Tesla Q2 Deliveries crushes estimates

[JeffKeryk]

Roller coaster = wild ride = speculative pick.

You and I are saying the same thing about the stock and the company.

Here’s the difference: I enjoy wild rides outside my portfolio. You clearly are OK with them in the portfolio.

So, for every time you say, “C’mon man! Join me on this ride!”

You must be prepared to accept, and understand, the reply, “This is not my cup of tea*”


*And it isn’t. For very sound reasons. We once owned it, just as we once owned gold. For a few months. Made a decent gain. On both. Got out. My total portfolio is riskier than average, much riskier than is recommended for my age. That is a choice as part of a financial plan that fits our tolerance and our unique circumstances. We have carefully chosen where to place that risk. Google. Apple. And others. But in the goal set and mix of the totAl portfolio, another crazy PE ratio simply doesn’t belong in it.

Absolutely. My portfolio is very conservative, mostly managed by the Schwab Wealth Advisory group. In my case, I only own 2 single stocks, a little TSLA and a bunch of options and grants from my working days in SEMI. IMO I am overly conservative but I let Schwab make most of the calls at this point. It is far more about keeping what I have vs gains at this point. Plus the Schwab team knows of far more investment products than I ever could. It's like going to my Stanford Doctor vs self diagnosing/medicating.

Astro, I am not sure I suggested others to join me on the Tesla roller coaster. Hopefully I have not inferred that. But yes, I am bullish on tech due to living here in the land of tech and thinking differently. Go big or go home, but don't be stupid.
In fact, when people ask me about buying TSLA, I offer the following: Are you OK with losing 50% or even more of your investment over the short term? Are you willing to keep it at least 1 year? I mention the volatility (aka roller coaster) over and over again. It is a risk. I would only gamble money on a single stock that I am willing to lose.
You want safe? In CA, get into a nice double tax free Muni Bond fund. I hate mine, by the way. But it's safe, if there is such a thing.

In my case, a little TSLA makes sense. And the profit will likely put some deserving young people through school. That would make it priceless to me.

 

[fdcg27]

Tesla is a manufacturing company, not a tech company. It derives its net from the sale of cars at what remain pretty good margins by industry standards and probably still makes more money selling carbon credits than it does selling cars.
The ultra high PE indicates that serious investors see continued growth for Tesla sales in the intermediate term.
There are reasons to doubt this potential, since every automaker is piling into the EV market and those companies know how to make potentially more appealing product at lower costs than Tesla.
It's now a race. If the old-school big boys can deliver compelling EV product that can be profitable at lower manufactured cost than Tesla, then Tesla may be vastly overvalued.
Tesla has benefited heavily from first-mover advantage. It may also end up suffering greatly from this.
I don't pretend to know, but the outlook for the company is not entirely rosy. If nothing else, the old line manufacturers will engage in a price war, something with which they've had long experience. At least some of these companies are financially strong enough to pose a serious threat to Tesla, their market valuations notwithstanding.

 

[Dave Hess]

You assume you know my investments, risk strategies, and my investing philosophy, and where I park my resources. You don't.

I have done far, far better on my bets, decisions, risks, investments, than you've just illuminated on TSLA.

How far, far better if you don’t mind me asking ?


I made a little money trading 3X and -3X ETFs depending on the market manipulation.

 

[DwightFrye]

Tesla very soon will be accruing huge profits from their business units separate from their sales of EV's. Think in terms of how much Microsoft makes every year just from their software licenses. Just as other EV makers are adopting the NACS connectors and allowing their vehicles to access the Tesla charging stations, if (and when) the Tesla FSD software becomes the standard that all others will want to adopt, the money coming in from licensing that software is going to be astronomical. Elon's long term plan is also to sell Tesla batteries to others or license their manufacture. And sell the software that manages the operational systems that EV's need which is very different from how relatively simple ICE vehicles are by comparison.

Tesla IS a tech company that also makes cars.

One thing that I think a lot of people who are debating TSLA's valuation at the moment are overlooking is the current macro environment for the stock market and the current rather tenuous economy. Do you think TSLA would be down 30% or 50% of its peak if we weren't experiencing 8% inflation and 6% interest rates and didn't have the most financially irresponsible and incompetent administration in history running the country the last 2.5 years ?

