Invest in Tesla?

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BradJ
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Invest in Tesla?

Post by BradJ » Wed Mar 28, 2018 10:14 am

Is it a good time to buy Tesla?

Jack FFR1846
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Re: Invest in Tesla?

Post by Jack FFR1846 » Wed Mar 28, 2018 10:15 am

If you want to fund all the investors who shorted the stock.......
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srmach05
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Re: Invest in Tesla?

Post by srmach05 » Wed Mar 28, 2018 10:19 am

Interesting WSJ article today about the company and the recent downgrade of it's bonds, if you have access it's worth a read -- would certainly scare me off the idea of investing in them.

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randomizer
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Re: Invest in Tesla?

Post by randomizer » Wed Mar 28, 2018 10:21 am

Yes. Via a total market index fund.
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MotoTrojan
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Re: Invest in Tesla?

Post by MotoTrojan » Wed Mar 28, 2018 10:23 am

Still has a market cap well over Ford (was double before recent drop). Ford had $7.6B in earnings with $12B in cash reserves. Tesla had $2B loss and will need to raise more capital soon.

If you believe they won't go bankrupt, you may be better off investing in their bonds. Current yield is over 7%.

Looks like "shortville" may have been right after all: https://twitter.com/elonmusk/status/848 ... 01?lang=en

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munemaker
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Re: Invest in Tesla?

Post by munemaker » Wed Mar 28, 2018 10:25 am


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Clever_Username
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Re: Invest in Tesla?

Post by Clever_Username » Wed Mar 28, 2018 10:25 am

BradJ wrote:
Wed Mar 28, 2018 10:14 am
Is it a good time to buy Tesla?
What do you know about Tesla that the people at Goldman Sachs do not?
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_

Nate79
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Re: Invest in Tesla?

Post by Nate79 » Wed Mar 28, 2018 10:31 am

The analysts are extremely negative and the bonds are junk. The competition is catching up and they have so far failed to ramp Model 3 along with talk of quality issues.

Bitcoin is also way down from the top, so the choices are difficult.

BradJ
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Re: Invest in Tesla?

Post by BradJ » Wed Mar 28, 2018 10:37 am

Clever_Username wrote:
Wed Mar 28, 2018 10:25 am
BradJ wrote:
Wed Mar 28, 2018 10:14 am
Is it a good time to buy Tesla?
What do you know about Tesla that the people at Goldman Sachs do not?
Nothing would be the answer to your question...........

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matjen
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Re: Invest in Tesla?

Post by matjen » Wed Mar 28, 2018 10:41 am

A man is rich in proportion to the number of things he can afford to let alone.

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DanMahowny
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Re: Invest in Tesla?

Post by DanMahowny » Wed Mar 28, 2018 11:11 am

Short TSLA
Funding secured

wilked
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Re: Invest in Tesla?

Post by wilked » Wed Mar 28, 2018 11:22 am

BradJ wrote:
Wed Mar 28, 2018 10:14 am
Is it a good time to buy Tesla?
Depends, what is the car it is replacing? How many miles is your daily commute?

BradJ
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Re: Invest in Tesla?

Post by BradJ » Wed Mar 28, 2018 11:59 am

wilked wrote:
Wed Mar 28, 2018 11:22 am
BradJ wrote:
Wed Mar 28, 2018 10:14 am
Is it a good time to buy Tesla?
Depends, what is the car it is replacing? How many miles is your daily commute?
Tesla stock, not the car. I apologize for the confusion.

aristotelian
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Re: Invest in Tesla?

Post by aristotelian » Wed Mar 28, 2018 12:28 pm

Assuming efficient markets, now is as good a time as any other. Of course, you can buy Total Stock Market Index and not worry about such things.

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HomerJ
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Re: Invest in Tesla?

Post by HomerJ » Wed Mar 28, 2018 12:34 pm

You are new to this forum. Welcome!

We do not normally discuss individual stocks here. We're not, generally, a stock-picking community.

We, mostly, believe in broad diversified index funds with very low costs. Own all of the market, get the market returns. Picking individual stocks that you hope will do better than the market is a tough game, and you can just as easily end up trailing the market returns instead.

Check out the wiki here.

https://www.bogleheads.org/wiki/Main_Page

onourway
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Re: Invest in Tesla?

Post by onourway » Wed Mar 28, 2018 12:37 pm

BradJ wrote:
Wed Mar 28, 2018 11:59 am
Tesla stock, not the car. I apologize for the confusion.
I believe your leg is being pulled. :D

I find it helpful during any downturn to go and look at the price charts and expand the view out to the 2-5 year time period. Doing that we find that Tesla's price today is approximately the same as it was in March 2017 which was an all-time high for them. Were you interested in Tesla stock in March 2017? If not, what makes you interested today? If anything the outlook for the company is far gloomier today than it was back then.

