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

[lascavarian]

Are we 100% sure that highland replaces, rather then augments the model 3?
Maybe model 3: highland is a new entry-tier for the model 3, cheaper than the standard range, with a few cosmetic differences to make it clear that its not as premium as the current model 3?
I bet a lot of model 3 buyers would be quite happy with less acceleration, and a slower max charge rate, maybe even a smaller screen, if it shaved a noticeable amount off the price. Might be the model 3 without indicator stalks (madness in my opinion, but YMMV).

I'd be quite happy with that strategy, as an investor. Model 2 is post-mexico build, and years away. Anything Tesla can do to expand the price range downwards, without compromising existing sales is good! Model 2 can be the big move in the future, but I bet Tesla can sell 500k cheaper model 3 highlands before model 2 is delivered.

I get your point but that adds a ton of complexity and slower moving inventory.

I like fewer options with quality features for a good price. High inventory turnover compounds available cash. YMMV

 

[Mengy]

View attachment 961900

The best just got better

Why would Tesla start producing Highland M3's when they haven't even officially announced it yet? Who will they sell them to?

 

[Stretch2727]

Weird. What’s the point of still producing the older 3 design? Using up parts?

Many auto changeovers are done this way but it depends on the complexity of the change. I looked for a reference but could not no find one as the strategy has been around for a long time. I believe Honda started doing this in the 1990's and many in the industry copied.

It's more efficient as you still get full line output but are able to "ramp" the new design. If you just try to go full speed right away on the new design the chances are it will not happen. You can always go back to the old design if there issues on the launch vehicle. It also forces you to design a process to be flexible for upgrade as you do not usually have an extended (days versus weeks) shutdown of production.

 

[DTG_]

Let's talk one more second about 2025 target prices and similar, with some basic math, as ive seen some terrible takes lately.
So far, for 23H1 we have less than 2$ EPS. Make it 4$ EPS for whole of 2023. Means a P/E of 62.
Now, let's say we get 7$ EPS for 2024, reasonable yet a bit hopeful assuming lowered cogs and new vehicles introduced plus some more energy stuff. Zero fsd. We get a P/E of 42 (cool) if stock price is around 300.
2025? I give it 12$ EPS and that's very very optimistic. P/E of 30 if share price is 350.

Going further than 2025 with numbers is useless, too many unknowns, but you can still make some reasonable approximations.
Let's say for *sugar* and giggles we get a 40$ EPS around 2030. This would imply a share price around 1000 with a good enough P/E.

So no, anybody who says "stock price should be 400$ right now and 800$ in 2025 because x,y,z thing which still hasnt materialized but will do so any day now, trust me" is either ignorant in basic economics or purposefully lying for whatever reason. Could it reach such targets? Sure. Could it maintain them? Not a chance. Gone are the days of P/E > 100.
Happy to be proven wrong of course.

 

[Stretch2727]

Why would Tesla start producing Highland M3's when they haven't even officially announced it yet? Who will they sell them to?

To minimize the loss of sales on the old design. They will just hold new inventory as well for a period. Good to have the vehicles close by in case there are any issues to sort out.

 

[unk45]

Many auto changeovers are done this way but it depends on the complexity of the change. I looked for a reference but could not no find one as the strategy has been around for a long time. I believe Honda started doing this in the 1990's and many in the industry copied.

It's more efficient as you still get full line output but are able to "ramp" the new design. If you just try to go full speed right away on the new design the chances are it will not happen. You can always go back to the old design if there issues on the launch vehicle. It also forces you to design a process to be flexible for upgrade as you do not usually have an extended (days versus weeks) shutdown of production.

Perhaps the most traditional model update process is the export of the old model tooling, parts and process to ‘less developed countries’
-the Hillman Hunter begat the Iranian Peycan; Morris Oxford begat Indian Ambassador; Opel Commodore begat ChevIran
There is also long precedent of keeping obsolete cars alive long after discontinuance in home market;
the Volkswagen became Brazil and Mexico successes for decades after German production ended.
The Fiat Uno was fresh an even exciting (Turbo I.e.) and still is sold as a cheap, cheap model in Brazil.

Tesla has toyed with model diversity Model S 40, 60, 85 etc, but never seems likely to follow any of those numerous precedents. Why?
Tesla continuously redesigns for cheaper production and improved economy. These are the antithesis of Tesla principles.

 

[Artful Dodger]

Let's talk one more second about 2025 target prices and similar, with some basic math, as ive seen some terrible takes lately. So far for 23H1 we have less than 2$ EPS. Make it 4$ EPS for whole of 2023. Means a P/E of 62...

