Tweet

@elonmusk

More from @garyblack00

Gary Black

@garyblack00

23 Dec

I have updated my top 10 reasons investors should buy $TSLA:

1/ Huge EV runway ahead, with global EV penetration now 3% likely to go to 20% by 2025 (6x increase = +46% CGR).

2/ TSLA’s EV share continues to grow - not fall - as TAM expands, even as ICE competitors launch...

their own EVs. New EVs take from ICE vehicles, not other EVs. This is biggest research flaw in short thesis.

3/ $TSLA has several positive Jan catalysts to propel it higher: 4Q vols (181K vs 172K Street, 1/4), FSD MRR (1/15), MIC Y production (1/15), CyTruck update (1/15).

4/ FY’21 vol guide of 840K+ will beat Street ests of 777K (1/27), driven by 1M installed capacity today, and spark new round of 2021 $TSLA EPS & PT increases.

5/ Biden’s 1/21 inaugural address will feature clean energy plan, incl restoration of $7.5K credit on all EVs incl TSLA.

Read 8 tweets

Gary Black

@garyblack00

15 Dec

Open letter to all S&P 500 benchmarked managers:

On Friday 12/18 at market close, $TSLA will enter the S&P 500 Index at an approximate 1.5% weight - the sixth largest weight in the S&P 500 index after $AAPL, $MSFT, $AMZN, $GOOGL, and $FB.

2/Goldman says 90% of you don’t own $TSLA, and you probably never had much interest in owning it, since it trades at 169x consensus 2021 EPS, and is +665% YTD. Surely you can ignore it for a little longer, and wait for it to come back down to Earth.

That would be a huge mistake.

3/ CNBC talking heads who know nothing about $TSLA have long proclaimed it to be overvalued. Celebrity shorts and sell side analysts who blindly compare it to other auto companies have been wrong about TSLA for years. Investors who I think are smart sound like empty suits...

Read 10 tweets

Gary Black

@garyblack00

14 Dec

Normally smart investors say the dumbest things when talking about $TSLA:

“Tesla has a P/E ratio of 1,220 times trailing earnings, when 10 to 20 is more typical for profitable automakers.”

First, no sophisticated investor would value TSLA, growing volumes at 40-50% per yr...

2/ at P/E ratios of legacy auto makers, which aren’t growing. Comparing $TSLA to legacy auto makers isn’t the issue. Putting the same P/E on TSLA with 40-50% growth as companies growing at zero makes no sense.

Second, using backward looking P/E ratios to value a company with..

3/ a long growth runway, expanding TAM, and unlevered brand is at odds with theory, since $TSLA value is in the tail. That short-term mindset caused investors to miss $AMZN, $FB, and other fast growers. The proper way to value growth stocks: Discount the value of future earnings.

Read 4 tweets

Gary Black

@garyblack00

13 Dec

I found this WSJ article about $YHOO’s entry to the S&P 500 from 12/8/99. Parallels vs $TSLA are striking: YHOO was a new entry to S&P 500 (not a step up), institutions’ widespread skepticism to YHOO given 1,000x+ P/E, very loyal retail investor base, first internet entry to S&P.

2/ Yahoo soared 63% betw 11/30/99 announcement and 12/8/99 inclusion, including stunning 24% on 12/7, the last day before inclusion. +63% would put $TSLA at $665. YHOO kept increasing after inclusion and only collapsed with other tech stocks in 2000 as the internet bubble burst.

3/ What’s changed vs 1999:
1) S&P index funds/ETFs were only 3% of S&P mkt cap of $12.0T.
2) YHOO went into S&P at ~0.5% float-adj wt vs $TSLA 1.5% wt.
3) Hedge funds were $200B total AUM in 1999 vs $3.3T today.
4) Trading commissions have collapsed from $.05/sh to zero today.

Read 4 tweets

Gary Black

@garyblack00

12 Dec

Next week will be volatile. I’m sticking with my previous expectation of a $650-$690 $TSLA top and then a 10-20% correction, but those ests could be too high or too low. No one knows how many shares are in the hands of speculators waiting to sell to indexers who need 130M shares.

2/ Friday’s action was not a good indicator, with $TSLA getting slammed repeatedly, most likely from institutional sellers of the 8M ATM shares bought at a discount last week. Index shops will likely give PMs lots of flexibility to buy TSLA shares earlier than the usual 2-3 days.

3/ Speculators have been buying $TSLA since 11/16 in the hope of exploiting the indexers who need to buy 130M shares. TSLA is up 50% since 11/16, but indexers need just 17% of TSLA float. Hopefully, some of the buying was by $8T in active mgrs, who would likely hold their shares.

Read 4 tweets

Gary Black

@garyblack00

8 Dec

According to S3 Partners, $TSLA shorts have lost $35B in 2020. I talk with many TSLA shorts, and have been on the other side of their trade all year. Here is where $TSLAQ got it wrong: Way under-estimating TSLA TAM, and in thinking ICE-branded EV launches would hurt TSLA.

2/ Street estimates are soaring. $TSLA 2020 and 2021 EPS ests have almost doubled this year, as Y has quickly become TSLA ‘s best selling model with less than 20% cannibaliz’n of M3. Model Y is now being taken global. Meanwhile, China volumes will be 50% of TSLA volume in 2021.

3/ When I argued with shorts about Model Y, they missed that Y was a small SUV and M3 was a small sedan. The two don’t compete. And yet, shorts would argue Y would massively cannibalize M3. Y more than doubled $TSLA ‘s US TAM, from 25% to 66%, and will do the same globally.

Read 10 tweets

Share this page!

Gary Black

Try unrolling a thread yourself!

More from @garyblack00

Gary Black

Gary Black

Gary Black

Gary Black

Gary Black

Gary Black

Did Thread Reader help you today?

Like this author's thread?