many snowflakes with tender egos did not like it.
Nothing new. The preferred gentlepeople can post any garbage, but cannot tolerate discussions by folks they don’t approve. Yet, endlessly people complain about how autocratic Saul on his namesake board.
Kingran I like some of your posts so I’m not anti-Kingran. But honestly you are by far the most fragile poster here.
And how do YOU value a company which is selling 50% more $50k+ cars per year at >30% margins…
Not that it is relevant or would change anyone’s mind about anything,
but just for a brief visit to reality, Tesla’s net margin is running around 13.5%, which is quite impressive.
Around 1/5 of that result comes from sale of tax credits.
It isn’t over 30%.
Jim
Something becomes fragile because it is relentlessly attacked?
Take your post, you didn’t address the hypocrisy I pointed out that, people complaining Saul autocratic for deleting posts, yet they perpetuate the same behavior. It is indefensible, so what you can do alternatively trash the person pointing out inconvenient things. Every cheap lawyer does that in every courtroom and it still works. Evidence is damning let us discredit the witness.
Disclosure: I own no Tesla directly.
How to value it? How quickly do you think they can double earnings twice? 5 to 7 years? At that point the TTM pe is 26,and they would need to still be dominant in electric cars.
Other things like solar roofs,etc.would likely be moving forward as well. I can certainly see both sides of this discussion,and I have owned and sold more than one enduring growth stock way too early. Not for me to judge.
JK
from sale of tax credits
The likes of BHE, OXY, GM, F and CVX will probably pay even more to TSLA
as they continue to pollute and burn more oil.
Free money for TSLA. Rinse and repeat year after year. What’s not to like ?
JimKredux said:
How to value it? How quickly do you think they can double earnings twice? 5 to 7 years? At that point the TTM pe is 26,and they would need to still be dominant in electric cars.
Other things like solar roofs,etc.would likely be moving forward as well. I can certainly see both sides of this discussion,and I have owned and sold more than one enduring growth stock way too early. Not for me to judge.
**BOTTOM LINE UP FRONT:**
A middling simple model of Tesla growth averaged over the last 5 years puts the time to “double earnings twice” that JimKredux seeks at less than 2.5 years from now. Most of the speed getting to that number arises from the fact that Tesla’s marginal cost to sell another Tesla is much less than their average cost, that is, they have built a big factory and cranking 10% more cars out of it raises their costs much less than 10%. The rest of their current story provides a lot of support for the idea that they will keep growing for another 2.5 years at least.
**TOO LONG DIDN'T READ:**
Jim, your post prompted me to do something I should have done a long time ago. Take 45 minutes to gather time series for share count, revenue, and net income. I put them in a spreadsheet and found, averaged over last 5 full years that share count grew at 9.4%/yr, revenue grew at 50%/yr and “revenue minus net income” grew at 44%/yr.
Extending those growth rates forward, we get an EPS which is growing faster than revenue growth because the cost of gaining revenue does not grow as fast as the revenue grows. This indicates what one expects from most manufacturing enterprises: the marginal cost of building the last car is far less than the average cost of building cars, so profit rises quickly as cars sold rises.
In the case of Tesla and with these numbers, using the 5 yr growth numbers to project forward, we would expect EPS to double in slightly over 1 year even though revenue takes 20 months or so to double. We expect EPS to double twice in perhaps 2.3 years even as it takes revenue nearly 4 years to double twice.
Will Tesla stay on its 5 year trends? On the “probably yes” side we have
What is the bear case? Something like
So indeed, Tesla is priced for future success, and its ability to pay off as an investment will require it to clear hurdles that are not the two-foot kind we prefer. But the “expected” time for TESLA to clear the hurdles you mention is more like 2.5 years than “5 to 7” years, at least figuring it based on what they have done in the last 5 years.
Cheers,
R:)
Extending those growth rates forward, we get an EPS which is growing faster than revenue growth
I don’t own Tesla, however, I have posted the above. And for reference, I used Netfix, how NFLX net profits started growing faster than their revenue after the inflection point.
There are folks who want to understand could have taken that as an example and do their own model. Remember, most folks are interested in that rather having an argument and not change their positions. They will keep coming at you, with various objections, or just plainly object you.
I believe one of the important point Divi made is “how Tesla doesn’t have to spend a dime on ad’s or leak margins through dealership”. Anyone can easily understand there is a significant customer acquisition cost for traditional automakers. Even if one buys GM, F or Toyota this time, for their next car, there is no way your previous CAC is going to get reduced, you still spend the same amount, or more due to inflation, competition. For Tesla, that CAC is $0, and continues to be $0 at scale is something folks don’t recognize.
