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

[StealthP3D]

I'll throw in Elon's quote about "the machine that builds the machine" being the most important factor to Tesla's growth as one of the predictions to watch. Especially this year as we will be able to see how quickly Berlin and Austin can ramp vs. Shanghi historical experience.

I would not expect the speed of the ramp to be a good indicator of how improved the "machine that builds the machine" really is. It's probable that a slow ramp could be indicative of a more technologically advanced production line that needs significant development and fine tuning to get humming at the peak speeds it's capable of. A very quick ramp in volumes could be more indicative of a production line that is more of a cut/paste of existing production lines.

 

[Ogre]

Indeed, and a huge amount of the hardware and software complexity comes as a result of trying to clean their poisons to the minimum extent they can get away with. Layer upon layer of weight, expense, complexity, software, calibration, sensors, actuators. Ridiculous really and they really need to be done away with ASAP.

Its funny, I was reading this and didn’t quite catch the context and I first thought about the destructive mining techniques most companies use.

So much of modern mining is based on processes which involve massive amounts of toxic chemicals then building increasingly complex machines to try and recapture or reuse those toxic chemicals. Then finally just giving up and outsourcing that mining to other countries.

I am very glad Tesla is pushing for cleaner mining techniques and look forward to seeing their take on lithium mining which is one of the dirtiest of the bunch.

 

[Don TLR]

Did Craig Irwin really just say something positive about Tesla?

“So short term, six days where Shanghai shut down does have an impact. We still grew deliveries sequentially by a scratch, a tad,” Irwin said. “You know, Austin’s ramping, Berlin’s ramping. So if there is a larger headwind in China, there may be some complications there. But Tesla– I wouldn’t be trading Tesla for a miss here. I think they’re actually pretty well teed up for the next series of quarters.”

Tesla analysts still confident in TSLA despite Giga Shanghai shutdown and supply chain challenges

Tesla analysts from Roth Capital Partners and Deutsche Bank are confident in TSLA stock and the company’s fundamentals. Tesla delivered a whopping 310,048 vehicles in Q1 2022, setting another record for deliveries in a quarter. The company produced 305,000 cars in the first quarter. Tesla...

www.teslarati.com

 

[thesmokingman]

Lmao, Amazon... next move copy SpaceX, same as last moves. They are getting into the satellite internet business.

Amazon announces huge rocket deal to launch its satellite internet constellation

Amazon is moving its business into the exosphere, with plans to deploy more than 3,000 satellites to beam internet connectivity all over the planet. On Tuesday, the company announced deals with three rocket companies that will launch those satellites.

www.cnn.com

 

[jbcarioca]

...

note: While Mercedes has the best automotive margins in the business, they compete in a rather niche market. Their high margins are not due to efficiency of manufacture but the fact that they can charge so much more simply because the product is of superior quality and/or so desirable amongst buyers for whom the quality/brand reputation is so much more important than price. Tesla has some of this same dynamic explaining their high margins but they compete in a much bigger market. I expect to see Mercedes volumes decline over the next 3-5 year timeframe which will cause their margins to collapse. It might even be apparent within a year.

This is a common misconception among US consumer-oriented people is that Mercedes Benz is possessed of the best margins and niche markets. Mercedes vans, trucks and busses, from Thomas-Built, to Smart, Sprinter and several others belie the niche-market story fairly well, as well as the suggestion of the "best automotive margins". Ferrari and Porsche, both public and more logically 'niche' ,show that the best ICE margins are indeed found with niche products.

The Tesla advantages are not related to niche markets but are a function of brilliant execution of vertical integration. Many of us keep misunderstanding how high gross margins and free cash flow are the result of:
-a business model that has an industry unprecedented short cash conversion cycle, related to the distribution and sales business model, uniquely so.
-a bisness model that treats manufacturing as a core product, so are by far the most efficient producer of motor vehicles.

Niche markets are the province of Ferrari and Porsche, which do indeed give high margins, if one really gets the product right. Check out Aston Martin, Lamborghini and several others to see what happens when they do not get the equation quite perfectly. Were they independent Rolls-Royce, JLR, Bentley and some others, can show what happens if the approach is deficient in any way.

BMW might be more apt than is Mercedes Benz. They even manage to keep Rolls Royce afloat by using mostly BMW parts.

Now back to how Tesla manages to have high margins and astounding Free Cash Flow.

 

[Knightshade]

Lmao, Amazon... next move copy SpaceX, same as last moves. They are getting into the satellite internet business.

Amazon announces huge rocket deal to launch its satellite internet constellation

Amazon is moving its business into the exosphere, with plans to deploy more than 3,000 satellites to beam internet connectivity all over the planet. On Tuesday, the company announced deals with three rocket companies that will launch those satellites.

www.cnn.com

This is not new. Just the specific launch deal your story cites is new.

