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

[JusRelax]

The analogy is, the car goes from DVDs (high associated costs of a way to send physical media to make chump change) and become Netflix datacenters. It's a new and more efficient way to distribute ride. One car can service the need of 20-30 families a day vs 1. Like how a DVD can only service one family vs a rack of server servicing a few thousand .

That sounds like it's probably more correct than what I had in mind.

I thought it was that Tesla is moving from primarily selling a product (DVD vs automobile), to primarily selling a service (providing content vs providing rides).

 

[AndrewZ]

One of the most followed people on the most famous and widely quoted social media sites on earth.
A HUGE part of PR is reach. People pay a LOT for reach. Average social media cost per thousand impressions is $6.
This recent post by elon (only yesterday) has so far got 49.5million views. It will be reported in the news, and quoted and reposted many more times, but lets conservatively stick with 50million views.
Thats $300,000 worth of PR for about 30 seconds work by Elon, and zero cost. Go back another 3 days and he has a spacex tweet with 85 million views.
Even assuming he only has a 50mill Tesla tweet once a month, thats $3.6million in free PR a year.

I think he is good at it.

I think advertising is more complex than this. Right off the bat, probably most of those views on Elon’s posts are people who actively follow him and they are less likely to need advertising or clarification/defence in the first place.

That’s like going into Red Lobster and shouting about endless shrimp to all the people already sitting in the restaurant.

 

[philw1776]

Elon's mean tweets are irritating potential customers and hurting sales. All my friends say this.

Only 2% or less people read or follow twitter and as such it is an utter PR failure for Musk's messages.

Same people. Different threads.

 

[Zaddy Daddy]

Delivery information coming in so far for first halve of Q2 is showing demand weakness again. There is data from China, Europe, and VIN data in the U.S. indicated deliveries are definitely going to be way behind 2023 Q2.

They also will be only a little better than Q1. There really at this point should be no more conjecture that "supply chain issues" explained the low deliveries in Q1. It's just simply incorrect.

https://twitter.com/x/status/1789285939388289119

The demand issue seems further validated by Tesla introducing low interest rate financing.

It will be interesting to see what the financial modelers spit out, but I would imagine automotive earnings will nearly be flat QoQ.

In addition, I think there is the realization happening that FSD subscription increases won't be helping the company financially for quite a while. The 50% cut in FSD subscription prices means that subscriptions will need to double just to make back the money lost from the price cut on current subscribers. FSD subscriptions will need to triple or quadruple probably to even have any real subtle effect on EPS. Not happening for a year at least, and that would be if the FSD gets really good, near robotaxi level.

With Megapack growth capacity stalled until 2025 (meaning no huge further gains until 2026) and Semi delayed, we are essentially now waiting to see what net income can be derived from a fully ramped Cybertruck line as the main contributor to incremental earnings in the next 12 months.

For Q4 if I assume a $80k ASP for 3,000 Cybertrucks / week with 20% operating margins, I get about 600 million in operational income (before taxes). So maybe $0.15 in incremental EPS from Cybertruck.

With costs going down from layoffs and some projects slowing and some additional Megapack revenue, maybe we could get a $0.2 to $0.25 increase in EPS by Q4. Maybe $0.6 or $0.7.

If we can, maybe the market will model $3.5 in EPS in 2025. With a forward PE of say 50, we would get $175 target share price, which coincidentally is near where we are today.

So I think the stock may oscillate around this price +/- 20% depending on sentiment until we get information that would materially affect earnings projections in 2025.

 

[EVMeister]

Elon's mean tweets are irritating potential customers and hurting sales. All my friends say this.

Only 2% or less people read or follow twitter and as such it is an utter PR failure for Musk's messages.

Same people. Different threads.

And they're empowering some other potential customers. Are "all of your friends" like minded folk? Why do they care so much about what Elon says, exactly? Do they prefer buying products from companies where they know nothing about the CEO? Ignorance is bliss, I guess.

As for that <2%, where did that come from? Are you including people who don't even have access to computers or smartphones in that figure, or did you just pull it out of thin air? Looking at the US population it's probably closer to 20% of the population using X (source).

 

[GOVA]

The analogy is, the car goes from DVDs (high associated costs of a way to send physical media to make chump change) and become Netflix datacenters. It's a new and more efficient way to distribute ride. One car can service the need of 20-30 families a day vs 1. Like how a DVD can only service one family vs a rack of server servicing a few thousand .

Thanks.

I don't think the Tesla car business will die as you mentioned.

 

[Singuy]

Thanks.

I don't think the Tesla car business will die as you mentioned.

It might in Elon's head. If this future of FSD happens how he envisioned, he will have a hard time selling cars to individuals without a hefty penalty cost because.