Valuethinker
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Re: Invest in Tesla?

Post by Valuethinker » Wed Mar 28, 2018 4:07 pm

BradJ wrote:
Wed Mar 28, 2018 10:14 am
Is it a good time to buy Tesla?
Massively overvalued.

Company is cash flow negative and misses all the targets set by Musk to investors and the company.

Musk has used Tesla to bail out his own investments in solar energy.

The bond market thinks it is a very poor credit risk indeed.

No.

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nisiprius
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Re: Invest in Tesla?

Post by nisiprius » Wed Mar 28, 2018 4:13 pm

Tesla Bonds are in Free Fall
Elon Musk’s creditors are suddenly having a serious bout of buyer’s remorse.... bondholders are asking hard questions about whether Musk can deliver on his bold promise to bring electric cars to the masses before the company runs out of cash. On Wednesday, Tesla’s notes plunged to a low of 86 cents on the dollar, the clearest sign yet creditors aren’t totally sure the company will be money good....

The company, which has never shown an annual profit in the 15 years since it was founded, will need to raise over $2 billion to cover not only its cash burn this year, but also about $1.2 billion of debt that comes due by 2019....

...with a junk rating of Caa1 from Moody’s on Tesla’s unsecured bonds (seven levels below investment grade...
I don't do the kind of analysis needed to invest intelligently in individual stocks or individual bonds, but this is a company that investors think might have trouble paying its bills.

Investing in Tesla might be a brilliant contrarian strategy, but this is certainly a high risk--betting on a company that seems to be in serious trouble.

BradJ, you want to have some pretty good reason for having more confidence in Tesla than other investors do.
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inbox788
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Re: Invest in Tesla?

Post by inbox788 » Wed Jul 18, 2018 12:13 pm

BradJ wrote:
Wed Mar 28, 2018 10:14 am
Is it a good time to buy Tesla?
Yes, at 258 on March 28. Did you? And if trading, did you sell at the peak of 370 on June 18? Today it's 322. Invest in Tesla?

If you're in it for the long haul, any of these prices may be good if they succeed with their plan. Here's an interesting take on their options and challenges. And if they fail, you'll find you paid too much. But what if they kind of succeed and kind of fail? Almost meet their target (build rate of 3700/week but average price of $58k Model 3), but 1-3 years late (say start selling the $35k Model 3 in 3 years)?

https://seekingalpha.com/article/418789 ... across-bow

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bottlecap
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Re: Invest in Tesla?

Post by bottlecap » Wed Jul 18, 2018 12:21 pm

It’s as good - or as bad - take your pick - a time as any to invest in Tesla.

JT

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DanMahowny
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Re: Invest in Tesla?

Post by DanMahowny » Wed Jul 18, 2018 12:38 pm

I have added to my TSLA short position and considering even more.

Feeling more confident everyday that Tesla is going bankrupt. Buying this stock is a very bad idea. Short the stock and you'll make money.

All but the most gullible are cancelling their model3 orders (or at least trying to cancel). Things are going to go very bad, very soon, and it won't take long for Tesla to fold up the tent.
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Mjar
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Re: Invest in Tesla?

Post by Mjar » Wed Jul 18, 2018 2:52 pm

MotoTrojan wrote:
Wed Mar 28, 2018 10:23 am
Still has a market cap well over Ford (was double before recent drop). Ford had $7.6B in earnings with $12B in cash reserves. Tesla had $2B loss and will need to raise more capital soon.

If you believe they won't go bankrupt, you may be better off investing in their bonds. Current yield is over 7%.

Looks like "shortville" may have been right after all: https://twitter.com/elonmusk/status/848 ... 01?lang=en
wasn't Amazon hemorrhaging cash for a while in the early years while they were hyper focused on the customer and low prices to undercut? I don't have position in Tesla nor will I but just being devils advocate

MotoTrojan
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Re: Invest in Tesla?

Post by MotoTrojan » Wed Jul 18, 2018 3:02 pm

Mjar wrote:
Wed Jul 18, 2018 2:52 pm
MotoTrojan wrote:
Wed Mar 28, 2018 10:23 am
Still has a market cap well over Ford (was double before recent drop). Ford had $7.6B in earnings with $12B in cash reserves. Tesla had $2B loss and will need to raise more capital soon.

If you believe they won't go bankrupt, you may be better off investing in their bonds. Current yield is over 7%.

Looks like "shortville" may have been right after all: https://twitter.com/elonmusk/status/848 ... 01?lang=en
wasn't Amazon hemorrhaging cash for a while in the early years while they were hyper focused on the customer and low prices to undercut? I don't have position in Tesla nor will I but just being devils advocate
How early you talking? Late 90’s they had a market cap under $1B (it peaked almost at TSLA levels back then though). Even so, that doesn’t prove this is a smart pick; more analogous to gambling with that logic.

