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

[EVCollies]

At an 11% discount rate, I get a share price of $1,865 at Dec 2022. This is the NPV of Cash Flow 2023 - 2042.
It's important to go out 20 years and then add a terminal value in year 21 ( I use 3 times year 20).
This is a lot of work and I short cut it a bit by doing a detailed 10 year forecast and then growing cash flow in years 11-20 by 10% tapering down to 5% as I get to year 20.

That would help with my necessary stock sale to pay Roth Conversion Taxes 4/15/23!

A friend in the financial business said that most analysts are basically doing marketing for their firm, not any serious analysis. Buy recommendations are made to curry favor with a particular company (or fans of the company). "Look at us, we believe in you! Do your business with us!!". Sell recommendations are the opposite - trying to curry favor with competitors (or detractors of the company). "Look at us, we think one of your prominent competitors suck! Do your business with us!!"

Since he told me that, the various "analysts" recommendations started making more sense.

That is true in my field, medicine. Those hospital rankings are nothing other than analysts requesting funds to rank your hospital better than your competitor.

 

[traxila]

After selling off on Friday and the early part of the weekend, cryptos have reversed and are powering ahead again st the moment.

Let’s see if the positive action extends again to equities tomorrow.

 

[CorneliusXX]

I believe Tesla’s promotion to “investment grade” is right around the corner, maybe in “two weeks.” (Thank you @MmeAlexandraS ). I also believe TSLA will have a nice spike higher when it does. (Not to where it should be, but higher just the same.) If I were a hedge fund or portfolio manager, I would think that now would be an excellent time to make an exception to any internal rule against investing in companies with below investment grade ratings. How difficult would that be?

I'm not holding my breath for a ratings upgrade to drive the stock price higher, it's unlikely there's enough investors that only focus on investment grade equities to really move the needle. Besides, we have two monster quarters coming up that will drive the stock price regardless of ratings.

 

[UncaNed]

....that appears to be exactly the same context, carried to its logical, mathematically inevitable, conclusion.

S/X sales were in decline, and especially relative to other models. Tesla focused on ramping other models elsewhere.

That decline has continued, and will continue even further as that other ramping keeps going, in even more places- despite the S/X being refreshed.





And all I'm saying is the issues were exactly the same and Elon was telling you exactly how this would go- and it's exactly how it went.

The only difference between then and now is Tesla executing exactly in the way they said they would, and the inevitable math that comes from that.

Hence Elon in 2019 explicitly saying not to expect S/X to play a big part in the future, and that's exactly what all the "now" numbers you cited show has happened.

Weren't S & X formerly shipped overseas, and so far as I know, have not resumed overseas sales yet, so It's a little premature imply lower S & X demand. Inside EV's quotes "shipments outside of North America to begin in the second half of 2022."

Also, regarding @jhm 's S & X production concerns aren't we:

?

Abandoning the S and X would allow breathing room to other high end EVs to survive and adopt Tesla’s master plan 1 .

Oh, no, not you too??? -

 

[CorneliusXX]

A friend in the financial business said that most analysts are basically doing marketing for their firm, not any serious analysis. Buy recommendations are made to curry favor with a particular company (or fans of the company). "Look at us, we believe in you! Do your business with us!!". Sell recommendations are the opposite - trying to curry favor with competitors (or detractors of the company). "Look at us, we think one of your prominent competitors suck! Do your business with us!!"

Since he told me that, the various "analysts" recommendations started making more sense.

I agree. Why would banks issue research for free if it was that valuable. If we're not paying for it then someone else is and they're the customer.

If the research was valuable then banks would buy equity in a prop trading firm, lend obscene amounts of money to it then only share their research to them. Oh wait, that's where their real research goes.

 

[petit_bateau]

Margins on both the Energy and Service segments were record breaking this quarter.
This is not getting enough attention by the media (surprise, surprise).
Look at those numbers ! 11.2% margin for Energy . . . .3.8% margins for Service. This is a big deal if it's sustainable.

View attachment 832277

It may take a repeat in Q3 for analysts to update their models but I'm doing it now.

