Author Topic: Is Tesla a good investment?  (Read 378062 times)

bacchi

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Re: Is Tesla a good investment?
« Reply #1600 on: January 04, 2023, 10:49:30 AM »
Here we go again. An analyst “questioning” forward demand is not proof of a demand problem.

Can you concede that when Musk stated more than 40% growth there may have been factors that were unknown. Perhaps he didn’t factor in a global economic downturn. Ongoing war in Europe.  Rampant COVID outbreak in China. Continued global supply chain and logistics issues. Passage of the IRA, which pushed off remain in the US to 2023. Given all this its amazing to me that Tesla grew deliveries by 40% and production by 47% this year. If Musk had sandbagged and put out a goal of 35%, everyone would have their mind blown that Tesla beat their goal by 5% and achieved 40% YOY growth! What manufacturing-based company does that in this environment!

I was explaining why Tesla stock dropped yesterday. Do you disagree that it was because a lot of stock holders are worried about Tesla's growth rate?*

If you have an alternative explanation for the sell off, we're listening.

Quote
Lastly, and what you continue to ignore, is that the difference between the production and deliveries is not unsold inventory sitting on dealer lots. It's largely cars that already have buyers, but are in route. It represents approximately two weeks of Tesla production and in two weeks times all these cars will be delivered and in the hand of their owners.

For earnings, it's all about booked revenue.

Legacy manufacturers book full revenue per car when the car leaves the line. That's because dealers buy their cars.

Tesla books full revenue per car when the car is delivered to the end user.

This is why the market/analysts/large holders pay attention to deliveries rather than production for Tesla.



* There's also concern about EPS, too, with the rebates in China and the US.

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #1601 on: January 04, 2023, 11:40:10 AM »
Here we go again. An analyst “questioning” forward demand is not proof of a demand problem.

Can you concede that when Musk stated more than 40% growth there may have been factors that were unknown. Perhaps he didn’t factor in a global economic downturn. Ongoing war in Europe.  Rampant COVID outbreak in China. Continued global supply chain and logistics issues. Passage of the IRA, which pushed off remain in the US to 2023. Given all this its amazing to me that Tesla grew deliveries by 40% and production by 47% this year. If Musk had sandbagged and put out a goal of 35%, everyone would have their mind blown that Tesla beat their goal by 5% and achieved 40% YOY growth! What manufacturing-based company does that in this environment!

I was explaining why Tesla stock dropped yesterday. Do you disagree that it was because a lot of stock holders are worried about Tesla's growth rate?*

If you have an alternative explanation for the sell off, we're listening.

Quote
Lastly, and what you continue to ignore, is that the difference between the production and deliveries is not unsold inventory sitting on dealer lots. It's largely cars that already have buyers, but are in route. It represents approximately two weeks of Tesla production and in two weeks times all these cars will be delivered and in the hand of their owners.

For earnings, it's all about booked revenue.

Legacy manufacturers book full revenue per car when the car leaves the line. That's because dealers buy their cars.

Tesla books full revenue per car when the car is delivered to the end user.

This is why the market/analysts/large holders pay attention to deliveries rather than production for Tesla.



* There's also concern about EPS, too, with the rebates in China and the US.

As a long term investor I don’t care why others sold yesterday. Trying to figure out why others behaved a certain way to justify your investment is a fool’s errand. Wall Street makes a lot of money manipulating retail investor sentiment.

As an investor I don’t really care how analysts count a sale when it comes to measuring demand, which is what we are discussing. The Tesla cars on a cargo ship in the middle of the ocean are more “sold” than the legacy auto cars sitting on dealer lots. Bears like you are spreading a false narrative that cars in transport to owners are somehow not “sold” and therefore demonstrate a demand issue.

You’re laser focused on two-weeks of production stuck in ports or on ships and brushing aside 40% YOY growth. It’s the definition of near-sightedness.  And when all these cars are delivered in two weeks time you’ll move on to the latest media driven crisis narrative of the day for Tesla.

TomTX

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Re: Is Tesla a good investment?
« Reply #1602 on: January 04, 2023, 12:09:29 PM »
Bears have always been super concerned about Tesla's end-of-quarter pushes to deliver cars and insisted it was bad practice.

Now that Tesla is finally easing up on that push, they're now flip-flopping to being super concerned about that as well.

OMG! 2 whole weeks of production in transit!

Oh, and I'll note - when Ford marks a car "sold" to a dealer, it's usually because Ford loaned the money to the dealer to "buy" the car.

bacchi

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Re: Is Tesla a good investment?
« Reply #1603 on: January 04, 2023, 12:18:56 PM »
Here we go again. An analyst “questioning” forward demand is not proof of a demand problem.

Can you concede that when Musk stated more than 40% growth there may have been factors that were unknown. Perhaps he didn’t factor in a global economic downturn. Ongoing war in Europe.  Rampant COVID outbreak in China. Continued global supply chain and logistics issues. Passage of the IRA, which pushed off remain in the US to 2023. Given all this its amazing to me that Tesla grew deliveries by 40% and production by 47% this year. If Musk had sandbagged and put out a goal of 35%, everyone would have their mind blown that Tesla beat their goal by 5% and achieved 40% YOY growth! What manufacturing-based company does that in this environment!

I was explaining why Tesla stock dropped yesterday. Do you disagree that it was because a lot of stock holders are worried about Tesla's growth rate?*

If you have an alternative explanation for the sell off, we're listening.

Quote
Lastly, and what you continue to ignore, is that the difference between the production and deliveries is not unsold inventory sitting on dealer lots. It's largely cars that already have buyers, but are in route. It represents approximately two weeks of Tesla production and in two weeks times all these cars will be delivered and in the hand of their owners.

For earnings, it's all about booked revenue.

Legacy manufacturers book full revenue per car when the car leaves the line. That's because dealers buy their cars.

Tesla books full revenue per car when the car is delivered to the end user.

This is why the market/analysts/large holders pay attention to deliveries rather than production for Tesla.



* There's also concern about EPS, too, with the rebates in China and the US.

As a long term investor I don’t care why others sold yesterday. Trying to figure out why others behaved a certain way to justify your investment is a fool’s errand. Wall Street makes a lot of money manipulating retail investor sentiment.

As an investor I don’t really care how analysts count a sale when it comes to measuring demand, which is what we are discussing. The Tesla cars on a cargo ship in the middle of the ocean are more “sold” than the legacy auto cars sitting on dealer lots. Bears like you are spreading a false narrative that cars in transport to owners are somehow not “sold” and therefore demonstrate a demand issue.

You’re laser focused on two-weeks of production stuck in ports or on ships and brushing aside 40% YOY growth. It’s the definition of near-sightedness.  And when all these cars are delivered in two weeks time you’ll move on to the latest media driven crisis narrative of the day for Tesla.

