Quick $TSLA thread.

After estimating 2024 earnings of $7.25 per share 18 months ago, The Street now thinks Tesla will do just $2.56 of EPS in 2024. I am closer to $1.85. Despite the emergence of competitive EV models from other manufacturers, particularly from BYD and the Chinese; and Tesla’s delays in launches, lack of product refreshes, increase in inventories, cash burn, and negative earnings growth...

Precisely five years ago, Tesla traded for $19.61 per share. At the time, the consensus 2023 EPS expectation for $TSLA was $2.81. Today, it is $3.16, or 12% higher.

The stock, however, is up nearly 1000% to $212.

A thread... Part of this move was very-much justified as five-year forward earnings expectations increased by 336% (from $2.81 to $12.24) from 2018 to 2023.

If the stock had merely increased by the improvement in those forward fundamentals, it would be at $85.

A thread on why retail investors get hurt more often than they need to:

So, $TSLA has gained over $50 billion in market cap today because sell-side analyst Adam Jonas at Morgan Stanley has again purposefully let his thesis drift. Adam now claims that the “supercomputer” Tesla has developed to “train” its FSD system alongside a Tesla- developed “custom AI/ASIC chip” that is more efficient than those at Nvidia, and produced at a fraction of the cost; thus opening Tesla up to a new TAM of $10 trillion.

If you are interested in $TSLA, or Mercedes, or Ford, or any automaker, or just the industry in general, you need to get to know BYD. Time for a quick thread. In terms of BYD and how their battery technology and EV offerings are competing on the world stage against traditional US manufacturers, industry guru Mike Dunne claims “we’re getting spanked.”

And I think he is right.

I’ve had a great debate over the past 2 years with Tesla fans, or I should say $TSLA fans. As some of you might now, I am not a $TSLA fan (although I am a Tesla fan). I simply believe that the stock price has built in grandiose, unrealistic expectations for their auto business. I also believe that many have baked in an impractical valuation outlook for the non-auto “Musk Option”, whether it be related to the energy business, to leadership in Level 5 automation with FSD, to AI-fuelled Teslabots, or to the next thing that @elonmusk will come up with.

I thought I'd trot out my comparative analysis of the performance of Berkshire Hathaway shares vs. the S&P 500. In short, what had looked like underperformance over the past 20 years basically unwound itself in a single year. 1/6 And as Buffett, Munger and Berkshire showed in their recent 2022 letter, this means that the cumulative outperformance of Berkshire over the SPX has been nothing short of phenomenal.

Time for a Tesla thread.

The early year sell-off in $TSLA was basically just way overdone. It opened on January 5, at $102 per share, and as we wrote in the FT the night before Despite my stock-price bearishness in 2021 and early 2022 with the shares north of $250 and $300 per share - and even if the bears are ultimately right that Tesla will be a bit player in automaking with a $50 share price - it felt like it could be too much, too fast.

Many traditional, incumbent automakers (what $TSLA fans like to call "legacy") are awash with cash as they make the transition to EV. Much of the Tesla community are confused by the financing arm of these businesses, and believes they are laden with debt. They're not.

A thread: When you add net debt to (or subtract net cash from) market values, you of course get Enterprise Values.
On this metric, despite $TSLA being down so sharply YTD, it still has the same EV of all these automakers combined. 2/3

“We’ve taken an approach to energy (policy) - using the cover of ESG and the propaganda and fear around climate change – to convince the current generation of leaders that we should be sawing off the trunk of the tree to save the branches.”

A🧵on the @DoombergT interview... I just watched this interview with @DoombergT and highly recommend it. I continue to be impressed by his ability to get the core of the issue, and explain it concisely. Agree or disagree, he makes you think.



I've pulled some thematic excerpts below:

It’s become a consensus view that an energy crisis is about to engulf Europe, and that a sovereign debt crisis will soon follow. Quite a few folks are writing, reading, and sharing tweets and articles like this one (1/4):

https://twitter.com/fejau_inc/status/1566657303784263681

Things are tricky in Europe indeed, particularly as it relates to natural gas, politics, and Putin. But when everyone and their brother is talking about it, the EUR is at 20-year lows, and the GBP is at 40-year lows, you have to wonder what it is in the price for equities. (2/4).

