Tesla Stock

[JeffKeryk]

Tesla can't trade like a tech stock forever. There a manufacturing company. They have to end up building stuff. If they want to double earnings they need to ship twice as many cars.

If faceplant or Twitter or whomever wants to double earnings, they need to get more users, replicate more servers, and sell more adds. Apple designs a new phone, pays Foxcon $100 to build it and sells it for 10X, and people change phones every year or so.

Making cars is hard.

It can go on for a while. They realistically have no competitor save maybe BYD. These high debt legacy OEM's can't compete in that market- they have too much debt. There operating in the old world. They need to consolidate - so we have 4 or 5 car companies not 20. It almost happened in 2008, but some folks got bailed out and ZIRP saved the rest. When that happens we will have a real market. Until then, we wait.

I agree and disagree at the same time; if that's possible!
Tesla continues to expand and build factories. IMO, the Model 2 at Texas and Monterrey has sooooo much potential. If they can build and sell that car with a 10% to 15% GM, you are talking about taking Civic/Corolla market share with far better margins. How can Tesla do that? Of course battery cost has to be improved, but Tesla continues to improve mfg efficiency. Their cost to manufacture goes down every quarter. The new lines and plants will be the most efficient yet.
From the car BU standpoint, I think the biggest barrier is the cars are getting stale. Yes they continually improve, the the "same car" offerings will last only so long. The S3XY may be on borrowed time.

Where I disagree is Tesla is only a mfg company. Tesla is a software company; I don't know of another car company that programs its own chip firmware. This allowed for Tesla to better weather the pandemic. Will other car companies code their own or source from Tesal?
The Dojo Supercomputer is powered by the D1 chip engineered by Tesla engineers. The D1 chip, manufactured by TSMC using 7nm nodes, features 50B transistors. It packs together 354 independent processors, resulting in 362 TFLOPS of compute and 440 MB of internal static random-access memory storage.

It goes on. What does the future hold? In my experience, the future is software.

Good conversation and I appreciate your thoughts.

 

[alarmguy]

Are we talking about Tesla or Tesla stock?

Tesla stock needs a crazy visionary to justify there multiples, so people believe earnings can continue to grow. So they need Elon. Can they get there - likely not - but its extend and pretend, the longer the better.

The earnings call was a mess. Last time Elon starting acting like this was when he was pushing the stock up so he could use his stock to leverage money for Twitter. Wouldn't shock me if he was talking it down for another one of his own reasons? Wouldn't be a new thing.

As for the P/E - one of the reason all these tech stocks (again the stock, not the car) are doing well compared to legacy companies is they have no debt in a rising interest rate environment, so in theory they should have a huge advantage. GM has $120B in debt compared to Tesla has like $2B.

Tesla‘s PE is not doing well. It’s been slashed in half over a period of a year or two.
Their fourth-quarter was a disaster and their first quarter is going to be far worse but it’s slowly getting built into the stock price.
6 billion of Tesla‘s profit last quarter was a one time credit
https://arstechnica.com/cars/2024/0...ncial-results-for-2023-profit-margin-shrinks/

 

[SC Maintenance]

They are also an energy delivery company with the largest network standard in the world.

If your EV car or truck isn't on NACS - it's obsolete. This boat sailed in 2023.

With no physical product to deliver - each connector is simply an arbitrage of money capable of real time but and sell price changes insuring every KW is profitably sold.

So should we value that portion of their business as a Utility, or a retailer. Or perhaps a REIT?

Not saying its not cool or a valuable asset, but were talking about stock, not the car. Investors care about only 2 things when buying a stock - their ability to grow earnings exponentially (appreciation via multiple expansion), or pay a dividend? Preferably both.

 

[SC Maintenance]

I agree and disagree at the same time; if that's possible!
Tesla continues to expand and build factories. IMO, the Model 2 at Texas and Monterrey has sooooo much potential. If they can build and sell that car with a 10% to 15% GM, you are talking about taking Civic/Corolla market share with far better margins. How can Tesla do that? Of course battery cost has to be improved, but Tesla continues to improve mfg efficiency. Their cost to manufacture goes down every quarter. The new lines and plants will be the most efficient yet.
From the car BU standpoint, I think the biggest barrier is the cars are getting stale. Yes they continually improve, the the "same car" offerings will last only so long. The S3XY may be on borrowed time.

