It can take wall street a little while to comprehend exactly what Tesla does. They deliver
so much information at once, it does take a while to interpret, even from fanboys at
times, let alone wall street analysts. In fact its really the numbers that they care
about most. It would seem any projections or targets Tesla have minimal, or often negative,
effects on the stock price.
For example when I discount back the value of the company to just Shanghai and Fremont,
then there is very little value you placed on 4680 batteries, FSD and basically none
of Robotaxis.
But with these latest numbers we have from Tesla, that give us a good indication of the
current average selling price, and their margins, well these are solid numbers we can do projections
with. I swear you have to watch this video to the
end, because you won't believe the results. I also have a little gift for everyone at
the very end.
I havent even done any back of the envelope numbers on this yet, so I am going to go through
all of it with you. But I have a feeling, that Tesla might not be far off a p/e ratio
of 100 by the end of the year, if the p/e was calculated solely on Q4. Then my theory
is that investors will not accept a p/e ratio of 100, relative to todays stock price, it
seems far too cheap, especially this year.
Great, sounds good, so we need to do some mumbers then. In calculating these numbers
we will be looking somewhat on the optimistic side, as in things going relatively well for
Tesla, and they dont run into any major issues for the rest of the year, such as component
shortages. Remember this video is about how Tesla could double this year, not Tesla will
double this year. So basically we will try to find a way of
calculating an estimated Q4 net profit, and assign a valuation on Tesla from there. I
am not going to go deep into the forensics here, as it is all somewhat speculative due
to such little information available. But I think the numbers should be plenty close
to see just what potential Q4 might offer us.
Let's get started then. First we will calculate the deliveries for each model from each factory.
Hopefully we see the Model X launch sometime this quarter, but I think that will still
be too late to get any decent numbers for X in Q4, but in the meantime, there is a good
chance Model S has scaled. Now before Tesla closed down the lines to update the new models,
X and S were selling 15,000 units a quarter combined. But more lines will be added, probably
similar to where they were before the Model 3 launch, selling around 30,000 units a quarter.
I dont think Tesla will manage that number for Q4 though, they may be at that run rate
by the end of it, but not accumulated over the months.
I would therefore like to assign just a 20,000 units for Model S and X. I am also going to
assume that Tesla are only selling the Plaid versions of both these models, in order work
out our average selling price.
Now Model 3 in Fremont seems fairly consistent at 50,000 units a quarter, I think Tesla would
rather ramp up Model Y with additional lines, rather than the less profitable Model 3, makes
sense from a business stand point. Now Model Y is sitting currently at around
an estimated 55,000 units, ramped up possibly 7,000 units from the previous quarter. If
we continue that pace to ramp up, then we would be at 69,000 units. Remember Fremont
claim a 500,000 capacity for 3 and Y. 50,000 a quarter from model 3 is 200,000 a year,
leaving 300,000 available capacity to the Y, or 75,000 a quarter, so 69,000 isn't impossible.
We have seen model 3 in excess of 25,000 units several months, including even December last
year. Also remember Q2 did suffer some downtime in the Shanghai factories, which did affect
numbers. So I am going to keep Model 3 at 25,000 a month, or 75,000 a quarter. I would
think that Model 3 is fairly ramped up there by that stage.
As for Model Y, it should be pretty much at capacity for the quarter. It's alleged capacity
is 200,000 units a year, which is only 17,000 a quarter. But they hit 15,000 just in May.
Also in the Q2 earnings report, we see the capacity for China has been changed to over
450,000 now, rather than just 450,000. Tesla like to play coy about what their capacities
are. Which means either I am a delusional fanboy,
or I think Elon might be Sandbagging. Anyway, personally I think Model Y will also
hit 25,000, same as Model 3, particularly due to the improved manufacturing techniques
between the two. But how about we take an average number between the capacity and what
model 3 is producing, giving 21,000 Model Ys a month, or 63,000 a quarter.
But it doesnt stop there. Elon said we had limited Model Y production to expect from
the new factories this year too. I think 10,000 is possibly a reasonable figure to use.
Also Q4 is always a really big push for the end of the year, to try and get as many cars
delivered as possible, and will likely also push out some stock too. I think 5,000 vehicles
from stock is a possibility, remember this is not necessarily what I think will happen,
but this based more on how things could possibly happen.
We will place the 5000 stock proportionally amongst all the cars.
Ok, once we add that in we actually get a total of 292,000 units of production for Q4.
A quick side note, current deliveries for the year are at 386,000. When you add 292,000
you get 678,000, which happens to be just 222,000 away from 900,000 for the year. Therefore,
although I have ruled out 1 million units, I do also see there is still a good chance
of reaching 900,000 units for the year.
Anyway, 292,000 units for Q4, wow, thats not far off 300,000, or a run rate of nearly 1.2m,
before the new factories are close to ramping up. Not a bad start for 2022.
Alright, but now we have to do the financials. First we will need to estimate the average
selling price of each vehicle. So I have constructed a spreadsheet to create an estimate of how
much each version of each model from each factory will cost. Now bear in mind, we are
in Q4, all the back orders for customers who ordered with the lower prices have likely
received their orders. So we will have a higher average selling price as a result.
