I think 50% down is more likely due to Macro. It is not specific for Tesla. Every "growth" company evaluation got hit hard by Macro. Only Apple is relatively maintaining theirs. This is also include "safe" investment like bonds and stuff. Although I also agree, Tesla valuation is outrages in 2020. @ThePlainBagel Can you make another Tesla analysis? Now, the P/E is around 60. It is double than Apple. Tesla claim 50% growth and P/S is around 9. Would you still consider Tesla expensive with recent information? I am genuinely curious with your thought.
@@Ahmad_Falah It is more than just the macro forces. Large stocks are down about 19% YTD (based on the S&P500). Tech stocks specifically if you look at the Nasdaq 100 Technology Stock index are down 37%. Tesla is doing worse than other growth stocks and particularly worse than large growth stocks.
I’m 62 and a passive investor in index funds. I really like watching his videos. He’s very knowledgeable and you can see he’s worked hard to become an expert at what he does. I respect his comments and became a subscriber. Keep up the great work!
When you die who's inheriting your portfolio Charles ?? I can be your sugarbaby if you want. Except im a man and all I care about is that bag you feel me.
Although im a huge Tesla bull, I really enjoyed this video. I believe anyone who invested a significant amount of his wealth into a single stock should at least hear the counterarguments out before instantly disliking or insulting.
Completely Agree, its always good to hear what the other side has to say so that you can know if your story for the company still holds up against opposition
Kudos for watching the whole video objectively. I am curious, could you please explain why you are bullish on tesla because even if you price in the most bullish case it's still overvalued by 80%+ on a UFCF DCF basis and even 120%+ on a LFCF DCF basis. Not hating just genuinely curious how anyone at this point can be bullish on tesla
It was mostly a superficial analysis with very little knowledge about the company. But i agree that it is important to hear how other people see the company.
@@peterhagtharp4263 my friend is an investment banker at a wall st firm and he told me “our job is to take 1-10%percent of whatever untill it all disappears.” So i would say i disagree.
Warren Buffet has been bailed out by the Government 3 times. He actually is way over rated, check it out. Over simplified, but he is a welfare investor to some degree.
@@theVarazi give me something to catch on. I don't see it. Maybe you confused of him bailing out companies? Max Keiser absoletly tells nothing relevant and seems like he talks just made up rubbish.
Fsd is the answer. Tesla Will earn 10000$ per car they sell, pluss 10000$ each year for all the cars that are robotaxi. Sooooo money Will be No problem.
I love how "value" buyers (value-trap) of Intel on diminishing market share and technological moat (cuz low pe, buybacks and dividends is a buy for them) mock young Robinhooders that on average outerformed SP500 and retail investors. They learn and adapt. You dont.
Good to find that there is still somebody who is still sane and is not buying the hype. There are going to be a lot of people wishing they had listened to this guy.
The problem is that Bitcoin is a currency. It doesn't produce anything. Buying Bitcoin is literally just speculating that you can sell the Bitcoin for more along the road. Apart from paying ransomware ransoms and speculating, there really isn't a good reason to own it.
It makes me cringe a bit to see Richard laughing so nervously in the beginning of the video. Richard is doing a favor to new investors of the tech space to explain to them the risks of buying an over-hyped stock. I personally agree with the ideals associated with Tesla but Tesla is truly too expensive as a stock.
He seems like such a nice guy - I find the nervous laughter endearing. I guess he was worried about the inevitable tsunami of comments from people who care about a random company more than I do some of my family members.
@@instanoodles Tesla fanboy here 🙋🏻♂️. Started with 375 shares, and down to 25 shares now. Company is going to do well short and long term, but the stock is too risky to buy in the short term. If it reaches $1000 in 2021 I'll sell the rest of my shares.
2 things can be true at once: You can be bullish on a company's future performance AND the company's stock price can be very overpriced. I think Tesla has a great future, but I personally don't think Tesla's stock is a good investment at this price.
I think its price is way more than bullish, it's stratospherically ridiculous. To live up to the speculators, Tesla would pretty much have to be the most successful company since the EIC back in the 17th century. It has to grow to a corporation who warrants entire chapters in history books. And that just seems really really unlikely, worse odds than winning the lottery.
This is a really good video 👏🏾👏🏾 As someone who's portfolio is Currently 90% Tesla I appreciate the objective risks you've pointed out and really appreciate how transparent you were in the beginning with the assumptions you've made. Any real long term Tesla share holder should appreciate this and not attack it.
Some stocks aren't fact-driven. They're more hype- and sentiment-driven. But even those stocks will become fact-driven over time. We just don't know how long it will be until then.
@@Gundi_King i am not an expert but as an engineer i can say that Tesla has done some unique/intrigue innovations when it comes to EV and their manufacturing which counts as a competitive advantage over the rest so over long term it can maintain it's hold in the market but right now even i agree that the prices of stock are more hype driven then value driven
@@ST-tn9ow Innovation sure, manufacturing wouldn't be so sure. I would personally rate it below other big players, they might not have as much experience with EVs specifically, but EVs are nothing special to manufacture.
@@_Ekaros it's more about the batteries and it's manufacturing Techniques that Tesla is really good at and that is actually special. Sure overall manufacturing may not be that amazing but with those patents alone they can stay competitive for 5-10 years which should be enough for them to step up their game if they really want to. This is what i believe at least because in terms of EV performance and efficiency alone their car offers, Tesla is really ahead than competitors
I would say most stocks aren't "fact driven". In fact, didn'y Daniel Khaneman receive a nobel prize for demonstrating the economy is based on emotion rather than fact?
This video has gotten more instructive over time. It's pretty common nowadays to see a Tesla on the road. The company has successfully delivered on most reasonable expectations for a new automotive company. And yet the stock price is still only about half of its peak. It's a great case study in how a stock price can become completely detached from any quantitative reasoning.
It's videos like this that made me fall in love with your channel. I'm studying finance and stats in college to be a financial analyst, and this channel has been a huge amount of motivation to keep going. Thanks man. Only one year left till I graduate, woohoo.
Tesla is like the girl who gave you a little chance but now won't return your texts, it will be hard but you just need to forget about her and chase others
Another important point worth mentioning about AMZN is that it's also a behemoth in web hosting and compute. AWS runs a substantial portion of the internet, and it has an extremely wide range of web services available, which they can get HUGE margins on due to their enormous scale. Airbnb, Netflix, Twitch, BBC, etc. all use AWS and fork over a TON of money to them, so it's definitely not just the retail.
So funny seeing you being careful with your words. Haha. Awesome video! Even when im bullish on a stock. I actually like hearing the bear case. That way i dont get blind sided.
@@ryanwschneeberger this isn't the bear case, this is the "normal case", the bear case says that Tesla don't really have any real value over the legacy car makers, and should be valued as them according to P/S, even though they have abysmal earnings. Their tech is not really much better than what companies like VW or Toyota has, and when these huge and experienced companies truly enters the EV space, they're going to eat Tesla's lunch.
This didn't seem to be a bear case, as I don't recall him saying the stock should be sold / shorted. He is just posing some questions and factors to consider.
I would encourage anyone digging into Tesla’s evaluation to explore these few nuggets of information often overlooked, even in this great video: - Autonomy revenue (retro) - Tesla Insurance - Autobidder software from Solar - S curve growth due to streamlining - Robotaxi network Like Elon said on his last earnings call, Tesla is like 7 start ups at once. Ive been in the auto business for 25 years and Tesla already put an ultimatum that the industry I know very well it’s practically over. This is only the beginning. Great channel! Keep up the great work.
I agree, I brought the same point up myself about automation. Tesla has a very good chance of being the first autonomous car manufacturer and turning into the Amazon of the automotive industry. I can't see any other end game to be honest, there's no serious competition.
Autonomy, I am assuming that is self driving - this is primarily going to be governed by politics and government regulations. They won't allow a monopoly which seems to be priced in Tesla insurance - why would tesla have a competive advantage in insurance industry? -autobidder solar- I believe these are miniature solar generators. I work in power Gen and their is a reason powerplants are massive. They become more economical and efficient with size. S-curve - that growth is priced in already Robotaxi - government regulations won't allow a monopoly.
This sounds like a similar conclusion to what I came to around a month ago.. It isn't that Tesla is a really bad buy, it's just too expensive for its current price.
@@JD-yx7be at least Shopify has precedent and scaling is much easier since it's 100% digital. I don't think it's justified but still a very different growth model
As a growth investor, we should not be looking at PE ratio. WE should be looking at CAGR of revenue which puts Tesla at 40%. But I guess, average investors old school analyst would never understand. If seriously amazon is overvalued back in. 2010 and amazon P/E ratio is 3000+ back in 2012, why is amazon still surviving? In growth companies, we need to understand a lot of the profits needs to be reinvested back to grow the company. PE ratio is only use for value stocks.
I personally disagree with many of your points. However, open discussion is healthy even for bulls to check with their thesis. I recommend that you have a chat with Dave Lee or Rob Maurer for an open debate. Cheers!
@@Mosesusorer Tesla is bringing 2 factories online next year, I agree with his graph of 2021 FCF but putting 2022 at about the same level for FCF is insane it will be about double that level. 26M EV's in 2030 is also way off the mark, we will cross that level in 2025 and by 2032 all new vehicles worldwide will be EV's (study S curve of tech adoption if you think that is wrong) he's % of Tesla's EV market is high but the size of the market to him is laughably low. Those two were just a couple of many wrong assumptions made in this video. I like looking at bear thesis on tesla to see if I missed any but most just don't have clue.
@@BrentTJo you clearly have NO idea how stock returns are achieved or what a stock even represents. It seems that you’re just regurgitating all the facts and opinions you’ve been fed..
@@Mosesusorer A stock is one share of the future profits of a company, to properly gauge what a stock is worth you need to understand the future profits of a company. One way to figure future profits is to look at past profits but that only works for stable companies like Coke or AT&T for growth companies you need to figure what timeline you will be invested in and what profits they will make then along with what others will expect going forward thus what you will get on the exit. Ok now correct me on where I don't understand what a stock is worth.
hope that's true because I was proud of myself when I sold my (4) shares of tesla when it jumped up by 300 or so then bounced another 800 dollars and got out. since then the stock split and it went up and up and up and yet I feel like my objective caution was reasonable. but i'd never buy it at current value. too rich for my blood.