Stop taking this so personally.

1) mistymoney was wondering why the stock dropped 12%.
2) I responded on why the stock dropped.
3) That's when you interjected about how Mr Market was wrong, the analysts were wrong, and I was wrong.

Yet it happened. The stock did drop 12% on Tuesday. Railing against analysts or me or sellers doesn't change that.

As for cars on ships being "sold," non-deliveries don't make it into the quarterly earnings. Tesla follows GAAP and maybe there's a way to book full revenue before actual delivery but you'll have to take that up with Tesla's accountants and probably the IRS.

Besides, those cars on ships will be reflected in next quarter's earnings.

lemonlyman

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Re: Is Tesla a good investment?
« Reply #1604 on: January 05, 2023, 10:54:48 AM »
Analysts expect a little less than 40% growth in 2023. Deliveries are much higher than expected from analysts in 2020 and 2021. Morningstar said they expect 2030 deliveries on CNBC yesterday to be 5 million which is an interesting insight into their models. Here's the last week of December averages for some analysts. Obviously these estimates will have changed after Monday's delivery print, but I don't have that yet.



What's interesting here to me is the compression of growth from ~38% in 2023 to 23% in 2024 to 18% in 2025. These are rates they're using in models to estimate EPS and return. IMO, Tesla can beat these estimates. In 2021, 1.21 million units as the common estimate for 2022 deliveries. Tesla *missed in 2022 as estimates updated, but 1.31 million delivered beat those 2021 estimates even with Shanghai shutdown in 2022, zero covid policy in China, huge interest rate increases on financing, and potential leader brand damage. I guess the point I like to keep in mind how close consensus estimates are in the near term, but how far off they are in the long term.

With Q4, the CFO said just under 50% growth in production on the Q3 call. They got 47% production growth, but that vague guidance created unreasonable expectations on deliveries too. I wish Tesla had a PR department and managed expectations better. They're coming in at $5.15 EPS for 2023 according to Bloomberg consensus. So concesus Forward P/E right now is 20 and they also expect ~20% growth in 2024. As an investor, there's definitely risk they come under those numbers, but there's also potential they come in higher. IMO, their 2025-2026 numbers are absurd, like IEA EV growth estimates each year over the past 5 years.

Also, Megapack factory is ramping in Lathrop, CA. 10,000 Megapack capacity at $2.1m/pack. That could add $0.60-$1 EPS depending on the margin in 2024.

mistymoney

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Re: Is Tesla a good investment?
« Reply #1605 on: January 05, 2023, 11:15:52 AM »
@lemonlyman

I also think non-auto revenue is going to become increasingly significant for tesla giong forward.

I did have one question for the group - more of a vocabulary question really. A page or two back, one poster mentioned Musk stating a goal of 50% increase on car deliveries at the outset of 2022, and then said that the company gave "guidance" of 50% increase and missed it. Is stating a future goal giving guidance? I though guidance was a little more formal and concrete - like if a company stated mid-quarter that they were having dificulties obtaining raw materials or were recruiting more new subscribers than expected, or something like that, rather than just a new year's resolution...

So is just stating goals giving guidance? Or how would you define guidance in these terms?


lemonlyman

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Re: Is Tesla a good investment?
« Reply #1606 on: January 05, 2023, 11:25:37 AM »
Stating goals is guidance. It's information investors and analysts use to build forecasts. Any material information given by leadership can be used as guidance. They don't seem to really care about being punished in the media for missing guidance though. If China's zero covid policy (with Shanghai shutdown in March 2022) hadn't been as severe, no war, or inflation being transitory like the Fed guided in 2021 was the reality of 2022, I think 50% probably would have happened. But 2022, in general, was a real tough year in many ways.

FINate

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Re: Is Tesla a good investment?
« Reply #1607 on: January 05, 2023, 11:33:11 AM »
@lemonlyman

I also think non-auto revenue is going to become increasingly significant for tesla giong forward.

I did have one question for the group - more of a vocabulary question really. A page or two back, one poster mentioned Musk stating a goal of 50% increase on car deliveries at the outset of 2022, and then said that the company gave "guidance" of 50% increase and missed it. Is stating a future goal giving guidance? I though guidance was a little more formal and concrete - like if a company stated mid-quarter that they were having dificulties obtaining raw materials or were recruiting more new subscribers than expected, or something like that, rather than just a new year's resolution...

So is just stating goals giving guidance? Or how would you define guidance in these terms?

From Investopedia:

Earnings guidance is defined as the comments management gives about what it expects its company will do in the future. These comments are also known as "forward-looking statements" because they focus on sales or earnings expectations in light of industry and macroeconomic trends. These comments are given so investors can use them to evaluate the company's earnings potential.

This is why communication from companies nowadays is so formalized, usually through PR departments and carefully controlled messaging at investor events. And it's why Musk's off-the-cuff remarks and shitposting on Twitter are so problematic.

mistymoney

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Re: Is Tesla a good investment?
« Reply #1608 on: January 05, 2023, 05:52:21 PM »
thanks @lemonlyman and @FINate, that is a little broader than I was thinking.

StashingAway

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Re: Is Tesla a good investment?
« Reply #1609 on: January 06, 2023, 08:26:29 AM »

What's interesting here to me is the compression of growth from ~38% in 2023 to 23% in 2024 to 18% in 2025. These are rates they're using in models to estimate EPS and return. IMO, Tesla can beat these estimates. In 2021, 1.21 million units as the common estimate for 2022 deliveries. Tesla *missed in 2022 as estimates updated, but 1.31 million delivered beat those 2021 estimates even with Shanghai shutdown in 2022, zero covid policy in China, huge interest rate increases on financing, and potential leader brand damage.

Do you suspect that the underlined had much influence on deliveries? I can't imagine it had much on the consumer end as Tesla doesn't seem to have problems selling cars, unless it correlates to the price drops in China. Did it influence production/delivery from Tesla's end?

lemonlyman

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Re: Is Tesla a good investment?
« Reply #1610 on: January 06, 2023, 09:31:43 AM »

What's interesting here to me is the compression of growth from ~38% in 2023 to 23% in 2024 to 18% in 2025. These are rates they're using in models to estimate EPS and return. IMO, Tesla can beat these estimates. In 2021, 1.21 million units as the common estimate for 2022 deliveries. Tesla *missed in 2022 as estimates updated, but 1.31 million delivered beat those 2021 estimates even with Shanghai shutdown in 2022, zero covid policy in China, huge interest rate increases on financing, and potential leader brand damage.

Do you suspect that the underlined had much influence on deliveries? I can't imagine it had much on the consumer end as Tesla doesn't seem to have problems selling cars, unless it correlates to the price drops in China. Did it influence production/delivery from Tesla's end?

