Alright due to popular demand, we are going to try and discover what a 500,000 delivery Q4
might just look like. Sure, as if I wasn't going to do it anyway, but I got you all commenting
asking me for it, which is always good for the YouTube algorithm. Please comment anyway, if you
ask me questions there is a good chance I reply, I genuinely like talking about Tesla with you all.
I think we have the upper echelon of intelligence in this community so we get a lot of great input.
And your comments are often what motivates me to think of ideas for videos so keep them coming.
1/2M Anyway,
a half a million delivery quarter, what a milestone, taking us very close to some of
the big boys, like Mercedes or BMW, at around 2.5 million. So does that mean that Tesla is
now one of the big boys too? I think we might cross that line sometime in 2023.
Anyway, we have TroyTeslike saying that China should deliver 100,000 just in September,
sure deliver not produce, but the difference is minor, and that's September,
the last month in Q3. So what if we took that same number for each month in Q4,
seems reasonable, even arguably bearish. You know assuming know lock downs or anything else crazy,
which there always might be. On the other hand, we heard insiders from Tesla China reporting much
higher figures too, over 110,000 even. So arguable this could be on the low side too.
But anyway, 300,000 from China already, oh and remember this is Q4 we are talking about,
which is always the biggest quarter for the auto industry, Tesla included, its
also the end of the year quarter where Tesla push deliveries the hardest to reach record numbers.
Great, so that's one location and we are already 60% the way to our target,
with 3 factories remaining. We are working back here.
Let's take 140,000 for Fremont, which given they were at 130,000 in Q2, seems very reasonable.
Which means we just need 60,000 from the two new factories. I expect them to be close to doing
those numbers each really to be honest. But we are just going to stick limit this to 500,000.
It also allows us some breathing room if there are any incidents that affect production. One
possibility being Germany's potential energy crisis. This could affect European production.
But we might hope Texas alone could carry us to these numbers anyway.
Besides 500,000 is not necessarily our target, we just want to know what its worth.
ASPs
We'll just keep similar ASPs that we used in Q3, they shouldn't be too far off,
and the new prices increases wont take affect yet. In fact serendipitously around
the same time the tax credits kick in. Quite the coincidence there perhaps? So in affect the new
price rise to $66,000, from when it was $59,000 earlier in the year, well after the tax credit,
that's actually only an increase of $500. In other words, all this talk we hear of people wanting to
cancel their orders to take advantage of the tax credit, well it will only save them $500, and they
will have to wait maybe 6 to 12 months longer. So I don't think that will be a thing. Of course
there are likely people who may have timed it just right and get $7,500 off the $59,000 price.
This comes to close to $28 billion of revenue. Wow that sure sounds like a lot of money.
MARGINS
I am going to keep margins about the same as I did in my Q3 estimate, with the exception of the
new factories, I am still keeping them low at 25%, but they would have definitely increased,
even at just 30,000 units each factory a quarter. Of course I expect their production to be higher
anyway, and if the production is higher then the margins are also higher. The higher production,
the higher the margins, the higher the gross, and which significantly affects net profits
that much more, now that OPEX has been covered. I say this often, because it's important. And is
the reason no one else can make a profit, because they can't hit volume production.
They just start new lines each time, and are hoping that eventually there will be
enough accumulative profit from them all, that they can finally cover OPEX.
REVENUE
Alright lets add $300 million in for regulatory credits as there are still a lot of auto
manufacturers who are failing to produce enough non-profitable EV compliance cars, that they
still have to buy credits from Tesla, and fund the future factory production. Remember when they used
to tell us Tesla will only be profitable whilst they can sell regulatory credits? Luckily for us,
we can read financial statements. That $300 million looks pretty small now in comparison.
The overall margin has gotten slightly lower
due to the new factories ramping up with a lower margin. But what has gotten
a lot bigger is the auto gross profit, now at $9.7 billion, that is very close to $10 billion.
Again we will just leave the other sides of the business
as they were in Q2, as they are inconsequential.
EARNINGS
OPEX should be about where it was at in Q2. Leaving us with an operating profit of $8 billion.
Over 3 times Q2, just 2 quarters earlier. Yea, that's a pretty big difference,
especially if a lot of the current valuation is to do with that terrible Q2.
Then after tax and interest we get to $7.1 billion in GAAP earnings, $7.5 billion in NON GAAP.
GAAP EPS of $2.27 or $6.82 post split. And non GAAP earnings of $2.39 post split, or $7.17
pre split. Wow, $7.17 pre split feels like a substantial number.
If we include my estimate for Q3, and use pre-split EPS, then we have $17.94 EPS
for the year. And what I think is more important is the actual GAAP earnings.
If we total that up for the year, it comes to $18 billion. Not quite 20, but a good effort
nonetheless, especially when you factor in all the massive headwinds Tesla have been facing.
Either way, this is an indicative enough number to actually calculate the twelve
month trailing p/e ratio, the biggest indicator used to value a stock price.
With the market cap at $846 billion, then that would be a p/e ratio of 47. If Tesla generated
these earnings for the rest of the year then they would have an actual p/e ratio of 47.
Now just to reclarify, 500,000 was not my estimate, I think it's possible it could be
even higher, I think the new factories should achieve a lot more than that.
China could have ramped more too. But either way, do you really think Tesla
should be sitting at a p/e ratio of 47. A valuation of 47 times their earnings.
Oh but hang on, 40%, yes 40%, of the entire years earnings would be through this Q4 at
500,000 units. Well if that's the case then lets see what that is annualized. It is $28.5 billion,
which is 60% higher than the trailing twelve months, big difference.
Now that ends up coming in at a p/e ratio of 29.5 relative to Q4. Now should Tesla,
a company that at this stage is literally just 1/10 the way through to their end of the decade
production target, have a p/e ratio under 30. Not to mention their FSD Robotaxi business that
should add an additional 0 on to valuation, not to mention their energy business which
could double the value again, not to mention their bots business that could double that value again.
Well thats for you to decide, I can only show you the numbers. But in my opinion,
I think a lot of people are really missing something here. They just arent getting Tesla.
I mean it's quite likely I get called a Tesla fanboy more frequently than the average Tesla
investor. But I humor and talk to people who have anything to the contrary to say, and
they usually do just end up with a comment like "you would say that you're just a Tesla fanboy".
But I am someone who is working very tackling every single angle I can think of to attempt to
think Tesla's Achilles heal. Anyway, it doesn't take me long to find they lack credibility,
and it also never gets through to them, because of the whole confirmation bias.
But these are the numbers, and that feels like a low p/e ratio to me. And even if Tesla don't reach
500,000 this quarter, well the next quarter is only 3 months away, and they probably will then.
In fact Tesla do have some plans to expand production quite a bit through next year,
whilst reducing cost quite significantly, with higher prices. Well they all add significantly
further to profits too. There definitely seems to be a massive disconnect between Tesla's value,
and Wall Streets valuation. In the meantime, don't second guess yourself,
don't listen to the anti-Tesla crowd, just think for yourself
without noise. Numbers are numbers, no statistics, no lies, they are what they are.
And of course this spreadsheet is available to download on Patreon.