1. Tesla can extract way more $/made car servicing 20 families per car made per day

2. People can use car to make money

3. If 20 families are served per day using the same amount of resources to make said car vs 1 family, then this goes against the mission of environmentalism hence the penalty.

So I can see Tesla actually reducing production if utility x10 or 20. This will use the least amount of resources per utility while making more money and reducing massive cost. Gigafactories would be geared toward making batteries to transform our grid instead as transportation is solved.

 

[NicoV]

Delivery information coming in so far for first halve of Q2 is showing demand weakness again. There is data from China, Europe, and VIN data in the U.S. indicated deliveries are definitely going to be way behind 2023 Q2.

They also will be only a little better than Q1. There really at this point should be no more conjecture that "supply chain issues" explained the low deliveries in Q1. It's just simply incorrect.

https://twitter.com/x/status/1789285939388289119

The demand issue seems further validated by Tesla introducing low interest rate financing.

It will be interesting to see what the financial modelers spit out, but I would imagine automotive earnings will nearly be flat QoQ.

In addition, I think there is the realization happening that FSD subscription increases won't be helping the company financially for quite a while. The 50% cut in FSD subscription prices means that subscriptions will need to double just to make back the money lost from the price cut on current subscribers. FSD subscriptions will need to triple or quadruple probably to even have any real subtle effect on EPS. Not happening for a year at least, and that would be if the FSD gets really good, near robotaxi level.

With Megapack growth capacity stalled until 2025 (meaning no huge further gains until 2026) and Semi delayed, we are essentially now waiting to see what net income can be derived from a fully ramped Cybertruck line as the main contributor to incremental earnings in the next 12 months.

For Q4 if I assume a $80k ASP for 3,000 Cybertrucks / week with 20% operating margins, I get about 600 million in operational income (before taxes). So maybe $0.15 in incremental EPS from Cybertruck.

With costs going down from layoffs and some projects slowing and some additional Megapack revenue, maybe we could get a $0.2 to $0.25 increase in EPS by Q4. Maybe $0.6 or $0.7.

If we can, maybe the market will model $3.5 in EPS in 2025. With a forward PE of say 50, we would get $175 target share price, which coincidentally is near where we are today.

So I think the stock may oscillate around this price +/- 20% depending on sentiment until we get information that would materially affect earnings projections in 2025.

The demand in 2023 was artificially high due to an endless stream of promotions, from inventory discounts to fsd transfers and even free supercharging transfers. I’m not even mentioning lower prices. I was one of the persons incentivized by free supercharging transfer to buy 1 or 2 quarters (maybe even longer) earlier than planned.
The public needs to learn that there is no point anymore to wait for end of quarter promotions. Then demand will stabilize at whatever it is. For now, demand is lower because of all the people fished out of the pool of potential buyers earlier than planned.

 

[insaneoctane]

Delivery information coming in so far for first halve of Q2 is showing demand weakness again. There is data from China, Europe, and VIN data in the U.S. indicated deliveries are definitely going to be way behind 2023 Q2.

They also will be only a little better than Q1. There really at this point should be no more conjecture that "supply chain issues" explained the low deliveries in Q1. It's just simply incorrect.

https://twitter.com/x/status/1789285939388289119

The demand issue seems further validated by Tesla introducing low interest rate financing.

It will be interesting to see what the financial modelers spit out, but I would imagine automotive earnings will nearly be flat QoQ.

In addition, I think there is the realization happening that FSD subscription increases won't be helping the company financially for quite a while. The 50% cut in FSD subscription prices means that subscriptions will need to double just to make back the money lost from the price cut on current subscribers. FSD subscriptions will need to triple or quadruple probably to even have any real subtle effect on EPS. Not happening for a year at least, and that would be if the FSD gets really good, near robotaxi level.

With Megapack growth capacity stalled until 2025 (meaning no huge further gains until 2026) and Semi delayed, we are essentially now waiting to see what net income can be derived from a fully ramped Cybertruck line as the main contributor to incremental earnings in the next 12 months.

For Q4 if I assume a $80k ASP for 3,000 Cybertrucks / week with 20% operating margins, I get about 600 million in operational income (before taxes). So maybe $0.15 in incremental EPS from Cybertruck.

With costs going down from layoffs and some projects slowing and some additional Megapack revenue, maybe we could get a $0.2 to $0.25 increase in EPS by Q4. Maybe $0.6 or $0.7.

If we can, maybe the market will model $3.5 in EPS in 2025. With a forward PE of say 50, we would get $175 target share price, which coincidentally is near where we are today.

