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

[sdtslafan]

We should all get together for a come out of retirement party.

 

[ZeApelido]

Even Elon basically admits he's killed the stock.

https://twitter.com/x/status/1603812729755779089

 

[EVNow]

Just recall what happened to Apple after their Board kicked out Jobs because he was too radical.

I don't remember Jobs trashing Apple customers.

 

[Nocturnal]

It's pretty pointless to argue about Elon's antics. Either he is hurting the brand/SP or not.

If you think he isn't, then you just need to buy the dip. Easy.

If you think he is, then it's just a matter of deciding if TSLA is still a good investment today or not. Venting might be a little cathartic, but it doesn't do much to inform your investment decision. I wish I had taken his hard shift into politics and the bird more seriously but crying over spilled milk is a waste.

My current thesis is that Elon is losing Tesla customers, but Tesla will still grow about as much as previously thought. EVs are clearly the future and the other brands can't or won't make enough. I'm my head I'm just adding a margin reduction of 5% to account for this until I get real data. Sure many people might be mad, but not enough people are so political that they would pay 10k more for a rival car with the same specs. A couple grand more? Maybe. If Elon does accelerate his war on every sector of US society then my thesis may change. Hopefully being threatened with sanctions by the EU and some other recent clap backs will get him to back off.

 

[mickle]

TSLA shares buy back coming today?

https://twitter.com/x/status/1603804175858429952

 

[AMN]

Well, 10,000 free supercharging miles... I have to take that Plaid X. LOL

 

[mongo]

Even Elon basically admits he's killed the stock.

https://twitter.com/x/status/1603812729755779089

Since disagrees requires posts...
The tweet has three statements:

1. He's definitely not killing the company
2. The stonk maybe you could argue
3. The company is stronger than every

It's a heck of a stretch Armstrong to claim a like on that is a full agreement to item #2 and that #2 is a fact versus a 'maybe could argue'
Especially when he has strongly advocated #3 from which follows #1 .

 

[FSDtester#1]

TSLA shares buy back coming today?

https://twitter.com/x/status/1603804175858429952

How cryptic is that??? Guesses?

Did he sell Twitter to Gordo?

 

[TrendTrader007]

Rapidly declining stock price in an otherwise financially strong company typically leads to an equally rapid and strong rebound
When, and not if, that rebound happens it will be amazingly impressive
I’m in a way relieved to see fast and furious decline of over 50% in stock price over last 3 months and overall 63% over last 14 months rather than slow torturous drip down over 2 to 3 years. Prognosis of current type seems much better.
At this time I have no idea when or what price bottom will be but surely end should come this month or most by February/March. Once stock price turns around it should be really rewarding for longs

 

[Gigapress]

Thanks @Ogre for bringing this up. Here’s a review.

$7 EPS projections by Wall Street were in fact ridiculously wrong. That’s $2.33 post-split, but actual earnings have been $2.89 in just the first three quarters with probably at least $4.20 for the whole year. So despite the many unexpected major setbacks, EPS is still going to be about double what Wall Street analysts projected.

Deliveries
With deliveries tracking for approximately 1.35M this year, obviously my delivery estimate even for the bear case was a bit too high. If I remember correctly that was meant to be a 10th percentile case.

Main unanticipated reasons for the miss:

• Continued COVID Zero lunacy in China that in January I expected would not happen again
• Invasion of Ukraine
• Two extra months of government delays at Berlin in Q1
• Neglecting inventory buildup as a natural consequence of larger production volume

As @Artful Dodger pointed out here, we lost roughly 200k production from Shanghai from COVID Zero ramifications.

As for Berlin, it’s doing about 3.3k per week now. With addition of a third shift imminent, approximately 5k per week will come next month, or around 22k, and maybe a few extra thousand the month after that. Thus, the delay earlier this year probably cost us about 55-60k from Berlin by pushing back the ramp schedule.

Then the invasion of Ukraine caused all kinds of disruptions to the supply chain that probably cost a whole bunch more production, but it’s hard to estimate how much. We do know that severe supply shortages resulted in major production decreases for some of the other major automakers, so I wouldn’t be surprised if this cost Tesla about another 100k. For example, up through October, VW Group’s year-to-date global deliveries were down 10.6% vs 2021 (source). Toyota is cutting production as well and idling factories. The industry as a whole is selling as many as last year and much less than 2019.

Without these unanticipated setbacks, 2022 deliveries would’ve been approximately 1.6-1.7M, as expected.

I also didn’t think of the fact that inventory would naturally tend to rise in rough proportion to production rates. Even if inventory stayed at about one week of sales, we’re selling like 20k more cars per week than at the end of last year. I failed to account for this in January. Oops.

Finally, I had expected Berlin and Texas to ramp somewhat faster than they actually have. Thus far they’re going slower than Shanghai did and are slightly behind the 5k/week target for the end of year that Elon had guided for earlier this year. This was a minor impact though of about 20k units because the overall numbers are still small.

Revenue Per Vehicle
The YTD average is $55.2k per car as of Q3 (including ZEV credits). Q4 should drag this up to around $55.6k, per my current estimates.

My January estimates were too high mainly due to:

• Guessing wrong on how quickly all the price hikes would actually come into effect
• Predicting that high-priced initial Cybertruck deliveries would begin this year
• Strong $USD from crazy forex moves
• Underestimating how much of Shanghai’s growth would come from SR variants with LFP packs

I still think we’ll hit the projected numbers but it’ll take until next year. I believe now that my timing was off by a couple quarters. For reference, right now I’m estimating $56.5k avg rev per veh for Q4 and slightly more than $60k by Q2/Q3 2023.