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Re: Invest in Tesla?

Post by niceguy7376 » Wed Jul 18, 2018 3:07 pm

inbox788 wrote:
Wed Jul 18, 2018 12:13 pm

Yes, at 258 on March 28. Did you? And if trading, did you sell at the peak of 370 on June 18? Today it's 322. Invest in Tesla?
I am learning of this "Shorting a stock". So some posters on Mar 28 told OP to short Tesla. based on inbox788 posting, stock price was 258. All those that shorted (if that is a word in this context), what price or time frame did you do?

What happened when the stock went up to 370 on June 18 (nearly 3 months)? Today's price of 322 is still very high compared to 258 (nearly 4 months).


So when do all those that shorted it expect that it goes down further than 258 price?

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Carlos Danger
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Re: Invest in Tesla?

Post by Carlos Danger » Wed Jul 18, 2018 3:17 pm

It's 0.63% of our portfolio mostly thanks to ARKW. Not crazy about Tesla or Netflix, but otherwise high on that ETF and it has been delivering for us. Plenty of stock in the S&P I'm also not crazy about, but STFAX is the only decent option in 403(b) so S&P 500 is a massive portion of our total portfolio. Not crazy about Facebook.

My thoughts on Tesla is that the stock is an absurd and obvious bubble, and that I'm smart enough to stay the hell away and not lose my shirt like the shorts. The market can remain irrational longer than you remain solvent, and shorting Tesla can crush you long before the believers take a cold, hard, rational look at all the relevant facts.

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Portfolio7
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Re: Invest in Tesla?

Post by Portfolio7 » Wed Jul 18, 2018 4:07 pm

I love the idea of Tesla, and am kind of a fan, but no way would I own the stock. My sense is that the price implies a decade of success and significant margin growth, beyond a standard car company (and I'm borrowing from some folks I've read here, not doing the math myself.) In any case, it sounds like the odds are against you even more than normal with that kind of bet. I'm happy with my index funds (though tbf I do rue not listening to that little voice telling me to buy Apple back 15-20 years ago.)
An investment in knowledge pays the best interest.

alfaspider
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Re: Invest in Tesla?

Post by alfaspider » Wed Jul 18, 2018 4:20 pm

Portfolio7 wrote:
Wed Jul 18, 2018 4:07 pm
I love the idea of Tesla, and am kind of a fan, but no way would I own the stock. My sense is that the price implies a decade of success and significant margin growth, beyond a standard car company (and I'm borrowing from some folks I've read here, not doing the math myself.) In any case, it sounds like the odds are against you even more than normal with that kind of bet. I'm happy with my index funds (though tbf I do rue not listening to that little voice telling me to buy Apple back 15-20 years ago.)
That's my take as well. The problem with TSLA is that complete success of its business is already priced into the stock at a time when success is very much in doubt. There's no doubt the company has a very compelling concept for the future of the automobile, but going from that to total market domination is a very uncertain path, especially when competitors like Porsche are coming out with similar competitors soon. Add to that a charismatic but mercurial leader, and you have a recipe for a wild investment ride.

motorcyclesarecool
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Re: Invest in Tesla?

Post by motorcyclesarecool » Wed Jul 18, 2018 4:24 pm

The safest way to take a short position is to buy out-of-the-money put options that expire a longish time from now. You need to educate yourself thoroughly in options trading and in your platform’s interface, so you don’t accidentally do something you didn’t intend. Taking any flavor of short position is for someone who understands the risks.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

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Re: Invest in Tesla?

Post by carguyny » Wed Jul 18, 2018 4:31 pm

niceguy7376 wrote:
Wed Jul 18, 2018 3:07 pm
inbox788 wrote:
Wed Jul 18, 2018 12:13 pm

Yes, at 258 on March 28. Did you? And if trading, did you sell at the peak of 370 on June 18? Today it's 322. Invest in Tesla?
I am learning of this "Shorting a stock". So some posters on Mar 28 told OP to short Tesla. based on inbox788 posting, stock price was 258. All those that shorted (if that is a word in this context), what price or time frame did you do?

What happened when the stock went up to 370 on June 18 (nearly 3 months)? Today's price of 322 is still very high compared to 258 (nearly 4 months).


So when do all those that shorted it expect that it goes down further than 258 price?
You can short for a very limited amount of time. I've done as little as an hour for 15% to 20% gains (not Tesla). Tesla is tough to short due to artificially limited float from insiders, so I only do it when I see an irrational run up vs betting on a negative reaction to news.

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Re: Invest in Tesla?