I think you have some valid points, but I also think you understated that TSLA is not just a car company. The current price is ridiculously high, there's no denying that. But a few things TSLA are working on that should grow extremely fast: - Its also a software company (and that portion is very profitable) - Solar roofing (in many places, the economics behind it will make it ridiculous to go for the traditional roof options). - Robotaxis (nobody knows when, but most likely in the next 5 years). - Vertical integration will make them insanely competitive. There's a huge difference between making a bit of money at every stage, and making all the profit at every stage. - Gross margins are better than the competition and will keep improving. - We are very close to the point where electic cars will cost less to produce than ICE cars. So even if price of oil dropped or popped, EVs will still make more sens. - They will soon have a 25k car which will be tough competition for companies starting out in the sector. - Semi-trucks (HUGE industry potential there) - HVAC systems (which will be way more efficient than existing systems, a lot of that technology comes from SpaceX, which was than applied to their cars, and now about to hit homes). - The insane amount of talent and skills available to TSLA via SpaceX, Neuralink, Starlink, etc, etc, etc. - If they are capable of producing more batteries than they need, there's also the potential there to become a battery provider for other manufacturers. - They have tons of cash (and if they decide to invest a portion of it in Bitcoin, it could even potentially get better!). They have enough cash to build 10 Gigafactories cash if they wanted to. -Car insurance, that will be more profitable and competitive than any other company because of the huge data advantage they have. If I had 100k to invest, would I put 50k in TSLA at current price? No way. If I bought them at an avg of 200$ and it now represented 50% of my portfolio would I be ok with it? Yes. TSLA is just part of the companies that will always appear to be way too expensive. I'm sure its still going to be the case in 5 years, 10 years, 20 years. If it drops at 350$ again, I'll be loading the boat (unless fundamentals had changed of course). This is really a long term play, 10+ years. Ark invest has analyzed this company upside down for years, and they are still as convinced as ever and you can look back at their price predictions and they are always on the money, even predictions from 2 years ago...and their ETFs have also been beating the market by an insane margin, for years. I can respect people who think TSLA is a bubble waiting to burst, like any stock it can certainly go through a major correction, I just personally wouldn't recommend shorting it as if price gets too low, chances are investors will be all over it again pushing it back up.
4 years since you wrote this, most things never materialised, no semi-truck, no vertical integration, no 25k car, no talent, gross margins were 21% in 2020 and are 18% as of end 2023 (notice they didn´t grow, they decline), insane competition from BYD and incumbent car makers, cash at Tesla has not even doubled since 2020, no Robotaxi, no HVAC systems, solar roofing insignificant in business model, software still good but so are others, car insurance insignificant at Tesla, ... The cherry on top is ARKK innovation quoted as some sort of quality stamp. ARKK Innovation ETF traded at $128/share in December 2020, and as of October 2024 trade for $48 (-62%). Notice how it doesn´t trade at $240 nor $480 nor $3000. It trades at $48. A fantastic value destroying ETF. Since you stated that this was a 10-year play, I will return in 2030 and follow up with ARKK ETF and with Tesla in this comment thread.
@@dodid0 If you read my comment it also said: "This is really a long term play, 10+ years." yes it might take more time as it often does, but someone whose young and holding this stock for - 10-20+ year horizon should do very well (of course no stock goes up in a straight line or is 100% guaranteed). Up 45% in the last 6 months, I don't think it's going to 0$, and still holding my position for many years ;)
solving the money problem may actually agree with plain bagel. STMP was making videos about tesla's value way back when it's price was more reasonable. At the time, it made way more sense to invest in tesla.
@@alainouellet7794 dude Tesla stock split into 5x, so current value x5 is greater than Amazon. Amazon is about web services AWS , you are forgetting about Tesla’s autonomous driving capabilities
To understand Tesla's valuation you have to know many of the differences: 1) Vertical integration means Tesla owns the distribution, the charging network, the insurance (starting) and significant parts of the supply chain (e.g. seats, battery). No other car company does this, they mostly rely on suppliers and their distribution network. So in earnest Tesla is several bussinesses combined into one. 2) New production processes (casting, no more body on frame) will make manufacturing cheaper and improve margins. Tesla has been steadily improving margins. 3) EV's will reach a tipping point after which they will be cheaper to buy (around 2023) and cheaper to maintain (already), market share will grow much faster after that. The Bloomberg projection doesn't account for tipping points, by 2030 almost all new cars sold will be autonomuous EVs. 4) autonomuous vehicules, Tesla is the leader in autonomuous vehicules and most likely be the first to have a general solution, this market is worth several trillion dollars. Tesla is the only manufacturer that already sells a software option for 10 thousand dollars and the price will continue to go up as it becomes clear that they will reach level 5 autonomy. 5) Higher integration of renewables into the grid requires storage. Most of the newly build utility scale solar installations from 2021 forward will have battery storage. Tesla is building Twh factories and has the software to be able to handle that market. 6) Legacy carcompanies are valued low because most of them will not survive the transition from internal combustion engine to EVs
Agreed. Especially with #6. Prowess and expertise in one domain can be baggage in another. Legacy automakers are dragging themselves down by not understanding EVs are more than replacing an engine with a motor, and a gas tank with a battery. Note that recent news shows Toyota CEO in denial about EVs, GM so desperate they friended Nikola, and secret shoppers for VW EVs visiting dealerships steered toward ICE vehicles instead.
Got your points. We need to consider those basic for sure. But also we need to do quality check. I mean details analysis of what tesla is. Comparing tesla to just car company is completely wrong. It is saying like amazon is just a shop back in 2005. Nobody understood amazon at that point.
That's because amazon was 'manipulating' the e in p/e because they didn't want big profits while massively growing the company, therefor the p/e was huge but if you looked closer at the cashflow statement it would make much more sense
Price to revenue also matters. It was always obvious Amazon could change their p/e ratio to increase profits in exchange for slower growth. The reason more people did not invest early was not the p/e it was that very few expected such crazy revenue growth.
All solid points. Appreciate you making this video knowing full well that the potential of being slashed ruthlessly in the comments is high. I'm a millennial retail TSLA investor and I will still hold onto / buy more of TSLA stocks. I will just proceed with caution and do the best I can to manage risks.
Tesla is not a car company. They are a tech company and utility, that also is making cars. - Stationary batteries (plus software revenue from software autobidder) - example: hornsdalepowerreserve.com.au/ and www.tesla.com/en_gb/energy - Solar cells / roof sales - Full Self Driving option (software sales) with the future option of robotaxi use - Battery production and eventually sales (yes, they have now started to produce their own batteries themselves) - Energy production from solar - Energy sales (both domestic and fees for charging EVs) - Income from letting other EV manufacturers use their charging infrastructure - and yes ... cars and soon trucks. - car insurance (currently only California, but that's also income) - and as a by-product from manufacturing EVs, they sell carbon emissions credits to other OEM, such as Fiat Chrysler and Honda. That is also treated as a "product". - and then in the near future the mining of silicon and nickel. - and well ... as a gimmick .. the sales of shorts and tequila. Yes, Tesla is a long term stock. Just investing for a few ḿonths or a year is not investing. But by valuing them as a car company, you're making the same mistake as most Wallstreet outfits. If you take ARKs valuation, they have a target price for Tesla stock of $7000 (pre-split) for 2024. That's $1400 post-split. And we're only half way there. Also, this years growth can be seen as the result from Tesla not getting any stock price recognition for at least the last 4-5 years and then finally being included in the S&P100 and S&P500, which was long overdue. So the stock price was just catching up. You need to view the stock over the last 10 years to make any sense of it's growth this year. Either way, form or shape, you only looked at a subset of their portfolio for your evaluation. Not the whole picture and not the fact, that they actually are a disrupter.
How? Stock went significantly higher after he published this Along with the whole markets it’s gone down bud the stock hasn’t gone below the price when he recorded this video
I'm not qualified in any way to evaluate stocks, but it seems to me that some of the risks mentioned like the risk of excessive vertical integration and the risk of competition all boiel down to Tesla's ability to penetrate new, different markets, which could further be boiled down to their ability to innovate faster than their peers (since it seems like funding will not be a problem anymore). Yet this is exactly what they've proven to excel at. It's by no means coincidental that for the last decade it always seemed like the competition is one step away from dampening its growth, and yet it couldn't. I think that the only essential advantage of Tesla is that it can maintain a faster rate of innovation. That somewhat deriskifies the companies ambitious goals, and that's why investors are willing to pay for such extraordinary valuations.
Tesla’s extremely fast rate of innovation/adaptation and market disruption is impossible to evaluate. You either believe they will succeed or you do not. I personally do👍
I agree and that's why I finally pulled the trigger once they became profitable. I think it is a mistake to only view Tesla as a car company. I think when you buy TSLA you're believing in Elon's vision. Risky, yes, but the guy is a winner.
Even though I’m long Tesla, I haven’t bought shares in over a year. I intend to keep holding my shares through the almost inevitable downs in the share price but I most definitely will not be buying any more any time soon at these price levels. Richard your videos and information that you provide are great! Keep it up!
If you’re not comfortable buying more shares at the current high price, then common sense says that you should sell your shares and get back in when the price inevitably corrects back to a more reasonable price
@@Mosesusorer no it doesn’t common-sense says hold them since you bought them at a fair price and in 3 years the market price will be higher than the price paid before its astronomical increase in market price
Good analysis. But try it again factoring in revenue growth from the following segments: 1) Home battery 2) Home solar 3) Tesla auto insurance 4) Auto-pilot/FSD (Note that FSD will be sold under a subscription model and will produce recurring revenue) These are all products that already exist and they are currently ramping up in the coming year.
Learning a lot from your videos about how to translate finance talk to my friends. Both this video and the FX video have been great for answering questions without getting too hung up on discounted cash flows or CIRP
Very level-headed analysis backed by very reasonable assumptions. Really like the fact that you are laying out the assumptions upfront clearly. Tesla is innovative no doubt but is over-reaching itself with all the “adjacencies’ it is getting into. Maintaining quality standards as it scales up and innovates and keeping the trust of the customers are going to be key..
Indeed, Mr Gregory, this did age well. I don't think any smart money was buying at those inflated prices with expectations of some even greater future result. I think retail investors were mostly riding the moonbeam to moneytown and the mass speculation was driving up the price while the Fed pumped money into all the stocks, making it worse. They never understood anything about P/E and all that. They were literally buying out of fandom. Most of them are now holding bags. It is unlikely that TSLA will go bankrupt, and they lose all their money, but Mr. Musk is very creative about losing money so, who knows.
Also, in addition to the EV market (where Ford is looking very good too) it should be noted that Porsche (in addition to making their own EV in the Tican) is developing a non-CO2 emitting synthetic fuel system. That’s still heavy R&D, but a significant potential alternative.
I think such a video is great. It helps “amateur “ investors understand how a trader/ investor thinks. Please make such videos about other companies and investments
Hey thanks for the Video. I'm an Tesla investor myself and here is my criticism: 1. The Automotive sales I thinks your forecast is pretty decent also I think tesla could very well hit 20mio Vehicles sold in 2030 2. Vertical Integration Through vertical Integration Tesla makes more profit on each Vehicle sold. That's why the profit margins will improve. 3. Data Tesla has an enormous data advantage. This is the main driver of the high evaluation. This enables them to offer costumers better prices insurance. Through Full self driving the cost per kilometer/mile traveled can drastically be improved. This will result in a change of society. See the research of Ark invest. Also: You compared Tesla's growths to Amazons and said Tesla's probably not going to keep that up. In the past they were actually better at the respective size. Thanks for reading and have a nice day:)
Even with autonomous vehicles, the value from a full market capture is still many times lower than current valuation. This is a bet that breaks even if tsla does well at 1. auto cars and transportation in general (replace uber, doordash, amazon delivery bots, etc.) 2. grid infra and energy storage 3. Something else Even if autonomous changes society utterly, the value add goes to the consumer and not to tsla. Most of the value is already captured in high density areas like india and china and EU with public transport. It's tbh only a problem worth solving becuase of the USA.
