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

[Mengy]

For god sake, unpacking my use of an emotion to stock price is hardly worthwhile . You know what I'm saying, and just in case you don't, I'm saying Tesla could continue to execute, continue to have high margins, but still end up with a PE of 30 or lower by year end. The share price could also revisit 100 or lower.

Now imagine if we do enter into a big recession and the economy gets much worse before it gets better. Auto sales would drop even more as spending on high priced items decreased. It's reasonable to assume this would impact Tesla as well, resulting in either decreased demand for Tesla's OR forcing Tesla to lower prices even further to keep sales flowing. Musk has already stated he'd lower prices to keep sales going, which would hit our margins even harder than we will see in a few weeks at the Q1 ER.

So, if things do get worse before they get better, and Tesla sees meaningful margin hits, it's very easy to see how Wall Street could spin that into Tesla FUD thereby keeping our PE suppressed or even dropping it very low once again (well under 50), despite Tesla executing well with production ramps, improving manufacturing efficiencies, starting CT production, increasing Megapack sales, etc.

My hunch is 2023 will be a largely flat to lower year as the inflation crisis plays out over a long, delayed timeframe. 2024 should be much more positive for the market as the recovery should be in full swing by then, but I think the market will get worse in 2023 before it gets better, and it's unreasonable (IMHO) to expect TSLA to be excluded from that.

Of course, I'd love to be wrong! It would be great if things only go up from here, I just don't expect that to be the case.

 

[AndrewZ]

Last time I looked, 23Q1 had higher for both production and deliveries than 22Q4, with deliveries being approximately 6% lower than production, as pointed out above, it's hard to improve on that %age at this scale... so Tesla essentially delivered all they could from a constrained production capacity.

To where there cars were delivered to is rather irrelevant, IMO, as Tesla have historically favoured some territories over others in different quarters for a multitude of reasons

Probably lots of nuance and impact to the bottom line when it comes to pricing power in each area, things like shipping costs, currency exchange rates, etc

I bet this is something Tesla puts a lot of work into

 

[EVNow]

In the context of inventory going up from 13 to 16 days of sales, here is the question I'd like Zach to answer at ER call.

What is the most operationally efficient and cost effective inventory level for Tesla in Q2 ? What is it in a year's time after Berlin and Austin have ramped up ?

 

[Stormy24]

Bad jobs report = market down
Good jobs report = market down

HODL till 2030

HODL til 2030 just in time for next pandemic, bank crash, war, next recession cycle, ai world domination…

 

[petit_bateau]

When 3 first came out, Tesla used to benchmark the price to BMW 3.

How is the comparison now?

What are you comparing to now?

I hadn't been too analytical when making the comment. I was simply looking at the UK best seller list that @UkNorthampton put up earlier and making an observation based on the results

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

A lot of the stuff below the Y is smaller/cheaper. Until the 2/Z are available the only way for Tesla to attack that segment - and thereby continue to ramp volumes (if there is excess production capacity in the 3 lines, or in the cell supply) is to reduce the cost / price of the 3.

However using your BMW suggestion for comparitive purposes. New BMW 3-series start at GBP 40k in UK for 320i. (Auto Trader UK - New and Used Cars For Sale) The Model 3 SR basic is at GBP 43k. (Model 3 | Tesla) So I'd say Tesla is likely production constrained on the 3 (for whatever reason) and therefore continuing to price high to choke demand.

 

[mongo]

The question was "Q1 vs. Q4".

There were 22,404 cars delivered in Q4-22 and 13,355 cars delivered in Q1-23, that's a 40% drop.

And to answer the question: it most likely relates to much higher electricity prices (both domestic and at public chargers, incl. SuC) and higher lease rates as a result of the Bank of England raising interest rates. Tesla's price cuts weren't enough to compensate for these headwinds. Keep in mind, the overall car market went UP by 1%, and total BEV sales went up by 4.5%.

Yeah, I copied in the the wrong comparison number, but the original issue was the Q1 prediction of
March: 2522
Q1: 4203
for the UK.

 

[phoggy123]

Now imagine if we do enter into a big recession and the economy gets much worse before it gets better. Auto sales would drop even more as spending on high priced items decreased. It's reasonable to assume this would impact Tesla as well, resulting in either decreased demand for Tesla's OR forcing Tesla to lower prices even further to keep sales flowing. Musk has already stated he'd lower prices to keep sales going, which would hit our margins even harder than we will see in a few weeks at the Q1 ER.

