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Thread: Short-Term TSLA Price Movements - 2013

  1. #8411
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    Quote Originally Posted by sleepyhead View Post
    You can very easily justify the valuation:

    2 - 3 years fom now Tesla will sell 100,000 cars for $10 billion in revenue with tech company-like margins.

    That alone is enough to justify today's market cap. Therefore you can buy TSLA today and still get a free option on Model E and everything else that is in Tesla's future.
    I could be wrong. I'm not trying to come in and here and be a naysayer (though it seems that way). I've followed the stock for awhile and been consistently surprised. But won't everyone eventually use the technology and margins will drop? Can TSLA's patents stop that?

  2. #8412
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    Quote Originally Posted by makinthdonuts View Post
    I could be wrong. I'm not trying to come in and here and be a naysayer (though it seems that way). I've followed the stock for awhile and been consistently surprised. But won't everyone eventually use the technology and margins will drop? Can TSLA's patents stop that?
    Cool, I hope you read some of the amazing posts by Dave, Sleepy and Citizen over the past year or so. Quote them in your responses so we know where you are starting from or at least your foundation of understanding. I started quite vanilla or fresh and have learned a lot.

    Yeah, that is what patents are for! They used to be anyway. But hardware patents still are for the most part. The quick and dirty answer is that the IP that TM has in the drivetrain cannot easily be reproduced to a quality, packaging and performance standard by even the current automobile giants. From an Engineering, Design, Manufacturing, Supply Chain point of view I'm guessing TM has a lead of at least 5 to 9 years from the set of exec/board meetings, at said current automobile giants, required to spend billions on a simple goal of "Design/build/sell/support a better (in the eyes of a consumer) car (product) and purchase experience than the Model S".

    NOTE: I think those meetings are most likely either happening now or will shortly.
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  3. #8413
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    Quote Originally Posted by makinthdonuts View Post
    I'm not a short, I'm a fan of TSLA, and I agree that it is massively disrupting the auto industry and all the big players are playing catch up. All the reviews make it clear that not having a big engine in the front, massive instant torque, and low center-of-gravity make it great fun to drive, along with battery technology that is significantly ahead of the competitors. But at 180+, you are betting that TSLA is going to perfectly execute on that promise and that there aren't going to be external economic events that disrupt the markets. But I think it could go to $200, but I think the end of the run is nearing.
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  4. #8414
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    Quote Originally Posted by makinthdonuts View Post
    I could be wrong. I'm not trying to come in and here and be a naysayer (though it seems that way). I've followed the stock for awhile and been consistently surprised. But won't everyone eventually use the technology and margins will drop? Can TSLA's patents stop that?
    Tesla's advantages extend well beyond technology, and reach into business models as well.

    Mr. Donut, your weekend reading (and anyone on here who hasn't yet) is the Innovator's Dilemma, by Clayton M. Christensen. It should become obvious that cars based on internal combustion engines are sustaining technologies and cars based on electric motors are disruptive technologies. Also note that existing car manufacturers are locked into selling to dealerships, not end consumers, and thus have to deliver products those dealers want. Tesla has smartly fought to break this model.
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  5. #8415
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    Quote Originally Posted by makinthdonuts View Post
    DaveT, I'm not a short, I'm just making an observation. You're right the whole market is very frothy right now, Tesla isn't the only company with an extremely optimistic valuation. It's a great company and will likely grow to be a major player in the auto industry and at the right price levels, it's a great buy. It's just I've followed TSLA since the beginning, but I never dreamed the price would get this high. I thought it was going to correct around $160.
    Actually my point was not that the market is frothy right now, but that any company growing at an incredible rapid revenue growth rate (ie., 100% annual rate) is going to get a very high valuation and this is just how investing works (as an investor you pay more for assets that are growing faster). Further, it's much easier to grow revenue from $1 million to $10 million, or even $100m to $1b. But it's much more difficult to grow revenue from $1b to $10b. And from $10b to $100b. There are very few companies that will grow from $1b in revenue to $10b in revenue in just 2-3 years. It's very rare. And for the companies that are able to grow at that rate, they will deservedly receive a very high multiple in their valuation.

    It's very rare for a company to be growing as fast as TSLA with revenue in the billions (ie., $1b to $10b in revenue in 3 years) in a huge addressable market (ie., $1.5 trillion auto industry). This is the reason for the seemingly valuation and the reason why it could go a lot higher as well (especially as we get closer to Gen III which will eventually take TSLA from $10b to $100b+ in annual revenue).

    - - - Updated - - -

    Quote Originally Posted by makinthdonuts View Post
    But at 180+, you are betting that TSLA is going to perfectly execute on that promise and that there aren't going to be external economic events that disrupt the markets. But I think it could go to $200, but I think the end of the run is nearing.
    Actually, I personally don't think the current stock price factors how fast Model S demand is/will grow over the next couple years (along with Model X demand that will likely surprise people). Most expect Tesla to sell 30k-35k Model S cars next year, and maybe 50-55k cars (Model S/X combined) or so the following year. But if TSLA can sell 40k Model S cars next year and 80k Model S/X cars in 2015, then this will drive the stock price A LOT higher.

    On the flip side, if TSLA can't sell 30-35k cars next year (and 50-55k cars in 2015), then the stock will get hit very, very hard.

    So when I hear people say that the current stock price is betting TSLA will execute perfectly, I think that's not accurate. The current stock price factors in a healthy demand of Model S cars (along with TSLA's ability to meet that demand) of maybe 35k cars in 2014 and 50-55k cars or so in 2015. So, if you think if demand is going to be significantly higher than that (and TSLA can meet that demand with production), then you really ought to be a long-term buyer of the stock at these levels.