Post by nps » Wed Jul 18, 2018 4:37 pm

DanMahowny wrote:
Wed Jul 18, 2018 12:38 pm
Things are going to go very bad, very soon, and it won't take long for Tesla to fold up the tent.
You mean the tent they are building Model 3s in?

niceguy7376
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Re: Invest in Tesla?

Post by niceguy7376 » Wed Jul 18, 2018 9:34 pm

Attention grabbing Headline of today - Tesla Could Be Doomed by Earning Money


https://www.barrons.com/articles/tesla- ... yptr=yahoo

Theoretical
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Re: Invest in Tesla?

Post by Theoretical » Wed Jul 18, 2018 10:29 pm

Terrible idea. Tesla is a cool company with truly horrifying fundamentals and some of the junkiest of junk debt.

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Re: Invest in Tesla?

Post by Valuethinker » Thu Jul 19, 2018 4:01 am

Portfolio7 wrote:
Wed Jul 18, 2018 4:07 pm
I love the idea of Tesla, and am kind of a fan, but no way would I own the stock. My sense is that the price implies a decade of success and significant margin growth, beyond a standard car company (and I'm borrowing from some folks I've read here, not doing the math myself.) In any case, it sounds like the odds are against you even more than normal with that kind of bet. I'm happy with my index funds (though tbf I do rue not listening to that little voice telling me to buy Apple back 15-20 years ago.)
Your caution is warranted.

Apple has always been cash flow positive, and has built up huge resources of cash.

By contrast Tesla is cash flow negative and has to borrow. That basically means the equity is a warrant (ie a long dated call option) on success-- and it could expire worthless.

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Re: Invest in Tesla?

Post by 4nursebee » Thu Jul 19, 2018 4:53 am

Clever_Username wrote:
Wed Mar 28, 2018 10:25 am
BradJ wrote:
Wed Mar 28, 2018 10:14 am
Is it a good time to buy Tesla?
What do you know about Tesla that the people at Goldman Sachs do not?
Goldman Sachs knows enough to be the 15th largest institutional owner to tesla stock according to the last 13-F filed.
4nursebee

Valuethinker
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Re: Invest in Tesla?

Post by Valuethinker » Thu Jul 19, 2018 4:59 am

4nursebee wrote:
Thu Jul 19, 2018 4:53 am
Clever_Username wrote:
Wed Mar 28, 2018 10:25 am
BradJ wrote:
Wed Mar 28, 2018 10:14 am
Is it a good time to buy Tesla?
What do you know about Tesla that the people at Goldman Sachs do not?
Goldman Sachs knows enough to be the 15th largest institutional owner to tesla stock according to the last 13-F filed.
If this is GS Asset Management then they may hold it on behalf of their clients. That's like saying Vanguard or Fidelity is a large shareholder in Tesla. If senior execs of Tesla have GS Private Wealth Management managing their portfolios, say.

If it is GS the bank on its own balance sheet, then they may have hedged. For example if they are writing Call options against Tesla on behalf of clients, they will also hold the underlying stock (writing naked calls is dangerous, because in theory you have the possibility of unlimited losses; so you always cover your call writing).

Similarly they may have clients who are senior execs or venture funds invested in Tesla. The GS holding in Tesla may be as part of a derivative service they are offering to protect the client's portfolio.

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4nursebee
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Re: Invest in Tesla?

Post by 4nursebee » Thu Jul 19, 2018 5:05 am

The bear case and negativity regarding TSLA has always been present and to date just plain old WRONG
Asking about TSLA @ BH forum really comes across as trolling... this is not the place to discuss individual stock investing.

Having said that my price target has always been a minimum of $2,000 per share and with energy business growth higher could be justified but I don't know how to add that to my analysis.
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4nursebee
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Re: Invest in Tesla?

Post by 4nursebee » Thu Jul 19, 2018 5:09 am

Valuethinker wrote:
Thu Jul 19, 2018 4:59 am
4nursebee wrote:
Thu Jul 19, 2018 4:53 am
Clever_Username wrote:
Wed Mar 28, 2018 10:25 am
BradJ wrote:
Wed Mar 28, 2018 10:14 am
Is it a good time to buy Tesla?
What do you know about Tesla that the people at Goldman Sachs do not?
Goldman Sachs knows enough to be the 15th largest institutional owner to tesla stock according to the last 13-F filed.
If this is GS Asset Management then they may hold it on behalf of their clients. That's like saying Vanguard or Fidelity is a large shareholder in Tesla. If senior execs of Tesla have GS Private Wealth Management managing their portfolios, say.

If it is GS the bank on its own balance sheet, then they may have hedged. For example if they are writing Call options against Tesla on behalf of clients, they will also hold the underlying stock (writing naked calls is dangerous, because in theory you have the possibility of unlimited losses; so you always cover your call writing).