View attachment 832276

Yes, that was some pleasant improvement.

If they can keep up the S&S manufacturing progress of the last quarter then there is a slender hope of making the progress required to the stated solar & storage targets. Everything to the right of the line is the forecast I made last year that included an allowance for typical quarterly variations. However I must say that I'm not hopeful on this.

Operationally the worsening of the charger contention ratio has decellerated markedly, though I'd like to see that actually improve especially given the network-opening plans. On the sales & maintenance side there does not seem to be enough satisfaction data for external observers to form a solid view.

Financially on services & other it seems absolutely on-target

 

[Matias]

I cringed at the thought of 3 more factories. The only case for many more would be separate factories very far apart in case of events like volcanoes or something. My favorite worry is Tesla Shanghai's proximity to the ocean.

Weren't S & X formerly shipped overseas, and so far as I

You still can't order S & X in Europe.

 

[dhanson865]

I cringed at the thought of 3 more factories.

I'd cringe at 3 new factories breaking ground at the exact same time right now with Berlin and Austin not fully ramped (Done with the initial ramp period)**.

I'm good with one breaking ground at end of 2022 or early 2023 and another two breaking ground in 2024.

* China = 1 at a time
* Berlin + Austin = 2 at a time, finish them in 2022 before starting
* somewhere A = 1 at a time, started in 2022 or 2023, finish it in 2024 before starting
* somewhere B and somewhere C = to have another 2 at a time going from 2024 until 2026. let those two get up to speed before starting
* the next one (somewhere D) in 2026 or 2027.

** on the topic of fully ramped, I just mean producing in the hundreds of thousands per year. Done with the initial ramp period, not necessarily built out to the maximum size of the land they bought.

 

[Knightshade]

Weren't S & X formerly shipped overseas, and so far as I know, have not resumed overseas sales yet, so It's a little premature imply lower S & X demand.

You appear to have misread my post- I bolded the important part-


"S/X sales were in decline, and especially relative to other models

That decline has continued, and will continue even further as that other ramping keeps going, in even more places- despite the S/X being refreshed.."

This is a factual statement, and says literally nothing about demand- it's about the fact the OTHER models are scaling (and selling) much faster and will continue to do so.




None of which means Tesla won't sell all they plan to make of them (which per their Q2 '22 report has a cap around 100k/yr- though there's very clearly been issues getting anywhere near that since the refresh), but they'll never be a significant % of total sales again.

Which is exactly what Elon said about it in 2019-- they were still making them for sentimental reasons, but to not expect them to be a significant part of Teslas future.

I'd cringe at 3 new factories breaking ground at the exact same time right now with Berlin and Austin not fully ramped (Done with the initial ramp period)**.

I expect there's something to be said here regarding exponential expansion vs. linear.

But fundamentally I'd expect how many they announce by end of year will be based on their projections for cell supply 2 years from now (including what their ability to produce them at scale in new factories is projected to look like then plus supplier projections)

Additionally, as we saw from Shanghai, Berlin, and Austin-- speed from "announce to production" varies by location, so even if they did announce 3 it doesn't mean they'd be expecting to move them all at the same pace and need to be doing the same thing at the same time 3 places.

 

[kanweg]

My point after that long-winded, non-value added preface? If the "financial experts" are this far off on TSLA and ignoring developments at the company, are any of their other analysis or predictions any more valid or less biased? I find many to have lost credibility. TSLA offers a pretty unique opportunity for retail investors because of the expertise offered by independent voices, such as this board, and the more credible Youtubers such as Dave Lee and some others. It's a shame more companies aren't drawing this level of attention.

tipranks ranks analysts by their success. There is an interesting correlation between the ranking and their stock price predictions for Tesla. Higher ranked analysts typically have expected stock price (for a year from now) that are relatively high (sometimes still low compared to what respected members of this forum expect) whereas the bottom analysts may have SP predictions that are a mere fraction of the current stock price. The correlation is not perfect but it is most certainly there.

 

[jerry33]

You appear to have misread my post- I bolded the important part-


"S/X sales were in decline, and especially relative to other models

That decline has continued, and will continue even further as that other ramping keeps going, in even more places- despite the S/X being refreshed.."

