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Huge News for Tesla Stock and Rivian Stock Investors
December 05, 2023 — 08:00 am EST
Written by Parkev Tatevosian for The Motley Fool ->
Fool.com contributor Parkev Tatevosian reviews what Tesla's (NASDAQ: TSLA) Cybertruck could mean for investors.
*Stock prices used were the afternoon prices of Dec. 2, 2023. The video was published on Dec. 4, 2023.
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Hit piece FUD story from Reuters
Tesla will have a record 4thQ
They spread sales now evenly throughtout the quarter as opposed to front loading domestic Chinese sales in the beginning of the quarter
Tesla: Pay Attention To FSD 12
Dec. 04, 2023 11:00 AM ETTesla, Inc. (TSLA)MBGAF, MBGYY, XPEV, XPNGF, LI, LAAOF, GM9 Comments
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Summary
Tesla, Inc.'s limited release of FSD 12 has the potential to change how drivers view autonomous driving and add billions of dollars in revenue and market capitalization.
The FSD 12 update marks a critical juncture in Tesla's journey towards achieving true full self-driving capabilities, with a shift towards a neural network-based system for driving decisions.
Tesla's supremacy in the autonomous vehicle sector, backed by its unparalleled data collection and extensive real-world testing, gives it a competitive advantage over rivals like Cruise and Waymo.
AI Safety Summit - Day One
Leon Neal/Getty Images News
Investment Thesis
As Tesla, Inc. (NASDAQ:TSLA) continues to blaze trails in the electric vehicle ("EV") and autonomous driving sectors, I think investors should pay closer attention to their recent limited release of FSD (full self-driving) 12, given out to only employees this past week but with industry-wide implications.
While much of the focus has been on the Cybertruck this past week, I think the real focus needs to be on FSD. FSD 12 has the potential to change how drivers view autonomous driving and add billions of dollars in revenue and market capitalization to Tesla. While CEO Elon Musk has missed promises in the past on full self-driving timelines, I think this one is different. In my opinion, the stock is a buy.
Background & FSD 12
Tesla's FSD technology, an integral part of its electric vehicle ecosystem, has recently taken a significant leap with the release of FSD version 12 (v12) to employees this past week. This update marks a critical juncture in Tesla's journey towards achieving true self-driving capabilities. Elon Musk has expressed confidence that with this update, Tesla is closer to realizing "true" self-driving capability, a goal that has been pursued with persistent innovation and technological advancements??. Some users have noted that the autonomous driving technology, even in the most recent 11.4 update, has felt smoother compared to earlier FSD updates. The expectation is that FSD 12’s update will make autonomous driving highly fluid and smooth.
In my opinion, the new FSD12 system is the game changer. The v12 update is particularly notable for its shift from hardcoded vehicle controls to those controlled by neural networks, encompassing everything from computer vision to driving decisions. The neural network-based approach allows for more adaptive and intelligent decision-making, a step closer to the complex task of full autonomy in varied driving conditions.
Tesla has also taken another leap forward recently with its integrated highway and city street programs. These programs have been merged into a singular, more complex system used in all driving scenarios. Tesla’s integration of these parts is a crucial step in enhancing the FSD's capabilities, ensuring consistent performance improvements in various environments??. As I mentioned before, enhancing self-driving technology going forward will be a function of making the technology more smooth so drivers have higher confidence in the software.
Implications Of FSD (For Tesla And For Their Customers)
The release of Tesla's FSD version 12 (v12) update signifies a ChatGPT-level technological leap, marking a shift towards a neural network-based system for driving decisions. With a better autonomous driving system comes more Tesla owners who are willing to adopt the technology.
For context, Tesla had around 285,000 FSD customers in the U.S. as of 2022, with payments ranging from $4,000 to $12,000 for FSD. With Tesla's expansion in vehicle sales and the potential increase in FSD prices (up to $14,000 or $20,000, or via monthly subscriptions), Tesla could add potentially billions in revenue each quarter with this technology.
For Tesla owners, Elon Musk is optimistic about the advancements in Tesla's Full Self-Driving technology, potentially leading to owners leasing their vehicles out into an autonomous fleet for a revenue share. Part of what is driving this confidence is a belief that FSD technology is nearing higher levels of autonomy and is “very close” to becoming safer than a human driver without monitoring.