Similarly they may have clients who are senior execs or venture funds invested in Tesla. The GS holding in Tesla may be as part of a derivative service they are offering to protect the client's portfolio.

61.72% is held by large funds on behalf of someone. I try not to read into it too much beyond that. The point is it is owned.
EM has >25%
And individuals have got to be holding a bit more
My read is it is tightly held
Business is war and this is a large battle
4nursebee

Valuethinker
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Re: Invest in Tesla?

Post by Valuethinker » Thu Jul 19, 2018 5:14 am

4nursebee wrote:
Thu Jul 19, 2018 5:05 am
The bear case and negativity regarding TSLA has always been present and to date just plain old WRONG
Asking about TSLA @ BH forum really comes across as trolling... this is not the place to discuss individual stock investing.

Having said that my price target has always been a minimum of $2,000 per share and with energy business growth higher could be justified but I don't know how to add that to my analysis.
What would be the market cap of Tesla at $2000 per share?

What would the Enterprise Value be?

What EBITDA are you forecasting? What about EBITDA margin? Are you assuming it will be cashflow positive by then?

Tesla feels a bit like Netflix - both companies are on very fast treadmills-- the faster they run the faster they have to go to keep up. However Netflix is a leader in its market with a high level of recurring revenue.

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Re: Invest in Tesla?

Post by TomatoTomahto » Thu Jul 19, 2018 5:18 am

Deleted post, back to my self-imposed exile from Tesla threads.
Last edited by TomatoTomahto on Thu Jul 19, 2018 7:38 am, edited 1 time in total.

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Re: Invest in Tesla?

Post by 4nursebee » Thu Jul 19, 2018 5:20 am

nisiprius wrote:
Wed Mar 28, 2018 4:13 pm
Tesla Bonds are in Free Fall
Elon Musk’s creditors are suddenly having a serious bout of buyer’s remorse.... bondholders are asking hard questions about whether Musk can deliver on his bold promise to bring electric cars to the masses before the company runs out of cash. On Wednesday, Tesla’s notes plunged to a low of 86 cents on the dollar, the clearest sign yet creditors aren’t totally sure the company will be money good....

The company, which has never shown an annual profit in the 15 years since it was founded, will need to raise over $2 billion to cover not only its cash burn this year, but also about $1.2 billion of debt that comes due by 2019....

...with a junk rating of Caa1 from Moody’s on Tesla’s unsecured bonds (seven levels below investment grade...
I don't do the kind of analysis needed to invest intelligently in individual stocks or individual bonds, but this is a company that investors think might have trouble paying its bills.

Investing in Tesla might be a brilliant contrarian strategy, but this is certainly a high risk--betting on a company that seems to be in serious trouble.

BradJ, you want to have some pretty good reason for having more confidence in Tesla than other investors do.
Which investors think it might have trouble paying its bills? My take of things has been the negative press has been overhyped because it gets lots of eyeballs=traffic. I am unaware of any "investors" that have said this.

I don't think the company is in serious trouble. But this viewpoint is less sensational. Isn't all the press on tesla an excellent example of yellow journalism and sensationalism? I think so and it has gotten worse over the years.
https://en.wikipedia.org/wiki/Yellow_journalism
https://en.wikipedia.org/wiki/Sensationalism
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4nursebee
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Re: Invest in Tesla?

Post by 4nursebee » Thu Jul 19, 2018 5:27 am

Valuethinker wrote:
Thu Jul 19, 2018 5:14 am
4nursebee wrote:
Thu Jul 19, 2018 5:05 am
The bear case and negativity regarding TSLA has always been present and to date just plain old WRONG
Asking about TSLA @ BH forum really comes across as trolling... this is not the place to discuss individual stock investing.

Having said that my price target has always been a minimum of $2,000 per share and with energy business growth higher could be justified but I don't know how to add that to my analysis.
What would be the market cap of Tesla at $2000 per share?

What would the Enterprise Value be?

What EBITDA are you forecasting? What about EBITDA margin? Are you assuming it will be cashflow positive by then?

Tesla feels a bit like Netflix - both companies are on very fast treadmills-- the faster they run the faster they have to go to keep up. However Netflix is a leader in its market with a high level of recurring revenue.
My analysis in 2012 included two different scenarios based upon potential sales, expected profit margins, reasonable p/e. I went back and looked at those simple calculations and minimum price at the time was actually 3995
Basically it hinged upon 10% of world car sales
10% profit margin
15 p/e
and a car that cost only 30K
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Re: Invest in Tesla?