I don't know. But interest rates shift the demand graph for sure. Hopefully they clear up what happened with deliveries on Jan 25 earnings. They've been saying for years that they are trying to flatten delivery waves, but data out of china has also been soft. They cut prices in China last night to stimulate local demand. They're working through 90-180 day raw material contracts at inflated flat prices so prices will come down anyway, but it also looks like they are trying to compete with BYD. And China is having severe COVID problems right now anyway. I'm sure everything has an impact.

New interesting video on the Semi:
https://www.youtube.com/watch?v=hvg_i0GE0Vo
« Last Edit: January 06, 2023, 10:16:17 AM by lemonlyman »

TomTX

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Re: Is Tesla a good investment?
« Reply #1611 on: January 06, 2023, 05:33:05 PM »
Stating goals is guidance. It's information investors and analysts use to build forecasts. Any material information given by leadership can be used as guidance. They don't seem to really care about being punished in the media for missing guidance though. If China's zero covid policy (with Shanghai shutdown in March 2022) hadn't been as severe, no war, or inflation being transitory like the Fed guided in 2021 was the reality of 2022, I think 50% probably would have happened. But 2022, in general, was a real tough year in many ways.
40% growth in a year when the overall industry contracted is still really impressive.

The rather major across-the-board Tesla price cuts in China and nearby countries do concern me.

https://www.cnn.com/2023/01/06/economy/tesla-china-price-cut-slowdown-intl-hnk/index.html

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #1612 on: January 08, 2023, 12:07:27 AM »
Stating goals is guidance. It's information investors and analysts use to build forecasts. Any material information given by leadership can be used as guidance. They don't seem to really care about being punished in the media for missing guidance though. If China's zero covid policy (with Shanghai shutdown in March 2022) hadn't been as severe, no war, or inflation being transitory like the Fed guided in 2021 was the reality of 2022, I think 50% probably would have happened. But 2022, in general, was a real tough year in many ways.
40% growth in a year when the overall industry contracted is still really impressive.

The rather major across-the-board Tesla price cuts in China and nearby countries do concern me.

https://www.cnn.com/2023/01/06/economy/tesla-china-price-cut-slowdown-intl-hnk/index.html

I certainly won’t argue that price cuts are somehow good news. I do think it’s worth noting some context though. These cuts come after several raises in the past year or two that saw the average sale price increase by about $10k/vehicle. I guess on some level it was probably unrealistic to think Tesla could grow production as quickly as they have and without mass-producing any new models since the Y and not have to pull some demand levers.

The good news is I think these price drops can be offset, such that Tesla may be able to maintain current margin levels. The dollar is softening and currency exchange rates will now favor Tesla for all vehicles sold outside the US. Raw material costs are dropping. The continued ramp of Austin and Berlin will spread the capex cost of those factories across ever more vehicles. Further refinement and simplification of the manufacturing process (4680s, giga-casting, shipping vehicles shorter distances) offer further cost savings. It’s quite possible Tesla can make-up for the price drops in the near-term, such that margins remain relatively unchanged.

lemonlyman

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Re: Is Tesla a good investment?
« Reply #1613 on: January 08, 2023, 01:06:58 PM »
Piper Sandler estimates the price cuts in China and Australia will cost around $0.60 to 2023 EPS. Not the end of the world for sure, and that can be made up in other ways. It’s massive pressure on BYD and OEM manufacturers who already have thin margins and need volume.

I’m seeing megapack margins are somewhere at 50% based on the material/ battery sizes. If that’s true, at capacity, that’s $2.90 addition to EPS. That’s insane. 50% growth in earnings in 2024 from megapack alone. 20 Forward P/E is too cheap. With a Beta of 2, I can see how forward PE is compressed so far, but only auto is being priced with 40% growth.

Mega caps growing earnings so fast is super rare.

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #1614 on: January 08, 2023, 01:46:17 PM »
Piper Sandler estimates the price cuts in China and Australia will cost around $0.60 to 2023 EPS. Not the end of the world for sure, and that can be made up in other ways. It’s massive pressure on BYD and OEM manufacturers who already have thin margins and need volume.

I’m seeing megapack margins are somewhere at 50% based on the material/ battery sizes. If that’s true, at capacity, that’s $2.90 addition to EPS. That’s insane. 50% growth in earnings in 2024 from megapack alone. 20 Forward P/E is too cheap. With a Beta of 2, I can see how forward PE is compressed so far, but only auto is being priced with 40% growth.

Mega caps growing earnings so fast is super rare.

Yep, something has to give, the disconnect is too strong right now to be sustained.

https://twitter.com/piloly/status/1611482719468376080

nick663

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Re: Is Tesla a good investment?
« Reply #1615 on: January 08, 2023, 01:49:58 PM »
Piper Sandler estimates the price cuts in China and Australia will cost around $0.60 to 2023 EPS. Not the end of the world for sure, and that can be made up in other ways. It’s massive pressure on BYD and OEM manufacturers who already have thin margins and need volume.

I’m seeing megapack margins are somewhere at 50% based on the material/ battery sizes. If that’s true, at capacity, that’s $2.90 addition to EPS. That’s insane. 50% growth in earnings in 2024 from megapack alone. 20 Forward P/E is too cheap. With a Beta of 2, I can see how forward PE is compressed so far, but only auto is being priced with 40% growth.

Mega caps growing earnings so fast is super rare.

Yep, something has to give, the disconnect is too strong right now to be sustained.

https://twitter.com/piloly/status/1611482719468376080
Why is the assumption there is a disconnect right now?  What if there was a disconnect before and the stock price has now returned to normal?

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #1616 on: January 08, 2023, 02:50:41 PM »
Piper Sandler estimates the price cuts in China and Australia will cost around $0.60 to 2023 EPS. Not the end of the world for sure, and that can be made up in other ways. It’s massive pressure on BYD and OEM manufacturers who already have thin margins and need volume.

I’m seeing megapack margins are somewhere at 50% based on the material/ battery sizes. If that’s true, at capacity, that’s $2.90 addition to EPS. That’s insane. 50% growth in earnings in 2024 from megapack alone. 20 Forward P/E is too cheap. With a Beta of 2, I can see how forward PE is compressed so far, but only auto is being priced with 40% growth.

Mega caps growing earnings so fast is super rare.

Yep, something has to give, the disconnect is too strong right now to be sustained.

https://twitter.com/piloly/status/1611482719468376080
Why is the assumption there is a disconnect right now?  What if there was a disconnect before and the stock price has now returned to normal?

EPS is at a record high. Tesla is a large cap company that just grew deliveries 40% YOY and production 47% YOY. The addressable market is huge. New vehicles are rolling out. New factories are still ramping. And the stock price is down 70% in the past year.