As crude oil, gasoline, and natural gas prices continue onward and upward, I have been amazed by the reactions of some people. These folks seem to believe that surging O&G prices emboldens their view that we should speed up the transition to zero carbon even more quickly.

1/8 High carbon (oil and gas) prices are not because we didn’t start the transition to zero carbon early enough, or with enough gusto. They are not because we underinvested in solar and wind.

2/8

A thread on investing in public companies vs. private equity, incentives and disincentives for both, and implications for pricing and returns.

1/22 When stock markets are closed, that doesn’t mean there is never any underlying change in the value of the thing you own.

2/22

Bill McBride @calculatedrisk has asked an interesting question this morning about the relationship of gas prices to car or light truck demand. 1/22

calculatedriskblog.com/2022/05/vehicl… In it, he had a very illuminating chart showing how the mix has dramatically shifted away from passenger cars toward light trucks (SUVs and pick-ups). 2/22

To be successful in the stock-picking and alpha generation business, one needs to have a fundamental outlook for a company that exceeds market expectations, and the stock price must not reflect that outlook already.
1|10 In periods of extreme market upheaval (whether up or down) it is very easy to believe that success was driven by your prescient fundamental work, while failures were just bad luck. The truth is often in the middle.
2|10

In terms of EV production, $TSLA has a very strong head start. Their success has forced a change in the mindset of their peers, and this has implications for the future of EV and competitive dynamics within the automaking industry. 1/5 Admittedly late, groups like VW, Ford, and others have awoken and will be dedicating a game-changing amount of focus, resource, and capital to EV and batteries.

You see it in the language of their press releases, and capital markets days, and indeed in their actions. 2/5

Isaac Asimov wrote a wonderful short story in 1953 called “Sally” and it takes place over 100 years in the future, in 2057.

1/11 Sally is an autonomous Corvette built 12 years earlier in 2045. Her owner, Jake, a former chauffeur, owns her and even owns one of the first autonomous cars, which had been built all the way back in 2015, and he was remembering the "good old days":

2/11

This is a thread that I hope is interesting to both $TSLA and $TSLAQ, and may be eye-opening to both groups. It’s a long one, so bear with me, but there are scenarios that justify both views. Fans of $TSLA make compelling arguments that automaking may go the way of handset manufacturing; and that there is a strong analogy to the Apple vs. Nokia/Blackberry/Ericsson/Motorola dynamic.

“Trading” and portfolio turnover aren't necessarily bad things. Here’s a thread on why, when it might make sense, and how to measure it. With a concentrated, best ideas portfolio, it is easy develop biases about your investments (the better you know the company and management team, the more likely this is).

albertbridgecapital.com/post/are-compa…

Each of us lives somewhere. Maybe a big town or a small one, the countryside or the mountains, by the water or in the desert. And we often feel a heavy weight on our shoulders, for reasons big and small.

Let me try to put our issues in perspective, starting with my own.

1/N My kids grew up in Chelsea. They were born in Chelsea Westminster hospital and are big fans of the Chelsea Football Club, which is just a 1/2 mile down the Fulham Road. That red circle below is St. Luke’s on Sydney Street, where they played football (soccer) day in and day out.

A quick thread to clarify the misinformation on Scion/Burry’s short bet on Tesla.

As many have already noticed the media is running with this notion that Michael Burry of “The Big Short” fame is short $534 million Tesla via a put strategy. However, as has been quickly identified by Fintwit, the 13F numbers are “notional”, which means they represent the number of underlying shares in the put contracts multiplied by the stock price – no matter what the strike is.

Enjoying this debate between @ChrisBloomstran and @garyblack00 on $TSLA. My followers will know I’m biased toward Chris’s view. But let me try to be objective here.

So, in the clearly infectious words of @SahillBloom, “Who’s up for a story?”

https://twitter.com/ChrisBloomstran/status/1345491339106988032

Actually, I won't be objective, I'll try to be optimistic.

So here goes.

2|22