Post by 4nursebee » Thu Jul 19, 2018 5:44 am

4nursebee wrote:
Thu Jul 19, 2018 5:20 am
nisiprius wrote:
Wed Mar 28, 2018 4:13 pm
Tesla Bonds are in Free Fall
Elon Musk’s creditors are suddenly having a serious bout of buyer’s remorse.... bondholders are asking hard questions about whether Musk can deliver on his bold promise to bring electric cars to the masses before the company runs out of cash. On Wednesday, Tesla’s notes plunged to a low of 86 cents on the dollar, the clearest sign yet creditors aren’t totally sure the company will be money good....

The company, which has never shown an annual profit in the 15 years since it was founded, will need to raise over $2 billion to cover not only its cash burn this year, but also about $1.2 billion of debt that comes due by 2019....

...with a junk rating of Caa1 from Moody’s on Tesla’s unsecured bonds (seven levels below investment grade...
I don't do the kind of analysis needed to invest intelligently in individual stocks or individual bonds, but this is a company that investors think might have trouble paying its bills.

Investing in Tesla might be a brilliant contrarian strategy, but this is certainly a high risk--betting on a company that seems to be in serious trouble.

BradJ, you want to have some pretty good reason for having more confidence in Tesla than other investors do.
Which investors think it might have trouble paying its bills? My take of things has been the negative press has been overhyped because it gets lots of eyeballs=traffic. I am unaware of any "investors" that have said this.

I don't think the company is in serious trouble. But this viewpoint is less sensational. Isn't all the press on tesla an excellent example of yellow journalism and sensationalism? I think so and it has gotten worse over the years.
https://en.wikipedia.org/wiki/Yellow_journalism
https://en.wikipedia.org/wiki/Sensationalism

For example, since this was posted a very short time ago, my market news feed has one item related to tesla, It reports that the diver that was involved in an "incident" with Musk has flow home. I don't find this real news and I did not find a single tweet an incident.
4nursebee

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Re: Invest in Tesla?

Post by bgf » Thu Jul 19, 2018 7:44 am

niceguy7376 wrote:
Wed Jul 18, 2018 9:34 pm
Attention grabbing Headline of today - Tesla Could Be Doomed by Earning Money


https://www.barrons.com/articles/tesla- ... yptr=yahoo
that has been precisely my hypothesis for a few years now. it is easier to build castles in the sky when one isn't shackled to the ground by actual profits and earnings...

while i think that way of thinking applies to tesla, i do not think it applies to amazon. amazon could be instantly and consistently profitable. tesla, i don't think, could.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

Valuethinker
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Re: Invest in Tesla?

Post by Valuethinker » Thu Jul 19, 2018 7:48 am

4nursebee wrote:
Thu Jul 19, 2018 5:27 am
Valuethinker wrote:
Thu Jul 19, 2018 5:14 am
4nursebee wrote:
Thu Jul 19, 2018 5:05 am
The bear case and negativity regarding TSLA has always been present and to date just plain old WRONG
Asking about TSLA @ BH forum really comes across as trolling... this is not the place to discuss individual stock investing.

Having said that my price target has always been a minimum of $2,000 per share and with energy business growth higher could be justified but I don't know how to add that to my analysis.
What would be the market cap of Tesla at $2000 per share?

What would the Enterprise Value be?

What EBITDA are you forecasting? What about EBITDA margin? Are you assuming it will be cashflow positive by then?

Tesla feels a bit like Netflix - both companies are on very fast treadmills-- the faster they run the faster they have to go to keep up. However Netflix is a leader in its market with a high level of recurring revenue.
My analysis in 2012 included two different scenarios based upon potential sales, expected profit margins, reasonable p/e. I went back and looked at those simple calculations and minimum price at the time was actually 3995
Basically it hinged upon 10% of world car sales
10% profit margin
15 p/e
and a car that cost only 30K
2012 was a long time ago -- have you updated your estimates?

10% of world car sales, for a company who is struggling to hit a run rate of 5k cars per week?

Still not sure what the market cap would be? What's your estimate of EV?

Normally one values car cos on EV/ EBITDA basis, to strip out the differences in accounting (some of them).

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Re: Invest in Tesla?

Post by pokebowl » Thu Jul 19, 2018 7:50 am

I currently hold TSLA through my holdings in VTSAX and VEXAX respectively. The last time I held the stock directly was between 2013-2015. :sharebeer
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4nursebee
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Re: Invest in Tesla?

Post by 4nursebee » Thu Jul 19, 2018 8:33 am

Valuethinker wrote:
Thu Jul 19, 2018 7:48 am
4nursebee wrote:
Thu Jul 19, 2018 5:27 am
Valuethinker wrote:
Thu Jul 19, 2018 5:14 am
4nursebee wrote:
Thu Jul 19, 2018 5:05 am
The bear case and negativity regarding TSLA has always been present and to date just plain old WRONG
Asking about TSLA @ BH forum really comes across as trolling... this is not the place to discuss individual stock investing.