    The other factor apart from Model S demand is the pending Gen III vehicle. Again it's all about demand and TSLA's eventual ability to meet that demand. If demand is off-the-charts (which I expect), then this will drive the stock price up A LOT. And since the markets are usually forward-looking, people are/will be pricing in Gen III into the current stock price and rightfully so. If you think Gen III demand will be significantly higher than what most people think, then again you should be a long-term buyer of the stock at these levels.

  6. #8416
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    Quote Originally Posted by Discoducky View Post
    4 posts! Joined last month! Stock is overvalued! What kind of donuts are you makin exactly?
    I have to agree with you...the shorts definitely have looked at this board and may try to infiltrate it...it's a trolling world we live in, especially Tesla investors

    keep a close eye on makinthdonuts
    Last edited by TSLAopt; 2013-09-21 at 01:01 PM.

  7. #8417
    Senior Member Mario Kadastik's Avatar
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    Well one recent SA article tried to do a calculation of future earnings with rough estimates and provided an excel spreadsheet. I've modified it to what I think is realistic for Tesla to achieve (23k MS this year, 43k next, 67k then etc with dropping yearly increase rates of 40%), Model X of 13k in 2015, 26k in 2016, 44k in 2017 etc and Model E 20k in 2017 growing at 100% initially with 10% per year growth downturn. The sheet accounts for a steady supercharger rollout in the whole world and I've set it up far more optimistically (i.e. more expensive) than the guy in the article did. We reach the ~200k cars sold some time in 2018 by which time Tesla will have figured out the battery supply. Using compression of P/E going from 45 in 2013 (high growth company) to 15 in 2020 (still growing, but reduced close to other major car makers.

    I'd consider this a pessimistic/realistic scenario with erring on the side of caution for X and E and the result is that I see the following stock prices:
    2013 -> $184.6 (hehe, nice coincidence, no tweaking to get it, promise)
    2014 -> $282
    2015 -> $383
    2016 -> $432
    2017 -> $509
    2018 -> $522
    2019 -> $501
    2020 -> $482

    Remember I used a pretty aggressive P/E compression and a relatively reduced growth and initial rates for the X and E with extended supercharger requirements that adds a lot of cost. The estimates do not include R&D costs or other unknowns, but purely based on sales of the cars. I assumed the S and X have 25% profit margin and the E would have 15% with average sale prices of S at $90k, X at $80k and E at $40k.

    And most of all I assumed that the SA author didn't **** up his excel sheet

    This is by no means a comprehensive analysis yielding concrete stock price predictions, but just a quick sanity check and it does say that while the price may indeed expect a decent execution by Tesla it's by no means expecting a perfect execution. Using idealistic numbers I saw in 2020 the stock price around $900, but that assumed a far faster ramp up of X and E (not unlikely though). So the $180 stock price is by no means extremely high, it seems far more likely to be about on-par with reality.
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  8. #8418
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    My gut feeling is we'll hit $200 by mid-November after Q3 ER and $220 before end of year, based on the last two month's momentum. The short interest has increased about 10% during the month of August, though we will see if that has changed when NASDAQ releases short-interest numbers this coming Tuesday 24th.

  9. #8419
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    Quote Originally Posted by Discoducky View Post
    4 posts! Joined last month! Stock is overvalued! What kind of donuts are you makin exactly?
    Since Elon Musk said that Tesla's valuation was "very generous" when the stock price was significantly lower than it is today, I don't think it is unreasonable to suggest Tesla is overvalued. It is absolutely a disruptive force in a huge industry, but so was Yahoo until a rival with better technology passed it by. Tesla could one day rule the world and have its stock go up by multiples more, but alot can happen between now and world domination.

  10. #8420
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    Quote Originally Posted by DaveT View Post
    So when I hear people say that the current stock price is betting TSLA will execute perfectly, I think that's not accurate. The current stock price factors in a healthy demand of Model S cars (along with TSLA's ability to meet that demand) of maybe 35k cars in 2014 and 50-55k cars or so in 2015. So, if you think if demand is going to be significantly higher than that (and TSLA can meet that demand with production), then you really ought to be a long-term buyer of the stock at these levels.

    The other factor apart from Model S demand is the pending Gen III vehicle. Again it's all about demand and TSLA's eventual ability to meet that demand. If demand is off-the-charts (which I expect), then this will drive the stock price up A LOT. And since the markets are usually forward-looking, people are/will be pricing in Gen III into the current stock price and rightfully so. If you think Gen III demand will be significantly higher than what most people think, then again you should be a long-term buyer of the stock at these levels.
    Fine, you make good points. I think demand could be huge, it really just depends on whether the Gen III is priced reasonably and if Nissan/GM/etc has put together a viable alternative by 2016. I am just wary because I think shares could drop if Q3 falls short of expectations or other bad news comes out. And the percentage of publicly traded shares is low and if more shares go public, that could push the price down as well.

    And disclaimer, I am not holding a short position. I imagine a real short would be more sophisticated than to just post an opinion on a forum with no backing evidence. I probably should have worded my initial post more carefully.

    EDIT: Also, I think the rumors of war in the Middle East, and the expectation of possibly higher gas prices, also help TSLA. That's been disrupting the markets a fair bit lately, and I think it has an impact.
    Last edited by makinthdonuts; 2013-09-21 at 04:04 PM.

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