Creating monetization opportunities from FSD is big. The upfront cost of the software package is incredibly expensive for any consumer (I can’t think of any other software I would buy from a personal perspective that is this expensive), but viewing it as an investment that allows you to rent out your Tesla can psychologically change the game.
Competitive Moat
Tesla's supremacy in the autonomous vehicle sector significantly outweighs its competitors like General Motors' (GM) Cruise and Alphabet's (GOOG) Waymo, primarily due to its unparalleled data collection. Tesla's fleet, numbering in the hundreds of thousands, has gathered over 1.3 billion miles of diverse driving data globally, essential for honing its machine learning algorithms. This volume vastly exceeds the data collected by Waymo and Cruise, estimated at 100 to 1000 times less, giving Tesla a unique edge in training and refining its autonomous driving technology.
In addition, unlike its rivals, Tesla employs both voluntary and automatic data transmission from its vehicles, ensuring continuous improvements from their owners simply driving their products. This allows Tesla to collect substantial data, estimated at 4 gigabytes per car daily.
First Principles Approach
Elon Musk's decision to rely on cameras over lidar for Tesla's FSD technology is based on his belief in the superiority of vision and a first-principles approach. Musk has expressed confidence in the camera-based system, arguing that vision has the potential to be far superior to radar or lidar. He points out that sensors like radar and lidar provide a bitstream of information, but cameras can deliver several orders of magnitude more bits per second, creating better data throughput, and allowing for better vision processing. Tesla can make radar increasingly redundant as vision technology improves??.
From a first principles perspective, Musk based on the idea on the fact that humans rely solely on vision (no Lidar) for driving. He highlighted this concept back in 2019 during Tesla's Autonomy Day, emphasizing the human-like approach to driving Tesla aims to replicate with its technology. Musk acknowledges the concerns about the safety of using cameras compared to radar, particularly in detecting events several cars ahead, but he remains confident in the capability of vision to perform as effectively as radar??.
The Power of Neural Networks
As touched on before, Tesla’s decision to adopt neural networks for FSD v12 marks a transformative leap in autonomous driving tech, shifting from code-heavy programming and further aligning with a first principles approach. The FSD 12 update is a significant upgrade and slashes over 300,000 lines of code, utilizing neural networks for steering, acceleration, and braking, closely emulating human decision-making.
Leveraging extensive real-world video data, at a level really only Tesla has, FSD v12 enhances its prowess in navigating complex scenarios. Its continuous learning from vast datasets and transition to network-path-based artificial intelligence ("AI") for tackling challenging environments highlight its potential for heightened safety and dependability.
Despite regulatory and safety challenges, I believe this update stands as a pivotal milestone for Tesla, propelling them towards a comprehensive "end-to-end AI" system, aligning AI with nuanced human behavior, and reinforcing their position in the AI-powered transportation sector.
How is The Rest of Auto Responding?
In my opinion, (and in contrast to Tesla's strides in Full Self Driving (FSD) technology), I think legacy automakers are trailing, with a few bright spots. One of Tesla's closest FSD competitors, Mercedes-Benz Group AG (OTCPK:MBGAF), received approval from the California Department of Motor Vehicles before Tesla for its Level 3 DRIVE PILOT system. This allows for conditional automation, but still requires human intervention at times (autopilot levels are 0-5, with 5 being the most advanced).
While this system is set to be available in 2024 S-Class and EQS sedan models in specific regions of the U.S. and Nevada, it's still confined within the bounds of specific use-cases and environments (for example, in California the max speed you can use this technology is set at 40 mph). Mercedes-Benz in a lot of ways is lacking the extensive real-world data and neural network sophistication of Tesla's FSD.
Chinese EV companies, like XPeng (XPEV) and Li Auto (LI), are aggressively pursuing their Navigation on Autopilot (NOA) systems, primarily focused on domestic markets. These systems are currently more driver-assist technologies (vs. full autonomy), requiring human drivers to be ready to take over. Approximately 360,000 cars in China are expected to be produced & equipped with city NOA capabilities in 2023. This compares to the 1.8 million vehicles Tesla is expected to produce this year alone, and all of them possess the hardware for their FSD technology. Furthermore, NOA technologies are still in early stages and are yet to demonstrate global applicability comparable to Tesla's FSD system. The technology is only useable near major cities in China like Beijing, Shenzhen, Shanghai, and Guangzhou.