As you can see I have created estimates for what might be the average selling price of
each vehicle. When we add them in, we are at almost $16 billion of revenue. That is
nearly up 60% from Q2. Hello? 60% increase in revenue over 2 quarters. I mean that surely
has to move the stock price right?
Now I calculated the ASPs for Q4 and Q2, and we can see that due to these prices rises,
and the Model S and X, we are now at nearly 10% higher average selling price. From $50,000
to $55,000. Ok, some of these cars do cost more to build like the Plaids, but most of
the others do not, as we just saw from the costs of goods sold in Q2. So even though
its a 10% rise in prices, I am only going to take half of that, and increase the margin
by 5%. So we had 28.4% margin in Q2, and if we increase that by 5%, then we are at 30%.
Therefore I am adding the margin as 30% for autos. I have also kept the same regulatory
credit we received from Q2. This then gives us a gross profit of $4.8
billion, which is up over 68% from Q2 gross profit.
Energy and services likely havent done anything major by that stage either. Energy wont have
much effect on Tesla for still some time. Possibly even about 2 years away. In case
you didn't hear in the earnings call, but Tesla havent made their LFP batteries yet.
These are the only cost effective batteries that can be used to scale energy. It's a little
disappointing. I hope we get an LFP battery day one day too.
Taking total revenue to $18 billion, which is starting look a bit more substantial. It's
also over twice Q1. Revenue has doubled within 3 quarters. I know we talk about 50% growth
with Tesla, but this growth figure is not for revenue, its for vehicle deliveries. The
revenue growth could be more, and wall street cares about dollars more than deliveries.
Now equally I am going to use the same costs as Q2 for energy and service. Which now gives
u a total gross profit of just over $5 billion, compared to $2.9 from Q2.
Now perhaps R & D is up somewhat, I am not quite sure what for, but lets be cautious
and increase it $700 million. S, G and A is likely also higher, due to further expansions,
and possibly with Texas and Berlin. So I am going up to $1.2 billion here, over 20% rise
from Q2.
And as for bitcoin, well lets just forget that altogether I think. Although we do hope
we are $100k there later this year. It should happen, if not this year then next.
Which gives us my favorite figure, because I think its the best sign on valuing growth
companies, income of operations at $3.2 billion, that's 140% increase from Q2. Ok this is getting
exciting. We will just use the same interest as Q2,
its insignificant anyway.
Now I had Tesla at a tax rate of 21%, which from my Q2 estimates, was actually where things
went wrong for me, up to that I was within 10% on income from operations. But Tesla only
paid 9% tax on all of this. Presumably being off set by depreciation.
So Tesla saved 12% from depreciation, which is $155 million. It's likely Tesla will have
at least that to depreciate again, but lets use that same figure again anyway. So we take
21% of income before tax, and then subtract the 155 million from that, to give us the
amount of tax to pay. Which is about $1/2 billion in tax.
Giving us a net income GAAP earnings of $2.65 billion, up from 1.18 billion, which is 125%
increase, and a GAAP EPS of $2.33. Ok sure growth has been priced into to the stock,
but not this much. Perhaps we should try and look at it in a different perspective.
What if we calculated what the p/e ratio would be if we annualized this quarter's profit.
That comes to earnings of $10.6 billion. Not too bad, if I recall that was the earnings
of Exxon/Mobil at around the late 90s, when they the largest earnings from any corporation
in the world.
But at the time of this video we are dealing with a market cap of $621 billion. Well get
this, here is where it gets absolutely crazy! If Tesla achieved these earnings in Q4 2021,
and the stock price was at the price it is today, of $621 billion. Well that comes in
at an annualized p/e ratio of just 59. Yes, Tesla would have a p/e ratio of 59, if Q4
went like this, and the stock price was as it is now.
But wait, we still dont have Berlin and Austin up and running yet, save around 10,000 units.
And we know the capacity that generates is 3 or 4 times. Ok I am starting to feel light
headed, this is too crazy. It a lot of money.
So what p/e ratio would you assign to Tesla then, well probably 500 to 1000, but thats
you and me, what we want to know is what the street thinks. Look, in all honesty I dont
see why a p/e ratio of 150 to 200 is out of the question. Which is a market cap of $1.6
trillion to $2.1 trillion, or stock price of $1,660 to $2,704. Or 157% to 333% return
from today. So yea, I would say there is a good chance TSLA can double this year.
Now once you wipe the drool off your faces, I have also shared this spreadsheet with you
all, its free to download, the link is below in the description. I dont ask that you join
on Patreon or anything if you use it. However, I would like to hear your feedback on what
results you get when you play around with it. Or if you find something I might have
over-looked. But, this is super exciting, and is just more of a part of the new intel
we got from the Q2 functions.
And if you liked this, then let me know if you want me to start estimating 2022 like
this too.
Thanks for listening, please hit the thumbs up and subscribe, you can follow me on Twitter
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