 7k+ pounds is my 11 year old Jeep Grand Cherokee with the V8 Hemi. I don't know how much longer the Jeep will last, and I don't want to waste money on a new/used ICE vehicle to replace it. So yesterday I put down a deposit on a Rivian (even though I made fun of its tiny truck bed for the last year). I hope I get the Cybertruck first and can cancel the Rivian. It will be fun to see which one actually gets delivered first. I'm a little sad because I told myself I would only buy Tesla going forward, but the delays are pushing my hand to do something different.... On the plus side, I've been looking at some Rivian videos, and it seems like a very well thought out truck....

I really could use a tow vehicle. I tow a little with my model 3 but the range/power just isn't enough. I have a lake house about 2.5 hours from me with no superchargers along the way.

The Rivians are very nice but the range is not enough to tow. My 3 get's hit with a 50% range reduction with a bulky load, probably worse if it were really cold out. I don't think a truck will do quite as bad because they create a larger area of drag already but still.

 

[StarFoxisDown!]

Yep, exactly. If we do go into a mini-recession due to the Fed increasing interest rates later this year to combat inflation (which is likely) my gut feeling is the market will pull back majorly for at least half a year or so, contracting PE's across the board. Including Tesla's, down to rates like the ones you cite above.

Long term the story is unchanged. If we hit a recession of any kind it will not last and the market will recover. Tesla would also survive any recession splendidly, much more so than it's competitors, so if we do hit a recession then on the other side of it TSLA literally explodes to the Moon. I just have this nagging feeling TSLA won't be lifting off this year, not quite yet.

Again, this is just my gut feeling, I'd be ecstatic to be very wrong about this of course! Either way my shares will go untouched for many, many years yet, so on a personal level none of it matters to me. Though if we do dip or remain flat I'll be going heavy into margin once that PE does (theoretically) contract.

I think what I'm pointing out and what others have, especially @Singuy , is that a bit of a recession is likely but that it's not going to be like previous recessions. In that the correlation between a recession and a pullback in earnings/revenues isn't going to happen. You're going to have somewhat of a recession while at the same time booming earnings. And that's because the metrics for GDP/recession are outdated.

Also, say the market does contract P/E multiples and say that it determines a fair forward P/E for TSLA is 50. That's absurd but for this comparison, we'll use that. Like I mentioned before, TSLA's real forward P/E is in the 70's. After Q1 earnings, if Tesla does say 340-350k for Q1, that alone with a 900/share price will drop the forward P/E to 50. But then what happens after Q2's earnings? And then Q3's?

I just don't think people are actually realizing how much TSLA's P/E is going to compress this year and rapid it's going to be. Just go and look at Q1 and Q2 2021 GAAP EPS. It's going to happen in a blink of an eye

 

[Artful Dodger]

It's going to be an interesting dynamic for sure. On one side, you have inflation care bears and just bears in general that have been waiting years for a "I told you so moment". On the other side, you have actual earnings that, just like every earnings season for the past few years, just crushed it. You have to ask.....what happens by around Q1's earnings and then Q2's earnings.....when companies are continuing to post earnings growth that's not impacted by inflation.

I'll add something and I'm sure some here will probably take a bit of issue with it, but I honestly do not think 7.5% YoY inflation matters to the economy. Now obviously if in a year inflation is up 7.5% YoY again, well then that's another story.

But inflation was stagnate for a long time. As pointed out here before, housing has gone up quite a bit in a number of areas, but that's primarily due to the migration of the tech workforce and remote workers. The people that were already living in those areas aren't paying a higher mortage. And the people that are on the move, are actually saving money on their housing/renting because they're moving from much higher cost of living areas. Food prices are higher but people are still actually saving money because again, remote work has taken over. Instead of spending money eating out for breakfast, lunch, dinner, they're buying groceries. So even if grocery prices are higher, people are still overall paying less on food. As for gas, now consumers actually have options for EV's that completely negate the increases in oil/gas. And not only does an EV negate any inflation in gas, overall deflates the cost of the car over time.

Now there will be a group/part of the economy that does get hit by this inflation and will see their discretionary spending contract a bit. Mainly because they won't enjoy the offset of remote working that I mentioned above because well, they weren't being hit by those things to begin with. And this will probably be the most controversial part of this post, but as we saw during the first year of Covid......this group doesn't matter to real GDP output,. the health of the economy, and most importantly to earnings for companies. They simply don't contribute enough to it to matter.

Thus I'm fairly confident that for the first half of this year and Q1 and Q2's earnings, we're going to see continued stellar earnings/revenue growth while at the same time getting lousy "old school" GDP tracking metrics. And that will result in a lot of dumbfounded looks by traditional economists and wall st bears that though this 7.5% inflation tick signals a major incoming recession and that the stock market is overvalued.

I expect a lot of "How are these companies doing this well when inflation has taken away all of the discretionary spending of the consumer????" The answer will be, it hasn't taken away discretionary spending due to deflation that's not showing up in traditional inflation/deflation metrics.