Amazon wants to launch thousands of satellites so it can offer broadband internet from space

Amazon is planning to build a network of more than 3,000 satellites, federal filings reveal, in an ambitious attempt to provide global internet access.

www.cnbc.com

That's from April 2019... (and AWS had begun building ground stations in mid 2018 before that)

They're among the folks who had been fighting regulatory battles against spacex in recent years trying to slow them down.

 

[Todd Burch]

Lmao, Amazon... next move copy SpaceX, same as last moves. They are getting into the satellite internet business.

Amazon announces huge rocket deal to launch its satellite internet constellation

Amazon is moving its business into the exosphere, with plans to deploy more than 3,000 satellites to beam internet connectivity all over the planet. On Tuesday, the company announced deals with three rocket companies that will launch those satellites.

www.cnn.com

That's going to be....expensive...without reusable launch vehicles.

 

[StealthP3D]

This is a common misconception among US consumer-oriented people is that Mercedes Benz is possessed of the best margins and niche markets. Mercedes vans, trucks and busses, from Thomas-Built, to Smart, Sprinter and several others belie the niche-market story fairly well, as well as the suggestion of the "best automotive margins". Ferrari and Porsche, both public and more logically 'niche' ,show that the best ICE margins are indeed found with niche products.

That's a nice word salad but, as you know, I'm too stupid to understand it!

 

[thesmokingman]

That's going to be....expensive...without reusable launch vehicles.

And wasetful no doubt.

 

[StarFoxisDown!]

Bear in mind that Tesla will not warrant a 200x PE in the near future.

We are currently in the steepest part of earnings growth, and that will slowdown in percentage growth terms through 2023 as net profit growth rate will more closely match the top line revenue growth rate as OpEx becomes smaller vs gross profits.

eg: Going from $1 EPS to $11 EPS is 1000% growth, but going from $11 EPS to $22 EPS is only 100% growth. And then $22 EPS to $38.50 EPS is 75% growth, $38.50 to $57.75 is 50% growth etc etc.

Tesla's earnings will grow close to 100% for the next 3 consecutive years. It absolutely deserves a 200X PE. Companies growing their earnings at 10-20% annually easily get 25-40X PE multiples.

Btw we're not at the "end" of the steepest curve in earnings growth. More like just the first quarter of a 4 quarter game. Austin/Berlin plus the major expansion of Giga Shanghai + the new Shanghai factory will provide operational leverage for easily the next 3 years that will provide 100% earnings growth until end of 2025.

If FSD (not Robotaxi) gets solved and wide release, earnings growth is going to be materially higher than 100% for the next 3 years.

 

[M|S|M MYP]

Tesla's earnings will grow close to 100% for the next 3 consecutive years. It absolutely deserves a 200X PE. Companies growing their earnings at 10-20% annually easily get 25-40X PE multiples.

Btw we're not at the "end" of the steepest curve in earnings growth. More like just the first quarter of a 4 quarter game. Austin/Berlin plus the major expansion of Giga Shanghai + the new Shanghai factory will provide operational leverage for easily the next 3 years that will provide 100% earnings growth until end of 2025.

If FSD (not Robotaxi) gets solved and wide release, earnings growth is going to be materially higher than 100% for the next 3 years.

So $5- $7k/share by 2025...got it

 

[Ogre]

That's going to be....expensive...without reusable launch vehicles.

My guess is they were planning on launching this service hand-in-hand with Blue Origin. I think Blue Origin was counting on NASA funding to help get their reusable orbital rocket funded. Since NASA ended up choosing Tesla exclusively for the Artemis project due to budget constraints, Blue Origin has to self-fund which is slowing things down.

Meanwhile back on earth, SpaceX slowly increases market and mind-share and is the cheapest way for anyone to get to orbit.

It feels a lot like Bezos tried to duplicate everything Musk has done, but almost every one of those efforts is falling short. Could be a coincidence, but seems unlikely.

 

[Chunky Jr.]

Did Craig Irwin really just say something positive about Tesla?

“So short term, six days where Shanghai shut down does have an impact. We still grew deliveries sequentially by a scratch, a tad,” Irwin said. “You know, Austin’s ramping, Berlin’s ramping. So if there is a larger headwind in China, there may be some complications there. But Tesla– I wouldn’t be trading Tesla for a miss here. I think they’re actually pretty well teed up for the next series of quarters.”

