Why Tesla Stock Is Up 51% In 30 Days

Summary

The video script discusses Tesla's stock performance, emphasizing the importance of separating the company's fundamentals from its stock price. It highlights a 51% increase in Tesla's stock in one month and a 90% increase in revenue. The speaker argues against overpaying for future potential, using Tesla's Full Self-Driving (FSD) as an example. They stress the need for a balance between a compelling story and solid numbers, advocating for investing when the value significantly exceeds the price.

Takeaways

• 🚀 Tesla's stock price has increased by 51% in the last one month, indicating a significant market movement.
• 🗨️ Discussions on social media platforms like Twitter are highlighting Tesla as a stock to own long-term, similar to past sentiments during its peak in 2021.
• 📈 The company's fundamentals have shown improvement, with revenues nearly doubling from $53.82 billion in 2021 to $94.7 billion in the last 12 months.
• 📊 The speaker emphasizes that stock prices are influenced by news and emotions, rather than just fundamentals, and warns of potential future sell-offs even by staunch Tesla supporters.
• 🤔 The importance of understanding the difference between a company's stock price and its underlying value is stressed, advocating for investment decisions based on fundamentals like revenue and profit growth.
• 🚗 The potential of Tesla's Full Self-Driving (FSD) technology is highlighted, with its subscription model contributing significantly to the company's potential profits and market cap.
• 💰 The gross margin for FSD is estimated to be around 75%, meaning each additional unit sold could bring in substantial profit and increase Tesla's market value.
• 🔢 The script challenges the narrative that Tesla's valuation is justified solely by its potential as a tech company, pointing out the need for a realistic assessment of its current status and future prospects.
• 📉 Tesla's stock has experienced volatility, including a drop in the price of its FSD subscription and delivery misses, which the speaker suggests should be considered in any investment decision.
• 📊 The speaker uses a stock analyzer tool to project different scenarios for Tesla's future, emphasizing the importance of a margin of safety in investment predictions.
• 🔮 A future vision of Tesla as primarily a software company is presented, but the speaker questions whether the market is overvaluing Tesla's potential in this area without sufficient current evidence.

Q & A

What is the recent performance of Tesla's stock price?

Tesla's stock price has increased by 51% in the last one month, as mentioned in the transcript.

What was the peak revenue of Tesla in 2021?

The peak revenue of Tesla in 2021 was $53.82 billion, which occurred on November 4th, 2021.

How much has Tesla's revenue increased in the last 12 months compared to 2021?

Tesla's revenue has seen a 90% increase in the last 12 months compared to 2021, reaching $94.7 billion.

What is the Full Self-Driving (FSD) feature, and what is its current subscription cost?

Full Self-Driving (FSD) is a feature offered by Tesla that aims to provide autonomous driving capabilities. It currently costs $99 per month for subscribers.

What is the estimated gross margin for Tesla's FSD subscription?

The estimated gross margin for Tesla's FSD subscription is around 75%, meaning for every unit sold, approximately $75 of profit is generated before overhead costs.

How much additional market cap does selling an extra FSD unit contribute to Tesla, based on the transcript?

Selling an extra FSD unit contributes approximately $188,000 in market cap to Tesla, calculated by applying a 20 multiple to the $900 annual profit per unit.

What is the current market cap of Tesla, and what is the target market cap to reach a valuation of $5 trillion?

Tesla's current market cap is over 700 billion dollars. To reach a valuation of $5 trillion, the company would need to significantly increase its value, as detailed in the transcript.

How many cars would Tesla need to sell FSD on to generate an additional $1 trillion in value, according to the transcript?

To generate an additional $1 trillion in value, Tesla would need to sell FSD on approximately 222 million cars, based on the $188,000 value per car calculation.

What is the current global market for new cars, and how does it relate to Tesla's FSD sales goal?

Around 50 million cars are sold worldwide annually. To meet the FSD sales goal of 222 million cars, it would take a significant portion of the global market, which may not be feasible in the short term.

What is the significance of the transcript's discussion on Tesla's revenue and profit in relation to its stock valuation?

The transcript emphasizes the importance of looking at the fundamentals of a company, such as revenue and profit, when evaluating its stock valuation. It suggests that Tesla is currently being valued more like a software company than a car company, which may not be justified by the current numbers.

What is the transcript's perspective on the future of Tesla's stock price and the role of emotions in investing?