@@TheHellogs4444 Did I read right and understand that you say that even with autonomous vehicles, the energy business and the insurance business. The valuation right now is too high?
@@miyuden4118 Yeah. I think there needs to be another innovation/product to market in order to justify the valuation right now. Autonomous + grid isn't enough. I would gladly pay 10x the 600B valuation for the combined group of all of Musk's companies
I recall Cathie Woods say a majority of the valuation that’s embedded is based on the autonomous ability. So basically, Tesla minus Uber minus Fedex/UPS market cap, what’s left is the core car manufacturing business. Math: Tesla ($800B) - Uber ($95B) - Fedex ($65B) - UPS ($135B) = $505B Top 9 car manufacturers combined market cap is around $500B. Names include General Motors, Ford Motor Company, Fiat Chrysler Automobiles, Honda Motor Company, Hyundai Motor, Daimler AG, Ferrari, BMW and Volkswagen. I think we have our 50/50 split there Tesla vs remaining car players ($505B vs. $500B)
Thanks for the viewpoint. I was a Tesla bear that converted to a bull about six months ago and own TSLA at 12% of portfolio. Given that, it is not a pure automotive company, is growing at remarkable rates, is bringing down the costs of production and will in fact make tremendous $$ from software (autonomous driving push) going forward. I won't argue FST vs. not-FST except to repeat that the autonomous driving software is a huge profit centre going forward. And economy EVs are coming. I think you miss these aspects. The industry forecasts are also too low.
Unfortunately ever since TSLA joined the SP500 its very hard to avoid exposure to it. Because a lot of ETFs are market cap weighted, there is a significant chunk of money that gets invested into them.
I think it is refreshing with a level-headed and sensible analysis based on critical thinking. The relatively few give hope for mankind....you do well.
Great presentation of potential concerns. I do believe the total EV market projections from Bloomberg are very conservative. Take Arks projection (obvious Bull) of EV sales hitting 37 million by 2024 and you see the other side of the coin.
A few more points for consideration: 1. Tesla consecutive profits that allowed it into the S&P500 came from credit sales to other manufacturers. Once these other manufacturers fully deploy their efforts into the EV space, and they will, profits will have to come from making cars. These other manufacturers know how to do it, Tesla does not seem to be there yet. 2. Nothing really concrete on the famous battery day, other than intentions. Tesla might have some IP on the batteries they use, i believe that, but they are Panasonic batteries at the end of the day. It's not like no one else is going to put some R&D into batteries. 3. Long history of over promising and under delivering if we want to be objective. $25k car promised in 2018 to MKBHD, tesla truck that is still nowhere to be seen. Again, great company, deserving of respect for what they have done, but there is nothing that fundamentally justifies the crazy price.
@@miken4591 That is quite unlikely to happen. Gasoline powered vehicles still have their place because gasoline offers advantages that EVs do not and EVs offer advantage that gasoline does not offer.
@@jeffshackleford3152 -what advantages will fossil fuel vehicles offer in 2025? Not price, not range, not power, not speed, not running cost, not sound, so what? Smell? You are thinking 2020.
Great video and hats off to you for standing up the tesla community! It takes some balls! Its good having someone who is more skeptical to review the company. It would be great if you could rerun your numbers with tesla's own guidance. They're aiming to hit 2TWh in 2030of battery production so using your simplified automotive model, that's around 20-25M vehicles (80kWh battery back per vehicle) in 2030 assuming they aren't using these batteries for their energy products. Also I don't think you mention robotaxis. This is another huge growth opportunity. It would be great if you could do an analysis taking into account the more speculative (as a bull i say inevitable haha) side of the business (energy and robo taxis) to understand if tsla is overvalued vs that analysis as i don't many investors valuing tesla as only an automotive company. So: -scenario 1: this analysis you've done (using consensus estimates and industry estimates) -scenario 2: assume tesla sells 25M in 2030 (only an automotive company) -scenario 3: value tesla's solar roofs, grid scale storage, semi, automotive and robotaxi segments separately for 2030 and sum this together. Then compare scenarios to understand whether current prices may in fact be good value (or not!) Cheers, Ollie
I've arrived late to this video. As a major Tesla bull I look for well thought-out counter-arguments to make sure that I haven't missed anything that could be costly. Thank you for giving your point of view. In the end, your points did not change my opinion or outlook on the stock long-term as, IMO, the initial assumptions are incorrect regarding growth, potential revenue streams etc. What I do take into consideration, what I also knew when first investing, is that there is still major risk involved with this stock as Tesla still has a lot to prove and make reality. Difference between us, I guess, is that to me that path to achieving those goals is clear and they are clearly taking the right steps to get there while competitors seem to lack what is needed, while you think this path is still 50/50 at best. When investing in such high growth stocks, the key is to invest what you can lose as some kind of "black swan" event can always happen. Don't stop giving you point of view, even if it's met with major criticism as I know there are a lot of Tesla investors that invested because Tesla went up majorly and can't take videos like this for what they are, an honest detailing of potential risks. Thanks, I'm really enjoying your content and channel, keep it up.
I'm a passive investor, although I'm quite young, but looking back at Tesla's historical price with it's fundamentals is kind of mindblowing. Informative video, thank you.
With the mania-bubbles popping everywhere (meme stocks, crypto, etc) and interest rates soaring, and competition aggressively taking market share, there has never been a better time to be short tesla.
Nobody buying Tesla stock at this level is paying for Tesla as just an auto company. There is no way the valuation is justified as that. Everyone buying the stock are buying autonomy, power grid and oil disruption, and software and services business in the future, including entertainment, insurance etc. The margins growth and operational leverage won't be touched, their growth rate will increase as they scale. The stock does have a tendency to over shoot short term. But it was flat for 6 years, so a huge breakout is not unexpected. Tesla is more like Amazon. It will also be a winner take most market, like Amazon enjoys.
I love your channel and I appreciate everything you to do educate us. But (there's always a but), I found your analysis over-simplistic. Please hear me out. - Comparing P/S of Tesla with legacy automakers is not prudent. Legacy automakers are mired in debt and potential legacy asset write-offs. For example GM, has more than $80 billion in Net Debt compared to negative $5 billion for Tesla. Debt is a major drag on legacy car makers' market caps. Enterprise-value/Revenue would be a better measure but it would still lack nuance. - Legacy auto makers also lag significantly in the transition to EV. They lack focus and innovation because of the traditional work culture and organizational incentive structures. This will lead spending more capex and r&d in attempt to chase Tesla's engineering prowess which keeps on moving the goalposts for the legacy to catch up. The risk for these old school car makers totally failing in this transition is very-very high. And this must reflect in the valuation. - Vertical Integration: Tesla is fully vertically integrated. Old automakers are only do catalogue engineering - which is only 10% of what Tesla as a company does. Tesla is vertically integrated from material supply -> material processing -> manufacturing cells -> pack manufacturing -> battery management software -> firmware -> infotainment -> OTA updates -> autonomous features -> charging infrastructure -> sales/delivery/service infrastructure. This leads to higher gross and operating margins because Tesla keeps all the profits, part of which it otherwise would be paying to the suppliers/dealerships. - Operating Leverage: Watch the video "TSLA Bull Case By Rob Maurer" to understand Tesla's amazing operating leverage. In the last conference call the CFO guided for mid-teens (~16%) operating margins in the medium-term. That's just the beginning. Once Tesla start realizing 100% of their FSD feature completion revenue ($10,000 per download), they'll approach 20% operating margin very rapidly. Compare that to legacy car maker's operating margins!! - Intangibles: Some of Tesla's value must be judged by their Technological lead, their engineering prowess combined with the emphasis on innovation and ruthless iteration. Tesla is alway in the ranked top 2 companies where fresh engineering graduates want to work. Great innovation in multiple fields is only possible if the workforce is inspired by the mission and their work affect the most people. Compare that to legacy automakers who are beholden to old-school investors who only want short-term profits and management who is focused on hitting those short-term goals to capture maximum salary. - Energy business: Tesla expects the energy business to be the same size as the auto business in longer term. Are any legacy automakers making battery storage or the software to support power-grid resiliency and virtual power plants? The answer is NO. Climate change is becoming more urgent and solar+battery is offering a cost-competitive solution for the electric grids. - Robotaxi: It's not a pipe dream anymore. Check the latest FSD-beta videos. Tesla is working on creating the right platform to rapidly collect data, train the software and deploy it to the entire fleet at once. In-house inference chip, over-the-air update capability, large fleet to mine data from, DOJO supercomputer for training - all that is coming together piece-by-piece to realize the robotaxi dream. Robotaxi may not come next year but it's definitely not more than 5 years away. The valuation must reflect this possibility increasingly as the beta software shows more promise with every software update. Edits: grammar and a word "dealerships"
This comment deserve more attention. I'm particularly excited in the latest FSD, if successful with the amount of data/training it will get, will be a full grown self driving AI capable of driving anywhere in any situation with minimal intervention. I don't see any other competition capable or near that level of spontaneous autonomy yet. Oh and if your country has no internet, that's where Starlink comes in.
P/E ratio of 1700... Yeah.. No. I love how you try to sell their "other markets" which are completely experimental and a fraction of their business which is car sales.
@@dukewellington7050 P/E ratio is a bad way to judge a growth company. Judging by p/e, you would have missed AMZN in 2012 with p/e of 3000 and NFLX in 2014 with P/E of 470. Same type of people missed Tesla's 20,000% gains since IPO because of judging growth company with value investing metrics.
1 year ago, you said Tesla was speculation. its up 700%. tesla stock is now up 10% since this video. tesla is a technology company who will get profit not from selling cars, but from selling subscriptions for self driving ,etc. The P/E is extremely high and it might be overcrowded. Sales aren't high enough yet. but it will probably be the most valuable company in 5 years, maybe tied with Amazon. hopefully their profits and revenues will catch up to their stock price. Tesla will dominate the EV market which will explode in the next 10 years. I think it will be easily worth over 2 trillion market cap.
I agree its overvalued, but I see it more as a symptom of our monetary system. There has been a glut of money printing this year. Bonds are offering absolutely no yield, where else do you put your money?
From a valuation point of view, Tesla is not valued as an auto company. If autonomous driving is a reality, auto companies will be like laptop producers using Microsoft Windows and Tesla will be like Microsoft providing autonomous operating systems. From this angle, Tesla is a SaaS company and therefore, will enjoy higher margins and valuation. This has not factored in the potential Robotaxi fleet business that could fundamentally change the transportation industry by substantially lower the cost of transportation and add value to consumers without auto insurance, maintenance, and parking required.
