Tesla

https://www.cnbc.com/2021/07/26/tesla-ts...-2021.html

Quote:Tesla reports more than $1 billion in net income during Q2, up tenfold from a year ago

8 consecutive quarters of positive net income, first time in Tesla's history as a public company. Probably deserves an update post.



Financial Multiples:
PS ratio (TTM): Circa 30x (at peak this year) to 15.7x
PE ratio (TTM): Circa 1402 (at peak this year) to 362

(vested)

(31-07-2021, 08:06 PM)Wildreamz Wrote: https://www.cnbc.com/2021/07/26/tesla-ts...-2021.html

Quote:Tesla reports more than $1 billion in net income during Q2, up tenfold from a year ago

8 consecutive quarters of positive net income, first time in Tesla's history as a public company. Probably deserves an update post.



Financial Multiples:
PS ratio (TTM): Circa 30x (at peak this year) to 15.7x
PE ratio (TTM): Circa 1402 (at peak this year) to 362

(vested)

The profits are impressive. 

unfortunately the initial big funds that invested are already cashing out in the 1H of this year.

And one could say Tesla has now matured into a profitable big car company and growth will be limited as competitors like VW are now already selling more electrics than them in Europe. Tesla has 20% market share now and GM has 14% and VW has 9% of EV sales worldwide and catching up fast. Even  Tesla's 680B market cap worth so much more than GM 82B and VW 125B market cap?

IMHO the Mega-Growth story is now ending and we should see PE multiples drop back to more reasonable probably 30-50s level as more competition creeps in on all fronts. Whilst profit should keep increasing as there is still more growth in EV market, the previous valuations based on triple digit type growth I believe are no longer valid and big shareholders are starting to realise it as well.

In addition the much hyped autonomous driving car has resulted in some crashes and still stuck in development at level 2. Though Elon has recently said by year end it will be level 5 fully autonomous. IIRC he previously said autonomous cars be on the road by 2018 so lets see what happens this year, we'll see...

Whats left really is the hype with Tesla's holding of bitcoin/dogecoin.

A few key points:

(1) Right now Tesla only has manufacturing capacity in the US and China. Hence, when they sell in any other markets, including Europe they will be facing heavy import taxes: https://www.teslarati.com/tesla-model-s3...te-europe/

The situation will of course change, when Giga Berlin comes online.

(2) Right now Tesla is supply constrain, both because they are still very early in their multi-year growth cycle (many Gigafactories yet to come online). As well as the semi-conductor shortages. They are selling as many cars as they can make.

Investors should be cautioned against looking at short-term market share trends now in specific markets, and extrapolating to the long-term and other markets. 

(3) VW's enterprise value is closer to $300bil, GM $170Bil, compared to Tesla's $670bil. They are priced closer than most market observers think: https://ycharts.com/companies/VWAGY/enterprise_value ; https://ycharts.com/companies/GM/enterprise_value

(4) As usual, nobody knows the future. We shall see. But at least for now, early investors, so far, seem to have bet on the right management, company and market trends. No one can take this away from them.

(31-07-2021, 10:31 PM)Wildreamz Wrote: A few key points:

(1) Right now Tesla only has manufacturing capacity in the US and China. Hence, when they sell in any other markets, including Europe they will be facing heavy import taxes: https://www.teslarati.com/tesla-model-s3...te-europe/

The situation will of course change, when Giga Berlin comes online.

(2) Right now Tesla is supply constrain, both because they are still very early in their multi-year growth cycle (many Gigafactories yet to come online). As well as the semi-conductor shortages. They are selling as many cars as they can make.

Investors should be cautioned against looking at short-term market share trends now in specific markets, and extrapolating to the long-term and other markets. 

(3) VW's enterprise value is closer to $300bil, GM $170Bil, compared to Tesla's $670bil. They are priced closer than most market observers think: https://ycharts.com/companies/VWAGY/enterprise_value ; https://ycharts.com/companies/GM/enterprise_value

(4) As usual, nobody knows the future. We shall see. But at least for now, early investors, so far, seem to have bet on the right management, company and market trends. No one can take this away from them.

all your points make sense. 

However have to keep in mind that all the other EV makers are also facing chip constrains and hence are probably selling out as many as they can make, since they are also limited by the chip constrains. Hence when these constrains are eased, all other car major car makers will be able to increase production capacity. In fact, VW already has many factories on each continent which have added or adding on EV manufacturing capability. This is the same story for other incumbent car makers which can easily add on EV manufacturing to their current facilities. Plus they have the "hybrid" car advantage, which is another fast growing segment Tesla does not have access to.

