JP Morgan asset management produced these charts. Bankers like to produce these charts (I was one of them) to show clients some fancy looking analysis to fill meeting time and look smart. What they ignore is the elephant in the room: mathematically there is NO correlation here and hence these charts are useless. In the following I explain why.

First, what do they show:
You can see the forward P/E ratio (horizontal axis) relative to the annualized return (vertical axis) for both the next 1-year (first chart) and next 5-year period (second chart).

Key observations - Next 1-year return:
1) The R2 is very low (0.05). This means there is no relationship between different levels of forward P/E ratios and subsequent returns.
2) The current forward P/E ratio of 22.4x is uncommon but not exceptionally rare. You can see dozens of similar datapoints. But that doesn't make the chart useless. That's just a sidenote.

Key observations - Next 5-year return:
1) The R2 is also very low (0.30). This means there is at best a very weak correlation between forward P/Es and subsequent long-term (5-year) returns.
2) You can see there were a number of years where very high subsequent returns resulted from years with very high P/E ratios.

Technically, an R2 of
A) 0.05 means there is almost NO relationship and the data proves it.
B) 0.30 means there is only a slight linear relationship between the variables: changes in one variable are associated with only small or inconsistent changes in the other.

In the attached posts we discuss why the R2 is so low. Spoiler: there are too many exceptions too each rule.

(Math sidenote: whenever you have a very widespread in datapoints, especially outlier datapoints that confirm the trend-whether on real correlation or not doesn't matter-, they have a disproportional impact on the R2 (they improve the R2). We can see the same in this data (5-year). There is a small number of confirmatory datapoints. If you removed them the R2 would drop even more. R2 is already negligible and hence this is irrelevant here.)
Red circle: High 5-year returns despite high P/E ratios.

In this thread I want to give you an idea just how insane the current government spending is and how far we drifted away from any sustainable fiscal spending.

This is all based on reported numbers and there are no assumptions/forecasts.

In the current fiscal year, the government already spent $4,159 billion. This is for the first 7 months and the fiscal year ends in September.

The latest available data is as of April. The already accrued deficit amounts to over $1 trillion: $1,049 billion.

You can see in the chart how net interest expense has become the #2 largest spending category at $579 billion (for 7 months) after social security ($907 billion) and even exceeded national defense ($536 billion), health ($555 billion), and Medicare ($550 billion).

The deficit is 34% of total receipts! (1049/3110)

In other words: the government spent 34% more than it took in. Last year, at the same point in the fiscal year (April 2024), the deficit was $855 billion ($194 billion lower) and interest expense was $65 billion lower. Again, this is only for the first 7 months of the fiscal year for an apples-to-apples with the current fiscal year.

The deficit was 29% of total receipts! (855/2964)

This is a must read for TSLA investors. I shared this thread with subscribers last month.

***
This analysis considers Tesla's existing business (auto, energy, credits, S&O components) but also FSD subscriptions, semi, robotics (Optimus etc), Tesla owner ride hailing , and Tesla ride hailing (Cybercab).

Further, the auto segment includes the LCV (lower cost vehicle) and Cybercab for purchase from 3Q 2026.

1) Scope
The attached is not the full slide pack. I am sharing this shortened version in the interest of time. Outputting all modelled businesses would have delayed this report by a few days.

2) Change in frequency
Since many of you asked, going forward I'll be sharing an updated outlook more frequently in which I'll be adding additional outputs (slides) from the model as they become available.

The primary argument for a more frequent update would be incorporation of latest market data. Market data (ie share price) affect the multiple and hence the implied PT range. Also, more frequent updates help to incoporate lates vehicle sales trends.

3) My PT has changed significantly
My prior PT was based on Elon's October 2024 guidance of "20-30% year-on-year" volume growth in 2025.
The new PT's volume estimate is based on sales trends extrapolation and competitive dynamics by market. I've been using the leading global automotive database to derive a volume estimate based on the world's 11 major sales regions by model based on market share. At time of my prior PT this was not available to me.

Old PT: I will cover all changes separately with a detailed review of key drivers. There are various other drivers, ie not only volume.

4) In this thread
Slide 1-9: summary slides of key financial outputs.
Slide 10-13: step by step derivation of price target.
Slide 14: price target.
Slide 15-16: revenue, gp, and gm overview by business line.
Slide 17-19: auto, energy, S&O key drivers.
Slide 20-21: R&D and SG&A.


5-8

This is a 37-page financial deep dive into Tesla's Q1 results. I shared this report with subscribers the day after Tesla released results (April 22).
If you invest in Tesla consider subscribing to my research to be kept up-to-date on the company's financials. 1-4

In this thread I explain briefly why Hyundai turned into a zombie company.