Even if you believed the stock price out ran EPS in the past, I don’t see any rationale for a 70% correction in SP given all the above.

Can you point to another large cap company that was in the midst of 40% YOY growth and record earnings that proceeded to lose 70% of its stock value in a matter of months?

Edited to add: Since the ATH, EPS is up 15% and the SP is down 70%.  Tesla is projected to grow another 40-50% in 2023 and increase EPS from current $1.26 to the $4-$5/share range. Please tell me why this stock should be down 70%? I understand some of its macro and the stock was likely overheated at its ATH, but even with that I can’t get to any rationale that justifies a 70% drop.
« Last Edit: January 08, 2023, 07:21:01 PM by ColoradoTribe »

nick663

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Re: Is Tesla a good investment?
« Reply #1617 on: January 08, 2023, 04:22:09 PM »
Piper Sandler estimates the price cuts in China and Australia will cost around $0.60 to 2023 EPS. Not the end of the world for sure, and that can be made up in other ways. It’s massive pressure on BYD and OEM manufacturers who already have thin margins and need volume.

I’m seeing megapack margins are somewhere at 50% based on the material/ battery sizes. If that’s true, at capacity, that’s $2.90 addition to EPS. That’s insane. 50% growth in earnings in 2024 from megapack alone. 20 Forward P/E is too cheap. With a Beta of 2, I can see how forward PE is compressed so far, but only auto is being priced with 40% growth.

Mega caps growing earnings so fast is super rare.

Yep, something has to give, the disconnect is too strong right now to be sustained.

https://twitter.com/piloly/status/1611482719468376080
Why is the assumption there is a disconnect right now?  What if there was a disconnect before and the stock price has now returned to normal?

EPS is at a record high. Tesla is a large cap company that just grew deliveries 40% YOY and production 47% YOY. The addressable market is huge. New vehicles are rolling out. New factories are still ramping. And the stock price is down 70% in the past year.

Even if you believed the stock price out ran EPS in the past, I don’t see any rationale for a 70% correction in SP given all the above.

Can you point to another large cap company that was in the midst of 40% YOY growth and record earnings that proceeded to lose 70% of its stock value in a matter of months?

Edited to add: Since the ATH, EPS is up 15% (before considering record Q4 22 earnings) and the SP is down 70%.  Tesla is projected to grow another 40-50% in 2023 and increase EPS from current $1.26 to the $4-$5/share range. Please tell me why this stock should be down 70%? I understand some of its macro and the stock was likely overheated at its ATH, but even with that I can’t get to any rationale that justifies a 70% drop.
Tesla looks great when you compare to Tesla.  Look at the rest of the industry though and the 70% drop seems more than rational.

For example, Toyota has an EPS of 13.71 (compared to Tesla's 3.14) and Toyota's market cap is almost half of Tesla after that 70% drop.  Will Tesla grow more than Toyota going forward?  Sure, but there is still a lot of growth priced in.

I also don't share your optimism for Tesla in the immediate future.  The EV space is becoming increasingly competitive and Tesla has aging platforms along with an engineering organization that struggles to get one new product out per year.  There will likely be price cuts necessary to keep Tesla's vehicles relevant to buyers which will hit their EPS.

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #1618 on: January 08, 2023, 05:38:15 PM »
Piper Sandler estimates the price cuts in China and Australia will cost around $0.60 to 2023 EPS. Not the end of the world for sure, and that can be made up in other ways. It’s massive pressure on BYD and OEM manufacturers who already have thin margins and need volume.

I’m seeing megapack margins are somewhere at 50% based on the material/ battery sizes. If that’s true, at capacity, that’s $2.90 addition to EPS. That’s insane. 50% growth in earnings in 2024 from megapack alone. 20 Forward P/E is too cheap. With a Beta of 2, I can see how forward PE is compressed so far, but only auto is being priced with 40% growth.

Mega caps growing earnings so fast is super rare.

Yep, something has to give, the disconnect is too strong right now to be sustained.

https://twitter.com/piloly/status/1611482719468376080
Why is the assumption there is a disconnect right now?  What if there was a disconnect before and the stock price has now returned to normal?

EPS is at a record high. Tesla is a large cap company that just grew deliveries 40% YOY and production 47% YOY. The addressable market is huge. New vehicles are rolling out. New factories are still ramping. And the stock price is down 70% in the past year.

Even if you believed the stock price out ran EPS in the past, I don’t see any rationale for a 70% correction in SP given all the above.

Can you point to another large cap company that was in the midst of 40% YOY growth and record earnings that proceeded to lose 70% of its stock value in a matter of months?

Edited to add: Since the ATH, EPS is up 15% (before considering record Q4 22 earnings) and the SP is down 70%.  Tesla is projected to grow another 40-50% in 2023 and increase EPS from current $1.26 to the $4-$5/share range. Please tell me why this stock should be down 70%? I understand some of its macro and the stock was likely overheated at its ATH, but even with that I can’t get to any rationale that justifies a 70% drop.
Tesla looks great when you compare to Tesla.  Look at the rest of the industry though and the 70% drop seems more than rational.

For example, Toyota has an EPS of 13.71 (compared to Tesla's 3.14) and Toyota's market cap is almost half of Tesla after that 70% drop.  Will Tesla grow more than Toyota going forward?  Sure, but there is still a lot of growth priced in.

I also don't share your optimism for Tesla in the immediate future.  The EV space is becoming increasingly competitive and Tesla has aging platforms along with an engineering organization that struggles to get one new product out per year.  There will likely be price cuts necessary to keep Tesla's vehicles relevant to buyers which will hit their EPS.

I’ve addressed all the concerns you put forward in your last paragraph multiple times in the course of this thread. I don’t have “optimism” or “belief” in Tesla. I have an investment thesis that I’ve backed up with facts repeatedly. It doesn’t mean I’ll be proven right, but I find it annoying the Tesla bears find it necessary to ascribe blind belief or emotion to Tesla bulls.

As for Toyota, they have totally dropped the ball when it comes to EVs. They made a huge mistake going down the road of hydrogen and wasted crucial years. They’re a dying business and headed in the complete opposite direction as Tesla (shrinking sales versus rapidly growing sales).  Additionally, Toyota also does not have solar, software, FSD, battery storage, or insurance as growing profit centers on top of automotive that I’m aware.