Finally, while GM's Cruise had a promising start, the last few months have shown a limit to their driverless technology. Cruise has pulled its vehicles off the streets in San Francisco after a series of accidents called into question the safety of their autonomous technology. The Co-Founder of Cruise, Daniel Kan, recently left the company. GM is planning on paring back its spending on Cruise next year in light of these setbacks.
Risks
The potential impact of FSD technology is a pivotal consideration for Tesla shareholders, but full of risks (as is any groundbreaking technology). This is definitely a high risk, high reward play on Tesla.
The elephant in the room is technological challenges and delays. Despite Elon Musk's ambitious vision, the progress towards fully autonomous vehicles has been slower (and rougher) than initially promised, contributing to investor skepticism (Elon has had a history of promising new technology far sooner than it occurs).
Moreover, FSD technology is only available for Tesla vehicles (unlike their charging network which was just opened up to most EVs). Tesla has to keep this technology to their vehicles due to the hardware requirements. What this means is that the limiting factor (until FSD becomes part of the purchasing decision) is the number of Tesla’s on the road. While Tesla is on track to deliver over 1.8 million vehicles this year, this is still a drop in the bucket compared to 70 million vehicles sold annually globally; their market is still relatively small.
Autonomous driving works best with more autonomous vehicles on the road. As such, Tesla’s FSD is not and will not be invincible; it's still at risk of crashing the vehicle. Previous accidents related to Tesla self-driving technology have made national news, and the NTSB has investigated previous accidents.
I think a lot of this has to do with the novelty of self-driving technology. It's much like how people fear riding on a plane vs. driving in a car even though riding in a car (no FSD) causes a much higher rate of accidents and injury. In essence, this psychological bias has to deal with control. Getting people to trust FSD technology will take time, but it will be part of the evolution. Already, there are studies that some autonomous technology is already better at driving cars than humans are.
In addition, while there is a risk that Tesla is not the first to reach FSD, I think in this case the downside would be largely mitigated. FSD is currently not a purchasing decision for automotive customers, since no automaker currently offers full self-driving to any customer (Tesla only offers FSD 12 to its employees right now). As such, the customers who purchase FSD from Tesla are people who already have a Tesla. Given they already have the car, I believe they will not make a switch to another vehicle from Mercedes or another automaker just because another automaker gets FSD earlier than Tesla (this was not a purchasing decision when they chose a Tesla EV initially, so why would it be one now)?
So, while there may be a short period where another automaker has FSD before Tesla (and this for the short run could impact future purchasing decisions for new Tesla customers), I believe this would be short lived. In my opinion, there is little evidence to show that Tesla, if it is not the first automaker to come out with FSD, won’t quickly follow and be one of the first. Their technology and datasets are extremely advanced, as I mentioned before. I believe they are a market leader even if they are not the market leader.
Valuation: Assessing Tesla's Market Potential and Growth Trajectory
While Tesla is an expensive stock when measured by normal valuation methods (FWD P/E Non-GAAP ratio of 75.04, compared to the sector median of 14.78), I don’t think investors have ever viewed Tesla as a value stock. Tesla has almost always been viewed as a growth stock, and this is key.
The Fair Value of FSD to Tesla Stock
Globally, the autonomous vehicle total addressable market (TAM) is projected to grow from USD $33.48 billion in 2023 to USD $2,796.33 billion by 2032. It's an exponential acceleration as self-driving technology takes over. I believe Tesla will lead.
Tesla's primary market, the U.S. autonomous car market (their SAM), was valued at $12.27 billion in 2023, with expectations to reach $31.17 billion by 2028. With Tesla's growing FSD Beta user base, I believe this suggests its strong potential to capture substantial market share. I believe they can capture (based on SOM) between $6.23 billion to $9.35 billion in annual revenue by 2028, implying a ~30-50% market share in autonomous technology software in the U.S.