Where I disagree is Tesla is only a mfg company. Tesla is a software company; I don't know of another car company that programs its own chip firmware. This allowed for Tesla to better weather the pandemic. Will other car companies code their own or source from Tesal?
The Dojo Supercomputer is powered by the D1 chip engineered by Tesla engineers. The D1 chip, manufactured by TSMC using 7nm nodes, features 50B transistors. It packs together 354 independent processors, resulting in 362 TFLOPS of compute and 440 MB of internal static random-access memory storage.

It goes on. What does the future hold? In my experience, the future is software.

Good conversation and I appreciate your thoughts.

You could be right. But in that case they might be more valuable selling / licensing their technology to others, or focus on selling things like batteries and chips to others. Let the legacy OEM's toil with building actual cars.

I am looking at this purely as an investor. They need to grow earnings - rapidly - to justify their multiple. Can they - in the short and long run I don't know? Investors are a very impatient bunch.

 

[UncleDave]

So should we value that portion of their business as a Utility, or a retailer. Or perhaps a REIT?

Not saying its not cool or a valuable asset, but were talking about stock, not the car. Investors care about only 2 things when buying a stock - their ability to grow earnings exponentially (appreciation via multiple expansion), or pay a dividend? Preferably both.

Good question - regardless of how one categorizes the asset, it's clear it deserves to be in the formula and is a major difference between tesla and any other manufacturer.

If I were to gamble on these assets paying off and continuing to grow - I would make/take that bet.

Problem is I cant gamble on that without gambling on tesla as well.

 

[JeffKeryk]

They are also an energy delivery company with the largest network standard in the world.

If your EV car or truck isn't on NACS - it's obsolete. This boat sailed in 2023.

With no physical product to deliver - each connector is simply an arbitrage of money capable of real time but and sell price changes insuring every KW is profitably sold.

Which company is CEO Farley advocating for?

 

[SC Maintenance]

Good question - regardless of how one categorizes the asset, it's clear it deserves to be in the formula and is a major difference between tesla and any other manufacturer.

Yes, but were not comparing or calling Tesla a car manufacturer - they have the multiple of a "tech company". Utilities trade with P/E of like 12. Toyota trades at 10. GM at 5. Tesla at 50.

Tech companies trade at huge mutliples because there is this belief there growth can be infinite but there costs decrease per unit. If I write an app and put it on the app store, if I sell 5 I get $5. If I sell 5 million i get $ 5 Million. Costs are about the same. Can't do that with a charger. I can only sell seat at the charger 24 hours a day. If I want more revenue, I need to add more chargers. Chargers cost money. Same as building cars. They don't really scale like software.

Tsla trades on momentum, not numbers. It can certainly go on for a very long time. But the street already expects them to sell 5X more cars than they are today. Its "priced in". They need to show a path to 5X growth or they won't keep that multiple - story or not.

 

[UncleDave]

Yes, but were not comparing or calling Tesla a car manufacturer - they have the multiple of a "tech company". Utilities trade with P/E of like 12. Toyota trades at 10. GM at 5. Tesla at 50.

Tech companies trade at huge mutliples because there is this belief there growth can be infinite but there costs decrease per unit. If I write an app and put it on the app store, if I sell 5 I get $5. If I sell 5 million i get $ 5 Million. Costs are about the same. Can't do that with a charger. I can only sell seat at the charger 24 hours a day. If I want more revenue, I need to add more chargers. Chargers cost money. Same as building cars. They don't really scale like software.

Tsla trades on momentum, not numbers. It can certainly go on for a very long time. But the street already expects them to sell 5X more cars than they are today. Its "priced in". They need to show a path to 5X growth or they won't keep that multiple - story or not.