That's because P/E is the wrong metric to use to determine the market value of a company growing at 50% per year: (it's all about the PEG ratio for growth companies)



P/E is for old, static companies past their growth phase. That's not Tesla. That's also why bears try to lowball Tesla's future growth, so they can lowball its value via PEG ratio.

See the bear method? It won't matter for TSLA long investors; the singularity is coming.

Cheers to the PEG!

 

[FireMedic]

Let's talk one more second about 2025 target prices and similar, with some basic math, as ive seen some terrible takes lately.
So far, for 23H1 we have less than 2$ EPS. Make it 4$ EPS for whole of 2023. Means a P/E of 62.
Now, let's say we get 7$ EPS for 2024, reasonable yet a bit hopeful assuming lowered cogs and new vehicles introduced plus some more energy stuff. Zero fsd. We get a P/E of 42 (cool) if stock price is around 300.
2025? I give it 12$ EPS and that's very very optimistic. P/E of 30 if share price is 350.

Going further than 2025 with numbers is useless, too many unknowns, but you can still make some reasonable approximations.
Let's say for *sugar* and giggles we get a 40$ EPS around 2030. This would imply a share price around 1000 with a good enough P/E.

So no, anybody who says "stock price should be 400$ right now and 800$ in 2025 because x,y,z thing which still hasnt materialized but will do so any day now, trust me" is either ignorant in basic economics or purposefully lying for whatever reason. Could it reach such targets? Sure. Could it maintain them? Not a chance. Gone are the days of P/E > 100.
Happy to be proven wrong of course.

So much wrong with this. I’m not sure where to start.

I don’t think it’s a “terrible take” to assume a company who grows earnings from $4-$7 in 12 months is worth a PE of 80 or 100 (see Peg ratio.)

High growth in stable industries like energy tend towards higher PE’s due to the reliability and robustness of those earnings and the megapack business is currently going gangbusters.

There are numerous ‘catalysts’ that could send us higher (or lower) but to assume that this stock will be caught up in PE compression pergatory that you describe, based on the analysis you demonstrated above, may be the actual “terrible take”.

 

[cliff harris]

Why would Tesla start producing Highland M3's when they haven't even officially announced it yet? Who will they sell them to?

Shanghai is export hub, and includes M3s for Europe. They might want them on ships now so they can be ready for delivery the day they announce?

 

[BigDawgz]

That's because P/E is the wrong metric to use to determine the market value of a company growing at 50% per year: (it's all about the PEG ratio for growth companies)

View attachment 961916

P/E is for old, static companies past their growth phase. That's not Tesla. That's also why bears try to lowball Tesla's future growth, so they can lowball its value via PEG ratio.

See the bear method? It won't matter for TSLA long investors; the singularity is coming.

Cheers to the PEG!

Tesla is very much not growing at 50% a year right now.

 

[Dikkie Dik]

Rumour about possible start Highland production in Shanghai

https://twitter.com/x/status/1687043233535426561

 

[JupiterMan]

Shanghai is export hub, and includes M3s for Europe. They might want them on ships now so they can be ready for delivery the day they announce?

I was thinking the same.

Timing of this announcement will be difficult logistically because of the European market.

What you don't want is stock of current spec M3s on a ship bound for Europe, when a new model has just been launched, as customers might reject the ones on that ship, leading to sales at hefty discounts.

If possible, what you do want is to launch the next model once all old stock is sold. For Freemont and China local sales this is easier, so initial builds may well be EU ones that will be put on a ship shortly and on their way to EU for when the official launch happens.

Looking at position of current M3 stock in transit (possible last current spec M3 ships landing in next 2 weeks or so), 0% financing deals (UK) ending 1st September and this new data I'm thinking September Highland launch date now looks likely, with Highland M3's getting to USA/China customers in that same month and reaching Europe from October.

 

[Knightshade]

Tesla is very much not growing at 50% a year right now.

Tesla was at ~1.2 million cars last year.

They are targeting ~1.8 million cars this year.

How much growth is that, exactly?


Honestly the issue is that Elon has repeatedly said 50% growth was about vehicle units- but people keep imagining he said it about EPS.

 

[Zaddy Daddy]

That's because P/E is the wrong metric to use to determine the market value of a company growing at 50% per year: (it's all about the PEG ratio for growth companies)

View attachment 961916

P/E is for old, static companies past their growth phase. That's not Tesla. That's also why bears try to lowball Tesla's future growth, so they can lowball its value via PEG ratio.