Keep in mind they are likely miles (literally with their training data) ahead of the competition, so I expect them to have a might higher market share of autonomous driving software vs. normal auto sales. Assuming that this annual software licensing revenue has typical EBITDA margins of around 40%, this should imply about $3.2 billion in EBITDA. Using an EV/EBITDA multiple that is just ½ of their current EV/EBITDA multiple of 49.26 (or 24.63), we get a $76.75 billion lift to the company’s enterprise value. Given this software will likely not add any incremental debt to the firm’s balance sheet, this should roll down to their market cap. This would imply about 10% upside to Tesla stock just by Tesla enabling this software for users to buy.
Why I do not think this is priced in
While it’s widely known that Tesla has been working on FSD technology, Elon Musk’s timelines have been long and unpredictable. He previously predicted that FSD would be available in 2020 or even earlier. There is no guarantee that investors are looking at this now as a catalyst. He has previously said that their market cap is tied to solving autonomous driving, but I believe this is not top of mind for many investors.
To be more precise, I am sure that more investors this past week have been looking at the Cybertruck launch vs. the new FSD technology. That’s not to say the Cybertruck can't be immensely beneficial to Tesla (I think it will be), I just think this technology could have an even more massive impact and its not getting the attention I think it deserves, given the potential.
Bottom Line
Tesla stands at the forefront of the electric vehicle and autonomous driving revolution. The company's significant advancements in Full Self-Driving technology and AI are not only groundbreaking but pivotal in shaping the future of automated transportation given their unique approach with neural networks. However, Tesla still faces regulatory pressures, previous bad publicity related to autonomous driving accidents, and likely some resulting consumer hesitation. Nonetheless, Tesla's proven ability to overcome such challenges given their first principles approach presents the company as a strong investment opportunity. This article isn't just an evaluation of Tesla's current status but a forward-looking assessment of its potential to reshape the automotive landscape with their autonomous technology. In my opinion, Tesla stock is a buy.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
Why Tesla Will Be a High-Margin Stock Again
December 02, 2023 — 05:12 am EST
Written by Lee Samaha for The Motley Fool ->
Tesla's (NASDAQ: TSLA) declining profit margins have become a cause of concern for investors. Profit margins are arguably the most important financial metrics to follow because when they fall, it's often a signal that a company's competitive position is declining. They also have a massive impact on the long-term financial models that investors use to price growth stocks like Tesla. That said, there's reason to believe the electric vehicle (EV) maker's margins will recover.
Tesla's profit margin
The chart below shows the market's concern. Following three years of excellent gross profit margin and operating profit margin expansion, Tesla's margins are down sharply year to date. The trend appears even worse if you look at the sequential progression in quarterly operating profit margin, which has gone from 11.4% in the first quarter to 9.6% in the second quarter and just 7.6% in the third quarter.
It doesn't take much to imagine the negative impact falling margins can have on Tesla's long-term valuation, especially if you pencil in the third quarter's operating margin of 7.6%, and contrast that with the 16.8% margin for all of 2022.
Tesla profit margins.
Data source: Tesla presentations.
What happened in 2023 to Tesla's margins?
Tesla's falling margins reflect increasing competition, waning demand for electric vehicles, and the natural outcome of a flood of new EVs in production as other companies play catch-up with Tesla. According to Cox Automotive's latest Electric Vehicle Sales Report, Tesla's share of the EV market fell from 65% in 2022 to 50% in the third quarter of 2023.
Moreover, major automakers have cut back on their EV manufacturing plans in response to weaker-than-expected conditions. For example, Ford recently announced it had scaled back its plans for the new EV battery plant it's building in Michigan. In addition, General Motors and Honda have canceled their plans to jointly develop EVs that would sell for less than $30,000. Even Tesla is being more cautious on its expansion plans. "We want to just get a sense for the global economy like before we go full tilt on the Mexico factory," said CEO Elon Musk about a planned gigafactory.
It's easy to conclude that investors need to start lowering their margin expectations for Tesla. However, I think that would be a mistake.
The automotive market has changed
The case for why Tesla's margins will improve comes down to two factors. The first relates to how its end market has changed, and the second relates to how it has stayed the same.