When this video was made, Tesla was at its peak, and worth 3-4 times more than it is today. If only more people followed the Plain Bagel, poor people would so much less poor.
It is precisely the reason that the finance world interprets a Tesla as merely " a car" and that Tesla is merely a "car company" that the future is bright for investors.
How can you evaluate tesla until 2030 and not even mention ride-hailing, robotaxi, FSD,energy component, software, dojo, solar, insurance,autobidder once?
its funny because I was hearing very VERY similar analysis on Tesla over a year ago when I bought at $46 a share. I like you’re channel but you’re doing the same mistakes as many did back then. The fact that you didn’t use the word robotaxi among others shows the knowledge on this particular company. Happy new year btw
Keep in mind Amazon also started off as online bookstore at the time competing with Barnes and Nobles then progressed to online shopping platform. Company then evolved and keeps evolving, branching out to other businesses, such as cloud, twitch, music, tv streaming, etc. Flaw that I see in your analysis is that you are treating Tesla as car company instead of more of IT company. On top of superior product competitive edge they have, in my opinion, once FSD is successfully launched, ride hailing, robo taxi, subscription FSD, selling charging network or even FSD capability to other automotive companies are all within a reach of possibility, which none of other car manufacturers are anywhere near it at the moment.
I work in the Fremont plant and it runs 24/7 but right now I'm off till jan 11. Austin giga factory will be up and running soon. But I enjoy listening to someone that doesn't own a stock share. I hope at least own a Tesla car.
I am long Tesla and I like to watch videos that critics Tesla to see if I missed anything in my calculation for long Tesla. It is interesting to bring Amazon`s PE PS ratio up without bringing it up the history of the company. I remember when Amazon was defined as "only an online bookstore" when clearly they were heavily investing in other segments. Today Amazon is far from only "online bookstore" with their AWS dominating the infrastructure. Which brings it up to my point: I disagree on Tesla is only a car company and therefore should be compared with likes of GM. Ford and Toyota. By looking at where Tesla is investments today it is very similar to Amazon's growth period where a lot investments are highly underrated. Sure Tesla might fail on many things like FSD, Robotics, Solar or Energy. But currently it is the most "Amazon-like" company there is out there.
Tesla: -$1 trillion market cap -Revenue: $31.5 billion -Cars Produced: 500k Toyota: -$252 billion market cap -Revenue: $257 billion -Cars produced: 9.5 million Volks Waggon: -$142 billion market cap -Revenue: $254 billion -cars produced: 9.3m GM: -$92 billion market cap -Revenue: $122 billion -cars produced: 6.8m Ford: -$78 billion market cap -Revenue: $127 billion -cars produced: 4.2m Despite these metrics… tesla is worth more than all these companies COMBINED. That is a bubble and it has to return to fundamentals at some point. Be cautious…. This stock will most likely lose a lot of people money because the valuation that the market is assigning is ridiculous
@@rudy8409 Tesla Debt: $7 billion. GM debt: $76 billion. Ford debt $87 billion. Toyota debt $130 billion. VW debt $240 billion. Transition to EV from legacy automaker is way more costly than what Tesla is doing. Tesla have none legacy costs and all the materials and design are for EV only and don't have the burden of dying legacy costs like material parts, production lines and so on. This however is the only EV part of Tesla. You are drawing conclusions based only on comparing part of Tesla against other automakers because currently their main income source. So did I with Amazon back in 2000. I have learned my mistake, which is why I was willing to bet on Tesla's future.
@@cbn1362 perhaps you are right about the long term prospects of tesla... however, it doesnt get away from the fact that the market is assigning an insane valuation on the company which are far from their fundamentals. further, i also believe that much of the buying pressure isnt coming from considerations of fundamentals but rather chasing gains. people saw the massive run up it had and want in which has ballooned the company to unreasonable valuations. do you really think that same crowd are gonna keep buying when the floor falls from beneath the stock? i think its got a long way to fall before it goes to fair value and it will likely overshoot the fair value point and become undervalued which will be the time to buy... but now it would be only a madman to buy at these prices.
Good job you valued Tesla as just a car manufacturer like everyone else , Did you forget they make batteries, sell them as storage solutions, along with solar panels / Tesla roofs. Then there's autonomous driving where people see lots of potential, and also Tesla insurance coming which Elon predicts will be huge. You referenced battery day but did you watch it?
This aged very well. Here we are a year later and Tesla is down over 50% from where it stood when this video was made.
I think 50% down is more likely due to Macro. It is not specific for Tesla. Every "growth" company evaluation got hit hard by Macro. Only Apple is relatively maintaining theirs. This is also include "safe" investment like bonds and stuff. Although I also agree, Tesla valuation is outrages in 2020. @ThePlainBagel Can you make another Tesla analysis? Now, the P/E is around 60. It is double than Apple. Tesla claim 50% growth and P/S is around 9. Would you still consider Tesla expensive with recent information? I am genuinely curious with your thought.
-60% today
@@Ahmad_Falah It is more than just the macro forces. Large stocks are down about 19% YTD (based on the S&P500). Tech stocks specifically if you look at the Nasdaq 100 Technology Stock index are down 37%. Tesla is doing worse than other growth stocks and particularly worse than large growth stocks.
Now 70%
@@happens4656 Stole my thunder 😂
I’m 62 and a passive investor in index funds. I really like watching his videos. He’s very knowledgeable and you can see he’s worked hard to become an expert at what he does. I respect his comments and became a subscriber. Keep up the great work!
When you die who's inheriting your portfolio Charles ?? I can be your sugarbaby if you want. Except im a man and all I care about is that bag you feel me.
@@subdiplomatic you better learn to suck
@@subdiplomatic no
Although im a huge Tesla bull, I really enjoyed this video. I believe anyone who invested a significant amount of his wealth into a single stock should at least hear the counterarguments out before instantly disliking or insulting.
Completely Agree, its always good to hear what the other side has to say so that you can know if your story for the company still holds up against opposition
Absolutely, this is a good way to be for just general opinions on lots of things 👍
Kudos for watching the whole video objectively. I am curious, could you please explain why you are bullish on tesla because even if you price in the most bullish case it's still overvalued by 80%+ on a UFCF DCF basis and even 120%+ on a LFCF DCF basis. Not hating just genuinely curious how anyone at this point can be bullish on tesla
Yep, and if this is all the bear has got... I'm even more bullish on $TSLA
It was mostly a superficial analysis with very little knowledge about the company. But i agree that it is important to hear how other people see the company.
I thought this video was made like a week ago but noo. A year ago.
Aged like a fine wine
Warren Buffet once said "Wall Street is the only place that people ride to in a Rolls Royce to get advise from those who take the subway."
Probably because they are financially stable. They are not betting their money. They are picking solid businesses to invest in.
@@peterhagtharp4263 my friend is an investment banker at a wall st firm and he told me “our job is to take 1-10%percent of whatever untill it all disappears.”
So i would say i disagree.
@@mohammedabdulmusawir4480 Your comment has no relevance to my comment. Disagree to your heart's content buddy.
@@mohammedabdulmusawir4480 which firm?
@@mohammedabdulmusawir4480 what they still playing wolf of Wall St lmao
"Any investment can turn into bad investment if you pay too much" - Warren Buffett
- Benjamin Graham
Warren Buffet has been bailed out by the Government 3 times.
He actually is way over rated, check it out. Over simplified, but he is a welfare investor to some degree.
@@theVarazi That is lie. Berkshire Hathaway was naver bailed out. You disgusting filthy lying little shit.
Craft Heinz.
@@theVarazi give me something to catch on. I don't see it. Maybe you confused of him bailing out companies? Max Keiser absoletly tells nothing relevant and seems like he talks just made up rubbish.
you are about to make a lot of 18 year old robinhooters very angry
dumb shorty!!!!! gonna go hosed!!!! TO THE MOON 🚀🚀🚀🚀🚀🚀
Fsd is the answer. Tesla Will earn 10000$ per car they sell, pluss 10000$ each year for all the cars that are robotaxi. Sooooo money Will be No problem.
Always fun to see someone researching 10 hours Tesla try to educate the people that does have 1000 hours.
@@mathiaszander381 1000 hours of researching tesla?
I love how "value" buyers (value-trap) of Intel on diminishing market share and technological moat (cuz low pe, buybacks and dividends is a buy for them) mock young Robinhooders that on average outerformed SP500 and retail investors. They learn and adapt. You dont.
Good to find that there is still somebody who is still sane and is not buying the hype. There are going to be a lot of people wishing they had listened to this guy.
Been watching videos for a while. What a breath of fresh air! No wide eyed thumbnails, no "next 10x stock", no nonsense. Really great content!
This aged like fine wine
Will it continue to age well though?
@@LiiChinHo It didn't.
@@HM-hu4huit did lol
@@davidorbang7152 It didn't, though.
@@HM-hu4hu except it did, elon fanboy.
An in-depth risk analysis like this on Bitcoin would be very interesting
what financials can be leaned on w/r/t bitcoin?
He’s already done a good video on Bitcoin
Yes it so very much would I'm begging the Plain Bagel for that!!!!
If it was that easy Hedgefunds will sell their bitcoins for profit than their shares of stock
The problem is that Bitcoin is a currency. It doesn't produce anything. Buying Bitcoin is literally just speculating that you can sell the Bitcoin for more along the road. Apart from paying ransomware ransoms and speculating, there really isn't a good reason to own it.
It makes me cringe a bit to see Richard laughing so nervously in the beginning of the video. Richard is doing a favor to new investors of the tech space to explain to them the risks of buying an over-hyped stock. I personally agree with the ideals associated with Tesla but Tesla is truly too expensive as a stock.
He seems like such a nice guy - I find the nervous laughter endearing. I guess he was worried about the inevitable tsunami of comments from people who care about a random company more than I do some of my family members.
@@JLL12345 Well, let’s get back to this video by end of 2021 and revisit in next few years.
It is a shame he has to be so nervous because Tesla fanboys are so damn fragile and cant handle any criticism.
@@instanoodles Tesla fanboy here 🙋🏻♂️. Started with 375 shares, and down to 25 shares now. Company is going to do well short and long term, but the stock is too risky to buy in the short term. If it reaches $1000 in 2021 I'll sell the rest of my shares.
@@JackHsu83 What if it never reaches $1000? I'm not cynical, just curois as I'm new to investing. Thanks
You're so brave, and I love you for doing this.
Why is it brave?
@@omarmahfouz5599 TSLA fanboys lash out aggressively
@@dkaoboy yeah so you mean he is brave for provoking internet trolls, how brave
@@omarmahfouz5599 internet trolls can be savage. Elon and Tesla aren't things you want to criticize on the internet.
Not only brave, but stunning
2 things can be true at once: You can be bullish on a company's future performance AND the company's stock price can be very overpriced. I think Tesla has a great future, but I personally don't think Tesla's stock is a good investment at this price.