The transcript suggests that emotions play a significant role in driving investment decisions and that the future of Tesla's stock price is uncertain. It advises investors to focus on the fundamentals of the company and make decisions based on a reasonable assessment of its value.

Outlines

00:00

🚀 Tesla's Stock Surge and Investment Philosophy

The speaker discusses Tesla's significant stock price increase of 51% within a month, attributing the rise to social media buzz and a shift in investor sentiment rather than fundamental business improvements. They emphasize the importance of evaluating a company's fundamentals, such as revenue and profit growth, over emotional investing driven by news or stock price movements. The speaker also introduces the concept of looking beyond the stock price to understand the company's value, using Tesla's full self-driving (FSD) technology as an example to illustrate the potential for future growth and profit, while cautioning against overestimating its current market value.

05:01

📊 Analyzing Tesla's Growth and FSD Potential

This paragraph delves into the financial aspects of Tesla's growth, comparing its current market performance with past achievements and future projections. The speaker questions the feasibility of Tesla's FSD technology reaching its full market potential, given the time it would take for adoption across all new cars sold annually. They highlight the unpredictability of technology and the competition that may arise, using the evolution of mapping software as an analogy. The speaker also addresses the discrepancy between Tesla's current valuation and its revenue, suggesting that investors are potentially overpaying for its future potential as a software company rather than a car manufacturer.

10:02

🤔 The Future of Tesla and Investment Strategy

The final paragraph focuses on the broader implications of Tesla's business model and its potential transition from a car company to a software business. The speaker discusses the importance of valuing a company based on its current achievements and potential for future growth, using various financial metrics and analyst predictions. They also touch upon the community aspect of investing, emphasizing the need for a balanced perspective that combines both the story and the numbers behind a company's value. The speaker concludes by promoting a software tool designed to assist in making informed investment decisions, highlighting its comprehensive features and the limited availability due to upcoming changes.

Keywords

💡Tesla

Tesla is an American electric vehicle and clean energy company that is central to the video's discussion on stock performance and company valuation. The script mentions Tesla's stock price increase, its revenue growth, and its potential as a tech company with products like Full Self-Driving (FSD). The video uses Tesla as a case study to illustrate investment principles and the importance of separating a company's fundamentals from its stock price.

💡Stock Price

Stock price is the cost at which shares of a company are bought and sold. The video emphasizes that while Tesla's stock price has risen significantly, investors should focus on the company's fundamentals rather than short-term price fluctuations. The script discusses how news and emotions can drive stock prices, but ultimately, the intrinsic value of the company should guide investment decisions.

💡Fundamentals

In the context of investing, fundamentals refer to the underlying financial and operational aspects of a company that determine its value. The script highlights that Tesla's fundamentals, such as revenue and profit, are improving, which is a key factor for long-term investors. The video contrasts the improvement in fundamentals with the stock's price movement to stress the importance of focusing on the former.

💡Revenue Growth

Revenue growth is the increase in income that a company generates from its business activities over time. The video script provides data on Tesla's revenue growth, showing an almost 100% increase from 2021 to the last 12 months mentioned, which is a strong indicator of the company's financial health and potential for future growth.

💡Full Self-Driving (FSD)

FSD is a feature offered by Tesla that aims to provide full autonomous driving capabilities in its vehicles. The script discusses FSD as a significant part of Tesla's tech offerings and a potential driver of future revenue and value. It also touches on the FSD subscription model and its impact on Tesla's gross margins and market valuation.

💡Gross Margin

Gross margin is the profit a company makes after deducting the costs associated with making and selling its products, but before subtracting other overhead costs. The video uses the example of FSD's gross margin to illustrate how additional units sold contribute significantly to Tesla's profits, affecting the company's valuation.

💡Market Cap

Market capitalization, or market cap, is the total market value of a company's outstanding shares of stock. The script calculates the potential increase in Tesla's market cap based on FSD sales, using it as an example to discuss how investors can estimate a company's future value based on its products and services.

💡Investment Emotion

Investment emotion refers to the psychological factors that influence an investor's decisions, often leading to non-rational choices. The video script warns about the dangers of emotional investing, advocating for a more analytical approach based on a company's fundamentals and long-term prospects rather than short-term sentiment.

💡Autopilot

Autopilot is Tesla's semi-autonomous driving system that assists drivers with steering, braking, and lane changes. The script mentions Autopilot to highlight the safety record of Tesla vehicles, comparing accident rates per mile driven with the national average, and to distinguish it from the more advanced FSD feature.