How much higher would Tesla’s current EPS be if Tesla wasn't plugging earnings back into R&D and Capex? How much lower would Toyota’s EPS be if they had been making the necessary EV investment in recent years. One company is sacrificing current earnings for future earnings and growth and one company is sacrificing future earnings and growth for current earnings. Which would you rather own?
« Last Edit: January 08, 2023, 07:25:49 PM by ColoradoTribe »

lemonlyman

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Re: Is Tesla a good investment?
« Reply #1619 on: January 08, 2023, 07:59:48 PM »
Piper Sandler estimates the price cuts in China and Australia will cost around $0.60 to 2023 EPS. Not the end of the world for sure, and that can be made up in other ways. It’s massive pressure on BYD and OEM manufacturers who already have thin margins and need volume.

I’m seeing megapack margins are somewhere at 50% based on the material/ battery sizes. If that’s true, at capacity, that’s $2.90 addition to EPS. That’s insane. 50% growth in earnings in 2024 from megapack alone. 20 Forward P/E is too cheap. With a Beta of 2, I can see how forward PE is compressed so far, but only auto is being priced with 40% growth.

Mega caps growing earnings so fast is super rare.

Yep, something has to give, the disconnect is too strong right now to be sustained.

https://twitter.com/piloly/status/1611482719468376080
Why is the assumption there is a disconnect right now?  What if there was a disconnect before and the stock price has now returned to normal?

EPS is at a record high. Tesla is a large cap company that just grew deliveries 40% YOY and production 47% YOY. The addressable market is huge. New vehicles are rolling out. New factories are still ramping. And the stock price is down 70% in the past year.

Even if you believed the stock price out ran EPS in the past, I don’t see any rationale for a 70% correction in SP given all the above.

Can you point to another large cap company that was in the midst of 40% YOY growth and record earnings that proceeded to lose 70% of its stock value in a matter of months?

Edited to add: Since the ATH, EPS is up 15% (before considering record Q4 22 earnings) and the SP is down 70%.  Tesla is projected to grow another 40-50% in 2023 and increase EPS from current $1.26 to the $4-$5/share range. Please tell me why this stock should be down 70%? I understand some of its macro and the stock was likely overheated at its ATH, but even with that I can’t get to any rationale that justifies a 70% drop.
Tesla looks great when you compare to Tesla.  Look at the rest of the industry though and the 70% drop seems more than rational.

For example, Toyota has an EPS of 13.71 (compared to Tesla's 3.14) and Toyota's market cap is almost half of Tesla after that 70% drop.  Will Tesla grow more than Toyota going forward?  Sure, but there is still a lot of growth priced in.

I also don't share your optimism for Tesla in the immediate future.  The EV space is becoming increasingly competitive and Tesla has aging platforms along with an engineering organization that struggles to get one new product out per year.  There will likely be price cuts necessary to keep Tesla's vehicles relevant to buyers which will hit their EPS.

EPS isn’t a like for like metric because every company has a different amount of outstanding shares. Tesla had more profit than Toyota last quarter despite Toyota having 4x more revenue and selling  8x as many cars.

The industry isn’t as homogenous as you make it seem anyway. When there’s no material volume growth and net  margin is less than 5%, yeah, a Forward PE of 7-10 makes sense. Here’s some other outliers: Porsche has a Forward PE of ~20 because it has margins like Tesla but little growth. BYD has a Forward PE of 50 because it has volume growth like Tesla but small margins. Tesla has both volume growth and high margins. The current price seems cheap imo.

You assume it’s rational but what is usual about a Forward PE of 20 for a company growing earnings >50%/year and market (not just industry) leading return on invested capital? Can you find another? Let me know! I’d like to check it out for investment. Tesla is at maximum negativity right now but it is still executing with new products (auto, energy and software) and continuous iterations to current products.
« Last Edit: January 08, 2023, 08:10:10 PM by lemonlyman »

Viking Thor

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Re: Is Tesla a good investment?
« Reply #1620 on: January 08, 2023, 09:24:39 PM »
In my opinion Tesla was maybe overvalued a bit before but now way undervalued.

Lower PE than Walmart.

Comparison PE to legacy auto makes no sense; anyone halfway serious and logical / non biased could see a huge number of meaningful ways that Tesla is positioned much better as a company than any other auto manufacturer.

Early 2023 may be a slow start due to some macro headwinds but as cyber truck scales and energy business prints huge profits with mega packs it will be clear 2 years from now how shortsighted the Tesla bears were in early 2023.



StashingAway

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Re: Is Tesla a good investment?
« Reply #1623 on: January 09, 2023, 08:45:21 AM »
insurance as growing profit centers on top of automotive that I’m aware.

Does anyone know how much profit comes from Tesla insurance?

mistymoney

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Re: Is Tesla a good investment?
« Reply #1624 on: January 09, 2023, 02:01:40 PM »
Timely

https://fallacyalarm.substack.com/p/what-is-a-fair-pe-ratio-for-tesla?utm_source=substack&utm_campaign=post_embed&utm_medium=web

Thanks, a lot to digest there.

Of particular interest I found is how they selected the peer group for comparisons. Brought a lot to the discussion.
« Last Edit: January 09, 2023, 10:28:08 PM by mistymoney »

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #1625 on: January 11, 2023, 09:49:20 AM »
Couple more YouTube videos with relevance to recent discussions here.

This one does a nice job breaking down the economics of the Tesla Semi.

https://www.youtube.com/watch?v=oeh_bURqRPs


And here’s one on worldwide auto sale trends and a forward look at the ongoing transition from ICE to EV.

https://www.youtube.com/watch?v=tDGf6ysDlQ8

NN6

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Re: Is Tesla a good investment?
« Reply #1626 on: January 13, 2023, 02:32:32 AM »
Timely

https://fallacyalarm.substack.com/p/what-is-a-fair-pe-ratio-for-tesla?utm_source=substack&utm_campaign=post_embed&utm_medium=web

This was a really interesting analysis and good read! However, now that Tesla is cutting prices around the globe (roughly 20% for a Model Y here in Norway) I am wondering what that means for this investment thesis? Obviously, it will hurt margins significantly but with the supply chain normalizing and the price cuts spurring demand there are also some tailwinds... Has anyone put thought into what this might mean for the stock in the short-, medium-, and long term?

maizefolk

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Re: Is Tesla a good investment?
« Reply #1627 on: January 13, 2023, 06:03:32 AM »
A Tesla Model Y long range that cost $66k yesterday and was tax credit ineligible costs $53k today making it tax credit eligible. The actual take home price for most buyers will be only $46.5k.

That's effectively 30% price drop overnight. Should be good for adoption and demand. Less good for Tesla's EPS in the short-to-medium term.

AdrianC

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Re: Is Tesla a good investment?
« Reply #1628 on: January 13, 2023, 06:14:27 AM »
EPS isn’t a like for like metric because every company has a different amount of outstanding shares.