When the grownups are in charge again and the market comes roaring back you'll be glad you have some TSLA shares in your portfolio.

 

[Lapham3]

Reading all this reminds me part of the reason that we mostly got out of the market after we had exceeded 'what we needed'. It was never a focus to me, but after 40+ years, we were able to be done. Of course, good pensions, supplementals and claiming SS late helped greatly. It was a different time and soon you young fellas are going to have to deal with what us boomers failed to do in many ways.

 

[UncleDave]

They have the best selling non-pickup vehicle in the US.

#1 selling vehicle in the world, at least in Q1 2023.

Tesla is a manufacturing company, not a tech company. It derives its net from the sale of cars at what remain pretty good margins by industry standards and probably still makes more money selling carbon credits than it does selling cars.
The ultra high PE indicates that serious investors see continued growth for Tesla sales in the intermediate term.
There are reasons to doubt this potential, since every automaker is piling into the EV market and those companies know how to make potentially more appealing product at lower costs than Tesla.
It's now a race. If the old-school big boys can deliver compelling EV product that can be profitable at lower manufactured cost than Tesla, then Tesla may be vastly overvalued.
Tesla has benefited heavily from first-mover advantage. It may also end up suffering greatly from this.
I don't pretend to know, but the outlook for the company is not entirely rosy. If nothing else, the old line manufacturers will engage in a price war, something with which they've had long experience. At least some of these companies are financially strong enough to pose a serious threat to Tesla, their market valuations notwithstanding.

Tesla is one of if not the worlds leading providers of energy to the EV sector.

They are effectively the modern gas station make money off not only their own - but everyone else's products.

It's going to be hard for the big boys to be competitive when they give the first 20-30% of the profit in a car away to a dealer channel.

 

[fdcg27]

You make some valid points but I'm not sure about the figures you're using for dealer margins. Seems rather high, by like a factor on two or three.
As EV market penetration grows so will charging networks outside of the one established by Tesla.
Early days yet and a lot will change as EVs become more mainstream.
Market cap really means nothing in the context of running a business. Cash and near cash assets count for a lot more and Tesla may be challenged on that basis as compared to some of the more established players in the motor vehicle market.
The shift to EVs is real and is not merely a passing fad or a very limited segment of the market. Policy plans have ensured that. This is a huge change and is an existential threat to some automakers.
I expect some of the more marginal players to be either snapped up in acquisitions if they bring some value to the table or merely allowed to whither on the vine and fall off.

 

[leadcounsel]

Tesla very soon will be accruing huge profits from their business units separate from their sales of EV's. Think in terms of how much Microsoft makes every year just from their software licenses. Just as other EV makers are adopting the NACS connectors and allowing their vehicles to access the Tesla charging stations, if (and when) the Tesla FSD software becomes the standard that all others will want to adopt, the money coming in from licensing that software is going to be astronomical. Elon's long term plan is also to sell Tesla batteries to others or license their manufacture. And sell the software that manages the operational systems that EV's need which is very different from how relatively simple ICE vehicles are by comparison.

Remember, first-mover advantages are not always sustainable and quite often replaced. This happens exponentially faster with modern technology. Think of how many computer companies, programs, software, has been surpassed almost immediately after release. I can think of hundreds, and there's probably thousands of examples.

Just the big examples: Records killed by tapes, Betamax was the better product, killed by VHS, cassette tapes killed 8 Track, all killed by compact discs and DVDs, which was quickly killed by streaming. Blockbuster replaced overnight by streaming tech. Polaroid was the giant in photography, inconceivable they'd be killed off, but they were killed by digital. Nokia basically invented the cell phone and were at one point the #1 seller I believe. Can you even buy a Nokia today? Essentially defunct. Palm pilots and Blackberries, giants in mobile phones, long ago irrelevant. Electric cars lost to ICE for 100 years or more, until now being able to compete with the help of government and propaganda.

