Ok, a lot of people are still very doubtful on FSD, let alone robotaxis. I don't think
anyone is close to credible enough to know whether it's possible more so than the actual
people working on FSD. However, those that you might assume credible, also seem to lean
on the side of positivity as far as Tesla's progress.
Wall Street however, well obviously are acting very conservative and dubious around
the whole ordeal. So much so, that I don't actually believe that FSD nor Robotaxis,
are very much even baked into the price, and even if they were, it wouldn't be much,
and is quickly diluted by any major advances in autos. For example, perhaps 10%
of Tesla's valuation is based on FSD and potential there.
i.e. if Tesla has a valuation of $1 trillion, and 10% of that is FSD, that would place $100 billion
valuation on FSD and Robotaxis. Now, if Tesla had a good quarter for deliveries, and profits,
it could see a 20% jump, i.e. $200 billion. i.e. twice what FSD has been valued into the company.
Any major negative FSD issues will only make the market over-react, it has no perspective,
or rationality. I swear if Tesla had some major FSD issue, it could tank the stock 30%, probably
about 3 times what the market valued FSD at. It could literally give FSD a negative valuation.
Like I was saying, the most credible people who think this can work are Tesla,
and they also have the most to gain, and when I say most, I literally mean the most, more than
anything anyone has ever gained ever before in history, a potential $10 to 30 trillion valuation.
That is what a lot of people believe the value of FSD might add on to Tesla. This is a lot of money,
obviously 10 to 30 times return. If you have about $50,000 invested, there's a good chance
this would make you a millionaire. It could be looked at about 10%
of our stock price is a lottery ticket for this event to occur.
Making what I would have thought, the majority of you listening potentially millionaires,
and some of you billionaires. Oh and Elon a multi-trillionaire.
So that's our lottery ticket, except it doesn't expire each week, we can hold it
for decades if we wanted, and if at any stage this FSD or Robotaxi service was ever achieved,
that would be our numbers coming up. Except instead of winning one line in lottery tickets, it
was thousands or hundreds of thousands of dollars, that all hit the right number. Except I think the
chance of Tesla achieving FSD are significantly higher than you or me winning the lottery.
And what if our numbers don't come up? Or at least what about until they come up? Does Tesla
have a massively inflated valuation, if FSD is not a reality, or at least not any time soon?
I think that is what a lot of people believe, but as I mentioned before,
FSD is probably only about 10% of the valuation,
so what's the rest based on? Well energy makes no profit, so that doesn't have much value.
Therefore the vast majority of the valuation does come down to just being a car company.
Tesla is still just valued as a car company. However, a car company in a
particular market segment, EVs. Which means it does get a higher valuation. And when the
market understands and differentiates more the difference between an EV and a Tesla,
kind of like the difference between and electric typewriter and an IBM,
back in the 80s. Then Tesla should also deserve a higher p/e than the rest of the industry.
Tesla deserves a higher p/e ratio, even Tesla matures, and all other EVs are mature too,
even if they all share the same tech, well license Tesla's I should say. Then Tesla will still have
a higher p/e. Why? Because Tesla will always have higher margins. Tesla can build their
cars at a much lower cost. Investors see value in a product with this much buffer in demand,
due to such higher margins. In a down economy Tesla can always lower prices,
or to be more competitive Tesla can lower prices. It's a great tool for any business to have.
It's somewhat similar to how the Middle East is able to get oil out of the ground so much cheaper
than other parts of the world, thus they can still profit through lower oil prices.
Hence Aramco having a p/e ratio than the rest of the industry.
Anyway, all of this means that the EV industry gets a much higher p/e ratio,
than the ICE vehicle industry, and likely will continue to have a high p/e for a long time.
I would expect that even next decade we may see Tesla with a p/e as high as 30 still. At least
relative to p/e's in today's economic environment. A p/e of 20 to 30 might end up being what the
market places on a mature EV company. Especially when there are major advances
in battery technologies to come, along with all other associated facets that will be invested in,
and thus hopefully the cost of EVs will drop further, and profits will rise.
In addition to that though are the jumps in progress with autonomous driving.
When that technology is out, then the p/e's will jump again, into the hundreds.
I know Tesla's p/e ratio still looks quite high,
but when you trim some fat, and massage some numbers, you can find a p/e of around 70,
that's based on 2021's Q4. If Tesla only double profit by 2022 Q4 then that's a p/e ratio of 35,
again perhaps with a bit of massaging. But eventually the market does catch up.
All the knots get massaged out, and the market feels better about the stock again.
That is however based on the earnings doubling year over year, does that sound
overly likely? I think probably closer to 150% increase. Which is a p/e ratio of around 30.
What am I saying here? I am saying, that I believe Tesla will have triple profits
in Q4 2022 than they do in Q4 2021. If the stock price hadn't changed,
then it would be the equivalent now of 28 years of these earnings from the 2022 Q4.
This is only from auto profits. Auto profits which have more than doubled year over year,
implying a lot of growth still going on within this company. Implying that perhaps a p/e ratio
of around 30 might still be too low. This doesn't factor in any new break-throughs,
announcements, product reveals or releases, or anything else that could boost the stock price.
This is Tesla solely valued as an auto company, just like it is today.
There just seems to be like some sort of esclation as to when this will all blow up in Elon's face.
FSD is going to be a total flop, and Tesla stock price is going to drop as
fast as Enron. It's all one big scam, FSD just isn't possible, not in our lifetime.
Well if FSD is all one big scam, then we still have this massive profitable,
fast growing auto business to ride the stock price, Robotaxis was just a lottery ticket anyway.
But FSD looks pretty good to me, in fact its mind blowing, absolutely. The fact my car can
pretty much drive itself, I mean get some reality, get some perspective. Oh but it phantom brakes
every now and then. It also drives you from home to work, uninterrupted every now and then too.
Remember it's clearly still in beta too. Also wouldn't you rather it was phantom braking,
than phantom accelerating? Or phantom swerving into the next lane. Wait until legacy autos start
evolving with their FSD's, and we will see what kind of phantoms come out with their driving.
Focus on what it actually has achieved, because have all become so spoiled or something,
and are not able to realize how truly amazing FSD is.
When did people become so entitled like this? Can't we just be happy for this company and CEO
who have worked really hard, in trying to make this product to enrich our lives,
and reduce the likelihood of someone close to us being involved in a fatal car crash.
No instead we have to jump all over them and criticize everything they do,
and hold back and suppress or oppress this life saving technology?
Why? Because you don't like Musk? You are envious you missed out on buy Tesla stock?
You can't let go of ICE? You're scared of robots? Why? Seriously. Why can't people
be supportive of one of the most amazing technological breakthroughs for mankind?
Anyway, I just wanted to break down these beliefs that so much Tesla
is riding on fantasy ideas of self driving vehicles,
and instead explain how the valuation is actually much more intrinsic than it actually appears.
FSD is absolutely unbelievable. Mind blowing. The fact it can do what it can do is impressive
enough. But do you know what? According to the research I have done regarding FSD, now
despite it already being as good as it is today, well, it would seem, according to my research
it's only going to get better. Not only that, once it has gotten better, it will keep getting
better again and again. Oh and exponentially. Anyway, if you ask me, as far as FSD is concerned,
we have already hit 5 out of the 6 lottery numbers, we are just waiting for the 6th.