I dont think the energy sales are the equivalent of software - but it's also not a normal car company asset.

What does that look like? Like a power company? Like a service org? Does it look like an oil company?

This business is just getting started.

 

[alarmguy]

One must (or should I say musk?*LOL*) either way, the stock is a pure spec play and nothing wrong with that for those who want to and can afford risk at its valuation. The only thing I see is possibly robots but that is a LONG way off.
It's not going to be cars if Musk is CEO unless he wakes up and produces something someone doesnt already sell.

Tesla will never be allowed to regulate the cost of recharging a car in the USA.

 

[demarpaint]

One must (or should I say musk?*LOL*) either way, the stock is a pure spec play and nothing wrong with that for those who want to and can afford risk at its valuation. The only thing I see is possibly robots but that is a LONG way off.
It's not going to be cars if Musk is CEO unless he wakes up and produces something someone doesnt already sell.

Tesla will never be allowed to regulate the cost of recharging a car in the USA.

People seem to be missing the 800 lb. Gorilla in the room, or soon to be in the room, BYD. That Mexican plant can be a game changer and their ticket to flooding the US market with cheap electric cars.

 

[alarmguy]

People seem to be missing the 800 lb. Gorilla in the room, or soon to be in the room, BYD. That Mexican plant can be a game changer and their ticket to flooding the US market with cheap electric cars.

For me, it's not just BYD, it's all manufacturers all over the world. Already there is a swelling of inventory and we are not even out of the gate yet for the mass EV transformation of transportation we have been told will happen. (NOT!)

China was all of Tesla's profit a short while back and BYD is now hammering away at their front door there. Musk used to laugh them off, once again, he was caught off guard. The guy is an inventor and a great one, lousy businessman. He will not be at Tesla forever and that is when I think they would actually have a chance of carving a market out for themselves someplace in this world but it wont be vehicles in the next decade or two because they do not offer vehicles with the ICE and that is what Americans want.

Outside of the USA, sure they can make a dent, Americans are used to luxury, many countries overseas are used to compact utility cars, motorcycles and mopeds.

Oh... and those great profit margins, as I suspected a long time back in this forum. They are in the toilet now that everyone else makes an EV.

 

[demarpaint]

For me, it's not just BYD, it's all manufacturers all over the world. Already there is a swelling of inventory and we are not even out of the gate yet for the mass transformation of transportation we have been told will happen. (NOT!)

China was all of Tesla's profit a short while back and BYD is now hammering away at their front door there. Musk used to laugh them off, once again, he was caught off guard. The guy is an inventor and a great one, lousy businessman. He will not be at Tesla forever and that is when I think they would actually have a chance of carving a market out for themselves someplace in this world but it wont be vehicles in the next decade or two because they do not offer vehicles with the ICE and that is what Americans want.

Outside of the USA, sure they can make a dent, Americans are used to luxury, many countries overseas are used to compact utility cars, motorcycles and mopeds.

I agree, so let me put it another way. BYD is more of a near term threat, with others on the way. I also doubt the US Government is going to allow Elon to create a charging monopoly either.

 

[UncleDave]

The BYD threat isn't just to Telsa, they are a threat to every automaker in the world.

Tesla doesn't have a monopoly on charging. NACS is both patent and royalty free.

Anyone with a big enough energy supply can buy a charger and get into the business.

 

[DwightFrye]

"Everyone else" may now be making an EV (which is an exaggeration) but none of them are making anywhere near the profit margin that Tesla is. In fact, Tesla's profit margins are enviable even compared to the margins that most makers achieve on their ICE vehicles.

TSLA's future valuation projections are based upon the inclusion of several highly profitable categories. They include licensing pf the FSD software to other manufacturers who are so far behind in that category that they will likely never catch up, the robotaxi business, the software to operate the charging system and general vehicle operation and the highly probable licensing of battery manufacturing. Or even just selling batteries to everyone else if it were possible to keep up with that demand.