So, if things do get worse before they get better, and Tesla sees meaningful margin hits, it's very easy to see how Wall Street could spin that into Tesla FUD thereby keeping our PE suppressed or even dropping it very low once again (well under 50), despite Tesla executing well with production ramps, improving manufacturing efficiencies, starting CT production, increasing Megapack sales, etc.

My hunch is 2023 will be a largely flat to lower year as the inflation crisis plays out over a long, delayed timeframe. 2024 should be much more positive for the market as the recovery should be in full swing by then, but I think the market will get worse in 2023 before it gets better, and it's unreasonable (IMHO) to expect TSLA to be excluded from that.

Of course, I'd love to be wrong! It would be great if things only go up from here, I just don't expect that to be the case.

I think you are largely right here. But my guess is WS is not ready for the margins Tesla shows the middle of this month at earnings. This will be a surprise catalyst that puts us in the 230 range. At that point we are going to hit a ceiling till the next shoe drops. I think inflation is going to be "over" by summer and everyone will be in a panic about the the coming serious recession. Feds gonna cut 3% by EOY which will propel us and other tech stocks in 2024. There just isn't enough buying pressure right now to knock us to 300...just my opinion.

 

[Tim S]

[Narrator voice] It wasn't, 13,355 for 2023 vs 15,557 for 2022.
;-)

Thanks, but my question, and the post I was responding to, were about QOQ deliveries in the UK. Your response is about YOY.

Q1 2023 13,355
Q4 2022 22,404

In the post I responded to, @Todd Burch estimated 4,203 for Q1 2023. He obviously underestimated March deliveries; it seems like the wave was still in effect for the UK.

Judging from the Q1 numbers by model, and the comment by @thx1139, the answer to my question is that UK vehicles (Right Hand Drive) all come from Shanghai, and the Model 3 line there was shut down for part of Q1 (retooling and/or holiday?).

Does that make sense?

Also, there is a seasonality issue in the UK due to semi-annual model year changes in early April.

Hopefully all these factors mean Q2 should be a good quarter in the UK.

 

[Nocturnal]

I think you are largely right here. But my guess is WS is not ready for the margins Tesla shows the middle of this month at earnings. This will be a surprise catalyst that puts us in the 230 range. At that point we are going to hit a ceiling till the next shoe drops. I think inflation is going to be "over" by summer and everyone will be in a panic about the the coming serious recession. Feds gonna cut 3% by EOY which will propel us and other tech stocks in 2024. There just isn't enough buying pressure right now to knock us to 300...just my opinion.

We are already there with inflation I think. Cuts in supply (oil) that cause prices to increase is not inflation as we think of it. Now everyone is thinking that we have a recession knocking.

Hope you are right on margins. Good odds but I don't have a solid read.

 

[Chocochip]

Yeah, I copied in the the wrong comparison number, but the original issue was the Q1 prediction of
March: 2522
Q1: 4203
for the UK.

Yeah, that prediction for March was completely unreasonable. Nevertheless, the actual number was below expectations (despite, incidentally, being the largest March delivery number for any European country for Tesla).

 

[MartinAustin]

Ugh. I thought TSLA was going to bounce off $187

 

[Featsbeyond50]

Now imagine if we do enter into a big recession and the economy gets much worse before it gets better. Auto sales would drop even more as spending on high priced items decreased. It's reasonable to assume this would impact Tesla as well, resulting in either decreased demand for Tesla's OR forcing Tesla to lower prices even further to keep sales flowing. Musk has already stated he'd lower prices to keep sales going, which would hit our margins even harder than we will see in a few weeks at the Q1 ER.

So, if things do get worse before they get better, and Tesla sees meaningful margin hits, it's very easy to see how Wall Street could spin that into Tesla FUD thereby keeping our PE suppressed or even dropping it very low once again (well under 50), despite Tesla executing well with production ramps, improving manufacturing efficiencies, starting CT production, increasing Megapack sales, etc.

My hunch is 2023 will be a largely flat to lower year as the inflation crisis plays out over a long, delayed timeframe. 2024 should be much more positive for the market as the recovery should be in full swing by then, but I think the market will get worse in 2023 before it gets better, and it's unreasonable (IMHO) to expect TSLA to be excluded from that.