This is a factual statement, and says literally nothing about demand- it's about the fact the OTHER models are scaling (and selling) much faster and will continue to do so.




None of which means Tesla won't sell all they plan to make of them (which per their Q2 '22 report has a cap around 100k/yr- though there's very clearly been issues getting anywhere near that since the refresh), but they'll never be a significant % of total sales again.

Which is exactly what Elon said about it in 2019-- they were still making them for sentimental reasons, but to not expect them to be a significant part of Teslas future.

That’s true financially but not true emotionally. People I talk to really love the X, and it’s the X and S that sell the 3 and Y.

 

[aubreymcfato]

Here is the relevant excerpt from Teslas employee stock purchase program:
View attachment 832084

The employee stock purchase program is divided into six month time periods with two purchase dates: Feb 26th and Aug 31st.

First period is Sept 1 - Feb 26th
Second period is March 1st - Aug 31st

What is interesting is how Tesla determines the price for the shares.

Tesla looks at the closing price on the first and last trading days of the period. For the Feb purchase this could be Sept 1 and Feb 26th assuming both days are trading days.

Tesla then takes the lower of the two closing prices, applies a 15% discount on the lower price, and applies this share price as the purchase price for employees.

So the important dates are Sept 1st and Feb 26th, and also March 1st and Aug 31st. Since the dates are adjoining at the beginning and end of each period we can just focus on the purchase dates: Feb 26th and Aug 31st.

Here is how a beneficial stock buyback program could work:

For the time period Sept 1st to Feb 26th. Take the closing price on Sept 1st and apply the 15% discount that employees will receive. This will be the share floor that activates the buyback program. Between Sept 1st and Feb 26th anytime the closing share price breaks below this number Tesla may buyback shares.

This can be applied to the March 1st to aug 31st time period as well. The amount of the buyback would be up to Tesla to decide.

This works under the theory that, in the long run, Tesla will continue to grow and increase profitability so any drops in share price are temporary and likely exacerbated by Fud and shorting.

This post should be saved in the Special Merit thread. It would be handy as a reference in the future.

 

[insaneoctane]

Margins on both the Energy and Service segments were record breaking this quarter.
This is not getting enough attention by the media (surprise, surprise).
Look at those numbers ! 11.2% margin for Energy . . . .3.8% margins for Service. This is a big deal if it's sustainable.

View attachment 832277

It may take a repeat in Q3 for analysts to update their models but I'm doing it now.

View attachment 832276

Using your table one can see service has only been positive in one previous quarter, so that is welcome. But the energy business shows very inconsistent results in your table. I wouldn't bank on energy staying positive from this trend, but agree it would be nice. I expect it will happen, I'm just not sure when...

 

[UncaNed]

The sides of the Cybertruck **might** be too tall or it **might** be too far to reach down even when it's squatting. The sides are a bit of a concern. Not just reaching down over the sides, but for other reasons (see attached photo).

Perhaps there'll be a nice Genuflect mode so it lowers the sides to your exacting specifications and then raises for the floor to meet your items once you've hefted them over the side.

 

[Lance Boyle]

Indeed. Having a standing 'buy-back' policy would enable Tesla to take advantage of those frequent artificial/contrived dips in the SP (a few times per year). Thus, Tesla puts a floor on the SP, and may 'discourage' further monkey business going forward.

However, a continuous high SP works against some of Tesla's internal provisions for stock-based compensation (SBC), where employess are allowed to buy a certain amount of TSLA shares at a reduced price vs. the Market, but based on the lowest Market SP reached during the previous incentive period (2x per year, IIRC).

I think these two mechanisms can be made to work together. However, it does require that Shortzes continue to massively undervalue Tesla as a company (looking at egregious pink-buoy Craig Irwin/Roth Capital Partners). One of these parties will foot the bill, and that right shortly.

I like it. Make it so.

Cheers!

In Your Opinion Sir... What Might Happen To The Short Sellers, Hedge Funds, M.M. ETC. If Tesla Pursued An Aggressive " Buy - Back " Policy/Program?