Tesla analysts still confident in TSLA despite Giga Shanghai shutdown and supply chain challenges

Tesla analysts from Roth Capital Partners and Deutsche Bank are confident in TSLA stock and the company’s fundamentals. Tesla delivered a whopping 310,048 vehicles in Q1 2022, setting another record for deliveries in a quarter. The company produced 305,000 cars in the first quarter. Tesla...

www.teslarati.com

"...so I'll keep my TSLA price target at 1/10 the current price"

 

[StarFoxisDown!]

So $5- $7k/share by 2025...got it

It "should".....but we all know it won't

More likely I think it trades at 125-150X PE at end of 2022. 100-120X PE end of 2023. 75-100X PE end of 2024. 60-75X PE end of 2025.

 

[insaneoctane]

That's more Honda than GM. Honda is in a really difficult, self-inflicted position at the moment.

FIFY

 

[jbcarioca]

.. They correctly surmised that there was no moat with EVs...

This is the only point on which I disagree with you. Otherwise I think you're spot on.
There is substantial competitive advantage in EV technology. No 'moat' because there really is not such a thing. Just ask Kodak!
From cells to battery packs, from Battery Management Systems to motors, from Giga-castings to factory automation...BEV manufacturing, distribution and support are all very different than ICE. Even OTA updates are essential when the technologies are rapidly changing, not so much when they are not.
BEV require charging infrastructure. ICE needed fuel, but John D Rockefeller did that himself.

If there is a modern equivalent in must be Elon Musk.
Not a 'moat' but sustainable competitive advantage. In that, John D is still an excellent example. The companies he formed are still the world's largest ones, a century later. Only the switch to renewable energy and BEV finally threaten their dominance. No 'moat' but he was the one who made the most investment in distribution to match production.

If anything really may resemble a 'moat' it is the simultaneous combination of Superchargers and manufacturing efficiency ('the Alien dreadnaught').
Only John D Rockefeller did that so completely. Thomas Edison and Alexander Graham Bell did that in a country or so. Standard Oil and Tesla 'did do'/'are doing' it in much of the world. Others are learning, but nobody will beat Tesla until regulatory intervention limits their market domination.

Elon Musk is developing seriously analogous characteristics to John D Rockefeller, too.

I welcome argument if you think I'm wrong.

 

[StealthP3D]

Last time it had enough authorized shares to do a split.

This time it does not (unless it were a very narrow and awkward one like 1.8:1 or something)

The board could vote to "announce a split pending shareholders passing a vote to approve more shares but they absolutely do need a shareholder vote to actually perform the split because currently not enough authorized shares exist to do even a 2:1 split- and the board can not increase that number without shareholder approval.

Tesla has not yet announced an intended split ratio. The fact that they have announced they will be asking shareholders to approve more shares indicates they intend to split each share at a greater ratio than the number of authorized shares would allow. But it is possible for them to perform a split right now without a shareholder vote.

Haven't you ever owned a stock that split 1.5/1? Many companies have done this so it's technically incorrect that Tesla cannot effect a split without shareholder approval.

The bottom line, regardless of this fact, is that I find most of the reporting on Tesla's announcement seriously lacking in factual accuracy (when they represent it as a vote to split the shares). News stories should accurately state the news, not butcher it.

 

[hobbes]

Europe looking good! Best quarter ever, even though Q1 is usually not as strong as later Qs. Hope it stays that way with Shanghai shutdown (lots of cars going to Europe from there).
Via @Troy :

https://twitter.com/x/status/1511324688814948358

https://twitter.com/x/status/1511319567376818182

Details in our wiki: Wiki - Tesla Europe Registration Stats

Switzerland nice, too - 3+Y in the first two places take 39% of the top ten sales (of all cars):

https://twitter.com/x/status/1511065438763077634

 

[Knightshade]

Tesla has not yet announced an intended split ratio. The fact that they have announced they will be asking shareholders to approve more shares indicates they intend to split each share at a greater ratio than the number of authorized shares would allow. But it is possible for them to perform a split right now without a shareholder vote.

Haven't you ever owned a stock that split 1.5/1? Many companies have done this so it's technically incorrect that Tesla cannot effect a split without shareholder approval.

I literally pointed this out in the post you quoted- so it's weird you think you're telling me something here.

(unless it were a very narrow and awkward one like 1.8:1 or something)

 

[TheTalkingMule]

Elon Musk is developing seriously analogous characteristics to John D Rockefeller, too.

I was just think that very same thing this morning. Henry Ford innovating, or JDR dominating the landscape? Likely will be seen as a combination of both once it's all said and done.

This highlights the importance of technology in human civilization. Drop JDR into his world and you get....scarcity, greed, chaos. Drop Elon into this world with the same dominant mentality and you get..... sustainable abundance.