So I think the stock may oscillate around this price +/- 20% depending on sentiment until we get information that would materially affect earnings projections in 2025.

IF demand continues to be challenging for EVs (or vehicles, in general), Tesla's announced pivot to fill out the current Gigafactories with a 2.5 product seems like a resourceful choice.

 

[philw1776]

And they're empowering some other potential customers. Are "all of your friends" like minded folk? Why do they care so much about what Elon says, exactly? Do they prefer buying products from companies where they know nothing about the CEO? Ignorance is bliss, I guess.

As for that <2%, where did that come from? Are you including people who don't even have access to computers or smartphones in that figure, or did you just pull it out of thin air? Looking at the US population it's probably closer to 20% of the population using X (source).

I believe you have not read the last several pages here. These are not my statements.

 

[EVMeister]

I believe you have not read the last several pages here. These are not my statements.

Ah, I see.

Well I have "read" the past several pages. Or tried my best. But honestly, I filter a lot of it out as the noise to signal ratio is just too high here at the moment.

 

[Discoducky]

Great insight as always. Agree with your last statement, with one important exception. If there is no mechanism for new posters to submit content, how does this forum attract and find the next @Gigapress ? And it’s just possible that an existing poster might occasionally have something very useful to say.

Thank you! IMO, if the thread quality goes up, that will attract more quality posts and folks, which in turn would prompt the mod's and current users to put energy in creating an easy way to add more folks. For instance, Community Notes have greatly improved the quality on X along with blue badge folks. On this platform, the mod's are filling these roles in practice and have a merit thread (which is appropriately locked) that *used* to have additions every few days/weeks, but I see hasn't had an update since Jan 24th. I think the idea would be to have a thread like that which is only open to folks the mod's feel are inclusive of 'healthy conflict', debate, discussion and generally moving the thread forward on the material topics of the day for investors. The last thing I want is an echo chamber, so I've tried to engage in other ways, but have found it to be less efficient and valuable than this thread *used* to be. I particularly like knowing which folks are experts in their area give more details and I can re-read several times until I'm able to ask/respond intelligently (or at least my idea of a thoughtful response).

 

[unk45]

The demand in 2023 was artificially high due to an endless stream of promotions, from inventory discounts to fsd transfers and even free supercharging transfers. I’m not even mentioning lower prices. I was one of the persons incentivized by free supercharging transfer to buy 1 or 2 quarters (maybe even longer) earlier than planned.
The public needs to learn that there is no point anymore to wait for end of quarter promotions. Then demand will stabilize at whatever it is. For now, demand is lower because of all the people fished out of the pool of potential buyers earlier than planned.

This is a crucial point in my opinion. Much of promotion is placed within the already existing customer base plus prospects directly influenced by existing customers. That, in turn, shows that many recent Tesla incentives, especially, Supercharger and/or FSD transfer, really effect changed in purchase timing rather than new sales.

An ancillary point is the interest rate subvention, as in the present promotions, does act to influence otherwise ineligible buyers; i.e. in historical context those tend to shift demand to less wealthy customers. Lease subventions tend to have bimodal influence: Those who are tax-based customers tend to shift demand based on those incentives. Lessors who are payment-sensitive but not tax-based generally are lower creditworthiness.

In the US customer base there is another large factor. People ineligible for IRA can lease on more attractive terms because the corporate entity (lessor) can exercise the rebate.

None of these seem to be as significant as would be new market entry, which Elon has recently mentioned. Were that to be done quickly, the effects on P&L should be immediate, particularly because the Capex involved would be relatively modest, except for Supercharger buildout. That is already an issue in, for example, Chile.

 

[Webeevdrivers]

This is a crucial point in my opinion. Much of promotion is placed within the already existing customer base plus prospects directly influenced by existing customers. That, in turn, shows that many recent Tesla incentives, especially, Supercharger and/or FSD transfer, really effect changed in purchase timing rather than new sales.

An ancillary point is the interest rate subvention, as in the present promotions, does act to influence otherwise ineligible buyers; i.e. in historical context those tend to shift demand to less wealthy customers. Lease subventions tend to have bimodal influence: Those who are tax-based customers tend to shift demand based on those incentives. Lessors who are payment-sensitive but not tax-based generally are lower creditworthiness.

In the US customer base there is another large factor. People ineligible for IRA can lease on more attractive terms because the corporate entity (lessor) can exercise the rebate.

None of these seem to be as significant as would be new market entry, which Elon has recently mentioned. Were that to be done quickly, the effects on P&L should be immediate, particularly because the Capex involved would be relatively modest, except for Supercharger buildout. That is already an issue in, for example, Chile.

