Thank you for your objective analysis. Its truly hard to find these days. Aswath damodoran valued tesla last year at 180 based on his models its interesting how different analysis come at different price targets using different methods. I've been buying tesla since 122 and in mid april i doubled my position at 165. I think of it dropped to 100 I'd be on a buying spree 🤣
Great point. You can come up with a justifiable price target that runs an entire range of values. That's why we don't pay attention to price targets much :)
Thank you for taking the time to let us know! Be sure to watch out most recent piece on the topic here: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-Alk4zi2uQHg.html
It only dipped to 108 because Elon was selling for his Twitter acquisition. It won't get that low again. I'll be surprised if it goes below 150. Cars, energy storage, robots, AI, services, trucks. Too many opportunities for huge growth.
This is exactly why we spent 12 minutes arriving at a price target. Guessing where a stock price ends up is just that - guessing. Utilizing valuation targets allows us to ascribe meaning to arbitrary round numbers. What you are saying here is that the SVR won't get down to 4 even though it has in the past. In other words, you see the other avenues of growth as more mature now. Fair enough! :)
I am concerned by the diversity of long term goals of Tesla. They don’t seem focused. Also, I think if they are successful in autonomous driving, as soon as they are, many other manufacturers will be too shortly after. Once one person or company does something impossible, it becomes much easier for everyone witnessing the new reality. Today’s order winner is tomorrow’s order qualifier.
Elon is assembling the puzzle pieces to dominate, because no one was doing it right or fast enough, and for resilience too. Energy to run the factories to build the cars/robots, with cameras to feed the compute for the AI for the cars/robots. As for AV competition, none seems to gather the huge video base necessary for training.
You touched on this as well during your video about Soundhound, but sometimes I think that Nvidia is paying their employees with advertising stumps. ie; I was watching their CEO give a presentation at Stanford the other day and right in the middle of it he looks at the camera, smiles, and mentions how much he likes Shutterstock and Getty Images. It was done with the same enthusiasm that you'd expect from a pro athlete talking about their favorite tire shop.
@@Nanalyze To be clear it was a joke. I don't really think the company pays the bills with covert product placements. However maybe his coin laundry gets a cash donation for every name drop.
@@factotums :) We're picking up what you're putting down! The number of "we partnered with NVIDIA" press releases is certainly suspect. These "partnerships" are often just a press release saying someone paid NVIDIA a whole bunch of money.
Like the no nonsense approach to your presentation. I'm not much into maths, so some of it went WHOOOOOSSSHHH!! But that said, I was able to follow your logic... New Subscriber...
I am long on Tesla but with open eyes and a plan. I will sell 50% of my stake at a $500 target and keep the balance until retirement years god willing I make it another 20years.
Having a plan is good. You can also at various intervals too, don't just feel like you have to unload at one particular point. You'll make it 20 years and all will be well!
Thanks for this video. Honest question from a young investor: How do you check your greed on the low end of a company's valuation? I really appreciate your advocacy for a rules based approach to investing. But once a company (and it's stock price) is deemed "investible", doesn't a rules-based approach mean holding price-targets (e.g. $127 for TSLA) loosely? Otherwise, what's the point of the rule? Probably not a fair question for RU-vid comments, but just thinking out loud.
Thinking out loud is always welcomed here! Check your greed by having a maximum amount of money you'll sink into any given stock. That's what we do so that we don't go chasing falling knives.
I'm taking ARK with a grain of salt on their "cars sold in 2027" number. They are expecting Tesla to sell over 10 million cars in 2027, at an average price of 34 000 dollars. And that's in their bear case. Not saying it won't happen, but to almost 8x EV sales units in such a short time, seems to me very optimistic for a bear case, considering that total new car sales annualy worldwide are under 80 million. That would be a huge chunk of the total world market. Again, not saying it's impossible, only that this valuation model is asking a lot. On the flipside, this bear case gets to a $1400 share price, so even if we get to a quarter of that, that would still be a good investment at current price.
TSLA might be overpriced for now but the reason is it overpriced is mostly due to interest rates which TSLA's business is quite sensitive to. Rates are expected to go lower this year and long term there is going to be more pressure from governments to transition to electric veichles, and progress on FSD and robotics does not seem to be excite investors at the moment. I like using valuations metrics as guides but it is still arbitrary to say at what point is a stock a buy in terms of a metric or even trying to predict how low a metric can go in the short term. Companies like TSLA can remain "overpriced" for a long time and while I think it can certainly drop lower I am personally starting to DCA into TSLA now.