I have no expertise in forex stuff and left that out of my model and still am doing so. Normally this doesn’t make much of a difference but 2022 had some extraordinary forex action thanks mostly to the Fed hawkishness and with simultaneous recessions in Europe and China that the USA was mostly spared from. Tesla said this caused a $250M impact in Q3 alone. This probably has affected overall 2022 avg revenue per car by like $400 thus far.

Gross Margin
Too low mainly as a consequence of some of the same reasons listed above.

Lower than expected revenue per car feeds straight into GM obviously. This caused the majority of the error.

Government disruption to Shanghai not only hurt margins at Shanghai, but also dragged down global average margin because of Shanghai being the most profitable factory for 2022.

Cost of goods per car was roughly as I modeled in January after factoring out Shanghai shutdown, so this wasn’t the issue.

Operating Expenses
On track to come in at about $7B, for better leverage than expected.

Bottom Line

• Wall Street was embarrassingly wrong again
• Great things happened within Tesla mostly as predicted
• An exceptionally bad series of external misfortunes from macroeconomy, war and government failings dragged down results
• Price increases came as expected but laggier than expected due to long backlog
• Progress on earnings and delivery growth is about one or two quarters delayed

Addendum:

I am glad in general for having predicted multi-thousand dollar ASP increase relative to 2021 and more so for correctly predicting that more major price hikes were coming in 2022, although the immediate trigger appears to have been a spike in EV interest caused by high gas prices after the surprising invasion of Ukraine. Getting the timing of backlog fulfillment wrong and not anticipating the wild change in the value of USD$ is temporarily masking the fundamental underlying trend of improved unit economics. I don't remember many people modeling for it to increase by ~$5k relative to the $50.7k it was in Q4 '21.

The main failure of the revenue per vehicle model was overestimating the speed with which the orders at new prices were fulfilled and then a strong USD$ artificially depressing the value of orders abroad. These are temporary factors and the long-term trend is still that when the smoke clears, the higher prices will come through to the bottom line, especially for Model Y which will make up majority of deliveries in 2023.

In the future, I will include more safety margin in the estimates for external challenges. 2023 was much worse than average for forces majeures, but I at least need to discount the effect government actions like wars, lockdowns and bureaucracy can have on Tesla's growth. Accordingly, I have reduced my expectations for the growth rate at Shanghai and Berlin for the next couple years in case of more lockdowns or the activist attempts to halt Giga Berlin construction for expansion are successful in slowing down the project.

Still looking at 2023 having about 2.4-2.8M deliveries, but think there's much less probability of achieving 3M or more than I thought a couple quarters ago. It could still happen, but it would require a confluence of tailwinds in 2023 on par with the confluence of headwinds we faced in 2022. Tesla only has so much control.

 

[SO16]

How cryptic is that??? Guesses?

Did he sell Twitter to Gordo?

I suspect more T files release.

 

[BornToFly]

Sure seems like if they can't take out 150 today, they will next week. Question is where does it stop? 140? 130?

 

[Moon Buggy]

TSLA shares buy back coming today?

https://twitter.com/x/status/1603804175858429952

I highly doubt it. That's not where his head is at. Very likely more Twitter Files.

 

[BornToFly]

How quickly can Elon make the Bird profitable, go public with it again, and then put all his money back into Tesla?

(asking for a friend)

 

[larmor]

How quickly can Elon make the Bird profitable, go public with it again, and then put all his money back into Tesla?

(asking for a friend)

Twitter payments...

 

[bballshinobi]

TSLA shares buy back coming today?

https://twitter.com/x/status/1603804175858429952

I think he's talking about us TSLA investors lol

 

[Artful Dodger]

Hence, there is no need to rebalance based on the price decrease as long as the index owned the appropriate amount of Tesla shares in the first place.

As an alternative to your hypothetical example, here's the personal opinion of someone with decades of experience on Wall St.

Alexandra Merz on Twitter: "Just a quick reminder: Volume will be crazy today and tomorrow. All ETFs & funds indexed on the S&P 500 need to rebalance quarterly, and now have to sell $TSLA. TSLA stock lost 45% in the last 3 months, S&P only 5%. It is what it is." / Twitter | Dec 15, 2022​

 

[rallykeeper]

Here is what happens next.

1.) It will involve Twitter files and the topic is most likely to be Fauci.
2.) Elon right or wrong will make inflammatory statements around this.
3.) Someone is going to post the AMZN chart next to TSLA and make statements like "Did AMZN or Bezos buy Twitter?!!??"
4.) Using #3 chart as supporting evidence, say Musk has nothing at all whatsoever (like totally nothing to do at all) with the effect on TSLA.

Funny. I'll take the bait on #3 since I'm just catching up! On the AMZN chart, no sense in arguing it, but I really wish the posters of that chart would acknowledge that they've cherry-picked the time period and the comparative companies. (Of course, I've cherry-picked too, but that's my point!)

Here are 2 other charts. One from April 18 through this morning. And trailing 2 years. Now try and make the same arguments as before....

 

[elasalle]

So how many cars do you suspect Tesla would produce if Musk sold Twitter entirely? Probably 3-3.1m easily right?

/s

or he could buy couple of million chairs from under the couch

 

[Webeevdrivers]

How quickly can Elon make the Bird profitable, go public with it again, and then put all his money back into Tesla?

(asking for a friend)

I am curious about the first part of that. Only from the perspective of how long until he gets it to a point where he can hire a CEO and get back to his real job.