Is "Tesla beats in Q4" a common financial reporting phrase? Google gave me five results for "in after hours trading following its general beat" and they were all for this article. Most of the results for "beats in Qx" were stories by Alex Wilhelm or blog spammy results.
The last time I valued Tesla, it needed to have CAGR revenue growth of over 70% in the next 5 years with margins of comparable high end car manufacturers (about 15%) to get a fair value of around $75.
I hope you get off the train before this cycle comes to an end.
I wouldn't weigh an investment in TSLA with the same metrics you'd use for mutual funds or steady large companies.
Tesla is clearly a growth company. They're creating new categories (luxury, electric vehicles) and building infrastructure around it. They've also only released 1 sedan so they've barely penetrated the market. As a growth stock, I don't see anything alarming about a company that's worth 30x its quarterly revenues. They have a visionary, intelligent CEO in Elon Musk and the image/brand of a car company that's ahead of the game. Not to mention, they make amazing products. FB is valued at 60x quarterly revenue, TWTR is valued ~140x quarterly revenue. I would much rather bet on Tesla becoming the most valuable car company in the world (at least ~$50b in mkt cap) than the insane valuations of social media companies.
They just had a run-up from 130 to an all-time high of over 200, they released early that they would be exceeding expectations.. and you had a put out for earnings?
Well yes, and the other side are all those people that keep themselves up-to-date on their stuff. If your information base is summed up as "a colleague has that car, but they recently had fires, so surely they are not worth X", why are you doing options?
(I have a theory of course: TSLA shorts stock supply is scarce enough to carry a very significant premium. So you enter options, where it's easier to find that "other side".)
That's the risk you run when shorting any stock, especially one with an already high short interest. It's better to just avoid the overvalued companies.
It is almost never correct to short a stock with long puts. It's not a solvency issue, it's a premium issue. You're making a bet that it will crash in time period X, and people overvaluing these time-limited bets is the #1 way options traders make money (seriously). Solvency won't save you when it's -EV.
If an acquirer would pay $23B and the market values it at $23B then you don't make any money. Meanwhile you take the risk of holding a high flying stock. Maybe you're right, but it's a gamble.
You're arguing for strong market efficiency. There's nothing wrong with index funds, but that doesn't explain why Graham, Dodd, Buffet, and similar investors have out performed market indexes for so long.
A stopped clock is right twice a day. If you compare random subsets of index funds (i.e. take a random half of the stocks in the fund and call those a new fund), some of those will consistently outperform the indexes too.
Tesla is strongly positioned (effective first mover, superior execution) in a rapidly growing slice (electric vehicles) of a stagnant market filled with cut-throat competition (U.S. automobiles). The present valuation precludes a Cupertino-style citadel in the luxury market - Tesla has to burn Ford, GM, and/or Fiat's market shares into the domestic market and/or steal their growth in emerging ones, or burn their capital trying.
Tesla's margins are almost double those of other manufacturers; a big part of the profit comes in from their automated highly scalable production. When they eventually release their Model E (affordable performance electric vehicle for the masses) it'll be a game-changer.
I'm curious: why did you restrict your analysis to 5 years?
On the one hand, I'd expect Tesla to have tech-like growth for 10 to 20 years. On the other hand, competition is bound to happen eventually. How did you pick 5 years?
Do you have this analysis handy? I find valuation...yada yada yada about as convincing as the other posts citing Tesla's great prospects. Tesla's margin is about 25%, so your valuation sounds like it would be way off out the gate.
Can anyone explain what's up with this GAAP/non-GAAP business? I am aware of GAAP, but i thought it was something you either followed or were naughty and didn't follow, not that you could simultaneously follow and not follow.
All companies in the US are required to report GAAP numbers according to the rules. Some companies choose not to follow the rules. But this is risky, because eventually someone with an accounting background will detect the discrepancies, and notify the SEC.
Thus, it's become fashionable to report both GAAP and adjusted numbers, and highlight the adjusted numbers in your press releases. Now the SEC can't get you. You've followed the rules and reported the GAAP numbers.
During the dot-com bubble, companies used to report GAAP earnings alongside EBITDA. Earnings before Interest, Taxes, Depreciation, and Amortization. In other words, we earned all this money, if you pretend that all of these other expenses didn't cost us anything.
As Warren Buffett pointed out: "References to EBITDA make us shudder — does management think the tooth fairy pays for capital expenditures?" Charlie Munger called them "bullsh_t earnings."
EBITDA eventually got such a bad rap that companies stopped using it after the dot-com bubble. These days, companies that want to distract from the GAAP numbers will report "non-GAAP" or "adjusted" earnings. This simply means that instead of mechanically excluding ITDA, each company makes its own decisions about what to exclude.
Basically it just says that following one set of guidelines (the GAAP) their numbers are this, but following another set of guidelines (their own preferred accounting guidelines) their numbers are higher. It's kind of like the difference between listing your cumulative GPA and major GPA. The numbers are the same, it's just the ones you choose to include that are different.
It has to do with the leases. If you just sell the car, then you record revenue in the amount of the sale * as soon as the buyer takes possession (typically this is a dealer, and the dealer takes possession when the car leaves the factory gate).
Since Tesla is doing their own lease transactions with a guaranteed repurchase price, the GAAP rules state the lease payments must be treated similar to rental income.
In the long term, it will balance out, but Tesla is providing non-GAAP accounting because changes to the lease/buy-outright mix will cause massive swings to the GAAP numbers, but that isn't really representative of the underling health of the company. The non-GAAP numbers basically assume all cars are bought outright.
I just want to know, how much are they making from cars and how much from other sources, namely credits related to pollution laws which are nothing more than handouts