💡Margin of Safety

Margin of safety is a principle in investing that suggests buying a stock at a price significantly below its estimated intrinsic value to reduce the risk of loss. The video script advises investors to use a margin of safety when analyzing stocks like Tesla, acknowledging the unpredictability of the future and the potential for mistakes in valuation.

💡Software Business Valuation

Software business valuation refers to the process of estimating the value of a company that primarily deals in software products or services. The script discusses the challenges of valuing Tesla as a software company, given its current revenue mix, and how market expectations may not align with the company's current business model.

Highlights

Tesla's stock price increased by 51% in the last one month.

The discussion on Twitter about stocks to own forever, including Tesla, has resurged.

Tesla's stock was previously considered a 'forever' stock during its dip to $415 two and a half years ago.

Fundamentals of Tesla have been improving, with revenues almost doubling from $41.5 billion to $94.7 billion.

The speaker emphasizes that news follows stock prices, not the other way around.

Investors should focus on the fundamentals of a company rather than just the stock price.

The importance of recognizing the difference between a stock's ticker price and its underlying value.

Tesla's Full Self-Driving (FSD) technology is a significant innovation, with a current subscription fee of $99 per month.

Estimation that the gross margin for FSD could be around 75%, adding significant profit per unit sold.

The potential market cap increase per FSD unit sold is calculated to be $188,000.

Discussion on the unrealistic expectation of Tesla needing to sell 222 million cars to significantly increase its market cap.

The importance of separating the admiration for Tesla as a company from its stock performance.

Tesla's autopilot technology has shown to be significantly safer than the US average for miles driven before an accident.

The speaker critiques the overvaluation of Tesla's stock based on its potential as a software company.

Tesla's current valuation is compared to that of an average car company and a software company like Microsoft.

The speaker uses a stock analyzer tool to project Tesla's future value based on different revenue growth and profit margin scenarios.

The importance of considering a margin of safety when making investment decisions and projections.

The speaker's approach to investing, emphasizing the need to buy when the value is significantly higher than the price.

A call to action for the audience to join a community and use a software tool for investment analysis before changes are made to the offer.