Ralph,
My 5 to 7 year quadrupling was a conservative guess based on the law of large numbers. As any company grows, there usually will be a slow down in growth. I would not
be surprised if Tesla is earning $30 per share in 2025. Indeed I would be happy. Elon Musk is,in my opinion, one of the few alive today making lasting change in some of the most difficult problems in the world. If it takes until 2028 to earn $30 per share, I can see a solid investment case for the stock. It will be interesting to watch,and I do own some due to index exposure,but in retirement, less risk is better. Once you have all you need,it takes a really compelling valuation to consider changing the 80% stock/20% cash allocation.
JK
I just found out that my son bought TSLA a few years ago at $49.65, it’s up almost 15 times. I have never had such luck.
The problem I have with Tesla is their valuation relative to other car companies. Sure, Tesla has some things going for them, but making a car with a different motor is not ummm….”rocket science”. Companies such as Toyota and VW are not incompetent. While a reasonable case can be made for current TSLA price, It is tough to see their huge value difference enduring. What do you think, is Tesla over valued or the other car companies a long term bargain? Or do you honestly feel Tesla represents half the value of the entire car industry?
<What do you think, is Tesla over valued or the other car companies a long term bargain? >
Very difficult to judge. I think it would be a mistake to short it. My son tried to convince me to buy a Tesla car. Somehow, Tesla seems to have won the heart of young people. The waiting list to get a car is over a year (it has been so for many years, not just in the past two), I don’t know of any other such business.
Re Tesla. If you can’t value it, it goes into the too hard pile. That’s the easiest way to approach it and any other similar company. Plenty of other ops out there.
The waiting list to get a car is over a year (it has been so for many years, not just in the past two), I don’t know of any other such business.
Build one:
https://www.tesla.com/model3/design#overview
Model 3
Est. Delivery: Jul - Oct 2022
Model 3 Long Range in blue, no other options.
Your Model 3 $58,440
Now, personally, I think that’s a lot to pay for a mid-size 4-door sedan, but I’ve never been in the market for a luxury car and don’t expect I ever will.
Our General Motors EV, which we love, cost <$25k. Don’t think GM made any money on it, though. Even more so now they have promised to give us a new traction battery.
Tesla’s are great, and they’re a luxury product. How big is the market for such products?
Build one:
https://www.tesla.com/model3/design#overview
Model 3
Est. Delivery: Jul - Oct 2022
Model 3 Long Range in blue, no other options.
Your Model 3 $58,440
You can save a few thousand dollars by getting white and not the upgraded wheels. But then the est delivery is later: Est. Delivery: Sep - Dec 2022
Also for base model choices in the Y:
Order your Model Y
Est. Delivery: Feb 2023 - May 2023
Yikes!!!
I just found out that my son bought TSLA a few years ago at $49.65, it’s up almost 15 times. I have never had such luck.
I bought some BRK.A some years ago for $32,600 a share. IIRC; the $600 was the commission back in the full-commission days for an odd lot. Even though it took only 10 shares to make a round lot. And now it is $462,001.00 so that, too, is up almost 15 times.
The waiting list to get a car is over a year (it has been so for many years, not just in the past two), I don’t know of any other such business.
The world is larger than the US. Here in Europe I see quite some T… cars — but contrary to 1-2 years ago when T… was practically “alone” more and more especially VW and Renault but also Nissan, Dacia, BMW, Peugeot, Fiat and other electrical cars.
T… will quickly fall back even more for a very simple reason if they do not very soon offer a much cheaper car: Because of the heavy subsidies (6-10k Euro) buyers of electrical cars receive from European countries which are limited to buying prices of usually around 30-40k Euro (less subsidies or none at all if the car is more expensive; Model 3 in Germany: 50k Euro => 0 subsidy).
Compare that with 20k for an “Dacia Spring”, with a 10k subsidy = 50%. Or an VW e-Up for 27k -10k subsidy = 17k net. Or with Europe’s best selling electrical car, the Renault Zoe for 30k - 10k subsidy = 20k.
Yes, they are no T…'s - but many buy those as 2nd (City) car — and I am tempted.
<Order your Model Y
Est. Delivery: Feb 2023 - May 2023>
It seems Tesla is selling shorter wait time with expensive options.
<I bought some BRK.A some years ago for $32,600 a share. IIRC; the $600 was the commission back in the full-commission days for an odd lot. Even though it took only 10 shares to make a round lot. And now it is $462,001.00 so that, too, is up almost 15 times.>
If I had not sold AAPL more than 20 years ago, it would be up hundreds of times. Sometimes I imagine I still hold it.