But, consider this. That EV tech is easy to replicate and improve upon. The US is a meager 5% of the world, much of the world is aligning against the US, and I'd bet China is harvesting, stealing, and improving on the Tesla R&D to create its own vehicles and infrastructure to sell to the world, using its slave-like labor and cheaper production methods. Remember about 50% of the globe is actively aligning against the US - major players like India, Russia, China, Brazil, the Middle East, much of Africa, Mexico, parts of Europe, etc. Patent laws will be ignored by the rest of the globe, which does not have western labor laws or environmental laws. Tesla will be unable to compete on that scale with California manufactured vehicles. That doesn't even address the big auto makers in the US, Ford and GM, which are coming hard at Tesla. Patents don't last forever, I think it's 7 or perhaps 20 years? And these (and global) companies are more than competent of producing numbers that can collectively hurt Tesla sales.

Combine that with the logistical small market share for reasons I've already stated. It will be a small saturated market for EVs.

One thing that I think a lot of people who are debating TSLA's valuation at the moment are overlooking is the current macro environment for the stock market and the current rather tenuous economy. Do you think TSLA would be down 30% or 50% of its peak if we weren't experiencing 8% inflation and 6% interest rates and didn't have the most financially irresponsible and incompetent administration in history running the country the last 2.5 years ?

When the grownups are in charge again and the market comes roaring back you'll be glad you have some TSLA shares in your portfolio.

This delves into "off limits" discussions here so I will merely state I fundamentally disagree with your points, and it's those very people who have propped up, not hampered, the EV industry.

* In 12/2021, the federal government enacted law to go EV by 2035. Very, very interesting that Tesla's all time high of 405 was just 1 month before this? How convenient, really....
* In fall of 2022, California enacted laws to go all EV by 2035.
* In fall of 2022, Washington State enacted laws to go all EV by 2035.

Likewise, extremely convenient Tesla's run up from 11/2021 thru mid 2022. Then the start of selloffs... Gosh, a skeptic might even look at that as front-running, stock fraud, manipulation, etc. I guess the old phrase, 'buy on rumor and sell on news,' fits here. Along with insider trading, stock fraud, etc.

These policies should have helped Tesla. Yet here we are. A run up and elevated price, and then the bottom fell out right after great news! Adjusted for stock splits and inflation Tesla was 405, 2 years ago but 275 today, which is a raw 35% loss but adjusted for real inflation (10-15% annually since 2021 on average), closer to 55-65% loss. E.G. your $405 (or $275) today isn't buying what $405 ($275) did in 2021. If you think that's incorrect, I don't know how else to explain it but go buy something and compare to what you paid in 2021, 2019, etc.

Gosh, and a full week after "crushing" expectations, delivering 5x more vehicles than just 3 years ago, Tesla is off by about 60% adjusted for inflation. Hmmmmmm.... Kinda makes you wonder, doesn't it?

 

[DwightFrye]

* In 12/2021, the federal government enacted law to go EV by 2035. Very, very interesting that Tesla's all time high of 405 was just 1 month before this? How convenient, really....
* In fall of 2022, California enacted laws to go all EV by 2035.
* In fall of 2022, Washington State enacted laws to go all EV by 2035.

Laws that are supposed to go into effect 12 years from now are having zero effect upon the EV market today.
Just as it was pointed out how former industry leaders like Nokia or Blackberry no longer exist, it is very probable that the mental midgets in high government positions will have been replaced by more sane people and the mandates for 2035 will have been pushed back as it becomes obvious that the infrastructure needed is far from ready.

Hopefully the same irresponsible policies of using taxpayer dollars to subsidize things like EV sales and every other vote buying giveaway that one political party is so fond of will also go the way of the dodo bird. It is obvious that the deficit spending we have seen is unsustainable and is the major cause of our current economic woes.

If Tesla ends up going away like AMC or Studebaker because other automakers make better and cheaper EV's, so be it.
But then again, look at how long Ford and GM have hung on while building pretty mediocre cars for the last 50 years.

 

[alarmguy]

But then again, look at how long Ford and GM have hung on while building pretty mediocre cars for the last 50 years.