Transcripts

guys Tesla is up

51% in the last one month that is right

51% when I see Twitter back to talking

about how these are the stocks you own

forever and Tesla's one of them again

after we had the flip Mo what was it

before before when when Tesla was at

4:15 two and a half years ago it was

Tesla stocked forever then what happened

then uh Elon went to buy Twitter now X

if I remember correctly correct um um

there's a lot of news that drove this

stock around yep and news nothing

fundamental no that's right fact

everything fundamental is getting better

and better and better at

4:15 to now

262 revenues almost doubled up almost

100% yeah I'd like to just show two are

you talking about 2021 yeah the peak of

414 which was on yep November 4th 2021

53.82 billion in Revenue in 2021 the

last 12 months last 12 months 94.7

billion guys it's like 90% increase in

Revenue this is proof absolute proof

that news follows a stock price I've

said before I'll say it again there will

be a time when people say you're stupid

to own Tesla that all the Bulls who sit

there and say I love Tesla I would never

sell Tesla will have their reason for

selling Tesla Tesla will be a much

better company in the future than it is

today when everybody's saying you got to

own Tesla forever and that's the beauty

of of investing it's the emotional part

emotion drives investing what I'm trying

to teach is this process of looking at

it and saying wait a second if the

fundamentals are getting better and it

made sense at X price and now the price

has fallen why would I not buy more but

what usually happens out there and

what's going to make you different as an

investor is you're going to realize that

this is just a ticker price what matters

is the fundamentals of the company the

revenue the profit and as long as the

revenue and profit are growing and the

business is getting better as the stock

Falls you should want more of it now

making the initial purchase is important

because you have to sit there and

realize that every investment's the

present value evolve future cash flow

and now Mo on that very same Twitter I'm

getting people saying Paul you don't

understand the power of this company

being a tech company FSD is huge now FSD

is huge for those you don't know that's

full self-driving and they're charging

currently $99 per month well what do you

think the gross margin is on this night

by the way gross margin means for every

doll every unit they sell how much of

this is profit before overhead and all

that stuff 70% I would guess it's 70 or

80% let's call it 75% so every extra

unit they sell they're getting

$75 probably per month in extra added

profit okay so times 12 months equals

$900 per year in extra cash flow all

right so every extra unit they sell if

you apply a 20 multiple to this it adds

$188,000 in market cap right so we had

$75 month in profit times 12 months 900

bucks times 20 PE equals $188,000 in

value for every time they sell a unit

now to generate the Kathy Wood idea of

trillions of dollars in value driven by

their technology right now they're 500

no they're more than that 700 billion

dollar company let's call it one

trillion 900 900 3 billion I'm sorry so

one trillion dollar market cap to get

to5 trillion that's $ trillion do in

value divide that by the 18,000 per car

they sell FSD on What's the total value

they have to be in

222 million cars jeez oh man okay before

I get into how reasonable this number is

I just want you to understand this this

is very very important for understanding

investment the story about FSD is

wonderful the story about Tesla is

wonderful I'm not against Tesla I have a

cyber truck on order I had a model X

plaid I'm not against Tesla I love Tesla

I think Elon Musk is brilliant but I

separate stock from the from the actual

company I don't know where Tesla stock

is going in the next few months I don't

know where it's going in the future my

job here what I'm trying to teach you is

that you have to look at Tesla and say

can I pay a reasonable price for the

company today that makes sense on this

company I'm only focusing on FSD Mo 50

million cars a year are sold worldwide

okay now remember our goal is to sell is

to have 222 million

cars actively buying FSD there are

283.15 a year on F

SD so that's the issue here guys we're

in the US where the average car is like

40 the average new car is like

$40,000 okay in the US we sell 15 call

it 20 million new cars a year I don't

think it's t 20 million but it's called

it 20 million that means it would take

11 years of 100% of the cars on brand

new cars selling let me said there say

well Paul some people are going to buy

for their you I get it it was all brand

new cars because Buick just sign a deal

with Tesla about putting they they're

talking about it it's very close in

talks about putting FSD in their cars

wonderful but it has to be put into

there I don't know what the other

technology will be but let's assume

every single car for the next 11 years

they'd finally get there that 220 sorry

it was 50 million cars not $50

million this is what I'm looking at

going it's going to take 11 years to get

that covered assuming that every single

car correct it's like best case scenario

now if 50 million cars are sold

worldwide let's say 25% of them which is

an egregious amount a percent by this

12.5 million what are we at 18 years or

so of cars before they get there my

point about this isn't to say it's going

to take longer my point is to say it's

probably not likely and in that time

what's going to happen with technology

are other people going to come out with

other versions of FSD maybe maybe not

there was map quest for a long time then

it was Google Maps and now it's Apple

Maps right I look at the saying guys FSD

has a great future but to just add $1

billion doll in free cash flow to to to

Tesla one billion in free cash flow

would be20 billion in value at a 20 PE

times 20 remember $188,000 per car in

value it takes 1.1 million cars having

the

software 1.1 million why do I keep

putting dollar signs here I'm so used to

it guys this year they're hoping toell

1.8 million cars now is there a lot of

growth potential in this absolutely but

remember people said before Oh Tesla's

going to grow like guys they're

struggling to even hit this 1.8 million

the stock is up a ton and guess what

happened they missed their deliveries

they didn't even hit their deliveries

guys this 51% run up is a combination of

many things I think one of them is short

sellers having to bail now maybe I'm

wrong because now I read today like

short selling has gone up to 3.7% of

shares outstanding are now short on

Tesla wow the point I'm trying to make

about all this data is guys there's a

great story but as professor aswa says a

story without numbers is a fairy tale

numbers without a story is an Excel

sheet you got to couple them together

the story of

FSD is a wonderful story it's a great

story the numbers on FSD not so much and

how much is the FSD price Fallen oh yeah