Of course, I'd love to be wrong! It would be great if things only go up from here, I just don't expect that to be the case.

I agree on all points and add, what I've been saying for months; no appreciable share price increase until CT is successfully ramping.

 

[Artful Dodger]

To be candid stock prices are not 'rational' or 'irrational'. They are, in nearly all global markets, established by 'market makers', a concept that is centuries old, established in the US case by a conference under the famed Buttonwood tree which was intended to protect brokers and underwriters and nobody else.

Haha, you are a fountain of knowledge. Thanks for that! Great story; interesting read:

Meet the Famous Buttonwood Tree of Wall Street | thewallstreetexperience.com/blog

Meet the Famous Buttonwood Tree of Wall Street | The Wall Street Experience

The buttonwood tree on Wall Street outside the NYSE is a symbol of American finance. Learn why plus what to see when you visit.

www.thewallstreetexperience.com

 

[Tim S]

The question was "Q1 vs. Q4".

There were 22,404 cars delivered in Q4-22 and 13,355 cars delivered in Q1-23, that's a 40% drop.

And to answer the question: it most likely relates to much higher electricity prices (both domestic and at public chargers, incl. SuC) and higher lease rates as a result of the Bank of England raising interest rates. Tesla's price cuts weren't enough to compensate for these headwinds. Keep in mind, the overall car market went UP by 1%, and total BEV sales went up by 4.5%.

Thanks for clarifying I was talking about QOQ.

However, I disagree that the drop has anything to do with electricity prices or interest rates. Those factors are not unique to the UK. I believe it is mainly a production/logistics issue getting the vehicles from China to the UK, along with some buyers waiting for the new model year license plates in April.

 

[mongo]

Yeah, that prediction for March was completely unreasonable. Nevertheless, the actual number was below expectations (despite, incidentally, being the largest March delivery number for any European country for Tesla).

Thanks, but my question, and the post I was responding to, were about QOQ deliveries in the UK. Your response is about YOY.

Q1 2023 13,355
Q4 2022 22,404

In the post I responded to, @Todd Burch estimated 4,203 for Q1 2023. He obviously underestimated March deliveries; it seems like the wave was still in effect for the UK.

Judging from the Q1 numbers by model, and the comment by @thx1139, the answer to my question is that UK vehicles (Right Hand Drive) all come from Shanghai, and the Model 3 line there was shut down for part of Q1 (retooling and/or holiday?).

Does that make sense?

Also, there is a seasonality issue in the UK due to semi-annual model year changes in early April.

Hopefully all these factors mean Q2 should be a good quarter in the UK.

My response was meant to only be a throwback to the Q1 estimate people took issue with which was 1/3 of actual as a resolution to the "so much" part of "so much lower".

I had no conscious focus on YoY vs QoQ and copied in the wrong second value. As often happens, like an inflamed appendix, the as-an-aside data I added becomes the issue.

 

[jerry33]

The question was "Q1 vs. Q4".

There were 22,404 cars delivered in Q4-22 and 13,355 cars delivered in Q1-23, that's a 40% drop.

And to answer the question: it most likely relates to much higher electricity prices (both domestic and at public chargers, incl. SuC) and higher lease rates as a result of the Bank of England raising interest rates. Tesla's price cuts weren't enough to compensate for these headwinds. Keep in mind, the overall car market went UP by 1%, and total BEV sales went up by 4.5%.

Q1 vs Q4 have no bearing on anything as car sales are typically lowest in Q1 and highest in Q4.

 

[larmor]

Ugh. I thought TSLA was going to bounce off $187

We all know that continued profits, selling of all cars made, and continuing r&d for both hardware and software is a strong market downgrade,

 

[oldTAVguy]

Pre-Covid sales comparison in Europe...

https://twitter.com/x/status/1643597909802336257

One is not like the others...
(well maybe two Porsche

 

[wtlloyd]

Now imagine if we do enter into a big recession and the economy gets much worse before it gets better. Auto sales would drop even more as spending on high priced items decreased. It's reasonable to assume this would impact Tesla as well, resulting in either decreased demand for Tesla's OR forcing Tesla to lower prices even further to keep sales flowing. Musk has already stated he'd lower prices to keep sales going, which would hit our margins even harder than we will see in a few weeks at the Q1 ER.