See the bear method? It won't matter for TSLA long investors; the singularity is coming.

Cheers to the PEG!

So much wrong with this. I’m not sure where to start.

I don’t think it’s a “terrible take” to assume a company who grows earnings from $4-$7 in 12 months is worth a PE of 80 or 100 (see Peg ratio.)

High growth in stable industries like energy tend towards higher PE’s due to the reliability and robustness of those earnings and the megapack business is currently going gangbusters.

There are numerous ‘catalysts’ that could send us higher (or lower) but to assume that this stock will be caught up in PE compression pergatory that you describe, based on the analysis you demonstrated above, may be the actual “terrible take”.

Using PEG is more appropriate, but you know you have to legitimately estimate the growth rate, right?

Where is this growing earnings from ~$3.70 (conveniently rounded up to $4) to $7 coming from? Analysts aren't estimating anywhere near $7 in 2024. They are in the mid $4 range.

Let's say Tesla adds a suprise $1 in 2024 due to megapacks to go to $5.5. Then they would have a PEG of 1.5 currently. I think you could have an argument for a 2 PEG ratio, which implies a current PE ratio of about 96, or $333.

So when the market realizes Tesla Energy will produce more profit and upgrade their 2024 expectations from mid $4 to mid $5, share price could go from $250 to $333 appropriately.

Expecting more than that means you would have to justify further earnings growth, like surprise FSD contributions or ASPs to stop plummeting and start increasing again.

 

[elasalle]

Both AAPL, AMZN report today evening ...

 

[jamaatta]

Off topic, but it's great to see progress in electricity networks in Europe. All connections are important and also a one step further from fossil fuels. So Denmark (with a huge wind power/wind power potential) and UK are now connected.

Laying of world record power cable between the UK and Denmark now complete | National Grid Group

Work to lay our record-breaking Viking Link cable between the UK and Denmark is now complete - linking the two countries for the first time.

www.nationalgrid.com

 

[ThisStockGood]

Off topic, but it's great to see progress in electricity networks in Europe. All connections are important and also a one step further from fossil fuels. So Denmark (with a huge wind power/wind power potential) and UK are now connected.

Laying of world record power cable between the UK and Denmark now complete | National Grid Group

Work to lay our record-breaking Viking Link cable between the UK and Denmark is now complete - linking the two countries for the first time.

www.nationalgrid.com

And Denmark is connected to Sweden and Norway with lots of hydro and nuclear power. So this is a giant step

 

[BigDawgz]

Tesla was at ~1.2 million cars last year.

They are targeting ~1.8 million cars this year.

How much growth is that, exactly?


Honestly the issue is that Elon has repeatedly said 50% growth was about vehicle units- but people keep imagining he said it about EPS.

Yeah I agree that's exactly the issue, but you don't value a company on the number of cars it makes, it's how many dollars it makes.

And they could very well get back on that track to the margin they had before if all the highland and improvements they showed at Investor day, and at battery day. People just need to temper their expectations, Battery Day was almost 3 years ago now and we still don't have all of those improvements implemented.

 

[Nocturnal]

Now if we are looking for the bull version of Gordon Johnson the freshest candidate is AlphiQuant, or maybe someone in the $10,000+ club in the list below:

View attachment 961856

Having an incredibly large PT is a great way to build a Youtube channel but I find this to be like listening to a psychic for lottery numbers. If they could pick the numbers they wouldn't be selling you palm readings for $50 (or making videos...)

 

[Rashomon]

I was thinking the same.

Timing of this announcement will be difficult logistically because of the European market.

What you don't want is stock of current spec M3s on a ship bound for Europe, when a new model has just been launched, as customers might reject the ones on that ship, leading to sales at hefty discounts.

If possible, what you do want is to launch the next model once all old stock is sold. For Freemont and China local sales this is easier, so initial builds may well be EU ones that will be put on a ship shortly and on their way to EU for when the official launch happens.

Looking at position of current M3 stock in transit (possible last current spec M3 ships landing in next 2 weeks or so), 0% financing deals (UK) ending 1st September and this new data I'm thinking September Highland launch date now looks likely, with Highland M3's getting to USA/China customers in that same month and reaching Europe from October.

I agree if the Shanghai Highland Production start tweet is right we should see an announcement within a month. Photos without disguise will leak sooner. As well as economy of production through large cast structures, Highland might see a further aero optimization, eking out perhaps a 5 percent improvement, perhaps a little more. It’d be very unlike Tesla not to aim for this. That might show up in either extended range or a slightly smaller battery pack capacity, further reducing cost.