I think its price is way more than bullish, it's stratospherically ridiculous. To live up to the speculators, Tesla would pretty much have to be the most successful company since the EIC back in the 17th century. It has to grow to a corporation who warrants entire chapters in history books. And that just seems really really unlikely, worse odds than winning the lottery.
THIS!
This is a really good video 👏🏾👏🏾 As someone who's portfolio is Currently 90% Tesla I appreciate the objective risks you've pointed out and really appreciate how transparent you were in the beginning with the assumptions you've made. Any real long term Tesla share holder should appreciate this and not attack it.
We finally broke out and on the run. Good job. Im up 73% as of today on tsla. Made over 100k lol
@@hansenluu Thats amazing! Congrats my fellow Tesla Investor! I do not have anywhere near that amount of stock but I'm overall up 360%
@Luís why's that?
You are gonna lose all of that 90%
wow. wag the dog.
Caution don't short if you don't know what your doing
Then how come people are making hundreds of thousands in wall street bets? I'll take my chances, thanks
@@dsai6653 and how many more lose?
I'm so sick of seeing instagram posts of "How this man turned 10k into 3 million investing in tesla" lol
Can instead go for a buy put option but the premiums will be extremely hefty.
@@alexanderiliev1431 people don’t understand survivorship bias.
"A great company is NOT a great investment if you significantly overpay for the stock".
-Ben Graham
100%
@@reachingforamillion4680 more like 800-1200% right
Some stocks aren't fact-driven. They're more hype- and sentiment-driven. But even those stocks will become fact-driven over time. We just don't know how long it will be until then.
Bro look at all these “experts” worshiping tesla. Totally fact driven lol
@@Gundi_King i am not an expert but as an engineer i can say that Tesla has done some unique/intrigue innovations when it comes to EV and their manufacturing which counts as a competitive advantage over the rest so over long term it can maintain it's hold in the market but right now even i agree that the prices of stock are more hype driven then value driven
@@ST-tn9ow Innovation sure, manufacturing wouldn't be so sure. I would personally rate it below other big players, they might not have as much experience with EVs specifically, but EVs are nothing special to manufacture.
@@_Ekaros it's more about the batteries and it's manufacturing Techniques that Tesla is really good at and that is actually special. Sure overall manufacturing may not be that amazing but with those patents alone they can stay competitive for 5-10 years which should be enough for them to step up their game if they really want to. This is what i believe at least because in terms of EV performance and efficiency alone their car offers, Tesla is really ahead than competitors
I would say most stocks aren't "fact driven". In fact, didn'y Daniel Khaneman receive a nobel prize for demonstrating the economy is based on emotion rather than fact?
Richard, you did your part! You warned them but nobody listened. Since the release of this video the share price dropped by approximately 70 percent.
Where is it now though.
@@ASTR0TALKSPHILOSOPHY Yeah, these people are extremely short-sighted.
This video has gotten more instructive over time. It's pretty common nowadays to see a Tesla on the road. The company has successfully delivered on most reasonable expectations for a new automotive company. And yet the stock price is still only about half of its peak. It's a great case study in how a stock price can become completely detached from any quantitative reasoning.
It's videos like this that made me fall in love with your channel. I'm studying finance and stats in college to be a financial analyst, and this channel has been a huge amount of motivation to keep going. Thanks man. Only one year left till I graduate, woohoo.
Abe Lincoln showing us that age does not matter when it comes to studying. #respect
You doing a master?
Those are very solid points.
Unfortunately, stonks only go up
Wirecard, Apache Corporation, Devon Energy entered the chat
This is the way
Tesla stock go BRRRRRRRR
ahh, a man of culture
Shit, I'm convinced
He was wrong, then he was right. Today at 138 it is STILL overprized. There is no way in hell Tesla is worth 6 times more than volkswagen.
Hell this was as spot on a year ago as it is today. Good on you mate
Tesla is like the girl who gave you a little chance but now won't return your texts, it will be hard but you just need to forget about her and chase others
@Ministry of Mystics no i like simping
I love the “party pooper” videos. Why be delusional with money?
How dare you insult our Lord and savior Elon Musk.
Of course you do, because fear and negativity gets more views.
@@reznor1718 actually, irrational exuberance gets far more views...look at bitcoin mania
@@reznor1718 Yea, generally anger is the best speader however
Another important point worth mentioning about AMZN is that it's also a behemoth in web hosting and compute. AWS runs a substantial portion of the internet, and it has an extremely wide range of web services available, which they can get HUGE margins on due to their enormous scale. Airbnb, Netflix, Twitch, BBC, etc. all use AWS and fork over a TON of money to them, so it's definitely not just the retail.
So funny seeing you being careful with your words. Haha. Awesome video! Even when im bullish on a stock. I actually like hearing the bear case. That way i dont get blind sided.
Yep, and if this is all the bear has got... I'm even more bullish on $TSLA
@@ryanwschneeberger this isn't the bear case, this is the "normal case", the bear case says that Tesla don't really have any real value over the legacy car makers, and should be valued as them according to P/S, even though they have abysmal earnings. Their tech is not really much better than what companies like VW or Toyota has, and when these huge and experienced companies truly enters the EV space, they're going to eat Tesla's lunch.
This didn't seem to be a bear case, as I don't recall him saying the stock should be sold / shorted. He is just posing some questions and factors to consider.
@@hans7743 The bear case is such an outlier based on such wrong information that I don't bother with it. My argument is with the "normal" case then.
I’m throwing in 20,000 in Tesla. If doesn’t work out I’m sure there’s a bridge nearby I can jump off 🤷♂️
I would encourage anyone digging into Tesla’s evaluation to explore these few nuggets of information often overlooked, even in this great video:
- Autonomy revenue (retro)
- Tesla Insurance
- Autobidder software from Solar
- S curve growth due to streamlining
- Robotaxi network
Like Elon said on his last earnings call, Tesla is like 7 start ups at once.
Ive been in the auto business for 25 years and Tesla already put an ultimatum that the industry I know very well it’s practically over.
This is only the beginning.
Great channel! Keep up the great work.
Addressable market of Solar and storage outweighs EV's by miles and Elon has stated he expects it to surpass revenue from EV's.
I agree, I brought the same point up myself about automation. Tesla has a very good chance of being the first autonomous car manufacturer and turning into the Amazon of the automotive industry. I can't see any other end game to be honest, there's no serious competition.
Autonomy, I am assuming that is self driving - this is primarily going to be governed by politics and government regulations. They won't allow a monopoly which seems to be priced in
Tesla insurance - why would tesla have a competive advantage in insurance industry?
-autobidder solar- I believe these are miniature solar generators. I work in power Gen and their is a reason powerplants are massive. They become more economical and efficient with size.
S-curve - that growth is priced in already
Robotaxi - government regulations won't allow a monopoly.
This is the comment I've been looking for
Well put, tesla semi is also a huge breaktrough in the truck-market which is easy to forget.
This sounds like a similar conclusion to what I came to around a month ago.. It isn't that Tesla is a really bad buy, it's just too expensive for its current price.
I bought 3 years ago and sold 1. I think I had good timing with their fundamentals. Never good have believed they'd blow up.
Imagine if you bought Tesla when the video came out and sold today at $1,025.
@@JetSkiBuyFixPlaySellChannel That's what I did. Bought at 600 when this video came out, sold at 1200 two weeks ago.
@@JetSkiBuyFixPlaySellChannel or now lol
@@giovannifrrri5495 you realize the stock split from one into three right?
A "Risk Factor" series about major stock performers seems warranted
True I can’t wait for Nio and their battery swap technology
Agreed. Would love if more people would do this with companies. Love to get other perspectives to add to my knowledge of my holdings.
TSLA is immune to P/E ratios, did you not get the memo?
You should look at shopify, tsla is nothing compared to that ratio
@@JD-yx7be That one is nuts too, 438x! Bagel should've did a video on that, which makes him doing this TSLA one super hater-y.
@@darthsiddious7469 Tesla's current P/E is over 1200
@@JD-yx7be at least Shopify has precedent and scaling is much easier since it's 100% digital. I don't think it's justified but still a very different growth model
As a growth investor, we should not be looking at PE ratio. WE should be looking at CAGR of revenue which puts Tesla at 40%. But I guess, average investors old school analyst would never understand. If seriously amazon is overvalued back in. 2010 and amazon P/E ratio is 3000+ back in 2012, why is amazon still surviving?
In growth companies, we need to understand a lot of the profits needs to be reinvested back to grow the company.
PE ratio is only use for value stocks.
I personally disagree with many of your points. However, open discussion is healthy even for bulls to check with their thesis. I recommend that you have a chat with Dave Lee or Rob Maurer for an open debate. Cheers!
You can disagree all you want and you’d still be wrong. Sorry!
@@Mosesusorer Tesla is bringing 2 factories online next year, I agree with his graph of 2021 FCF but putting 2022 at about the same level for FCF is insane it will be about double that level. 26M EV's in 2030 is also way off the mark, we will cross that level in 2025 and by 2032 all new vehicles worldwide will be EV's (study S curve of tech adoption if you think that is wrong) he's % of Tesla's EV market is high but the size of the market to him is laughably low. Those two were just a couple of many wrong assumptions made in this video. I like looking at bear thesis on tesla to see if I missed any but most just don't have clue.
@@BrentTJo you clearly have NO idea how stock returns are achieved or what a stock even represents. It seems that you’re just regurgitating all the facts and opinions you’ve been fed..
@@Mosesusorer A stock is one share of the future profits of a company, to properly gauge what a stock is worth you need to understand the future profits of a company. One way to figure future profits is to look at past profits but that only works for stable companies like Coke or AT&T for growth companies you need to figure what timeline you will be invested in and what profits they will make then along with what others will expect going forward thus what you will get on the exit. Ok now correct me on where I don't understand what a stock is worth.
@@BrentTJo a rather vague answer but it works. Now tell me where stock returns come from
"What a wise man does in the beginning, the fool does in the end"
hope that's true because I was proud of myself when I sold my (4) shares of tesla when it jumped up by 300 or so then bounced another 800 dollars and got out. since then the stock split and it went up and up and up and yet I feel like my objective caution was reasonable. but i'd never buy it at current value. too rich for my blood.
@@justin_5631 Tesla stock has been pretty crappy for the past 5 months. You got out at a pretty good time.
@@alvadagansta Nah I got out like 8 months too early. This was before the split. O well.
Buy Tesla.
@@alvadagansta it's at $1,025 today.
This has aged like a fine wine. Well done!
I think you have some valid points, but I also think you understated that TSLA is not just a car company. The current price is ridiculously high, there's no denying that. But a few things TSLA are working on that should grow extremely fast:
- Its also a software company (and that portion is very profitable)
- Solar roofing (in many places, the economics behind it will make it ridiculous to go for the traditional roof options).
- Robotaxis (nobody knows when, but most likely in the next 5 years).