Well, in all honesty, GM isn’t exactly holding on as they’ve been the number one seller of automobiles in the USA for 90 years except for one year

 

[alarmguy]

. Do you think TSLA would be down 30% or 50% of its peak if we weren't experiencing 8% inflation and 6% interest rates and didn't have the most financially irresponsible and incompetent administration in history running the country the last 2.5 years ?

what will it be if taxpayers stop paying $7500 to purchase one?
What will it be when the world’s largest manufactures start selling EVs?

The market looks forward, not backwards and 6% interest rates historically are at the lower end

 

[UncleDave]

Well, in all honesty, GM isn’t exactly holding on as they’ve been the number one seller of automobiles in the USA for 90 years except for one year

Well.. they did go bankrupt eliminating and abdicating 100% of shareholder value and hosing their creditors.

 

[UncleDave]

what will it be if taxpayers stop paying $7500 to purchase one?
What will it be when the world’s largest manufactures start selling EVs?

The market looks forward, not backwards and 6% interest rates historically are at the lower end

Remember when everyone said the model three wouldn't sell without the credit? .

 

[alarmguy]

Remember when everyone said the model three wouldn't sell without the credit? .

No

 

[alarmguy]

Well.. they did go bankrupt eliminating and abdicating 100% of shareholder value and hosing their creditors.

GM Top seller of vehicles in the USA for just shy of 90 years, easy to pick and choose events over that time frame vs a car company that has lost money since it’s inception every year for the last decade and just became profitable 2021/2022
Just as Tesla benefits from my paycheck taxes soon GM will once again

 

[UncleDave]

No

I do. The question you pose already played out .

 

[UncleDave]

GM Top seller of vehicles in the USA for just shy of 90 years, easy to pick and choose events over that time frame vs a car company that has lost money since it’s inception every year for the last decade and just became profitable 2021/2022
Just as Tesla benefits from my paycheck taxes soon GM will once again

Events like massive bail outs and bankruptcies tend to stick out.

I hope GM succeeds even though they stole my investment in them.

 

[Torrid]

I do. The question you pose already played out .

I bought without the credit. To be fair though when the credit actually went away it was put out that the credit would be back in 2023. A number of people did cancel orders but many would if they knew that they only had to wait 6 weeks to save $7,500. If it just went away the cars would either sell or adjust the price if necessary, but the cars don't just sell for $7,500 off.

Some cars sell better than others. My Jeep dealer has $6k listed off a Rubicon 4Xe currently. It's been there awhile. I'm sure most sell fine, but it's a $70k sticker Wrangler.

 

[UncleDave]

I bought without the credit. To be fair though when the credit actually went away it was put out that the credit would be back in 2023. A number of people did cancel orders but many would if they knew that they only had to wait 6 weeks to save $7,500. If it just went away the cars would either sell or adjust the price if necessary, but the cars don't just sell for $7,500 off.

Some cars sell better than others. My Jeep dealer has $6k listed off a Rubicon 4Xe currently. It's been there awhile. I'm sure most sell fine, but it's a $70k sticker Wrangler.

It went away in 2018/19 along with the bolts, both continued to sell extremely well.

The anti EV/ tesla goalposts have been moving for so long detractors have become a little bit like the flesh wound knight in the holy grail.

Ice isnt going anywhere, but there's this all or nothing thing thats completely nonsensical.

 

[CanAmAndMore]

Maybe not for you, but the Model Y is the #1 selling car in the world. And by far the #1 by revenue. The Model 3 is right behind.

Maybe for a quarter of a year, but civic, corolla, and many other cars have overall outsold any model of tesla by a HUGE margin.

Wake me up when tesla catches up to any major brand of automobile.

I'll be dead long before tesla sales ever catch up to Ford, GM, Toyota, Honda, etc.
In fact even if those companies all stopped building vehicles as of today, I'll still be dead before tesla sales catch up to them.
Tesla cannot ever catch up to just F series pickups, corollas, or civics, much less every make from those brands. If I live another 30 years, God willing, tesla will still not do it. In fact I'll bet that in 30 years tesla will not even make a true self driving car.
In fact if tesla can build a car in 30 years, that i can simply tell it to drive itself from my house, to the Atlim Mountain Inn where I recently stayed, after driving a Super B up there. I will wear a pair of underwear for 24 hours, and then eat them. That is how sure I am that they cannot do it.