VW is also expanding and lowering cost by building battery plants all over europe as well. Which is due to their higher software and battery making costs, around $1300 more per car compared to Tesla, due to Teslas vertical integration. But costs should be similar soon I reckon in the coming years.

Main thing is as much as Tesla now would like to expand into Europe, India and other big markets in the world like Africa or South America, it will be met with stiff competition and likely will be left fighting for market share in the future. It w

So unless they have an autonomous software platform which all other car makers have to use and provides a steady income, much like Apple having their Itunes/apple store platform, it will be very hard for them to compete with the other big car makers in the "hardware" market share part. Just like how the mobile market is now dominated by chinese makers who are running android or their own platforms.

This is a good read on how chinese car makers are catching up quickly. 
https://www.scmp.com/magazines/style/new...-elon-musk

So EUROPE market its outsold by VW already.
China market, it enjoyed perks to make gigafactory there, but you know the chinese, they give you something, they taketh more (China–Singapore Suzhou Industrial Park is a lesson SG gov learnt) Chinese now also have fully working Autopilot software (do you think they "research it themselves")
USA market Tesla still goes strong but majority lead is slowly eroding. 

Even if Tesla doubles its earnings next year, and share price maintains the same, PE will still be 150++ which is way above the big name car makers which have PE around 10 range. And compared to other stocks like software makers, amazon PE 57, FB 26, Netflix 53, Microsoft 35, Apple 28. High multiple for Tesla and other growth stocks is usually market pricing in future high growth, which i do not think is going to happen for Tesla now that its grown so big.

yes those that made a bet on Tesla decade ago would have made 100x, and couple years back would have made 10x, but I reckon they should heed the SMART MONEY which is selling out, and take some profits and possibly reinvest, maybe into the STARLINK IPO  . 

Its is very unlikely we see another 10x in a year like last year for Tesla again given now its gone from loss to profit and startup to maturing car maker. Most chartist will also tell you that usually with such an exponential spike in price, there will be a similar steep drop after. I reckon not seen the bottom of this drop yet until PE settles to at last below 100x.

As usual, excessive debate is futile (especially on subjective and unknowable matters). We can only see how things develop. A few quick points tho:

(1) Again, you are implying that Tesla already "lost" Europe, it's far too early. Especially before Giga Berlin comes online. And even today, Tesla still holds the market share lead for the highest selling single model: https://europe.autonews.com/sales-segmen...models-lag Even though they are supply constrained and Model Y sill isn't available at volume in Europe yet. Do you think it's reasonable to assume that there might be some customers who really want an affordable SUV, holding out, because they know Giga Berlin may be coming online soon?

(2) Even though the entire car industry faces chip shortages. The difference between Tesla and traditional automakers are, traditional automakers aren't growing at ~100% revenue growth rate; in spite of the shortage. In fact, many of their revenues are lower than their all time highs (pre-pandemic). And in cases like Ford, below their 2007 highs.

(3) Frankly, at the moment, the market is starting to value these automakers, mainly in terms of current and future EV productions and sales. And their traditional ICE business are valued as declining businesses. This is why you see the disparity in valuations, and the recent tick up the the market price of companies like GM, as they seem to have found their mojo back in EVs (as well as the surprise demand for cars, post-pandemic, causing the chip shortages, and driving up prices). It's yet to be seen if they really can compete in EVs though.

(4) The decline in Tesla's multiple is normal and expected (ie grow into it's valuation), and it's not solely driven by decline in market price; but net income and revenue expansion as well. I expect this trend to continue when it inevitably grows (barring unforeseen setbacks).

(5) Outside of Tesla, I'm frankly most bullish of the young startups like Nio, Xpeng etc. But I don't know much about them, and I have no idea they will succeed. I used to invest in BYD, however, after a few years, it was clear that it was underperforming the growth of the entire sector in China. Just because something is cheaper, doesn't mean it will get market share.

(6) Self-driving tech. This is a very interesting debate. Inherently, in the case of Deep Learning (what's behind most self-driving tech), you can't really "steal the software". It requires a rich and constantly updating dataset. In the case of Tesla, it has thousands of fans, constantly and actively "volunteering" to test-drive the beta (frequently, in difficult edge case conditions), and training the algorithm (https://www.youtube.com/results?search_query=tesla+fsd). I haven't even seen similar OTA-updating "self-driving betas" copied by competitors + deployed en-masse yet; let alone the thousands of fans around the world volunteering and training the software.

At this point Tesla already solved many of these issues (building a fanbase, building scale and volume etc) and is cash flow positive. Whereas, even extremely strong consumer brands would need to retrace the beaten path taken by Tesla; some have given up before they even started (e.g. Dyson) after they did the cost benefit analysis; some have tried and failed (IMO BYD, now at 4th place globally).