Hyundai was the most cash burning automaker globally in 2024 with a negative free cash flow of $11.8 billion. In the fourth quarter of 2024 alone, Hyundai burned $5.4 billion. To fill the capital hole, Hyundai raised net $15B in capital in 2024 (financing cash flow). Negative free cash flow was driven by a lack of operating cash flow (OCF). Hyundai's 2024 OCF was negative $4.2 billion.

This post is about VW's China business.

The key takeway is that VW is done in China. This business won't provide upside to the group.

VW is simply not competitive in the BEV and quickly growing EREV segment while ICE market is shrinking rapidly.

This makes VW increasingly vulnerable to weakness in other geographies.

How is this relevant to investors?
[🔐subs only]

[the following thread as shared with subscribers on March 11, 2025]
***
VW Group's China business went from a cash cow to a non-needle mover. This chart shows trailing 12 months China income: you can see how the decrease has been accelerating. VW Group's China JV income dropped to just $0.4B over the last 4 quarters.

Opensourcing Nvidia research. I shared this with subscribers last month.

I highly recommend every investor interested in Nvidia reads this report.

1-4


5-8

NEWS: Stellantis announced FY2024 results and expects "return to profitable growth and positive cash generation in 2025", proposed dividend implying 5% yield, and 'contemplates' another SBB in 2H 2025.

FY2024 (year-on-year)
>Revenue down 17%
>Vehicle deliveries down 12%
>Net profit down 70%
>Free cash flow was negative €6B ('industrial FCF')
>Inventories down 18%, of which U.S. dealer stock down 20%.
>Net financial position (ie liquidity minus debt) at €15.1B (which is relatively low given S' operating leverage).
>Pays a divided of €0.68/share, equivalent to roughly 5% yield.

FY2025 outlook
>"Positive" revenue growth (this can mean as low as +$1 extra).
>"Mid-Single Digits" AOI margin. This means adjusted operating income (ie operating income less items S' considers one-offs) relative to revenue. Mid-Single Digits means typically 4% to 6% (but is not exact science). 1% to 3% is usually referred to as "low-single digits".
> "Positive" industril free cash flow. Again, this can mean $1 of cash flow. Industrial free cash flow strips out the financial business of S and is the correct way of looking at cash flow on an operating basis for an automaker since the financial business can create significant volatility that is not really reflective of underlying FCF generation. Loss of volume and poorer mix (fewer higher value vehicles) drove the revenue decline. Pricing pressure and currency effects added to the decrease.

If you invest in Tesla and really want to know what's going on with Tesla in China you should read this thread 🧵. Exhibit 1: Battery Electric Vehicle (BEV) Sales in China by Manufacturer.

Key observations:
1. BEV sales volume is dominated by a few large players: BYD, Geely, SAIC-GM, and Tesla but this isn't even half the story.
2. Seasonality has a major impact on the Chinese vehicle market: it always crashes in 1Q followed by a strong rally to the end of the year.
3. Tesla's zigzag sales line is the result of Tesla's export strategy which focuses on exports first-half of a quarter causing predictably a drop in registrations followed by a strong rally into end of quarter.

This is the big picture of Hyundai, perhaps one of the least understood large automakers globally.
(I shared this with subscribers in December)

1. H has been in a long term decline.
2. Until fairly recently, the stock traded for a decade below ATH to return in June to a new ATH.
3. Just like many other high inventory OEMs, Hyundai benefitted enormously from the pandemic creating exceptional windfall profits and cash generation.
4. Structurally Hyundai is a low profitability automaker. The last 18 months profitability was largely driven by various non-sustainable / one-off factors.
5. As the market woke up to this reality the stock sold off almost 30% over the last 6 months and now trades at a 4.2x LTM P/E.
6. Taking into account operational leverage, Hyundai's capitalisation has never been as weak as it is right now.

Bottom line: Financially, Hyundai might be the most overrated automaker right now, especially outside auto industy analysts.

Big picture: Hyundai is not a formidable contender in the global automotive battle. Hyundai maintains its sales primarily by deploying a "throw and see what sticks" strategy, which isn't a strategy at all. A relatively short and therefore highly costly product refresh cycles helps to maitain sales.


5-8

I decided to release early this subscriber-only full Tesla report to everyone.

I highly recommend every Tesla @tesla investor reads it.

This report covers:
1. In detail how I derive a price target of +$600 by year end 2025.
2. Fully models and breaks out Tesla's current and upcoming revenue streams providing a sense of realistic timing.
3. Reflects all publicly available management guidance.
4. Lots more...


2.