You are right, valuation metrics are guides that present a best guess. I think this video was important in showing how arbitrary price targets don't mean much unless some valuation math goes into producing them. Joe P.
Main issues I have now is Musk has sold down a lot of his stake, hence he will put more of his efforts into the other businesses such as space X, Twitter etc at which point Tesla only becomes a car manufacturer. The other issue is sentiment, once this starts to really sell off for whatever reason then I can see this falling far lower than any worthwhile valuation. It has happened in the past with companies like XOM when it went as low as $32, Intel dropped to the low $20s and theres plenty more examples
Gubment is gonna be the gatekeeper though. That's a concern. If they won't even invite Musk to the White House along with all other EV makers, they're probably not going to welcome his efforts with open arms.
You can play that game if you like personally I buy heavy near the $160 mark when the PE is under40. I don’t think people really have an understanding of how big Tesla will become with just automotive and energy and I think people are foolish to think they won’t make massive profits on AI and robotics in the future. Two things to keep in mind next platform coming in 2025 will be 4x the model 3 and Y. Mega packs cash flowed 500 million in 2023 I’ve seen very reasonable growth models on mega packs showing it will free cash flow 5 billion in this one product by 2025. That’s 25% of what all of Teslas profits are right now. Go ahead and be greedy but that’s not a risk I would take and if I new other companies with as little risk and upside I would be buying them as well.
So you are using a P/E measure as a price target. Good. That was the entire purpose of this exercise - to show people how to use valuation metrics to arrive at price targets. Saying people are foolish for not blindly believing in promises of future growth seems foolish in itself. Investors have every reason to be skeptical about grandiose visions and instead value a company based on what they're dong today. As we said, Musk is the double-edged sword here. It would seem (here's that word again) foolish to bet against him, but foolish to blindly believe everything he says. You cannot describe ANY tech stock as "little risk" because they are all inherently risky. Greed is probably what drives many people to invest without considering the true risks of what they're investing in.
@@Nanalyze I’m a growth investor I really heavily on value metrics. I think it’s foolish at this point not to be investing in Tesla based on the PE and their balance sheet. I even think a value investor at this point can make an argument for investing in Tesla. Personally I can make the argument based on energy storage, automotive sales growth and manufacturing. We don’t even need to talk about the speculative robotics and AI if you think you are paying for that when Tesla is trading at a PE of 38 you are massively underestimating their already massively profitable components and their growth going forward. Unless you think energy storage is a fad and electric vehicles are not here to stay. Just remember 2017 EVs made up 0.25% of sales it’s 10% in 2023 and will be over 15% in 2024 despite the noise from the media. Who do you think is poised to benefit from that expansion legacy automotive lol. The new platform coming in 2025 is game set match. They underestimated the model Y and laughed at Elon in 2020 when he said it would be the most profitable automotive they did that in 2022 and in 2023 it was the highest volume as well. People laughing at the cyber truck today thinking they may sell 10,000 units if they are lucky but they are likely going to hit 250,000 run rate by the end of the year based on the evidence so far. What’s the other narrative Tesla is a car company yet in 2023 8% of its profits came from energy. You know at one time Amazon was considered a retail company and AWS accounted for less than 10% of its profits. Sure if your strategy is ETF and blue ship legacy companies then you have a valid point but if you are going to have one growth company I would argue from a risk to rewards perspective You would be hard pressed to find a better one. If Tesla hits a stock price of $127 that will actually be a lower evaluation than when it bottomed in January 2023 that’s when I picked up the majority of my position and if the market does that again I will probably triple my position because they are in a lot better spot today than in January 2023. I see an easy 4 million units sold by 2026 and the mega pack profits 10x so about 5 billion that will actually likely happen in 2025 for energy.
Thank you for the short novel on Tesla's bullish talking points. This isn't a pulpit, but we'll let this one slide since you put so much effort into this. You're preaching to the choir mate. We're already bullish on Tesla, you don't need to sell us. What you don't seem to be aware of is company specific risk. // You also need to listen to what you say. "What’s the other narrative Tesla is a car company yet in 2023 8% of its profits came from energy." Exactly. Tesla is a car company until the majority of revenues aren't coming from cars. You also talk about future metrics as if they're facts. They're not. They're things you think have a high probability of happening. Sounds like you're extremely bullish about Tesla, but you don't sound experienced. Why? Because experienced investors are the most critical about the companies they're most bullish about. If you're going balls deep on one stock because you think it's the greatest thing since sliced bread you ought to be spending all your time discussing the bearish talking points, not the bullish ones.