EPS = Earnings per share

lemonlyman

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Re: Is Tesla a good investment?
« Reply #1629 on: January 13, 2023, 07:02:31 AM »
This was a really interesting analysis and good read! However, now that Tesla is cutting prices around the globe (roughly 20% for a Model Y here in Norway) I am wondering what that means for this investment thesis? Obviously, it will hurt margins significantly but with the supply chain normalizing and the price cuts spurring demand there are also some tailwinds... Has anyone put thought into what this might mean for the stock in the short-, medium-, and long term?

It does for sure in the short term. Hard to say in the medium. Not much difference long. Pricing is certainly competitive now. With the tax credit, a long range Model Y is $45.5k? That's going to sell, but now they have to rely more on volume. But there are more unknowns like FSD take rate now that it's available to anyone, energy margins in 2023, or corporate tax credit amounts for battery manufacture. Hard to say. I don't particularly like it much for margins. They need to be crystal clear on 1/25 earnings and 3/1 investor day on their expectations for 2023.

Here's one positive take written before they happened. Don't know what ASPs will actually be but $46k sounds about right:



EPS isn’t a like for like metric because every company has a different amount of outstanding shares.

EPS = Earnings per share

Thanks?
« Last Edit: January 13, 2023, 07:40:57 AM by lemonlyman »

ChpBstrd

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Re: Is Tesla a good investment?
« Reply #1630 on: January 13, 2023, 08:02:18 AM »
A Tesla Model Y long range that cost $66k yesterday and was tax credit ineligible costs $53k today making it tax credit eligible. The actual take home price for most buyers will be only $46.5k.

That's effectively 30% price drop overnight. Should be good for adoption and demand. Less good for Tesla's EPS in the short-to-medium term.
Was it one month ago or two months ago when I said this would happen in response to competition, and was corrected by multiple people who explained that price cuts would never happen because Tesla products are so different and because demand is a bottomless pit?

Tesla without margins is like Meta without growth.

lemonlyman

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Re: Is Tesla a good investment?
« Reply #1631 on: January 13, 2023, 09:00:46 AM »
Was it one month ago or two months ago when I said this would happen in response to competition, and was corrected by multiple people who explained that price cuts would never happen because Tesla products are so different and because demand is a bottomless pit?

Tesla without margins is like Meta without growth.

Tesla has been earning a 28% net margin from their customers, eight times what market leader Toyota pulls in. Their ability to grow organically (e.g. set up new factories) has been fueled by quickly-growing operating earnings, but it all comes back to their customers being willing to pay several thousand dollars extra per car. Why are customers willing to pay Tesla roughly $9,500 in margin per car? An economist might say because Tesla has monopoly power in the BEV market (71% market share for BEVs in 2021, down to 65% in 2022). If you wanted a BEV in the past few years, it was Tesla or the downmarket Leaf / Bolt, which were themselves fairly expensive and had shorter range. Yes, there were some startups like Fisker also selling upmarket BEVs, but they weren't widely available.

There's also the tailwind from Tesla selling billions of dollars worth of pollution credits over the past few years. That market is destined to dry up as more and more manufacturers make their own BEVs.

The question is whether Tesla will continue to grow the top line quickly while simultaneously maintaining 8X industry margins in a near future when customers have many possible choices, such as a $34k Chevy Equinox BEV or Hyundai Kona BEV. An economist might say these new market entrants will break the monopolist's pricing power and force margins toward equilibrium.

Of course, the Tesla brand may retain some additional value to certain customers as a status symbol, so their margins may never get as low as a Chevy or Kia, but there are other luxury nameplates like Cadillac, Lexus, or Infinity that should be able to do the same thing. It will soon be fair to ask why Tesla is so special that their cars are worth thousands of dollars more than equivalent offerings from their competitors.

4. Tesla will reduce price and cost while increasing other services. Margins will not compress. Top line will grow with Cybertruck, Semi, FSD sales, Supercharger growth, and Energy Storage growth.

I said prices would decline but cost would too. Tbh, today's price cuts were way more dramatic than I thought in one go. Margins will certainly compress in the near term. I thought they'd do it throughout the year.

But you've always ignored cost. Incremental decline in COGS/unit and increasing operating leverage. You think costs are static?


lemonlyman

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Re: Is Tesla a good investment?
« Reply #1632 on: January 13, 2023, 12:29:22 PM »


Rough numbers I'm thinking about today. Energy and other reached $3 billion in revenue in Q3 2022, but this is only auto. Can't take out proportional Op Ex out. Wouldn't know what those are. But there are other businesses growing that I think they are expecting to build the earnings on and only enhance operating leverage IF they can squeak out GM on them. Megapack ramp suggests they can.

But yeah, hit on margin. Getting back to pre-covid/inflation pricing in difficult macro environment. Waiting to see how far they can lower COGS now that inflation is cooling and Texas and Berlin are speeding up production. With the $7500 tax credit they haven't had access to since December 2018, these are really competitive with ICE segment cars on price in addition to total cost of ownership.

EchoStache

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Re: Is Tesla a good investment?
« Reply #1633 on: January 15, 2023, 06:24:56 AM »
I wonder if the massive hit on sales that non Tesla manufacturers might will most likely encounter due to Tesla's price cuts has been considered?  For example, A consumer could go either way when considering a $65,000 Ford Mustang Mach E or a $65,000 Tesla Model Y.  But how many of those buyers would now buy a $65k Mach E over a $45k MY that has longer range, faster charging and drastically better charging network......

Or for that matter, who will buy a $50K+ Ioniq 5 or EV-6 with significantly less range.  There's really nothing competitive at this point, and legacy makers don't have the margin to drop prices.  I see this as Tesla potentially running away from the rest of the industry so drastically that I don't see how it won't hurt them badly.

Ford and GM stock took a big hit when Tesla announced the price drops.
« Last Edit: January 15, 2023, 06:37:36 AM by UltraStache »

waltworks

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Re: Is Tesla a good investment?
« Reply #1634 on: January 15, 2023, 07:36:51 AM »
That's the scenario a lot of us were talking about earlier - competition arrives and drives margins down for everyone. I'm not investing in Ford or Chevy either!

-W

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Re: Is Tesla a good investment?
« Reply #1635 on: January 15, 2023, 07:38:05 AM »
I wonder if the massive hit on sales that non Tesla manufacturers might will most likely encounter due to Tesla's price cuts has been considered?  For example, A consumer could go either way when considering a $65,000 Ford Mustang Mach E or a $65,000 Tesla Model Y.  But how many of those buyers would now buy a $65k Mach E over a $45k MY that has longer range, faster charging and drastically better charging network......

Or for that matter, who will buy a $50K+ Ioniq 5 or EV-6 with significantly less range.  There's really nothing competitive at this point, and legacy makers don't have the margin to drop prices.  I see this as Tesla potentially running away from the rest of the industry so drastically that I don't see how it won't hurt them badly.