First, it's impossible to separate trading conditions in 2023 from the overall interest rate environment. The reality is that the automotive market, whether for traditional internal combustion engine (ICE) vehicles or EVs, is highly sensitive to interest rates. Rising rates increase monthly payments and act as a brake on consumer spending. Faced with these conditions, automakers can shade toward trying to sustain prices and margins, or cut prices in a bid to grow unit sales.
Tesla chose the latter route. On the company's recentearnings call CFO Vaibhav Taneja said, "As interest costs in the U.S. have risen substantially, it has required us to adjust the price of our vehicles to keep the monthly cost in parity." Those price cuts have pressured its margins in 2023.
An electric car being charged.
Image source: Getty Images.
The automotive market hasn't changed
It's a strategy based on understanding the second factor: The automotive market's fundamentals haven't changed. In other words, the growth area of the market is in EVs, not ICE vehicles. Tesla wants to retain its leadership of that market, and that will require it to scale up production and generate cost improvements as it does so.
Indeed, Tesla shut down some factories in the third quarter to implement factory improvements.
Furthermore, Tesla is generating substantive improvements in cost per unit vehicle, and that's an ongoing trend. For example, between 2018 and 2022, the cost to manufacture the Model 3 (Tesla's second best-selling vehicle after the Model Y, and responsible for 17% of total industry EV sales in the U.S. in the third quarter) fell by 30%. Meanwhile, Tesla's overall average vehicle cost has dropped from slightly over $39,500 in Q4 2022 to $37,500 at present.
Why Tesla's margins will improve
The company's strategy makes sense. The interest rate cycle will eventually turn, and Tesla will be able to raise prices again when it does. In addition, despite the doom and gloom about growth trends, overall EV sales in the U.S. were up nearly 50% year over year in the third quarter.
It's still a high-growth market. Tesla's leadership and ability to invest and generate cost-per-vehicle improvements mean it's highly likely to grow its margins when the interest rate environment improves. But it will only be able to keep its leadership if it grows volumes and continues to steal marches on its rivals by improving productivity and developing affordable cars while its rivals are shelving plans to do the same.
It could easily hit 1100 in 24 imho
Could not agree more. Being involved in AI I have more than a feeling we'll see nice gains next year.
Cybertruck launch will be enormous for the stock. Then v 12
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TSLA Stock Bullish Diagonal Trade Targets a Price of $265 by December 15
November 29, 2023 — 07:03 am EST
Written by Gavin McMaster for Barchart ->
A bullish diagonal spread is an advanced option trade and generally not suitable for beginners, but it can have its place within an option portfolio.
It is a bullish strategy that benefits from time decay and is best placed when volatility is low, such as the current conditions.
The strategy involves buying a long term, in-the-money call and selling a monthly out-of-the-money call against it.
The trade is best placed when the trader has a bullish outlook and thinks the stock could get to the short call strike by the first expiration date.
A rise in implied volatility will benefit the trade as it has positive Vega overall.
The big risk with the trade is a sharp move lower early in the trade.
Let’s look at an example using Tesla (TSLA).
TSLA Stock Bullish Diagonal Example
Tesla put in a solid day yesterday closing up 4.51% and closing above the 50-day moving average.
TSLA stock is also showing impressive accumulation.
Let’s look at how we can use options to find a favorable risk to reward trade on the assumption that TSLA stock might rally to $265 in the next few weeks.
We will look at a bullish diagonal spread which allows traders to get long TSLA without risking too much capital.
A bullish diagonal spread is a trade that involves buying a long-term call option and selling a shorter-term, further out-of-the-money call option.
Structuring the trade at $265 gives the trade around 38 delta, which is roughly equivalent to being long 38 shares of the stock.
Selling the December $265-strike call option will generate around $340 in premium and buying the June 2024, $240-strike call will cost around $4,230.
That results in a net cost for the trade of $3,890 per spread, which is the most the trade can lose.
The estimated maximum profit is around $1,380, but that can vary depending on changes in implied volatility. The maximum profit would occur if TSLA closes right at $265 on December 15.
The trade benefits from time decay as the short-term option will decay at a faster rate than the longer-term option.