Valuating Tesla using basic technical and fundamental tools is like mining Bitcoin with a pick and shovel. While I appreciate your work, I'd rather pay the admission and enjoy the ride.
Fool me once, shame on you. Fool me 15x, shame on me. Any investor (someone with a time horizon of 5 years min) valuing tesla based on “the numbers” has been wrong since it IPOed. Maybe this time is different 😅
The market may be a voting machine in the short term, but Tesla stock is a sentiment machine based on tantrums. Hard to touch this until I can see their market leadership in innovation pick up. So far none of the "sacred catalysts" has played out. They are still a car company with a small solar energy/battery segment (btw upsetting to see that they are still not at the peak of innovation with batteries and that they still lag behind Panasonic, CATL or even LG ).
160 is great if your willing to hold 10 years+ I believe if you buy at this price you will be able to make 100%+ of your entry cost every year selling coverd calls
Selling covered calls on a growth stock might cap your gains. If you were to engage in such a strategy it might be better suited for value. And yes, a decade time horizon sounds about right. ;)
It will not get bellow 150. Weekly relative strength the downside is it’s 3rd diverging pivot, stocks, especially the large caps bottom on their 3rd pivot and makes a higher low on their 4th. Only reason Tesla is pulling back this much is because the market has to grab enough liquidity to justify the valuation reset run it is about to go on, same thing that happened to Nvidia. Nothing in the fundamentals have changed & they’ve only been improving, 5T Tsla market cap in the next 5 years. They’ve beat the hardest industry to beat, I don’t see any challenge they can’t fight off in the coming years.
@@singed8853 the market is toward looking, it punishes stocks ahead of time, not in the midst of time, Tesla stock as of now has already priced in a poor Q1 due to Elons guidance from the past few quarter. However this time, in the Q1 earnings call, even if Tesla drops a slither of good news, which they likely will is margins are nearing its bottom as Tesla begins to raise vehicle prices, aslo why it’s important to invest in conglomerates, you never know where good news will come from that will help the stock price tremendously and that the market has not priced in because it was just previously a tailwind. Anywho, Tesla will pop on Q1 earnings next month. Edit: forgot to mention Tesla is the #2 non BTC miner company with the most BTC, which will also boost stock performance and likely as Elon ramps up X to be an endpoint platform, Tesla Dogecoin bag will also be pumping. What’s happening now is textbook wallstreet. They missed out on tesla years ago, now there dragging it down, shaking out all the weak hands, in turn creating liquidity so the price has a reason to go on a 5x run within the next 3 years.
My rationale for not jumping on the Tesla train is that I just don't believe they have any (or enough) competitive advantage remaining. Their first-mover advantage took them to where they are now, but much like Apple, they had decent products, and a loyal fanase, but the real innovation and moentum is in the rearview mirror. Now the much more difficult task at hand is competing apples-to-apples with a dozen auto makers in a far more steady-state environment. The company (and to Musk's credit, he himself) has stated plainly and clearly that they expect slower growth, and one should listen up, because from a historical modelling perspective any company with such explosive growth always matures and slows its growth. Going forward Tesla may well be a large player, and may well rake in tidy peofits (likely even grow profits) as Apple does, but their growth will more likely resemble the growth of the total addressable market. Growth, to be sure, but in a growth pool teeming hungry competitors. Sorry it's so wordy. I guess i should have led with TSLA $6.12 by end-of-trading tomorrow, followed by some sort of down-arrow icon that I cant find on my keyboard. I gotta work on my clickbait skills.
Hahaha.. great comment! You are correct that large companies often see growth slow and we should expect that. Musk's story is that growth is slowing so they can retool their platform in 2024. As for competing in EVs, BYD is a formidable competitor so Tesla really needs to a) step up their auto game and compete on price with BYD b) start showing us that those skunkworks projects can generate revenue.
Yes, I didn't address the other potential growth engines, but if he/they keep throwing shite at the wall it would not surprise me if some of it sticks. I cannot stand Musk, but he has motivated and cheerleaded quite an enterprise, and one would be a fool to not recognize that fact. It really is a tough call, but at the right price even sluggish growth would be lucrative.@@Nanalyze
"The leader in AI' is a very debatable claim. Everyone tells you they're "the leader in AI." The ground truth is always in revenue growth. NVIDIA is showing us what that looks like. Tesla certainly has promise but they'll need to show us proof in the form of revenue growth.