Having said that my price target has always been a minimum of $2,000 per share and with energy business growth higher could be justified but I don't know how to add that to my analysis.
What would be the market cap of Tesla at $2000 per share?

What would the Enterprise Value be?

What EBITDA are you forecasting? What about EBITDA margin? Are you assuming it will be cashflow positive by then?

Tesla feels a bit like Netflix - both companies are on very fast treadmills-- the faster they run the faster they have to go to keep up. However Netflix is a leader in its market with a high level of recurring revenue.
My analysis in 2012 included two different scenarios based upon potential sales, expected profit margins, reasonable p/e. I went back and looked at those simple calculations and minimum price at the time was actually 3995
Basically it hinged upon 10% of world car sales
10% profit margin
15 p/e
and a car that cost only 30K
2012 was a long time ago -- have you updated your estimates?

10% of world car sales, for a company who is struggling to hit a run rate of 5k cars per week?

Still not sure what the market cap would be? What's your estimate of EV?

Normally one values car cos on EV/ EBITDA basis, to strip out the differences in accounting (some of them).
I think I once looked at my future estimates to get a gauge of things.
Yes.
I think I looked at the market cap but don't recall focusing on it. What I did do is as I described, I tried to come up with a potential future price based upon potential future sales, profit/earnings using the formula 15= price/earnings. I did not need whatever EV is for this but do not discount whatever it might imply.
(Market cap looks too rich given my price)
I am not an accountant to know EV/EBITDA stuff.

Perhaps critique my math or thinking. Please, I am serious, have had similar requests online for years without serious critique
If TSLA were to ever sell 10% of the worlds autos, as other companies do
AND the world market was at least 100M vehicles per annum
That would mean they would sell 10M cars per annum
If the sales from said cars assuming low end price 30K
the sales would be 300,000,000,000 300B per year
10% profit (I surrender this is simple but will use it for my calcs) is 30B profit(earnings)
I assume now 170 M shares so earnings per share is $264
Solve for P in formula 15 = P/E
P= 15 * 264
P= $3969

Limits of the above. Overly simple math. Profits are not earnings but gave me a starting point to approximate. Sales price likely low given history, market trends. Profit might be larger (see Munro eat crow if need be google it).

Thank you for any critque.

AMZN has a PE of 290
4nursebee

alfaspider
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Re: Invest in Tesla?

Post by alfaspider » Thu Jul 19, 2018 8:53 am

4nursebee wrote:
Thu Jul 19, 2018 5:27 am
Valuethinker wrote:
Thu Jul 19, 2018 5:14 am
4nursebee wrote:
Thu Jul 19, 2018 5:05 am
The bear case and negativity regarding TSLA has always been present and to date just plain old WRONG
Asking about TSLA @ BH forum really comes across as trolling... this is not the place to discuss individual stock investing.

Having said that my price target has always been a minimum of $2,000 per share and with energy business growth higher could be justified but I don't know how to add that to my analysis.
What would be the market cap of Tesla at $2000 per share?

What would the Enterprise Value be?

What EBITDA are you forecasting? What about EBITDA margin? Are you assuming it will be cashflow positive by then?

Tesla feels a bit like Netflix - both companies are on very fast treadmills-- the faster they run the faster they have to go to keep up. However Netflix is a leader in its market with a high level of recurring revenue.
My analysis in 2012 included two different scenarios based upon potential sales, expected profit margins, reasonable p/e. I went back and looked at those simple calculations and minimum price at the time was actually 3995
Basically it hinged upon 10% of world car sales
10% profit margin
15 p/e
and a car that cost only 30K
Ford has a US market share of 14% (global seems to be in the 7-8% rage) and a market cap of $42B. Tesla has a $52B market cap TODAY. Tesla would need to be an order of magnitude more profitable than Ford at the same market share to support anything like $3,000/share. Seems wildly unrealistic.
Last edited by alfaspider on Thu Jul 19, 2018 10:10 am, edited 1 time in total.

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4nursebee
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Re: Invest in Tesla?

Post by 4nursebee » Thu Jul 19, 2018 9:06 am

On thinking about Tesla and other car co's: Might that not be some kind of an anchoring cognitive bias? It might be reasonable for some, but not an exercise I have partaken in. Kind of like looking at MSRP- boom, one gets anchored to that price. Thinking of TSLA share price, market cap, profit, etc... in terms of other autos, might only work if they are like other autos, and gets one anchored to thinking like them.

Tesla seems like the kind of company that is growing new market, new product, with increasing sales. 2018 stands a chance to have 100% sales growth. Isn't that the kind of company to invest in? Growth that exceeds the market averages?
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Valuethinker
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Re: Invest in Tesla?