Speaking of which. I occasionally check to see if there are any new superchargers in Chile. There are still zero. That surprises me as I thought with the building of a showroom there it was an indication of a future or new market. Thoughts?

 

[GatorMeat]

One of the most followed people on the most famous and widely quoted social media sites on earth.
A HUGE part of PR is reach. People pay a LOT for reach. Average social media cost per thousand impressions is $6.
This recent post by elon (only yesterday) has so far got 49.5million views. It will be reported in the news, and quoted and reposted many more times, but lets conservatively stick with 50million views.
Thats $300,000 worth of PR for about 30 seconds work by Elon, and zero cost. Go back another 3 days and he has a spacex tweet with 85 million views.
Even assuming he only has a 50mill Tesla tweet once a month, thats $3.6million in free PR a year.

I think he is good at it.

Elon is not good at PR. Since his recent post Covid heel turn:

Tesla and Elon approval ratings have fallen off a cliff. Half the country hates him, the political right wing he amplifies want to destroy his business, former fans hate him and the majority believe all the FUD about EVs, even when they are told otherwise by EV owners.

The majority think Tesla's are $100k cars,
they need a new $25k battery every 5 years,
they cannot be driven in the winter and don't operate below freeezing,
they may catch fire in the garage,
the grid can't handle EVs,
hybrids are the solution, and even gas cars are better for the environment.

They think Elon is an absolute disastrous, money grubbing (the big truth his fans don't see) billionaire with an unstable, womanizing, multiple baby-mama drama personal life. Go outside of the Tesla/Twitter 'Elon is a God' bubble and see for yourself.

Elon is poor at PR

 

[GatorMeat]

Exactly. Someone that would have had a 10% rate due to bad credit will have a buy down to 5-6% rate. As well the credit risk stays with the bank and is not with Tesla if the buyer defaults.

Do you know for a fact that this is a 4% rate buy down for all?
It's advertised at .99% for well qualified buyers. You think they are also buying down the rates for all buyers?

 

[GatorMeat]

Depends on how you define “started.” They did work to get permission to proceed. Elon Musk receives go-ahead to start DC to NYC Hyperloop tunnel. They had permission in DC to begin digging a tunnel, and had the backing of the then Governor of Maryland, Larry Hogan. Appears they pulled the plug in 2021.

As a developer/builder, I define 'started' as breaking ground, as in permit in permit box on site, contractor hired, all ducks in a row and physically moving dirt and starting actual physical building. As does the whole construction/development profession.

'Started' doesn't mean, 'planing', 'permits submitted', 'developing', 'permitted', 'support from the Gov.', etc.

It's not like Elon doesn't have a history of telling lies like these to pump the stock.

 

[Webeevdrivers]

Elon is not good at PR. Since his recent post Covid heel turn:

Tesla and Elon approval ratings have fallen off a cliff. Half the country hates him, the political right wing he amplifies want to destroy his business, former fans hate him and the majority believe all the FUD about EVs, even when they are told otherwise by EV owners.

The majority think Tesla's are $100k cars,
they need a new $25k battery every 5 years,
they cannot be driven in the winter and don't operate below freeezing,
they may catch fire in the garage,
the grid can't handle EVs,
hybrids are the solution, and even gas cars are better for the environment.

They think Elon is an absolute disastrous, money grubbing (the big truth his fans don't see) billionaire with an unstable, womanizing, multiple baby-mama drama personal life. Go outside of the Tesla/Twitter 'Elon is a God' bubble and see for yourself.

Elon is poor at PR

Yep. Around here we have lots of people considering an EV for their next vehicle. We often get asked questions. Even offer a test drive. But it stops there because although they are sure they will be buying an EV next it definitely won’t be a Tesla because of Elon. It’s just the way it is now.

Even some tesla owners here won’t get another one just so they don’t have to deal with the condescending attitudes of friends and family. It has been an interesting phenomenon to watch the change from 4 and a half years ago. Back then it was the car to own. Now it’s the car to scorn.

Our next vehicle is still an X though.

 

[unk45]

Speaking of which. I occasionally check to see if there are any new superchargers in Chile. There are still zero. That surprises me as I thought with the building of a showroom there it was an indication of a future or new market. Thoughts?

I am bewildered by this one, especially since they could cover the entire country with a dozen or so Superchargers. A long-narrow country is not difficult.

 

[GatorMeat]

I think advertising is more complex than this. Right off the bat, probably most of those views on Elon’s posts are people who actively follow him and they are less likely to need advertising or clarification/defence in the first place.

That’s like going into Red Lobster and shouting about endless shrimp to all the people already sitting in the restaurant.

According to Cliff, advertising and PR need only be done via Twitter via the same account that shitposts all kinds of other crazy