- Vertical integration will make them insanely competitive. There's a huge difference between making a bit of money at every stage, and making all the profit at every stage.
- Gross margins are better than the competition and will keep improving.
- We are very close to the point where electic cars will cost less to produce than ICE cars. So even if price of oil dropped or popped, EVs will still make more sens.
- They will soon have a 25k car which will be tough competition for companies starting out in the sector.
- Semi-trucks (HUGE industry potential there)
- HVAC systems (which will be way more efficient than existing systems, a lot of that technology comes from SpaceX, which was than applied to their cars, and now about to hit homes).
- The insane amount of talent and skills available to TSLA via SpaceX, Neuralink, Starlink, etc, etc, etc.
- If they are capable of producing more batteries than they need, there's also the potential there to become a battery provider for other manufacturers.
- They have tons of cash (and if they decide to invest a portion of it in Bitcoin, it could even potentially get better!). They have enough cash to build 10 Gigafactories cash if they wanted to.
-Car insurance, that will be more profitable and competitive than any other company because of the huge data advantage they have.
If I had 100k to invest, would I put 50k in TSLA at current price? No way. If I bought them at an avg of 200$ and it now represented 50% of my portfolio would I be ok with it? Yes.
TSLA is just part of the companies that will always appear to be way too expensive. I'm sure its still going to be the case in 5 years, 10 years, 20 years. If it drops at 350$ again, I'll be loading the boat (unless fundamentals had changed of course).
This is really a long term play, 10+ years.
Ark invest has analyzed this company upside down for years, and they are still as convinced as ever and you can look back at their price predictions and they are always on the money, even predictions from 2 years ago...and their ETFs have also been beating the market by an insane margin, for years.
I can respect people who think TSLA is a bubble waiting to burst, like any stock it can certainly go through a major correction, I just personally wouldn't recommend shorting it as if price gets too low, chances are investors will be all over it again pushing it back up.
You forgot car insurance business. A cash generating machine.
@@AR-ev9qm Thanks, its hard to remember all they do! Added it to the list.
4 years since you wrote this, most things never materialised, no semi-truck, no vertical integration, no 25k car, no talent, gross margins were 21% in 2020 and are 18% as of end 2023 (notice they didn´t grow, they decline), insane competition from BYD and incumbent car makers, cash at Tesla has not even doubled since 2020, no Robotaxi, no HVAC systems, solar roofing insignificant in business model, software still good but so are others, car insurance insignificant at Tesla, ...
The cherry on top is ARKK innovation quoted as some sort of quality stamp. ARKK Innovation ETF traded at $128/share in December 2020, and as of October 2024 trade for $48 (-62%). Notice how it doesn´t trade at $240 nor $480 nor $3000. It trades at $48. A fantastic value destroying ETF.
Since you stated that this was a 10-year play, I will return in 2030 and follow up with ARKK ETF and with Tesla in this comment thread.
@@dodid0 If you read my comment it also said: "This is really a long term play, 10+ years."
yes it might take more time as it often does, but someone whose young and holding this stock for - 10-20+ year horizon should do very well (of course no stock goes up in a straight line or is 100% guaranteed). Up 45% in the last 6 months, I don't think it's going to 0$, and still holding my position for many years ;)
Thanks for the advice Richard, shorting my year's salary on Tesla to celebrate the great news
D:
🤣🤣🤣🤣🤣 are you ready to live in a Honda if shit hits the roof?
@@amoghkaushik1764 he’s joking
@@alexk1682 I hope he is....for his own sake 😂
@@alexk1682 lol
Great Video!
Wow! Patrick is actually being a UA-camr apart from being a UA-camr!
Would be great seeing a debate between you and “saving the money problem” Marc Ryan.
fuck yeah!
It's "Solving the Money Problem" (just to make it easier for him to find the channel). Yes, I would very much like to see that discussion!
He’s not gonna debate since he’s a pussy
tweet it , i did already
solving the money problem may actually agree with plain bagel. STMP was making videos about tesla's value way back when it's price was more reasonable. At the time, it made way more sense to invest in tesla.
A true Canadian! Practical and apologetic! Good work! Your making us proud!!!
IMHO its the Amazon effect of investing, they are afraid of missing the boat of the next $3K stock
Tesla is gonna go way past 3k.
@@breaknfiction21 but price means nothing? Without proper multiples to compare anything.
amzn has sales
@@alainouellet7794 dude Tesla stock split into 5x, so current value x5 is greater than Amazon. Amazon is about web services AWS , you are forgetting about Tesla’s autonomous driving capabilities
@@breaknfiction21 Tesla’s stock (before stock split) is above 3k , Tesla current stock into 5x its above Amazon’s current stock value
To understand Tesla's valuation you have to know many of the differences:
1) Vertical integration means Tesla owns the distribution, the charging network, the insurance (starting) and significant parts of the supply chain (e.g. seats, battery). No other car company does this, they mostly rely on suppliers and their distribution network. So in earnest Tesla is several bussinesses combined into one.
2) New production processes (casting, no more body on frame) will make manufacturing cheaper and improve margins. Tesla has been steadily improving margins.
3) EV's will reach a tipping point after which they will be cheaper to buy (around 2023) and cheaper to maintain (already), market share will grow much faster after that. The Bloomberg projection doesn't account for tipping points, by 2030 almost all new cars sold will be autonomuous EVs.
4) autonomuous vehicules, Tesla is the leader in autonomuous vehicules and most likely be the first to have a general solution, this market is worth several trillion dollars. Tesla is the only manufacturer that already sells a software option for 10 thousand dollars and the price will continue to go up as it becomes clear that they will reach level 5 autonomy.
5) Higher integration of renewables into the grid requires storage. Most of the newly build utility scale solar installations from 2021 forward will have battery storage. Tesla is building Twh factories and has the software to be able to handle that market.
6) Legacy carcompanies are valued low because most of them will not survive the transition from internal combustion engine to EVs
Agreed. Especially with #6. Prowess and expertise in one domain can be baggage in another. Legacy automakers are dragging themselves down by not understanding EVs are more than replacing an engine with a motor, and a gas tank with a battery. Note that recent news shows Toyota CEO in denial about EVs, GM so desperate they friended Nikola, and secret shoppers for VW EVs visiting dealerships steered toward ICE vehicles instead.
Everything you described can easily be copied. Who the hell says they will only be Tesla's prospects?
@@catmaxi2599 And then what? They can copy or produce similar things anytime they want. Just like Apple is doing now.
@@ilkethegreat Ten years on and no one as copy Tesla, not so easy to copy I guess...
@@americanix7951 Not because it is hard to, it's because it was unnecessary. Now they're starting to copy it
SHUN THE NON-BELIEVER!!
Got your points. We need to consider those basic for sure. But also we need to do quality check. I mean details analysis of what tesla is. Comparing tesla to just car company is completely wrong. It is saying like amazon is just a shop back in 2005. Nobody understood amazon at that point.
September 2024, almost 4 years and this video is holding against Elon big ego and no signs of Tesla boys around 😂
Richard the almighty 💪
I wonder if you can do the same postmortem analysis on amazon? At one point their p/e ratio was 3k but no crash.
That's because amazon was 'manipulating' the e in p/e because they didn't want big profits while massively growing the company, therefor the p/e was huge but if you looked closer at the cashflow statement it would make much more sense
Price to revenue also matters. It was always obvious Amazon could change their p/e ratio to increase profits in exchange for slower growth. The reason more people did not invest early was not the p/e it was that very few expected such crazy revenue growth.
look at price to sales ratio in companies like amazon
They invested all their e-commerce revenue into expansion in AWS, retail, tech etc. Now it’s an all in one company. Investors were blindsided.
All solid points. Appreciate you making this video knowing full well that the potential of being slashed ruthlessly in the comments is high. I'm a millennial retail TSLA investor and I will still hold onto / buy more of TSLA stocks. I will just proceed with caution and do the best I can to manage risks.
How did you do on TSLA?
I like this guy. He's got some big cojones.
He does have some big ice cubes
He posted this in December and five months later in April Tesla is still above 600
@@Tony-yn5rr *3 months and 7 days
@@deeptoot1453 il be back in 1 month and tesla still wont be under 500 so good luck
@@Tony-yn5rr The short term doesn't matter. He's talking about a long term outlook on the company.
Tesla is not a car company. They are a tech company and utility, that also is making cars.
- Stationary batteries (plus software revenue from software autobidder) - example: hornsdalepowerreserve.com.au/ and www.tesla.com/en_gb/energy
- Solar cells / roof sales
- Full Self Driving option (software sales) with the future option of robotaxi use
- Battery production and eventually sales (yes, they have now started to produce their own batteries themselves)
- Energy production from solar
- Energy sales (both domestic and fees for charging EVs)
- Income from letting other EV manufacturers use their charging infrastructure
- and yes ... cars and soon trucks.
- car insurance (currently only California, but that's also income)
- and as a by-product from manufacturing EVs, they sell carbon emissions credits to other OEM, such as Fiat Chrysler and Honda. That is also treated as a "product".
- and then in the near future the mining of silicon and nickel.
- and well ... as a gimmick .. the sales of shorts and tequila.
Yes, Tesla is a long term stock. Just investing for a few ḿonths or a year is not investing. But by valuing them as a car company, you're making the same mistake as most Wallstreet outfits. If you take ARKs valuation, they have a target price for Tesla stock of $7000 (pre-split) for 2024. That's $1400 post-split. And we're only half way there.
Also, this years growth can be seen as the result from Tesla not getting any stock price recognition for at least the last 4-5 years and then finally being included in the S&P100 and S&P500, which was long overdue. So the stock price was just catching up. You need to view the stock over the last 10 years to make any sense of it's growth this year.
Either way, form or shape, you only looked at a subset of their portfolio for your evaluation. Not the whole picture and not the fact, that they actually are a disrupter.
This video has aged extremely well. Good job and great explanations as usual
How?
Stock went significantly higher after he published this
Along with the whole markets it’s gone down bud the stock hasn’t gone below the price when he recorded this video
I'm not qualified in any way to evaluate stocks, but it seems to me that some of the risks mentioned like the risk of excessive vertical integration and the risk of competition all boiel down to Tesla's ability to penetrate new, different markets, which could further be boiled down to their ability to innovate faster than their peers (since it seems like funding will not be a problem anymore).
Yet this is exactly what they've proven to excel at. It's by no means coincidental that for the last decade it always seemed like the competition is one step away from dampening its growth, and yet it couldn't. I think that the only essential advantage of Tesla is that it can maintain a faster rate of innovation. That somewhat deriskifies the companies ambitious goals, and that's why investors are willing to pay for such extraordinary valuations.
Tesla’s extremely fast rate of innovation/adaptation and market disruption is impossible to evaluate. You either believe they will succeed or you do not. I personally do👍
@@JoeL-pe7hy
Never say impossible ¹ 😉
1 - unless it really is ²
2 - e.g. Gödel's incompleteness theorems.