It's not impossible to catch up at Tesla at this point. I am just not seeing any obvious competitor yet. 

(7) Also, you may be interested to see the teardown of Tesla's closest competitors by industry experts:
https://cleantechnica.com/2021/05/02/san...ress-more/

https://www.straitstimes.com/singapore/t...les-portal

Quote:Tesla delivers first cars in Singapore five months after opening sales portal here

..

The senior Mr Teng, a retiree, said: "When I was in Hainan and Tibet in 2014, 2015, I noticed all the motorcycles were electric. And I thought to myself, the Chinese are not doing this for environmental reasons. They're doing this because it made economic sense.

"And if something makes economic sense, nothing can stop it."

He said he was drawn to Tesla because of "all the publicity", and he even visited its factory in Fremont, California, to find out more about the company.

The long wait did not deter him. "When I was with (insurer) AIA a long time ago, I bought $70,000 of (parent group) AIG shares. I was able to buy my Jaguar XJ when the shares appreciated in value.

"So I thought I could do the same with Tesla."

He bought US$70,000 (S$94,800) worth of Tesla shares in 2016, and because of the increase in its stock price in recent years, he was able to pay for two Model 3's, as well as a Model X SUV which he plans to buy, "and more".

..

(03-08-2021, 01:10 PM)Wildreamz Wrote:

Quote:..........

He bought US$70,000 (S$94,800) worth of Tesla shares in 2016, and because of the increase in its stock price in recent years, he was able to pay for two Model 3's, as well as a Model X SUV which he plans to buy, "and more".

..

Tesla's profitability has only turned around recently. His purchase in 2016 probably means he must have a lot of conviction at that point in time. 

We do not know the price/qty/schedule of TSLA which he sold / is selling, but with the original "not too small" invested sum and subsequently price run up, it could pay for many things indeed.

I think the invested amt is one very key issue for the retail investor. If the invested sum is negligible, even if the share is a multi-bagger, it may not have made much of an impact.   

For a part-time investor, the small windfall probably comes as a bonus. But for the full-time investor, factor in the time and diligence to track the company fundamentals/developments day in, day out(not the daily share price), is it really worth it ? I believe a full-time job is a much better bet for making more money and more definitely.

On the other hand, if one were to invest a significant sum, one really has to have the conviction and competence especially for a loss making company(or no track record of positive decent earnings). Even if one invests in a star company, things cld go wrong; nothing is 100% certain.  

In the end, I suppose if a full time investor tries for long enough time(maybe > 1 decade) with grit and diligence + some luck, one shd be able to see some significant success in investing.

If you invest in small number of names (<10, preferably <5); then the work required to keep up with each company's progress would be significantly lesser. And the contributions of each name with outlier returns will also be significantly higher.

IMO, in general I know much less than management about the day-to-day of the business. And the focus of my effort is with betting on the right Jockey/Team/business/trend with huge runway (>10 years) from the start.

The rest of the work, is just checking back occasionally to make sure the underlying story/assessment/competitive landscape etc. is approximately unchanged; and not be fazed by daily price quotes and the occasional inevitable huge drawdowns and/or price increase, even as these positions become a bigger part of your personal wealth (by far the most difficult part of holding a long-term 10+ bagger).

Peace.

(vested)

If there is one investment lesson to take away from the article, it is that rich retirees have better odds of investing success.

If they have been accumulating cash and investing expertise throughout their lives, they are more likely to be able to make many big bets (a $3m portfolio means you can have 30 bets of $100k). Because of the possibly lower living expenses and lower wealth ambitions at an advanced age, there is also less urgency for the portfolio to grow quickly, encouraging him to sit on his stocks.

You wouldn't need to spend so much time on investing activities, and one will probably be better served by spending more time on other activities -- which in the case of the retire could be taking care of grandkids.

As you can imagine, the temperament of a 35 and a 65 are probably quite different. As is the psychology of an individual holding a portfolio of 3 stocks of $100k each versus another with a portfolio of 30 stocks of $100k each.

But the ironic thing is that if you have a $3m portfolio at age 65, I believe you will not be very much happier even if you can double or triple it at age 70. You will probably be more worried about other things. There isn't as much utility in being an investing expert at that age.

(04-08-2021, 08:26 PM)karlmarx Wrote: But the ironic thing is that if you have a $3m portfolio at age 65, I believe you will not be very much happier even if you can double or triple it at age 70. You will probably be more worried about other things. There isn't as much utility in being an investing expert at that age.

At the age, if the individual has met their financial goals, the focus is going to be different. It would be a combination of wealth preservation as well as legacy planning. I would also think there are better things to do in life than looking at annual reports and charts.

Well, maybe not the annual reports part.