MitchJi
10 MW
I copied this from a thread I started on the TMC Model 3 forum:
https://teslamotorsclub.com/tmc/threads/fund-a-big-percent-of-your-m3-purchase-by-buying-tesla-stock.76732/
If you want my response it might be better to post there.
I am sharing information and opinions which I believe is very close to a slam dunk. But please be careful with your hard earned money. Please do your own research and DD before investing. Please don't invest money that you can't afford to lose!
That said, in the past quite a few TMC Members funded their Model S purchases by buying TSLA. I believe that buying shares to fund a Model 3 purchase is extremely safe, almost as safe as shooting fish in a barrel. OTOH between now and whenever Tesla has produced over 100k M3's I think it could be a bumpy ride, which means that even though I believe that shares purchased now, for about $200 will be worth at least $350 when the M3 production has ramped, I would not be shocked if it dips to $150 at some point between now and then. If that would be stressful for you I'd advise you not to do this!
It also means that buying options is a much riskier strategy. Please don't buy options unless you are very knowledgeable! I'll might post on this thread when and why I believe buying options is relatively safe. In the meantime educate yourself as much as possible about investing in general, and about investing in TSLA.
It's important to note that a major reason that this opportunity is so huge are the problems Tesla has had ramping the MX production. This was due to the fact that the MX is an extremely difficult car to build. If they had designed and built a conventional SUV, which would have been about as difficult to build as the MS there is every reason to think that the results would have been similar to the Model S (very successful).
http://bgr.com/2016/01/03/tesla-model-s-sales-2015/
Income (profits), driven by car sales, has always been the major determinant of Tesla's share price (SP).
From "Elon Musk" by Ashlee Vance Page 342:
Elon's projection for 2018 MS-MS plus M3 production:
To put the effect of the M3 on the SP in perspective a major issue now for the SP is the ability of Tesla to produce 50k cars in the second half of 2016. When they have the M3 production line running smoothly they will be producing over 40k per month off MS-MS plus M3! Even if that slips by 12-24 month's (chances close to zero IMO), that only delays the SP increase.
In the very near future stationary storage (TE) will start to have a huge impact on profits. At the 2016 shareholders meeting Elon said that (he said this was highly speculative) that he thinks that the revenue from TE will be equal to the revenue from cars, and that it will grow faster. That would be the revenue equivalent to 250k (projected) cars in 2017.
The following estimate for SP, based higher vehicle deliveries, and not considering the impact of Tesla Energy Storage (TE) was posted on Jan 6, 2014. about 2 years before the M3 reveal, and the accelerated ramp plans were announced.
Notes:
1. I added numbers in brackets "projected by Elon", next to DaveT's numbers.
2. If we add the TE revenue equivalent to about 250k cars to Elon's projection of 500k cars we have revenue in 2018 that is greater than the the 700K cars number that DaveT used to calculate his 2019 projected conservative SP of at least $630/share!
3. Even if Tesla sells zero M3's in 2018, between the MS-MX and TE their revenue should be equal to roughly 400k cars, for an SP of about $360!
In other words, if you are saving for an M3 you have a double hedge when buying TSLA. When the M3 ramps the SP will rise, and even if M3 is never produced at all (not going to happen) TE production will cause the SP to rise.
https://teslamotorsclub.com/tmc/posts/543169/
https://teslamotorsclub.com/tmc/threads/fund-a-big-percent-of-your-m3-purchase-by-buying-tesla-stock.76732/
If you want my response it might be better to post there.
I am sharing information and opinions which I believe is very close to a slam dunk. But please be careful with your hard earned money. Please do your own research and DD before investing. Please don't invest money that you can't afford to lose!
That said, in the past quite a few TMC Members funded their Model S purchases by buying TSLA. I believe that buying shares to fund a Model 3 purchase is extremely safe, almost as safe as shooting fish in a barrel. OTOH between now and whenever Tesla has produced over 100k M3's I think it could be a bumpy ride, which means that even though I believe that shares purchased now, for about $200 will be worth at least $350 when the M3 production has ramped, I would not be shocked if it dips to $150 at some point between now and then. If that would be stressful for you I'd advise you not to do this!
It also means that buying options is a much riskier strategy. Please don't buy options unless you are very knowledgeable! I'll might post on this thread when and why I believe buying options is relatively safe. In the meantime educate yourself as much as possible about investing in general, and about investing in TSLA.
It's important to note that a major reason that this opportunity is so huge are the problems Tesla has had ramping the MX production. This was due to the fact that the MX is an extremely difficult car to build. If they had designed and built a conventional SUV, which would have been about as difficult to build as the MS there is every reason to think that the results would have been similar to the Model S (very successful).
http://bgr.com/2016/01/03/tesla-model-s-sales-2015/
...during the last quarter of 2015 managed to deliver more Model S vehicles than ever before. Over the weekend, the company quietly issued a press release announcing that it delivered 17,400 Model S sedans to customers over the past three months, setting an all-time quarterly record in the process.