Ford and GM stock took a big hit when Tesla announced the price drops.

My memory is a bit fuzzy on exact price points, as I last looked at them about 6 months ago.  This is based on a general memory, but not a detailed comparison.

I think the EV6 and Ioniq 5 are still very compelling at their current prices.  Their higher trims are comparable to the Model Y, and they have a better charging speed at the right charging stations.  And the higher trims are priced right around the new Model Y price.  There's plenty of customers that will compare these options and choose Tesla or non-Tesla for their own individual reasons.

The Mach-E is now way over-priced.  I think Ford will need to drop the price significantly to stay competitive.  Or at least start making more of the lower-trim versions.  They were mostly only making the Premium and GT trims when I last looked for inventory.

I think 2023 will be the year the market for EV CUV's at $50K+ becomes nearly fully saturated in the US.  Not that there will be zero growth thereafter, but we might get to the point of seeing inventory on lots by the end of the year.  At least if gas prices stay low. 

I think this is great news for the EV market as a whole, but not great news for Tesla as an investment.

NorCal

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Re: Is Tesla a good investment?
« Reply #1636 on: January 15, 2023, 07:42:16 AM »
That's the scenario a lot of us were talking about earlier - competition arrives and drives margins down for everyone. I'm not investing in Ford or Chevy either!

-W

There is one reason to own Ford shares.  Ford runs an "X-pricing" program for anyone who has owned 100 shares (~$1,300) for at least 6 months.

I bought 100 shares back when I was looking at the Mach-E.  It would have saved me about $800 on the purchase.  I went a different direction on the purchase, but I'm curious to see Ford's next EV entrants before I sell. 

But you're right.  It's not worth buying on business fundamentals.

EchoStache

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Re: Is Tesla a good investment?
« Reply #1637 on: January 15, 2023, 08:04:43 AM »
I wonder if the massive hit on sales that non Tesla manufacturers might will most likely encounter due to Tesla's price cuts has been considered?  For example, A consumer could go either way when considering a $65,000 Ford Mustang Mach E or a $65,000 Tesla Model Y.  But how many of those buyers would now buy a $65k Mach E over a $45k MY that has longer range, faster charging and drastically better charging network......

Or for that matter, who will buy a $50K+ Ioniq 5 or EV-6 with significantly less range.  There's really nothing competitive at this point, and legacy makers don't have the margin to drop prices.  I see this as Tesla potentially running away from the rest of the industry so drastically that I don't see how it won't hurt them badly.

Ford and GM stock took a big hit when Tesla announced the price drops.

My memory is a bit fuzzy on exact price points, as I last looked at them about 6 months ago.  This is based on a general memory, but not a detailed comparison.

I think the EV6 and Ioniq 5 are still very compelling at their current prices.  Their higher trims are comparable to the Model Y, and they have a better charging speed at the right charging stations.  And the higher trims are priced right around the new Model Y price.  There's plenty of customers that will compare these options and choose Tesla or non-Tesla for their own individual reasons.

The Mach-E is now way over-priced.  I think Ford will need to drop the price significantly to stay competitive.  Or at least start making more of the lower-trim versions.  They were mostly only making the Premium and GT trims when I last looked for inventory.

I think 2023 will be the year the market for EV CUV's at $50K+ becomes nearly fully saturated in the US.  Not that there will be zero growth thereafter, but we might get to the point of seeing inventory on lots by the end of the year.  At least if gas prices stay low. 

I think this is great news for the EV market as a whole, but not great news for Tesla as an investment.

I think the Ioniq 5 and EV6 base model RWD will be competitive on price point and range i.e. $45k, 300 mile which is actually a little better than Tesla base model.  However, Tesla will get some tax rebate and still have the drastically better charge network.  But ya, probably close enough, and  somewhat competitive.  However, moving up to the AWD of those cars drops range to 260 vs 330-350 for Tesla, and $50k+ with no rebate.  The charging *speed* seems really good on those cars, but Tesla still replenishes *range* faster than any car made since they are so efficient, whereas Kia, Hyundai, Ford are more barn door/brute force approach.  Tesla replenishes range nearly twice as fast as Mach E.  Mach E achieves its lower range with a *massive* battery, which in turn makes charge times slower.

lemonlyman

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Re: Is Tesla a good investment?
« Reply #1638 on: January 15, 2023, 08:56:33 AM »
I’m very interested in the now price parity with midrange models of ICE vehicles. The Y is now price parity with midrange models like Toyota Highlander, Jeep Grand Cherokee, and Honda Pilot. Lots of buyers there who now have a new choice. Same with the model 3 at $36.5k after the credit.

Sticker price minus fuel and maintenance makes it very compelling. Not to mention easily best infotainment. And standard autopilot is way better than most adas. Tho Openpilot got a big price cut, but I don’t think most buyers get it to improve the standard.
« Last Edit: January 15, 2023, 09:05:02 AM by lemonlyman »

FINate

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Re: Is Tesla a good investment?
« Reply #1639 on: January 15, 2023, 09:33:38 AM »
I think the Ioniq 5 and EV6 base model RWD will be competitive on price point and range i.e. $45k, 300 mile which is actually a little better than Tesla base model.  However, Tesla will get some tax rebate and still have the drastically better charge network.  But ya, probably close enough, and  somewhat competitive.  However, moving up to the AWD of those cars drops range to 260 vs 330-350 for Tesla, and $50k+ with no rebate.  The charging *speed* seems really good on those cars, but Tesla still replenishes *range* faster than any car made since they are so efficient, whereas Kia, Hyundai, Ford are more barn door/brute force approach.  Tesla replenishes range nearly twice as fast as Mach E.  Mach E achieves its lower range with a *massive* battery, which in turn makes charge times slower.

All true, but largely irrelevant. As has been covered multiple times in these forums, most EV owners charge at home most of the time. Charge times and 260 vs 330 miles of range doesn't matter as long as these are good enough. For daily driving, 200+ miles and overnight charging is good enough. Sure, a segment of consumers really value efficiency, maximum range, and fast charge times, and Tesla may capture a lot of this segment, but if you look the EV market today there are a number of vehicles that are close enough that the differences are marginal (https://www.autoguide.com/auto-news/2022/09/most-efficient-ev-top-10---the-110-mpge-club.html). But in relative terms this is a shrinking segment as more people choose EVs based on intangibles like style and brand identity.

The EV price wars have started. As someone looking to buy an EV in the next couple of years, I'm watching gleefully as car companies commit to over $500 billion in EV investments through 2026, multiple new models hit the market yearly, and companies battle it out on price and features.
« Last Edit: January 15, 2023, 09:39:58 AM by FINate »

lemonlyman

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Re: Is Tesla a good investment?
« Reply #1640 on: January 15, 2023, 11:01:32 AM »
ICE is the main loser in this “pricing war.” But Tesla and BYD are the only ones to show margin at all so far in EV. So going to be rough to continue down for most as Tesla continues to drive down its cost.