But it's going to take for all that to really show, which is why I'm not that optimistic for Q1. I think Q1 and Q2 will be mostly flat quarters for the market overall.....and that's a good thing actually.

Nominated for "Moderators' Choice: Posts of Particular Merit". Thank-you.

 

[Unpilot]

and I'm going to turn into a grumpy old man again

Again?

 

[growler23]

*cough* FSD becomes safer than average human *cough*

I have a question on this oft-expressed idea/assumption/sentiment -- that FSD becoming statistically safer than a human will drive massive rapid public acceptance.
It seems to me, given the example of how almost every fire in a Tesla makes USA national news, that FSD is going to have to be almost perfect - far better than "just beats a human". Every single fatal accident involving FSD will be guaranteed to make the national news at first, and the general public thinks once again, as they have been preconditioned to think by the FUD, that you cannot trust the robots.
Stats show in the USA in 2021, we had an average of roughly 50 fatal accidents a day. If even 1 of those per WEEK is related to FSD in its first release year, we will be hit over and over every week with a national-level story of robot-caused deaths. And even if the news stories say "statistically these cars are safer" in a quick sentence at the end, statements like that are, in the viewing public's collective mind, more than offset by a video of a burning Tesla, an ambulance, and grim looking first responders.
The argument that "the statistics show its safer per mile" convinces very few airplane-fearers to take a plane rather than a car, and I think that same argument will convince very few low-information drivers that taking their hands off the wheel and putting the AI in charge is safer.
I grudgingly think the rollout of FSD will therefore be slow, and only helped along as public attitudes change, and that pace may well be glacial. I am actually encouraged that other automakers are advertising at least limited autonomy, as this may help the public attitude change needed to make us all safer in the long run.
Can someone talk me off the ledge here?

 

[AudubonB]

Ref. post #324,759:

I believe we've ferreted out who are the classicists here.....

 

[lafrisbee]

With MY so close from taking top spot in California, it will likely get it in Q1. My friend just had her Feb delivery date in Toronto pushed back to June this week, and my 7 seat Y also got pushed from March to June delivery yesterday. My guess is someone in CA willgetboth of them so that Tesla can win there for Q1.

Top 5 cars of all propulsion types in 2021 in California:
- #Toyota #Camry 61’599
- #Tesla #ModelY 60’394
- #Honda #Civic 59’818
- #Toyota #RAV4 59’157
- #Tesla #Model3 53’562

Phil stresses what a huge achievement Tesla accomplished

https://twitter.com/x/status/1491458753740292099

OK
I read enough of these posts. I haven't seen any human make the association.
Elon publicly stated that the Model Y would beat the Corolla in total market in terms of financials. Seems like it is going that way...

 

[Artful Dodger]

I grudgingly think the rollout of FSD will therefore be slow, and only helped along as public attitudes change, and that pace may well be glacial. I am actually encouraged that other automakers are advertising at least limited autonomy, as this may help the public attitude change needed to make us all safer in the long run.
Can someone talk me off the ledge here?

Well it was never going to happen as fast as Elon thinks (remember, if he wasn't optimistic he wouldn't be doing this). And "fear-of-Robots" has been engrained in our culture since Isaac Asimov's "I, Robot" (1950), and even fear of new technology in general since the Luddites (19th Century English textile workers afraid for their jobs).

FSD will come in stages simply because each nation or region controls its own highway rules. In Europe for example, FSD adoption rates lags the USA becaue the EU mandates a nerfed lane-changing 7-sec pause which makes the feature usable (without making it safer). In China, there is simply a culture of not purchasing software 'extras' no matter what they are.

Does that change the purpose or ultimate outcome for FSD? Not in the slightest. Stepping back, you can see the cumulative improvements in self-driving during FSD Beta in particular, and for AI in general (which will spur Tesla's next stage of exponential growth). The resources and the will to make FSD succeed is there, rest assured.

If you are long, it will happen. Best to sit back and enjoy the ride. Advice? “Keep your arms and legs inside the ride at all times.”

Cheers!

 

[pitabun]

What's holding NHTSA back from disabling FSD? It seems they are very active now with steamrolling features into oblivion, especially now that Cummings is there 'not' giving advice on Tesla.

I feel it's a ticking time bomb, and if Tesla recalled FSD, TSLA would take a HUGE hit.

 

[StarFoxisDown!]

What's holding NHTSA back from disabling FSD? It seems they are very active now with steamrolling features into oblivion, especially now that Cummings is there 'not' giving advice on Tesla.

I feel it's a ticking time bomb, and if Tesla recalled FSD, TSLA would take a HUGE hit.

If NHTSA bans FSD beta, then Tesla easily has grounds to say NHSTA has to ban all driving assist. So all the advertising for Ford and GM's "hands free" driving is gone. Seeing how other car manufacturer's actually have to have their customers come in even for software updates, you're talking massive recall costs across the entire industry.....except for Tesla. As someone pointed out in a earlier post, other car makes have cars that emit sounds, just like what Tesla is doing. Tesla could push back on the NHTSA about this sound issue but probably decided it's not worth the hassle.