@@brianblockchain6039 Now you're repeating yourself so we will as well. "The leader in AI' is a very debatable claim. Everyone tells you they're "the leader in AI." The ground truth is always in revenue growth. NVIDIA is showing us what that looks like. Tesla certainly has promise but they'll need to show us proof in the form of revenue growth.
Hate to say it but I think you are fundamentally mistaken. Massive improvements in battery tech is needed to make electric cars comparable to internal combustion engines. Moreover, we aren’t seeing much innovation in batteries at all. It looks like Li batteries are already well optimized. No disruptive potential. No one has any great autonomous vehicle technology. Sorry.
Electric cars are comparable to gas powered engines which is why people in emerging markets - especially taxi drivers, some of the most shrewd people out there - are buying BYD cars as fast as they can make them. Battery improvements continue with innovations like solid state promising large improvements (admittedly, we'll believe it when we see it). We're as skeptical as you are about EV adoption, but when you look at the numbers - especially what China has accomplished - it is really impressive. EV TCO appears to be cheaper than gas, especially at BYD's price points. We've researched this extensively in past videos. Tesla's new platform - said to come online in 2024 - is what they'll use to compete against BYD. As for autonomy, robotaxis operating on streets seem pretty compelling.
Tesla is a FCF generating, mature company who should be valued based on how much FCF can be returned to investors. Valuation based on revenue is not appropriate and will lead to poor results, especially if they do not disrupt and continue to see tough competition, as it is now.
The question about Autonomy is when and how? Tesla's Autopilot program is rated and shown not to be safe (even worse at Level 2 than GM or Mercedes) . The only thing going for them is the data they have. If the best computer vision researchers at Cruise, Waymo and Uber (in that order) hired from the CMUs and MITs cannot crack level 4 autonomy with the "crutch" called Lidar, what are the odds that Tesla can do it with sensors? And even if they do, what are the odds they'll be first to market? And even if they do, what are the odds they'll create network effects with robotaxis given the niche appeal of their products? It's easy to use Musks track record as being first to market through great industrial design using cutting edge technologies. But in this case, the technology itself is not there and that's constrained by the deep RL models, not sensors. (pun intended), he's no Tesla. Sorry to say this Joe (my second disagreement with you here) but investors will be better served by demanding cars with wider appeal and monetization of other potential sources of revenue. Please don't go the Cathy Wood route here.
1) Competitors don't go anywhere/do anywhat Tesla FSD does, so what is the comparison based on? 2a) Bad management can ruin unlimited engineering. 2b) Tesla is not niche: luxury, crossover, truck, semi. And they are only getting started. 3) AI technology improves FAST. Last month was ages ago. 4) Monetization, aka squeezing the user for every last drop and chasing him away.
@prasvasu4217 Indeed, the uncertainty around the future growth story creates all the volatility we're seeing here. Cars with wider appeal should come out of Tesla's factory retooling - the old platform 2.0 - coming out in 2024. That will help them better compete with the likes of BYD. If they can get energy storage to really take off, that's exposure we'd like to have. So the EV and energy storage exposure are both compelling and the potential of autonomy is a nice to have. It's just richly priced EV / energy storage exposure, thus the reason for setting an aggressive and (based on history) realistic price target.
@@musaran2 Apologies if I didn't make my points clear. 1. Level 2 autonomy rank: 1. Merc 2. Tesla "FSD" 3. GM(not by far) 2. Level 4 Autonomy: This is actual "Full Self Driving" : 1. GM Cruise 2. Google Waymo 3. Uber These companies use the crutch called Lidar, tesla doesn't feature 3. Tech: these guys hired Dr.Karpathy (now moved to Google Brain), the founder of GANs used for fundamentally all Computer Vision applications including self driving vehicles. If using complete vision (Lidar) and a ton of training data using best in class algorithms wasn't enough for Uber to prevent an accident, then what is? Remember, even if they're safer than humans, we will distrust it for one accident just coz a human behind the wheel could've discerned better. This is the same reason, using deep learning for basic prediction tasks in the corporate world hasn't picked up (lack of explainability, even with better accuracy) 4. To your point on AI moving at a rapid pace, it's basically hardware achieving economies of scale at a rapid pace (think tons of compute), the algorithms have stayed pretty much the same for long with alternate approaches offering tiny improvements in performance or energy efficiency. Moral of the story: Invest in tractable problems folks are solving today for a tangible growth story.