I agree and that's why I finally pulled the trigger once they became profitable. I think it is a mistake to only view Tesla as a car company. I think when you buy TSLA you're believing in Elon's vision. Risky, yes, but the guy is a winner.
@@RedScareClair 94% of their revenue comes from cars, I think that qualifies them as a car company
@@RedScareClair that’s the main problem it’s all hype and believe on something outside your control
This is mostly new people that are in the market
Even though I’m long Tesla, I haven’t bought shares in over a year. I intend to keep holding my shares through the almost inevitable downs in the share price but I most definitely will not be buying any more any time soon at these price levels. Richard your videos and information that you provide are great! Keep it up!
If you’re not comfortable buying more shares at the current high price, then common sense says that you should sell your shares and get back in when the price inevitably corrects back to a more reasonable price
@@Mosesusorer no it doesn’t common-sense says hold them since you bought them at a fair price and in 3 years the market price will be higher than the price paid before its astronomical increase in market price
@@georgeosborn421 it just is. Ever heard of the Endowment Effect? What? You haven’t? I thought so..
I’m still buying $TSLA. Today’s price will look dirt cheap by 2030.
@@mrjonnylowesmaybe, or maybe not. It’s a gamble at this point (and at any point, for that matter)
Good analysis. But try it again factoring in revenue growth from the following segments:
1) Home battery
2) Home solar
3) Tesla auto insurance
4) Auto-pilot/FSD (Note that FSD will be sold under a subscription model and will produce recurring revenue)
These are all products that already exist and they are currently ramping up in the coming year.
all 4 of these points have already failed
Yeah only comparing against gas car sale is missing 80% of the story
Learning a lot from your videos about how to translate finance talk to my friends. Both this video and the FX video have been great for answering questions without getting too hung up on discounted cash flows or CIRP
Very level-headed analysis backed by very reasonable assumptions. Really like the fact that you are laying out the assumptions upfront clearly. Tesla is innovative no doubt but is over-reaching itself with all the “adjacencies’ it is getting into. Maintaining quality standards as it scales up and innovates and keeping the trust of the customers are going to be key..
Funny thing is people said the same thing about apple back in 2007
what is apple's PE in 2007 ?
Plain begal please make a video about private equity and venture capital i have zero understanding about that please hope you read this 🙏🏼
He did it soon after you posted this message, so he mustve read your comment
Richard, I think you forgot that stonks always go up.
stocks don't always go up. the market always goes up, but many stocks will still fail as investments, particularly in the short term.
@@rhueoflandorin Disagree stonks always rise.
@@rhueoflandorin you missed the joke by a mile
@@vitsadelhole if that was supposed to be funny, maybe he should stick to whatever his day job is instead of trying to do comedy.
@@rhueoflandorin You probably just don't know the meme, it's not even HIS joke.
Indeed, Mr Gregory, this did age well. I don't think any smart money was buying at those inflated prices with expectations of some even greater future result. I think retail investors were mostly riding the moonbeam to moneytown and the mass speculation was driving up the price while the Fed pumped money into all the stocks, making it worse. They never understood anything about P/E and all that. They were literally buying out of fandom. Most of them are now holding bags. It is unlikely that TSLA will go bankrupt, and they lose all their money, but Mr. Musk is very creative about losing money so, who knows.
Nope, Tesla is up since this was posted.
This video has cemented your credibility in my mind. Subscribed.
Two words on Tesla...
Game over....
Big Tesla bull here but you definitely deserve great respect because we Tesla bulls need to be tested a bit. Thank you!
You will have a rough 2021. Then you will recover. Then you will grow. Good luck.
@@joonpak Thank you for the support!
Underappreciated video. Keep up the great work
Beautiful explanation!! It is crystal clear now ...
Also, in addition to the EV market (where Ford is looking very good too) it should be noted that Porsche (in addition to making their own EV in the Tican) is developing a non-CO2 emitting synthetic fuel system. That’s still heavy R&D, but a significant potential alternative.
I think such a video is great. It helps “amateur “ investors understand how a trader/ investor thinks. Please make such videos about other companies and investments
Hey thanks for the Video. I'm an Tesla investor myself and here is my criticism:
1. The Automotive sales
I thinks your forecast is pretty decent also I think tesla could very well hit 20mio Vehicles sold in 2030
2. Vertical Integration
Through vertical Integration Tesla makes more profit on each Vehicle sold. That's why the profit margins will improve.
3. Data
Tesla has an enormous data advantage. This is the main driver of the high evaluation. This enables them to offer costumers better prices insurance. Through Full self driving the cost per kilometer/mile traveled can drastically be improved. This will result in a change of society. See the research of Ark invest.
Also: You compared Tesla's growths to Amazons and said Tesla's probably not going to keep that up. In the past they were actually better at the respective size.
Thanks for reading and have a nice day:)
they won't read this,only "reddit elon musk" comments will get likes.
Even with autonomous vehicles, the value from a full market capture is still many times lower than current valuation.
This is a bet that breaks even if tsla does well at 1. auto cars and transportation in general (replace uber, doordash, amazon delivery bots, etc.) 2. grid infra and energy storage 3. Something else
Even if autonomous changes society utterly, the value add goes to the consumer and not to tsla. Most of the value is already captured in high density areas like india and china and EU with public transport. It's tbh only a problem worth solving becuase of the USA.
@@TheHellogs4444 Did I read right and understand that you say that even with autonomous vehicles, the energy business and the insurance business. The valuation right now is too high?
@@miyuden4118 Yeah. I think there needs to be another innovation/product to market in order to justify the valuation right now. Autonomous + grid isn't enough. I would gladly pay 10x the 600B valuation for the combined group of all of Musk's companies
Uhhhmmm, and by how much, nothing explains the stock price except speculation
I recall Cathie Woods say a majority of the valuation that’s embedded is based on the autonomous ability. So basically, Tesla minus Uber minus Fedex/UPS market cap, what’s left is the core car manufacturing business.
Math: Tesla ($800B) - Uber ($95B) - Fedex ($65B) - UPS ($135B) = $505B
Top 9 car manufacturers combined market cap is around $500B. Names include General Motors, Ford Motor Company, Fiat Chrysler Automobiles, Honda Motor Company, Hyundai Motor, Daimler AG, Ferrari, BMW and Volkswagen.
I think we have our 50/50 split there Tesla vs remaining car players ($505B vs. $500B)
I like how he laughs sheepishly when doing party pooper videos, possibly in anticipation of the flak he's going to cop 😂
I'm sure the subscribers would love to hear an update on this topic. I can't believe tesla just hit 1 TRrillion absolute insanity 😳
Yeah, agree
the pricing is f***ing insane just now with p/e is basicly infinity
Time to just admit a fat L
@@niccoloviale3073 will be when the market wakes up and pricing it right... tesla is a pyramid game...all end eventually
@@kukucska1984 ok ill wait
As a CFA candidate myself, I very much appreciate the candid analysis and it's fundamental roots. Nice work, Richard.
Its*
You should do a video on the solar energy industry
Thanks for the viewpoint. I was a Tesla bear that converted to a bull about six months ago and own TSLA at 12% of portfolio. Given that, it is not a pure automotive company, is growing at remarkable rates, is bringing down the costs of production and will in fact make tremendous $$ from software (autonomous driving push) going forward. I won't argue FST vs. not-FST except to repeat that the autonomous driving software is a huge profit centre going forward. And economy EVs are coming. I think you miss these aspects. The industry forecasts are also too low.
Subbed. I just binged on your videos. Very impressed
Well this aged well, spot on
Love this more chilled out style of video, great to see some personality and smiles :)
Unfortunately ever since TSLA joined the SP500 its very hard to avoid exposure to it. Because a lot of ETFs are market cap weighted, there is a significant chunk of money that gets invested into them.
Not anymore
@@Joeproctor3122 yay!
Damn that's crazy
* puts a couple thousands more into Tesla stock *
🤣🤣
just did lol
U too
Lulz
Save some for the $rope
I think it is refreshing with a level-headed and sensible analysis based on critical thinking. The relatively few give hope for mankind....you do well.
Great presentation of potential concerns. I do believe the total EV market projections from Bloomberg are very conservative. Take Arks projection (obvious Bull) of EV sales hitting 37 million by 2024 and you see the other side of the coin.
Precisely. Using a disruptive S curve analysis, EVs will be the only vehicles sold after about 2026. This is the essence of the difference in views.
A few more points for consideration: 1. Tesla consecutive profits that allowed it into the S&P500 came from credit sales to other manufacturers. Once these other manufacturers fully deploy their efforts into the EV space, and they will, profits will have to come from making cars. These other manufacturers know how to do it, Tesla does not seem to be there yet. 2. Nothing really concrete on the famous battery day, other than intentions. Tesla might have some IP on the batteries they use, i believe that, but they are Panasonic batteries at the end of the day. It's not like no one else is going to put some R&D into batteries. 3. Long history of over promising and under delivering if we want to be objective. $25k car promised in 2018 to MKBHD, tesla truck that is still nowhere to be seen. Again, great company, deserving of respect for what they have done, but there is nothing that fundamentally justifies the crazy price.
@@miken4591 That is quite unlikely to happen. Gasoline powered vehicles still have their place because gasoline offers advantages that EVs do not and EVs offer advantage that gasoline does not offer.
@@jeffshackleford3152 -what advantages will fossil fuel vehicles offer in 2025? Not price, not range, not power, not speed, not running cost, not sound, so what? Smell? You are thinking 2020.
@@miken4591 oh yea, you are right. I am definitely thinking 2020.
Great video and hats off to you for standing up the tesla community! It takes some balls! Its good having someone who is more skeptical to review the company.
It would be great if you could rerun your numbers with tesla's own guidance. They're aiming to hit 2TWh in 2030of battery production so using your simplified automotive model, that's around 20-25M vehicles (80kWh battery back per vehicle) in 2030 assuming they aren't using these batteries for their energy products.
Also I don't think you mention robotaxis. This is another huge growth opportunity. It would be great if you could do an analysis taking into account the more speculative (as a bull i say inevitable haha) side of the business (energy and robo taxis) to understand if tsla is overvalued vs that analysis as i don't many investors valuing tesla as only an automotive company.
So:
-scenario 1: this analysis you've done (using consensus estimates and industry estimates)
-scenario 2: assume tesla sells 25M in 2030 (only an automotive company)
-scenario 3: value tesla's solar roofs, grid scale storage, semi, automotive and robotaxi segments separately for 2030 and sum this together.
Then compare scenarios to understand whether current prices may in fact be good value (or not!)
Cheers,
Ollie
I've arrived late to this video. As a major Tesla bull I look for well thought-out counter-arguments to make sure that I haven't missed anything that could be costly.