Apple stock was down 1.8% last night after reporting quarterly financials. This thread takes a look. @Apple

Key takeaway: Apple's main struggle continues to be growth. 1. Revenue is up 6% yoy but Apple's top line is treading water.

This is PART 2 of a Tesla 4Q financial outlook and financial deep dive based as closely as possible on Tesla's guidance.
@Tesla
PART 2: Slides 41-80
Part 1: Slides 1-40


2

PART 1: This is a Tesla 4Q financial outlook and financial deep dive based as closely as possible on Tesla's guidance. @Tesla

To support this type of financial research follow or consider subscribing or leave a like/repost.

(this thread is split into two parts as it exceeds X's single thread capacity) 1

Here is my deep dive into Tesla's 3Q financials updated for yesterday's announcement reflecting the impact of deliveries/production/leasing and of course storage deployments.

I recommend that Tesla investors read this thread in full.

If you want to support this type of research, please consider following / subscribing.

Financial Summary 1. 3Q Deliveries At 463K Imply An Increase Of 6.4% YoY And 4.3% QoQ.

2. Average Vehicle Selling Price At New All-Time Low.
3. Automotive Revenue Increases Modestly YoY Driven By Cybertruck.
4. Cybertruck's Growing Contribution At High ASP Reduces The Impact of Low Financing Rates On ASP.

Lucid's CEO Peter Rawlinson tries to smear Tesla's technology in this clip. @LucidMotors @elonmusk @larsmoravy @Tesla @PIF_en

Peter, if it was true that your tech was so capable at low cost (which of course it isn't) how on earth is it possible that your company:
1. Has the worst gross margin: negative 134%
2. You spend $196,000 per vehicle (costs of goods sold, not operating loss) which you sell on average for just $84,000
3. Your company ranks globally as the least profitable automaker with a negative profit before tax margin of shocking 321%.

Beyond all of this, how/why should anyone believe you now Peter after you missed your 2023 deliveries goal by 88%. Lucid told investors to deliver 49,000 vehicles in 2023 but delivered only 6,001.

Dear PIF leadership, Peter is just fooling you. He creates technology and products which are not cost competitive. Please take a minute and look through the attached materials.

x.com/LucidOasis/sta… Lucid's gross margin is negative 134%!!!

This is a deep dive into latest trends observable in the Chinese passenger vehicle market including Tesla's market share. I'll share with subscribers additional deep dives on specific automakers in the next days.

1. China Vehicle Sales Declined For The 5th Consecutive Months In August (YoY) 2. Despite Overall Weakening Vehicle Sales, BEVSales In China Increased 19% YoY In August

EV maker Xpeng delivered 14.0K units in August, implying a 2.5% yoy growth rate. This is too slow given the small scale of Xpeng.

Xpeng's trailing 12-months sales rate increased only 0.2% month-on-month (MoM) in August after increasing only 0.1% MoM in July. This too points to a significant slowdown in Xpeng sales growth. The problem is that at an annual sales rate of just over 150K units Xpeng remains too small to become a viable automaker in its segment (mass market).
In 2Q 2024, Xpeng's business provided only $157M in gross profits. This is not nearly enough to cover Xpeng's ongoing R&D and admin expenses.

This is an updated deep dive into Toyota's global vehicle sales trends.
Anyone invested in the automotive industry should read this thread since Toyota is the largest automaker and understanding this key player's sales trends can provide valuable context and key insights.

Key findings include:
1) Toyota has been shrinking for several months.
2) Toyota’s BEV adoption is decreasing.
3) Toyota’s current BEV growth is so slow that it would take at least 5 years to catch up even with an assumed constant VW Group in BEVs (let alone Tesla).
4) Toyota tries to sell more hybrids as ICE sells recorded the 14th month of consecutive declines.
5) It appears Toyota is winding down Fuel Cell Electric Vehicle sales.
6) Sales in China, one of Toyota's main markets, dropped to a multiyear low.

There is a lot more.

Please don't forget to like for the algo. Thanks.

1. Deliveries Remained LargelyUnchanged YoY In July 2. Toyota Has Been Shrinking For ~6 Months Although At A Slow Rate

This is my 3Q Nvidia forecast. I highly recommend to any Nvidia investor to read this thread in full.

Please don't forget to like/comment for the algo. If there is a lack of interest in this type of research, there is no point in me continuing to share it. Thanks 1. 3Q Revenue Estimated To Grow +16% QoQ To $34.7B

This is a deep dive into BYD's 2Q 2024 financials (published today).

I highy recommend anyone invested in the automotive sector to read this thread since it provides important context for assessing competitors' relative performance.

1. Revenue Increased +26% YoY To $24.3 Billion 2. Gross Profit Increased +26% YoY To $4.5 Billion

3. Selling Expenses Near All-Time Record High