it used to be what $12,000,000 then it

dropped it was a one time 12000 y then

it dropped to 10 then it dropped to 999

bucks a month I I don't know guys the

same point

like I probably if if the software

wasn't perfect I probably wouldn't pay

$99 a month even if I had a Tesla but

look at this this is just autopilot this

is not even full self-driving Tesla

vehicles using autopilot

technology look at how many millions of

miles driven per accident it's only

gotten better

7.63 million miles driven before an

accident when the US average is 6

670,000 miles this is 12 times safer now

I also saw some other report that said

Tesla's had the most accidents from

November 2022 to November 2023 I don't

know what that was about but this is a

report here and it says Tesla vehicle is

not using autopilot it was still better

by 50% than the US average but how much

better using autopilot guys the

autopilot the full self driving it is

absolutely awesome I love hearing about

it is a great tool but don't overpay for

that now guys this is exactly how our

community talks about stocks it is not

just a ticker price we have to look Way

Beyond the ticker price there is

something behind that price there's a

value and our goal and the goal I'm

trying to teach here is whatever you're

looking investing in I want you to have

a new way of thinking and that way of

thinking is there's a value and there's

a price I want to buy when value is

significantly higher than prices and

that's why this whole entire software is

made but if you watched our channel

before you've probably noticed that we

have limited daily spots for this

community and software and the reason

for that is because the software as it

exists today includes everything we have

to offer for stocks retirement in real

estate as you can tell from all these

tools up here it helps you in all those

areas now we are making some changes

behind the scenes so that in the near

future that offer is going away as we've

been getting feedback from our community

members people have expressed that they

want us to focus on specific aspects of

everything money for them they want to

focus on what applies to them in that

moment they don't want to have too many

options like the Cheesecake Factory they

want to say this is what I'm focused on

right now so if you've been watching for

a while you'll remember that I built

this software selfishly for myself

that's how the software started people

ask how do I get that software and it

was always built for my team and I so we

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and retirement but as the channel is

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obviously has to become a lot less about

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the good news is we have not made those

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join you'll be grandfathered in for life

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you'll get them for life no matter what

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go do it right now if you sign up today

you'll be able to keep all the tools

even after we make those changes and

trust me this will be the best decision

you've made all here that is what's key

about investing with like-minded people

there are people in our community who

absolutely love Tesla and think it's

awesome and I would tell people out

there if you own Tesla stock and bought

it real cheap it's hard to decide should

you stay in or stay out is there a lot

of potential for Tesla of course but

right now the numbers look like a car

company 95 billion in Revenue $13

billion in profit it's better than the

average car company don't get me wrong

but you have to sit there and realize

that over 90% of its Revenue comes from

I think it was 83 84% Mo remember we did

the numbers like wait a second the other

services included like used car sales

and I was like wait a second it's like

90% plus cars

guys if I'm a high school athlete and

I'm a top prospect I'm not a

professional athlete yet don't pay me

professional athlete money let Tesla

become the software business that you

think they're going to become valued in

there you have to account for that but

remember you got to sit there and put

some sort of value to that future and

the chance of it happening so let's see

what analysts are saying about

this Mo do you see this big time growth

in EPS according analysts almost

tripling oh yeah I was surprised to see

this a drop this year of 20% but going

to

$743 in the next four or five years

Revenue doubling revenue dou from 100 to

28 billion you know what the interesting

part is Mo if this 28 billion was all

software and there were like Microsoft

that had 30% bottom line it'd be a $60

billion business which is 15 PE and

today's numbers guys that's what I mean

people are overpaying for the future

they're overpaying for the future the

average car company sells for between

0.5 and one times Revenue Tesla's

currently selling for almost 10 times

Revenue this is Microsoft money

Microsoft's like 13 but fair value is

probably around 10 times revenue or

something lower than that people are

valuing this as a software company 100%

without a car component if you don't

agree with me that it's a car component

company I don't to tell you if you used

to think that and go wait a second those

numbers are adding up I think there's

hope for you I do think there's value to

Tesla being a software business the

question is what's that value so that's

when you pull up stock analyzer tool Mo

I'm GNA pull up the last time I did

Tesla so I remember when I did this one

and I did a a low middle and a

ridiculous high so we can go through

that if you want Oh Revenue growth same

numbers 720 and 60% Revenue growth by

the way only did five years though

profit margin 820 and 35 this makes it

more software like yep right so we're

sitting there saying listen they crush

it next five years and guys they're not

going to have this kind of profit margin

20% re I mean I don't well maybe it will

next five years maybe it will PE I did

18 25 and 30 what about you I did the

same numbers okay and a 9% desire return

because that's the market return 9 or

10% let's put what's the market value

but remember you need to have a higher

when you're doing this s from the

software you need to put a higher

desired return for a larger margin of

safety you need margin of safety because

the future is unknown and we're humans

we make mistake you've got to be able to

sit there and factor in what mistakes am

I making in all of these assumptions you

are making mistakes we are I am I'm

making a ton of mistakes the question is

what's my margin of safety but here's

what's interesting let's hit the analyze

button by the way the fiveyear analysis

was for Kathy Wood's 2030 prediction

correct guys 4 on the low side 2,000 on

the high side with 60% Revenue growth

247 in the middle so if you want to see

my reaction video to Kathy Woods

egregious price target for Tesla watch

this next video thank you for your time