For some reason people seem to think the NHTSA can just target Tesla exclusively which can't be farther from the truth. If they target Tesla exclusively, they open themselves up to lawsuit that Tesla would easily win

 

[Artful Dodger]

OK
I read enough of these posts. I haven't seen any human make the association.
Elon publicly stated that the Model Y would beat the Corolla in total market in terms of financials. Seems like it is going that way...

Pretty sure Elon said Model Y is likely to overtake Corolla in sales revenue this year, and sales volume next year. Already happening in California, the rest will come when Giga Texas has a full year's worth of production under it's (big, silver) belt buckle.

Cheers!

 

[AudubonB]

This is becoming somewhat tedious...
"Tesla recalls more vehicles as US agency increases scrutiny"

Tesla recalls more vehicles as US agency increases scrutiny

Tesla is recalling nearly 579,000 vehicles in the U.S. because a “Boombox” function can play sounds over an external speaker and obscure audible warnings for pedestrians.

apnews.com

I need to understand this in anticipation of my impending deafness and blindness. I understand I will be stone cold deaf and blind in less than ninety years from now.
What appears to be happening is that one will not be able to hear an approaching vehicle because it will be too loud.

On edit -

Mildly more seriously: This may or may not be the case in whatever universe you're living in, but in the Audieverse, there is a very very special place in Hell for anyone who ever polluted others' environment with a Boombox.

 

[Prunesquallor]

TSLA holding up well compared to the other top-10 equities in the S&P 500 at 09:41 ET

View attachment 767326

Cheers!

The bike is finally rebuilt. Went out for a long ride this morning. Karma restored. You’re welcome.

 

[Chunky Jr.]

a bit of a recession is likely but that it's not going to be like previous recessions. In that the correlation between a recession and a pullback in earnings/revenues isn't going to happen

dumb question - how does GDP contract for two consecutive quarters (definition of a recession) while earnings go up? If the economy is contracting, by definition some companies will be outputting less. So these companies would have to be growing revenue while reducing output. Is the claim that inflation will make up for this? Or am I missing something?

 

[Ogre]

I need to understand this in anticipation of my impending deafness and blindness. I understand I will be stone cold deaf and blind in less than ninety years from now.
What appears to be happening is that one will not be able to hear an approaching vehicle because it will be too loud.

On edit -

Mildly more seriously: This may or may not be the case in whatever universe you're living in, but in the Audieverse, there is a very very special place in Hell for anyone who ever polluted others' environment with a Boombox.

My Tundra made these loud rumbling noises when it was driving, totally couldn’t hear the low speed warning noise over it.

Maybe they should recall those too?

 

[raffiniert]

What's holding NHTSA back from disabling FSD? It seems they are very active now with steamrolling features into oblivion, especially now that Cummings is there 'not' giving advice on Tesla.

I feel it's a ticking time bomb, and if Tesla recalled FSD, TSLA would take a HUGE hit.

I want to friendly remind you that there is a world outside the USA.
Go ahead, ban it there, we here in Switzerland are very happy and welcome the training on much more difficult streets. And many other countries as well. And then, the USA doesn't want to be at the back of this revolution, so pressure will rise to allow it as well.

So in short: not going to happen.

 

[scaesare]

Finally, the long-awaited Plaid Battery pack teardown begins:

"Sandy & Ben dive into a few initial battery pack features in our introduction Tesla Model S Plaid ..."
Duration: 28:06 Posted: 2 hrs ago

Engineering Masterpiece | Tesla Model S Plaid Battery Pack | Munro & Associates (Youtube)

Cheers!

FYI Phil (Ingineerix) did one a few months ago. I generally find his stuff has more technical detail than Munro's, although both are useful...

 

[StarFoxisDown!]

dumb question - how does GDP contract for two consecutive quarters (definition of a recession) while earnings go up? If the economy is contracting, by definition some companies will be outputting less. So these companies would have to be growing revenue while reducing output. Or am I missing something?

For a couple reasons:

1) GDP data tracking is outdated especially in times where there's a huge shift/transition in workforce, migration of where people are living, etc...Here's an example. A couple who work in the tech field transition to work from home and move to a cheaper cost of living state. The nanny that they use or the daycare center they used for their kid they no longer need. Instead of eating out for lunch and dinner every day, they buy more groceries. The net is they're overall contributing less to the economy which creates a reduction in GDP. While transitions like this happen, you're going to have recession in certain sectors of the economy, sometimes big recessions. It just takes time to equalize because then that said couple will spend their new amounts of discretionary spending in other ways. But it takes time.


2) I'm going to generalize this the best way I can but the "new" economy which are comprised of companies that highly adopt technology to drive efficiency generate much more profit per dollar of revenue than the "old" economy. Thus every dollar spent towards the new economy in this transition, leads to a net overall increase in earnings for the S&P. Every dollar Apple or Microsoft and so on generate, they make way more profit than companies from the old economy. A great example of this is our very own Tesla. Tesla is a highly tech leveraged company and thus they generate exponentially more profit per dollar revenue than legacy auto does.

Thus you can have an overall reduction in dollar spent in the economy and still have higher earnings