To put that figure into perspective, the number of Model S deliveries in Q4 of 2015 represents a 75% increase compared to the same quarter a year-ago. What’s more, Tesla completely smashed its previous delivery record (11,574 set during Q3 2015) by an incredible 50%.
For the entirety of 2015, Tesla delivered 50,580 cars, an impressive figure that just managed to surpass the low-range of Tesla’s delivery projection of 50,000 to 55,000 vehicles. By way of contrast, Tesla’s previous annual delivery record, set in 2014, checked in at 33,157 units. All told, Tesla deliveries year over year increased by 52%, a striking figure given that some analysts have been quick to proclaim that anyone who already wants a Tesla likely already owns one.
Income (profits), driven by car sales, has always been the major determinant of Tesla's share price (SP).
From "Elon Musk" by Ashlee Vance Page 342:
The 500 or so people Musk had turned into car salesmen quickly sold a huge volume of cars. Tesla, which had only a couple of weeks of cash left in the bank, moved enough cars in the span of about fourteen days to end up with a blowout first fiscal quarter. Tesla stunned Wall Street on May 8, 2013, by posting its first-ever profit as a public company--$11 million-- on $562 million in sales. It delivered 4,900 Model S Sedans during the period. This announcement sent Tesla's shares soaring from about $30 a share to $130 per share in July.
Elon's projection for 2018 MS-MS plus M3 production:
I think the most important point here that we want to make is that we're advancing the Model 3 build plan substantially, and just the overall volume plan, with Tesla aiming to get to the half million unit per year run rate in 2018 instead of 2020.
To put the effect of the M3 on the SP in perspective a major issue now for the SP is the ability of Tesla to produce 50k cars in the second half of 2016. When they have the M3 production line running smoothly they will be producing over 40k per month off MS-MS plus M3! Even if that slips by 12-24 month's (chances close to zero IMO), that only delays the SP increase.
In the very near future stationary storage (TE) will start to have a huge impact on profits. At the 2016 shareholders meeting Elon said that (he said this was highly speculative) that he thinks that the revenue from TE will be equal to the revenue from cars, and that it will grow faster. That would be the revenue equivalent to 250k (projected) cars in 2017.
The following estimate for SP, based higher vehicle deliveries, and not considering the impact of Tesla Energy Storage (TE) was posted on Jan 6, 2014. about 2 years before the M3 reveal, and the accelerated ramp plans were announced.
Notes:
1. I added numbers in brackets "projected by Elon", next to DaveT's numbers.
2. If we add the TE revenue equivalent to about 250k cars to Elon's projection of 500k cars we have revenue in 2018 that is greater than the the 700K cars number that DaveT used to calculate his 2019 projected conservative SP of at least $630/share!
3. Even if Tesla sells zero M3's in 2018, between the MS-MX and TE their revenue should be equal to roughly 400k cars, for an SP of about $360!
In other words, if you are saving for an M3 you have a double hedge when buying TSLA. When the M3 ramps the SP will rise, and even if M3 is never produced at all (not going to happen) TE production will cause the SP to rise.
https://teslamotorsclub.com/tmc/posts/543169/
2019: The long horizon approach to TSLA investing
The main reason I’m invested in TSLA is because of the long-term potential of Tesla to disrupt the auto industry and lead an electric vehicle revolution. The world auto market is huge and is prime for disruption but the shift to EVs will not happen overnight. That’s why I think it’s crucial that the buy-and-hold investor has a long-term view on Tesla.
<snip>
TSLA as a stock will likely go through great volatility over the next several years. It will waver between periods of exuberance where much distant future value will be sucked into the present stock price and periods of depression where people dwell on major doubts of Tesla’s ability to disrupt the auto industry and be a global leader in the auto market.
<snip>
2019 TSLA stock price
Let’s examine a bit more what TSLA stock price might be in 2019 if they’re able to sell 700k cars. I’ll use rough numbers but you can plug in numbers you feel more comfortable with.
<snip>
I’ve plugged in rough guesses for 2014-2016:
2016 120k [vs 85k-95k Tesla's guidance]
2017 200k [vs 220k-320k projected by Elon]
2018 400K [vs 500k projected by Elon]
2018 700K [vs 750k projected by Elon]
700,000 cars x $50,000 (avg selling price due to 150k cars being Model S/X and GenIII selling mostly with 5-10k in options) = $35 billion 18% gross margin = $6.3 billion.
So, now the question is what multiple will investors give Tesla. If Tesla is growing rapidly, which they will be in order to reach 700k cars in 2019, investors will likely give at least 20x profit. So, $3.15b x 20 = $63 billion market cap divided by 150m shares (rough estimate) = $420/share.
Now this is a very conservative estimate of $420/share if Tesla is able to sell 700k cars in 2019. More likely is that investors will give a higher multiple than 20x since Tesla is still rapidly growing.
I would imagine a 30-40x multiple might be fair and realistic. Let’s use a 30x multiple to be conservative. $3.15 billion profit x 30x p/e = $94.5 billion market cap divided by 150m shares = $630 share price.
So conservatively if Tesla can sell 700k cars in 2019 then the stock price will likely be at least $630/share...