Tesla has a lot coming down the pipe.

1. Cybertruck
2. Generation 3 platform
3. Lithium refinery
4. Continuous 4680 ramp
5. Next Giga locations
6. Megapack ramp in Lathrop
7. Insurance expansion
8. V4 superchargers

And FSD is the elusive white knight in the investment. This expansion of vehicles continues the data training flywheel. Who knows when it’s done but it drives me around very well today. I’d say it’s done in 2024 for sure. Looking forward to V11 soon.

waltworks

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Re: Is Tesla a good investment?
« Reply #1641 on: January 15, 2023, 12:54:46 PM »
Nah, competition is what it is. Not every EV maker will survive but plenty of ones (just like Tesla) will lose money for a few years before they get their costs/process down to where they're making money.

Consumers win, ain't capitalism great?

-W

EchoStache

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Re: Is Tesla a good investment?
« Reply #1642 on: January 15, 2023, 01:16:33 PM »
Nah, competition is what it is. Not every EV maker will survive but plenty of ones (just like Tesla) will lose money for a few years before they get their costs/process down to where they're making money.

Consumers win, ain't capitalism great?

-W

Wait, Tesla is losing money?  Aren't they the most profitable car company in the world(per car) by a huge margin?
« Last Edit: January 15, 2023, 01:30:02 PM by UltraStache »

GuitarStv

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Re: Is Tesla a good investment?
« Reply #1643 on: January 15, 2023, 02:33:38 PM »
Nah, competition is what it is. Not every EV maker will survive but plenty of ones (just like Tesla) will lose money for a few years before they get their costs/process down to where they're making money.

Consumers win, ain't capitalism great?

-W

Wait, Tesla is losing money?  Aren't they the most profitable car company in the world(per car) by a huge margin?

Nope.

Toyota is the most profitable - 19.1 billion in profit in 2022.

Tesla is the most highly valued car company by stock price.  The come in around 9th as far as profits at 3.3 billion in 2022, behind Peugeot, SAIC motors, Volvo, Honda, BMW, GM, Volkswagen and Toyota.

EchoStache

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Re: Is Tesla a good investment?
« Reply #1644 on: January 15, 2023, 03:29:01 PM »
Nah, competition is what it is. Not every EV maker will survive but plenty of ones (just like Tesla) will lose money for a few years before they get their costs/process down to where they're making money.

Consumers win, ain't capitalism great?

-W

Wait, Tesla is losing money?  Aren't they the most profitable car company in the world(per car) by a huge margin?

Nope.

Toyota is the most profitable - 19.1 billion in profit in 2022.

Tesla is the most highly valued car company by stock price.  The come in around 9th as far as profits at 3.3 billion in 2022, behind Peugeot, SAIC motors, Volvo, Honda, BMW, GM, Volkswagen and Toyota.

Highest profit per car.

I think 3.3 billion is their profit for *just* the third quarter? I'm having trouble finding precise numbers for 2022, but I saw trailing 12 month profit at the end of the 3rd quarter around 11 billion.  I'm not sure where that puts them ranked against other companies overall, but I'm thinking ahead of GM, so not sure about the stats you posted.

Primarily, I was addressing @waltworks who stated Tesla will lose money for years.  Over 3 billion in profit in one quarter isn't losing money.

waltworks

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Re: Is Tesla a good investment?
« Reply #1645 on: January 15, 2023, 04:01:09 PM »

Wait, Tesla is losing money?  Aren't they the most profitable car company in the world(per car) by a huge margin?

Sorry, I wasn't clear. I meant that Tesla spent a long time losing money before they got to the point where they were making money. Other car companies are going through the same process with EVS right now.

-W
« Last Edit: January 15, 2023, 04:03:11 PM by waltworks »

EchoStache

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Re: Is Tesla a good investment?
« Reply #1646 on: January 15, 2023, 04:33:54 PM »
@waltworks that makes more sense!  I agree, it's gonna be tough for some of the legacy makers to transition to EV.  What the heck will they do with the millions(billions?) of ICE infrastructure???

waltworks

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Re: Is Tesla a good investment?
« Reply #1647 on: January 15, 2023, 04:45:30 PM »
Some of the infrastructure is the same, some that is specific to the ICE engines will be written off in another decade when ICE cars aren't being made anymore.

I mean, it's not going to put anyone out of business, I'd guess. They'll have to build/convert some plants, but they can just let the ICE specific infrastructure decay as demand drops and then shutter it eventually.

Like I said, I'm not rushing out to invest in legacy car companies either!

Honestly I have a feeling this is going to be a Levi Strauss situation where the boring subs that supply materials/subassemblies for EVs are going to be the real winners.

-W

Viking Thor

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Re: Is Tesla a good investment?
« Reply #1648 on: January 15, 2023, 10:12:12 PM »
Nah, competition is what it is. Not every EV maker will survive but plenty of ones (just like Tesla) will lose money for a few years before they get their costs/process down to where they're making money.

Consumers win, ain't capitalism great?

-W

Wait, Tesla is losing money?  Aren't they the most profitable car company in the world(per car) by a huge margin?

Nope.

Toyota is the most profitable - 19.1 billion in profit in 2022.

Tesla is the most highly valued car company by stock price.  The come in around 9th as far as profits at 3.3 billion in 2022, behind Peugeot, SAIC motors, Volvo, Honda, BMW, GM, Volkswagen and Toyota.

Tesla made that much just in 3q. Just another example of how the typical Tesla bear has no clue what they are talking about.

Margins will be fine as well despite the price cut. Small decrease in Margin % for a couple quarters, will still show healthy continued profit growth long term. Degree of price cut was due to IRS unexpectedly screwing Tesla by making the Y not an SUV.

Tesla went on offense and dropped price to get under the non SUV cap.

They will spread fixed cost across more car sales so margin hit will be less than expected and over time trend similar to historical average. Also energy profits will be enormous long term and Cyber truck has 1.5 million orders; will be high margin.

Paper Chaser

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Re: Is Tesla a good investment?
« Reply #1649 on: January 16, 2023, 04:38:42 AM »
@waltworks that makes more sense!  I agree, it's gonna be tough for some of the legacy makers to transition to EV.  What the heck will they do with the millions(billions?) of ICE infrastructure???

The billions in ICE infrastructure pay for the EV development as they build scale. TSLA investors supported Tesla through their money losing period. The legacy OEM investors wouldn't tolerate losses with $/kwh so high. So the legacy OEMs use the funds from ICE sales the same way that Tesla used funds from investors.