Post by Valuethinker » Thu Jul 19, 2018 9:23 am

4nursebee wrote:
Thu Jul 19, 2018 8:33 am
Valuethinker wrote:
Thu Jul 19, 2018 7:48 am
4nursebee wrote:
Thu Jul 19, 2018 5:27 am
Valuethinker wrote:
Thu Jul 19, 2018 5:14 am
4nursebee wrote:
Thu Jul 19, 2018 5:05 am
The bear case and negativity regarding TSLA has always been present and to date just plain old WRONG
Asking about TSLA @ BH forum really comes across as trolling... this is not the place to discuss individual stock investing.

Having said that my price target has always been a minimum of $2,000 per share and with energy business growth higher could be justified but I don't know how to add that to my analysis.
What would be the market cap of Tesla at $2000 per share?

What would the Enterprise Value be?

What EBITDA are you forecasting? What about EBITDA margin? Are you assuming it will be cashflow positive by then?

Tesla feels a bit like Netflix - both companies are on very fast treadmills-- the faster they run the faster they have to go to keep up. However Netflix is a leader in its market with a high level of recurring revenue.
My analysis in 2012 included two different scenarios based upon potential sales, expected profit margins, reasonable p/e. I went back and looked at those simple calculations and minimum price at the time was actually 3995
Basically it hinged upon 10% of world car sales
10% profit margin
15 p/e
and a car that cost only 30K
2012 was a long time ago -- have you updated your estimates?

10% of world car sales, for a company who is struggling to hit a run rate of 5k cars per week?

Still not sure what the market cap would be? What's your estimate of EV?

Normally one values car cos on EV/ EBITDA basis, to strip out the differences in accounting (some of them).
I think I once looked at my future estimates to get a gauge of things.
Yes.
I think I looked at the market cap but don't recall focusing on it. What I did do is as I described, I tried to come up with a potential future price based upon potential future sales, profit/earnings using the formula 15= price/earnings. I did not need whatever EV is for this but do not discount whatever it might imply.
(Market cap looks too rich given my price)
I am not an accountant to know EV/EBITDA stuff.

Perhaps critique my math or thinking. Please, I am serious, have had similar requests online for years without serious critique
If TSLA were to ever sell 10% of the worlds autos, as other companies do
AND the world market was at least 100M vehicles per annum
That would mean they would sell 10M cars per annum
If the sales from said cars assuming low end price 30K
the sales would be 300,000,000,000 300B per year
10% profit (I surrender this is simple but will use it for my calcs) is 30B profit(earnings)
I assume now 170 M shares so earnings per share is $264
Solve for P in formula 15 = P/E
P= 15 * 264
P= $3969

Limits of the above. Overly simple math. Profits are not earnings but gave me a starting point to approximate. Sales price likely low given history, market trends. Profit might be larger (see Munro eat crow if need be google it).
It would be more than 10% of the world car market in terms of actual dollars spent. Say Tesla vehicles are on average 2x the average car price.

This feels a bit like the forecasts that were issued during the dot com boom. Amazon is actually pretty close to hitting the number of $ ecommerce sales per customer, number of customers, that were set back then (rather, its 2010 numbers were not far off what was predicted in 1999). However different companies emerged to seize the revenue and profit pool (Facebook, Google). Amazon is the survivor (along with Apple, Microsoft) but so many others dropped by the wayside - Cisco, Intel, Dell, HP.

Thank you for any critque.

AMZN has a PE of 290
That's a dangerous line of logic "this may look expensive, but look how expensive *this* other stock is". It happened in 1999-2000 to justify ludicrous valuations for tech companies, equipment companies like Nortel & Lucent, etc.

Amazon has that PE because:

- AWS is a very profitable business (25%+ profit margins) - they are a key participant in cloud infrastructure

- Bezos has executed successfully in so many of the areas Amazon has entered. Thus, as it comes to dominate a more mature market (books) it moves into adjacent markets (streaming media). It makes very little profit because of its constant reinvestment which lowers current earnings

I think the valuation is extremely stretched, but there is a logic behind it.

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4nursebee
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Re: Invest in Tesla?

Post by 4nursebee » Thu Jul 19, 2018 9:35 am

I get your points. But I do not find them a critique of my math to come up with a potential future price of TSLA.

AMZN shows how crazy P/E can be given growth story. It is not pertinent to how I figure out potential TSLA price.

Using Bezos as an example could perhaps favor trusting Musk. While he has not been timely in things he says, what he says does happen. X.com, paypal, tesla til now, SpaceX, all amazing stories of 0-1 over and over. Boring company again. Solarcity again.

I was only aiming for 10% of world car sales. I know the cars are more expensive but he is aiming for lower priced cars. If cars are more expensive and more profitable the bullish case is all the better.
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