@@musaran2 - Level 2 Autonomy results ie. today's FSD (check some youtube videos to see consensus): 1. Merc 2. Tesla 3. GM (not by far) - Level 4 Autonomy tech leaders (all use Lidar): 1. Cruise (by GM) 2. Waymo (by Google) 3. Uber - Level 4 Autonomy is close to or even safer than humans at this stage, but one accident like the Uber one a few years back ruins everything. People would think, if its a human behind the wheel, he/she should have detected the pedestrian. Safety concerns will hold back approvals; lack of explicability of deep learning (used for Computer Vision) would make it worse. So its not a mgmt. problem; One future scenario is infrastructure specifically for swarms or multiple robot car agents. But for now, its not going to hit the road. - With one pedal driving, the placement of stocks, the operation of vehicle and out there design (of components like door handles or even the cyber truck) does mean it has a niche appeal. You can love it or hate it. Points to the fact that the business was launched with "new category creation" in mind. So then, don't expect it to cannibalize competitor sales by much. But to their credit, it may increase brand loyalty. - AI hardware improves fast, AI software or workflows are written with new use cases in mind; but AI algorithms DON'T IMPROVE FAST. These algos (RL for eg.) was invented in the 70s; hardware wasn't cheap back then; and today we're seeing very small improvements in algos realized through minor changes in architecture of processors or in some cases, the algos themselves (think neural network architectures etc.). In self driving, the bottleneck is the ALGORITHM, not energy, not hardware. - You raise a good point about squeezing the user for every last drop. Do we know how much of their revenues come from car sales versus services/add-ons?
I'm not touching Tesla until I start to hear about a new battery technology that is significantly better. With the current battery technology, there is no telling how unpopular EVs would become.
tesla is priced too rich for an auto company lol this is where everyone gets tesla wrong its a tech company that sells cars, just that most of its revenue comes from EVs
@@Nanalyze yep. who would've thought nvidia would triple 100 going from to 300 then 900 a share today, you need to buy leaders in the space, tesla's competition is struggling, look at lucid,FSR,rivian... only maybe BDY is true competitor, tesla is selling cars without advertising, most of EV videos are about tesla reviews and are not sponsored
After Nvidia teamed with BYD for self-driving ... 85.00 is a buy. I made a lot of money on tesla as a long holder, but this stock is toxic, mostly because of Elon Musk cringe kamikaze missions.
Musk is a polarizing figure, a double-edged sword. Do you perceive the stock as toxic, or Musk as toxic? The media has turned on Musk incredibly fast for whatever reason. We look at the results. Investors need to keep this objective and focus on numbers here. We've looked at BYD quite a bit and they're - admittedly - behind in autonomy. We happen to like BYD too - video here: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-D0jJG0Sego4.html
@Nanalyze I'm in for the long haul so selling weekly puts and calls have lowered my cost basis. I Never sell a call below basis and with this swing I keep delta below .20
@@BTBLive That's great to hear Gordon Gekko ;) For the rest of us, staying away from options is the best way forward. Making retail investors think that the path to wealth is paved in options is completely irresponsible.
All things equal, more revenue means a lower valuation, so that would likely cause us to re-work the price target :) One of the appeals of Tesla is the ability to invest in multiple themes with one company.
Saudi is one interesting place these days. No religious police, women are driving, they're throwing raves, rumor has it booze will be sold. You can't even recognize the place anymore.
@@Nanalyze Thanks I buy $100 of worth of tesla a day set on an automated reoccurring buy till I'm satisficed with my position size, I never buy in all at once, I learned my lesson and I'm more likely to get a better average , you can never time the bottom, only buy if you believe in the future growth of the company.
That's why ARK's perspective is so interesting. They're claiming that half of Tesla's potential hasn't yet been realized - and that's just autonomy. Our biggest concern is the regulatory hurdles.
@@fendicoathelpmehidegun5021 Musk's relationship with the current administration is what we're referring to. When all the EV makers were invited to the White House except Tesla (why he was snubbed is irrelevant) then perhaps being first to market with autonomy might meet some unexpected hurdles. Politicians gonna politic.
@@Nanalyze the fact of the matter is that if(more then likely when)FSD is safer than humans at driving, no administration could deprive citizens of higher safety, and if you think about further, it’s also a possibility that regulators would push for autonomous vehicles to be a standard for every vehicle.
@@fendicoathelpmehidegun5021 Good point. It could be even made as standard equipment. We would like to think that governments always act in the best interests of their citizens, but have seen outcomes that hint otherwise. We're certainly hoping you are right!