Tesla is still at least 4-5 years ahead of everyone else. The others may just eventually throw in the towel and pay Tesla some vigorish just so they can sell their own branded EV's to loyal customers who would never buy a Tesla.

As far as BYD taking over the US market ? I suspect we will see some trade barriers to that. Of course everything I just said is speculation too. But we'll see.

 

[alarmguy]

Not sure if this is why Tesla stock is getting whacked this morning down 6.5% and 12 points in one hour which was around 175 when I typed this. I wonder what the day will end at? Impossible to figure out
I have to be honest down 25% so far in one month, you would think you would see a technical bounce. I find it tempting but there is huge danger in trying to catch a falling knife in your spec account. However this is the danger buying into a company with crazy high valuations in an industry with low valuations, you can lose big time thinking the stock will not test its low of 108 just over a year ago.

Today's news, some German Company is going to stop using Tesla cars for its fleet. Saying their unreliable pricing is costing them too much money.
Furthermore many analysts are "throwing in the towel" on the company for earnings this year.

No idea what this all means, never owned the stock but not saying I wouldnt short term trade it. Maybe if it hits its new low near 100 or maybe whatever.... it's fun watching the stock, just like it is bitcoin. Anything I type here doesnt matter, the stock never made sense and why it doesnt make sense buying or selling... You never know.

 

[demarpaint]

The BYD threat isn't just to Telsa, they are a threat to every automaker in the world.

Tesla doesn't have a monopoly on charging. NACS is both patent and royalty free.

Anyone with a big enough energy supply can buy a charger and get into the business.

I agree. Once BYD gets that plant built in Mexico, they are going to be selling cars in the USA and Canada because of the free trade agreement. The Chinese are far from stupid, all the automakers will take a hit, but imo TSLA is going to take the hardest hit. ICE cars will do OK because there are still enough people that want no part of an EV.

 

[BrainThicknessVariation]

I think Elon Musk is a visionary but also drawn to crazy things like buying Twitter.

Twitter was a great buy. I was pissed that my shares were bought out as part of the private sale. The company had/has great promise but was being run into the ground before the takeover.

 

[Donald]

Twitter was a great buy. I was pissed that my shares were bought out as part of the private sale. The company had/has great promise but was being run into the ground before the takeover.

There are also stories in news about Elon Musk and drugs. Regardless of how you feel about recreational drugs personally I doubt investors want to hear the CEO is using drugs.

The issue (or a big one) is that Twitter got rid of a lot of monitoring so a lot of racist and hate Tweets came back and the advertising jumped a sinking ship.

 

[Dave Hess]

There are also stories in news about Elon Musk and drugs. Regardless of how you feel about recreational drugs personally I doubt investors want to hear the CEO is using drugs.

The issue (or a big one) is that Twitter got rid of a lot of monitoring so a lot of racist and hate Tweets came back and the advertising jumped a sinking ship.

A little bit of drugs is OK for a person’s brain.

 

[Trav]

"Everyone else" may now be making an EV (which is an exaggeration) but none of them are making anywhere near the profit margin that Tesla is. In fact, Tesla's profit margins are enviable even compared to the margins that most makers achieve on their ICE vehicles.

TSLA's future valuation projections are based upon the inclusion of several highly profitable categories. They include licensing pf the FSD software to other manufacturers who are so far behind in that category that they will likely never catch up, the robotaxi business, the software to operate the charging system and general vehicle operation and the highly probable licensing of battery manufacturing. Or even just selling batteries to everyone else if it were possible to keep up with that demand.

Tesla is still at least 4-5 years ahead of everyone else. The others may just eventually throw in the towel and pay Tesla some vigorish just so they can sell their own branded EV's to loyal customers who would never buy a Tesla.

As far as BYD taking over the US market ? I suspect we will see some trade barriers to that. Of course everything I just said is speculation too. But we'll see.

Keep telling yourself that. BYD is already there as far as being an equal and actually produce a nicer car (nothing too difficult there), it will not take 4-5 years for them to eat tesla's lunch. When BYD is made in Mexico there will 100% not be any trade barriers. JM2C