So, if things do get worse before they get better, and Tesla sees meaningful margin hits, it's very easy to see how Wall Street could spin that into Tesla FUD thereby keeping our PE suppressed or even dropping it very low once again (well under 50), despite Tesla executing well with production ramps, improving manufacturing efficiencies, starting CT production, increasing Megapack sales, etc.

My hunch is 2023 will be a largely flat to lower year as the inflation crisis plays out over a long, delayed timeframe. 2024 should be much more positive for the market as the recovery should be in full swing by then, but I think the market will get worse in 2023 before it gets better, and it's unreasonable (IMHO) to expect TSLA to be excluded from that.

Of course, I'd love to be wrong! It would be great if things only go up from here, I just don't expect that to be the case.

Seems logical and likely.

And then, you're sitting at a stop light, waiting for the change. And a Cybertruck pulls up along side.

Once there are around 1000 Cybertrucks on the roads and highways, parked in driveways and parking lots, during the long, slow news dog days of summer (hopefully), there won't be enough advertising money in the world to compete with "Tesla Tesla Tesla!".

It's like floating in a pond, drifting and dozing, thinking of dinner to come, and a meteor crashes in.

This is the calm before the storm.

BTD!

 

[Artful Dodger]

Yes, these sorts of articles make me chuckle, too...

Pardon, I had to add some white-space to read your very astute and well-reasoned comment. Thanks for that, and chin up! In spite of the day, over the long run we are winning. And this is a fight we must have, the dark forces must not prevail.

@joh01652 quoted below:
========

Yes, these sorts of articles make me chuckle, too, because it just goes to show who is really in charge, and it's not the voting public. The world we live in today is hilarious for so many reasons, like:

1. Justice is a function of price—those who can afford to keep the best lawyers and accountants on retainer can freely game the law and distort the markets, elections, science, etc, while real moms and pops and kids commit suicide, go bankrupt, lose their jobs, their homes, wear silly masks, take experimental injections, all while watching their savings, pensions, kids’ college funds, etc, evaporate before their very eyes.
2. Organized financial crime is rewarded, while virtue, honesty, meritocracy, hard work and thrift gets its throat crushed, making a complete mockery of our political system, justice system, regulatory agencies, indeed the entire notion of rule of law. “Rules for thee, but not for me, the public be damned!” says Global Capital.
3. Shareholder democracy (as well as political democracy) is a total sham when the global financial apparatus can just fail-to-deliver shares in one long never-ending-game of musical chairs or “mistakenly” mark trades to make insane amounts of money in seconds; in other words, they can do whatever they damn well please. Which segues into…
4. Picking winners and losers in a rigged global marketplace: you’ve got to love how unelected, unaccountable Central Banksters/Transnational Financiers can manipulate credit and monetary policy that selects certain investments and investors over others; a game of picking winners and losers that Wall Street happily takes part in. The Fed gets to play both arsonist and firefighter in this game, while Wall Street leverages whatever monetary morphine the Fed throws its way to create a meritless, artificial economy. Covid, Ukraine and the “banking crisis” are just the latest episodes of jamming the democratic process while Transnational Finance forces economic transformation without representation; Central Banksters are empowered to do what elected officials cannot without facing the wrath of the voters. What a hoot, indeed, my stomach is aching I'm laughing so hard.
5. Corporate mainstream media. We all have to congratulate the multibillion dollar, multinational corporate mainstream media for their stellar work in mass mind control—a system of deception and deceit owned and operated by serial liars and con men whose wealthy handlers won’t allow real crimes to come to surface, like naked short selling, censorship of dissent, regulatory capture, bribing politicians and other unelected public servants/scientists. No, mainstream media teaches us to fear really really scary things, like EVs, Elon Musk, our neighbors, virus spreaders, science deniers, working class people, basically people who don’t fall in line with the official narratives spoon fed to them from CNBC, BBC, NPR, New York Times, etc.

I could go on and on, but this might be too much laughter for one morning, so I’ll stop.

#MONEYISNTEVERYTHINGITSTHEONLYTHING!

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MODS, is there a way we can put @joh01652 thoughts into the "Posts of Merit" thread? Thanks, sorry to cause extra work.

Cheers to the Longs!