Thank you for giving your point of view. In the end, your points did not change my opinion or outlook on the stock long-term as, IMO, the initial assumptions are incorrect regarding growth, potential revenue streams etc. What I do take into consideration, what I also knew when first investing, is that there is still major risk involved with this stock as Tesla still has a lot to prove and make reality. Difference between us, I guess, is that to me that path to achieving those goals is clear and they are clearly taking the right steps to get there while competitors seem to lack what is needed, while you think this path is still 50/50 at best.
When investing in such high growth stocks, the key is to invest what you can lose as some kind of "black swan" event can always happen.
Don't stop giving you point of view, even if it's met with major criticism as I know there are a lot of Tesla investors that invested because Tesla went up majorly and can't take videos like this for what they are, an honest detailing of potential risks.
Thanks, I'm really enjoying your content and channel, keep it up.
I'm a passive investor, although I'm quite young, but looking back at Tesla's historical price with it's fundamentals is kind of mindblowing. Informative video, thank you.
With the mania-bubbles popping everywhere (meme stocks, crypto, etc) and interest rates soaring, and competition aggressively taking market share, there has never been a better time to be short tesla.
Nobody buying Tesla stock at this level is paying for Tesla as just an auto company. There is no way the valuation is justified as that. Everyone buying the stock are buying autonomy, power grid and oil disruption, and software and services business in the future, including entertainment, insurance etc. The margins growth and operational leverage won't be touched, their growth rate will increase as they scale. The stock does have a tendency to over shoot short term. But it was flat for 6 years, so a huge breakout is not unexpected. Tesla is more like Amazon. It will also be a winner take most market, like Amazon enjoys.
I love your channel and I appreciate everything you to do educate us.
But (there's always a but), I found your analysis over-simplistic. Please hear me out.
- Comparing P/S of Tesla with legacy automakers is not prudent. Legacy automakers are mired in debt and potential legacy asset write-offs. For example GM, has more than $80 billion in Net Debt compared to negative $5 billion for Tesla. Debt is a major drag on legacy car makers' market caps. Enterprise-value/Revenue would be a better measure but it would still lack nuance.
- Legacy auto makers also lag significantly in the transition to EV. They lack focus and innovation because of the traditional work culture and organizational incentive structures. This will lead spending more capex and r&d in attempt to chase Tesla's engineering prowess which keeps on moving the goalposts for the legacy to catch up. The risk for these old school car makers totally failing in this transition is very-very high. And this must reflect in the valuation.
- Vertical Integration: Tesla is fully vertically integrated. Old automakers are only do catalogue engineering - which is only 10% of what Tesla as a company does. Tesla is vertically integrated from material supply -> material processing -> manufacturing cells -> pack manufacturing -> battery management software -> firmware -> infotainment -> OTA updates -> autonomous features -> charging infrastructure -> sales/delivery/service infrastructure. This leads to higher gross and operating margins because Tesla keeps all the profits, part of which it otherwise would be paying to the suppliers/dealerships.
- Operating Leverage: Watch the video "TSLA Bull Case By Rob Maurer" to understand Tesla's amazing operating leverage. In the last conference call the CFO guided for mid-teens (~16%) operating margins in the medium-term. That's just the beginning. Once Tesla start realizing 100% of their FSD feature completion revenue ($10,000 per download), they'll approach 20% operating margin very rapidly. Compare that to legacy car maker's operating margins!!
- Intangibles: Some of Tesla's value must be judged by their Technological lead, their engineering prowess combined with the emphasis on innovation and ruthless iteration. Tesla is alway in the ranked top 2 companies where fresh engineering graduates want to work. Great innovation in multiple fields is only possible if the workforce is inspired by the mission and their work affect the most people. Compare that to legacy automakers who are beholden to old-school investors who only want short-term profits and management who is focused on hitting those short-term goals to capture maximum salary.
- Energy business: Tesla expects the energy business to be the same size as the auto business in longer term. Are any legacy automakers making battery storage or the software to support power-grid resiliency and virtual power plants? The answer is NO. Climate change is becoming more urgent and solar+battery is offering a cost-competitive solution for the electric grids.
- Robotaxi: It's not a pipe dream anymore. Check the latest FSD-beta videos. Tesla is working on creating the right platform to rapidly collect data, train the software and deploy it to the entire fleet at once. In-house inference chip, over-the-air update capability, large fleet to mine data from, DOJO supercomputer for training - all that is coming together piece-by-piece to realize the robotaxi dream. Robotaxi may not come next year but it's definitely not more than 5 years away. The valuation must reflect this possibility increasingly as the beta software shows more promise with every software update.
Edits: grammar and a word "dealerships"
This comment deserve more attention. I'm particularly excited in the latest FSD, if successful with the amount of data/training it will get, will be a full grown self driving AI capable of driving anywhere in any situation with minimal intervention. I don't see any other competition capable or near that level of spontaneous autonomy yet. Oh and if your country has no internet, that's where Starlink comes in.
holy crap, thanks for the write up! also you forgot tesla insurance, would potentially disrupt the motor insurance sector.
P/E ratio of 1700... Yeah.. No. I love how you try to sell their "other markets" which are completely experimental and a fraction of their business which is car sales.
@@dukewellington7050 P/E ratio is a bad way to judge a growth company. Judging by p/e, you would have missed AMZN in 2012 with p/e of 3000 and NFLX in 2014 with P/E of 470. Same type of people missed Tesla's 20,000% gains since IPO because of judging growth company with value investing metrics.
1 year ago, you said Tesla was speculation. its up 700%.
tesla stock is now up 10% since this video.
tesla is a technology company who will get profit not from selling cars, but from selling subscriptions for self driving ,etc.
The P/E is extremely high and it might be overcrowded. Sales aren't high enough yet. but it will probably be the most valuable company in 5 years, maybe tied with Amazon. hopefully their profits and revenues will catch up to their stock price.
Tesla will dominate the EV market which will explode in the next 10 years.
I think it will be easily worth over 2 trillion market cap.
I agree its overvalued, but I see it more as a symptom of our monetary system. There has been a glut of money printing this year. Bonds are offering absolutely no yield, where else do you put your money?
From a valuation point of view, Tesla is not valued as an auto company.
If autonomous driving is a reality, auto companies will be like laptop producers using Microsoft Windows and Tesla will be like Microsoft providing autonomous operating systems. From this angle, Tesla is a SaaS company and therefore, will enjoy higher margins and valuation.
This has not factored in the potential Robotaxi fleet business that could fundamentally change the transportation industry by substantially lower the cost of transportation and add value to consumers without auto insurance, maintenance, and parking required.
When this video was made, Tesla was at its peak, and worth 3-4 times more than it is today. If only more people followed the Plain Bagel, poor people would so much less poor.
_Efficient market hypothesis wants to know your location_
It is precisely the reason that the finance world interprets a Tesla as merely " a car" and that Tesla is merely a "car company" that the future is bright for investors.
How can you evaluate tesla until 2030 and not even mention ride-hailing, robotaxi, FSD,energy component, software, dojo, solar, insurance,autobidder once?
LOL it's just cars and balance sheets from the past
its funny because I was hearing very VERY similar analysis on Tesla over a year ago when I bought at $46 a share. I like you’re channel but you’re doing the same mistakes as many did back then. The fact that you didn’t use the word robotaxi among others shows the knowledge on this particular company. Happy new year btw
Keep in mind Amazon also started off as online bookstore at the time competing with Barnes and Nobles then progressed to online shopping platform. Company then evolved and keeps evolving, branching out to other businesses, such as cloud, twitch, music, tv streaming, etc.
Flaw that I see in your analysis is that you are treating Tesla as car company instead of more of IT company. On top of superior product competitive edge they have, in my opinion, once FSD is successfully launched, ride hailing, robo taxi, subscription FSD, selling charging network or even FSD capability to other automotive companies are all within a reach of possibility, which none of other car manufacturers are anywhere near it at the moment.
Hmmmm
I work in the Fremont plant and it runs 24/7 but right now I'm off till jan 11. Austin giga factory will be up and running soon. But I enjoy listening to someone that doesn't own a stock share. I hope at least own a Tesla car.
An insider!
Do you work on the model s or x line?
I am long Tesla and I like to watch videos that critics Tesla to see if I missed anything in my calculation for long Tesla.
It is interesting to bring Amazon`s PE PS ratio up without bringing it up the history of the company. I remember when Amazon was defined as "only an online bookstore" when clearly they were heavily investing in other segments. Today Amazon is far from only "online bookstore" with their AWS dominating the infrastructure. Which brings it up to my point: I disagree on Tesla is only a car company and therefore should be compared with likes of GM. Ford and Toyota. By looking at where Tesla is investments today it is very similar to Amazon's growth period where a lot investments are highly underrated.
Sure Tesla might fail on many things like FSD, Robotics, Solar or Energy. But currently it is the most "Amazon-like" company there is out there.
Tesla:
-$1 trillion market cap
-Revenue: $31.5 billion
-Cars Produced: 500k
Toyota:
-$252 billion market cap
-Revenue: $257 billion
-Cars produced: 9.5 million
Volks Waggon:
-$142 billion market cap
-Revenue: $254 billion
-cars produced: 9.3m
GM:
-$92 billion market cap
-Revenue: $122 billion
-cars produced: 6.8m
Ford:
-$78 billion market cap
-Revenue: $127 billion
-cars produced: 4.2m
Despite these metrics… tesla is worth more than all these companies COMBINED. That is a bubble and it has to return to fundamentals at some point. Be cautious…. This stock will most likely lose a lot of people money because the valuation that the market is assigning is ridiculous
@@rudy8409 Tesla Debt: $7 billion.
GM debt: $76 billion.
Ford debt $87 billion.
Toyota debt $130 billion.
VW debt $240 billion.
Transition to EV from legacy automaker is way more costly than what Tesla is doing. Tesla have none legacy costs and all the materials and design are for EV only and don't have the burden of dying legacy costs like material parts, production lines and so on. This however is the only EV part of Tesla.
You are drawing conclusions based only on comparing part of Tesla against other automakers because currently their main income source. So did I with Amazon back in 2000. I have learned my mistake, which is why I was willing to bet on Tesla's future.
@@cbn1362 perhaps you are right about the long term prospects of tesla... however, it doesnt get away from the fact that the market is assigning an insane valuation on the company which are far from their fundamentals. further, i also believe that much of the buying pressure isnt coming from considerations of fundamentals but rather chasing gains. people saw the massive run up it had and want in which has ballooned the company to unreasonable valuations. do you really think that same crowd are gonna keep buying when the floor falls from beneath the stock? i think its got a long way to fall before it goes to fair value and it will likely overshoot the fair value point and become undervalued which will be the time to buy... but now it would be only a madman to buy at these prices.
Good job you valued Tesla as just a car manufacturer like everyone else , Did you forget they make batteries, sell them as storage solutions, along with solar panels / Tesla roofs. Then there's autonomous driving where people see lots of potential, and also Tesla insurance coming which Elon predicts will be huge. You referenced battery day but did you watch it?
not even pros know. Its all probability vs manipulation vs techniques vs hype. I do love your vids.
This video aged well.