 

[Knightshade]

Using your table one can see service has only been positive in one previous quarter, so that is welcome.

This service profit thing is actually a really good example of Elon changing his mind on something over time:

Our philosophy with respect to service is not to make a profit on service. I think it's terrible to make a profit on service

Long-term, I would expect service to be a significant revenue item, and to be a positive margin contributor, as it's going to be a function about fleet size

 

[unk45]

Their extraction costs are low because they have a pool of essentially slave laborers and a fully compliant society. But you gotta remember that compliance comes at a steep cost.
...

There are enough serious problems in Saudi Arabia and nearly everywhere to avoid FUD. We all are irate about TSLA FUD but ignore it in many other cases. This one is one that should not be ignored!

Saudi extraction costs are low for the same reason Kuwait's are. The oil is very easy and cheap to produce because of geology. That 'slave labor' does not exist there. A complaint society has nothing to do with it either.

Limits on OPEC Output Increase Global Oil Production Costs

www.nber.org

What you know about The Ghawar Oil Field, Saudi Arabia?

The Ghawar Oil Field is by far the largest conventional oil field in the world and accounts for more than half of the cumulative oil production of Saudi Arabia. Although it is a single field, it is divided into six areas. From north to south, they are Fazran, Ain Dar, Shedgum, Uthmaniyah, Haradh and

csegrecorder.com

I will attempt zero defense of Saudi social or educational policies. That is a distinctly separate topic and has pretty much nothing at all to do with petroleum extraction in the world's easiest to access field.

For TSLA current investment policies in that country are positive. For all mankind undoubtedly we should have figured out solar, wind and tidal resources decades ago, and should have invested Tesla at least 100 years ago. We, globally, did not. We, the west, created 'modern' Saudi Arabia, Iran, Iraq, Kuwait, Qatar and the UAE. Frankly it's ridiculous to become all righteously indignant about the world we created.

Tesla has been built to help accelerate the world for a sustainable future. We should concentrate on that.

 

[Darkfox021]

Margins on both the Energy and Service segments were record breaking this quarter.
This is not getting enough attention by the media (surprise, surprise).
Look at those numbers ! 11.2% margin for Energy . . . .3.8% margins for Service. This is a big deal if it's sustainable.

View attachment 832277

It may take a repeat in Q3 for analysts to update their models but I'm doing it now.

View attachment 832276

Used car sales show up in Service Revenue, right? This part may be a welcome, but only temporary boost.

 

[Words of HABIT]

To be extra clear, Elon did not exactly say Tesla is "nothing" without FSD. If I recall correctly, he said Tesla will be nothing in the future if it doesn't solve FSD while other companies do. This is pretty obvious, since cars/trucks with level 4 or 5 autonomy will obsolete nearly all those without it.

"Elon said Tesla is nothing" is a misinterpretation spread by FUDsters like CNBC (not you).

It should be mandatory that whenever a poster quotes Elon that the poster provide the link to the quote to prevent misinterpretation. Words matter.

EM: "The overwhelming focus is solving full-self-driving and that's essential, and like that's really the difference between Tesla being worth alot of money and being worth basically zero."

So let's say Tesla without FSD is X, and Tesla with FSD is 10X.
Now let's go for lunch. You can have a decent lunch for $10. But wait, you can't buy anything to eat for only $1. $1 is worth basically zero when buying lunch.
Do we all get it now?

 

[unk45]

Legally speaking, you would be incorrect...

You may want to refresh your memory so you can see the statement I was taking issue with:

If you change 'you' to 'I' you'd be correct.
OTOH, the person you were quoting obviously was incorrect, but your responses broadened the issue.
The fundamental issue here is Elon Musk's, and perhaps others, ancillary benefits.
Items not considered business expenses end out being taxable income to the beneficiary one way or another.
This debate is only relevant to TSLA if there are allegations of unreasonable or unreported personal income. That becomes an accounting problem, which is just how such policies end out being resolved. Reasonableness does, from time to time, end out in litigation. That is how it should be, is it not?