Did Seekingalpha find an acorn?

Discussion in 'Tesla' started by bwilson4web, Dec 15, 2018.

  1. bwilson4web

    bwilson4web Well-Known Member Subscriber

    Source: https://seekingalpha.com/article/4228535-tesla-quick-look-2019-convertible-settlement

    . . . Oppenheimer justifies its price target by looking out three years to project earnings, applying a multiple, and discounting back to bet a 12-month price target. $21 of EPS with 250 million shares outstanding (my wild guess estimate, there are 171.7 million currently outstanding) implies net income of $5.25 billion. This seems pretty ambitious as does the 25x multiple. The stock feels overvalued, but the stock always has been overvalued from the beginning. If TSLA hits Oppenheimer's Q4 production estimates of 66k, the stock is not going to trade down. To believe that the stock is going to decline meaningfully from here, an investor must believe that TSLA will miss Q4 production estimates.

    As to what the future holds? That brings us back to this quote:

    “For me, the fact that we were able to build at scale, amid all that craziness, that’s the real accomplishment,” one former engineering executive told me. “Just think about it: We designed a car that is so simple and elegant you can build it in a tent. You can build it when your CEO is melting down. You can build it when everyone is quitting or getting fired. That’s a real accomplishment. That’s amazing.”​

    For all the insanity that has occurred at TSLA, Musk has still built an impressive company.

    This is the first time I've read one of their reports that was not a transparent "hit job." Sure there are some snarky parts, no worse than my review.

    Bob Wilson
  2. Pushmi-Pullyu

    Pushmi-Pullyu Well-Known Member

    "We designed a car that is so simple and elegant you can build it in a tent."

    Except that's not true. It's a rather significant exaggeration; there are many parts of the auto assembly process that have not been put under those tents, and won't be.

    In fact, the entire quote from which the above is an excerpt, looks like spin to me. Not much fact there.

    * * * * *

    Can you find a nugget of gold in the giant pile of garbage that is Reeking Alpha? Well, yes. I subjected myself to reading all the Tesla-related blog posts (the so-called "articles") and comments there for several months. Long enough to usually be able to recognize anti-Tesla propaganda, pravduh and FUD when I see it... and also recognize Tesla "cheerleader" comments which are just as biased, altho generally much, much more truthful, because usually (not always) the actual facts favor Tesla.

    Nearly everything posted to that site is intended to influence stock investments, rather than actually inform or present facts and analysis in an objective or neutral way. I'd say maybe 1 in 50 of the Tesla-related blog posts are actually both objective and well-informed enough to be worth reading. So yes, very occasionally one can find an "acorn" or nugget amid the endless stream of refuse piling up there.

    In fact, I once wrote to the InsideEVs editors and recommended they cover one of the blog posts there. (The rather misleading title was "Tesla: Big Hole In Model 3 Design", which sounds like it's anti-Tesla, but isn't.) IEVs did cover that... but only several days later, presumably after others also recommended covering the subject of that blog post.

    For all the insanity that has occurred at TSLA, Musk has still built an impressive company.
    Well, yes and no. First of all, Musk didn't do it all himself... even if he keeps trying to grab all the credit. He didn't found the company, and he needed lots of help from executives with experience at other auto makers to make Tesla a success. It's hard to imagine anything that's more of a team effort, and less of an one-man operation, than mass producing automobiles.

    Now, that's not to belittle Musk's indefatigable and unending efforts at leading Tesla to not only survive despite all odds, but grow rapidly into a company that by all appearances will soon become one of the leaders of the auto industry. Nor should we ignore the fact that Elon has been willing to bet his entire very large personal fortune to ensure the survival of Tesla. Very, very few millionaires or billionaires are willing to "put their money where their mouth is" the way Elon has... and not just some of their money, but all of it!

    Second: The company is Tesla, not "TSLA", which is the stock market abbreviation for the stock.

    One thing I've noticed in following the "story" of Tesla and reading comments from investors, is that the latter seem to have trouble distinguishing between the two. Most significantly, they keep confusing the performance of Tesla (the company) and TSLA (the stock). Since there is a tremendous amount of speculative investing in TSLA, the rise and fall of the stock price often (or perhaps even usually) has very little if anything to do with how well or poorly the company appears to be performing at the time.
    Last edited: Dec 16, 2018
  3. bwilson4web

    bwilson4web Well-Known Member Subscriber

    Good point!

    The irony is seeing how good, no superior, the Tesla Model S/X/3 are that led me to move some of my 401k to TSLA. From 2017 Q3 through 2018 Q2, it was obvious that Tesla was building the factories needed to make the Model 3 ... a car with an impressive waiting list. A high quality product with amazing demand, it was an easy decision. But I take your point:
    • Tesla - a company, a group of people who are making amazing products
    • TSLA - an investment article whose price is subject to non-objective value
    As for SeekingAlpha, you have more experience. In my limited exposure, this was the first post/article that didn't just throw manure on Tesla.

    Bob Wilson

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