The ideal scenario for this TSLA trade is for the stock to stay above $245 for the next few weeks.
ByMaria MeranoPosted on November 29, 2023
Wedbush analyst Daniel Ives reiterated his Outperform rating and $310 price target for Tesla.
“This is another historical moment for Tesla and Musk with the Cybertruck unveil as the Street is excited to see the formal vehicle launch featuring the dual-motor trim and its top-level tri-motor AWD performance model along with updates regarding production and scaling of the Cybertruck platform, which is expected to be ~250k units per year by FY25,” commented Ives.
10 Microns is 0.001cm, i.e 1/1000
Credit Suisse AG Has $1.42 Billion Position in Tesla, Inc.
China: Nov (20-27)
16.7K insurance regs - highest weekly insured regs this qrt.
$TSLA
NLRB dismisses case alleging Tesla fired workers for union drive
Josh EidelsonBloomberg
Tesla Inc. has fought off allegations it illegally terminated dozens of New York employees in response to a unionization campaign, a setback for organizing efforts at the Elon Musk-led carmaker.
A regional director for the National Labor Relations Board has dismissed a case against Tesla filed by the Workers United union in February, Kayla Blado, a spokesperson for the agency, said by email Monday.
Doesn't hurt
NEWS: Tesla has won in Swedish court and the Swedish Transport Agency must let Tesla collect its license plates from the manufacturer Scandinavian Motor center.
5 Tech Stocks You Can Buy and Hold for the Next Decade
Motley Fool - 59 minutes ago
Technology is a fascinating field to invest in, as you put your money into the companies building the future. But disruption can happen fast, and the investing landscape is constantly changing.
That's why looking for battle-tested leaders in growing industries can be a great way to find the right stocks for your long-term portfolio. Sometimes, swinging for singles and doubles is better than striking out looking for a grand slam.
Here are five fabulous technology winners you can enjoy buying and holding. Their persistent growth and billions of dollars in cash flow give them the tools to invest, innovate, and reward shareholders for the next decade.
1. A tremendous software company for government applications
Palantir Technologies(NYSE: PLTR) made a splash on Wall Street, weaving its custom software into the inner workings of America's government and that of its allies. Palantir's Gotham, Foundry, and AIP platforms can create and deploy software and artificial intelligence (AI) to help organizations analyze data and make better real-time decisions. Overall, Palantir gets about half its revenue from the U.S. government and is steadily building its commercial customer base.
PLTR Revenue (TTM) Chart
PLTR Revenue (TTM) data by YCharts
The United Kingdom's National Healthcare Service recently awarded Palantir a seven-year contract to rework the country's healthcare system, a deal worth potentially more than $400 million. The company has already done extensive work with the U.S. Department of Defense and military branches, so this shows the continued ability to win over deep-pocketed government clients.
2. The chip company powering the AI revolution
Semiconductor leader Nvidia(NASDAQ: NVDA) has become the de facto chip company of this year's AI explosion. Nvidia specializes in computer chips for high-compute applications like gaming and cryptocurrency mining. But that has seamlessly translated to data centers and AI models that require high-powered chips.
NVDA Revenue (TTM) Chart
NVDA Revenue (TTM) data by YCharts
Industry experts believe that Nvidia could have as much as 80% of the current market for AI chips. The surge in AI investments accelerated Nvidia's growth and pushed the stock to all-time highs. This doesn't seem like a fluke. Artificial intelligence could add trillions of dollars in economic value over the next two decades, making Nvidia an obvious choice to invest in the future.
3. A social media powerhouse
Dominating the world's social media landscape, Meta Platforms(NASDAQ: META) is behind several of the world's most popular apps, including Facebook, Instagram, and WhatsApp. Nearly 4 billion people log on to Meta's family of apps each month. Meta makes billions of dollars from showing ads to its huge audience.
META Revenue (TTM) Chart
META Revenue (TTM) data by YCharts
Meta's user numbers keep growing, and the company is just beginning to monetize WhatsApp, setting the stage for future growth. It's also investing heavily in AI and metaverse technology, which could eventually add to the stock's upside. Founder and CEO Mark Zuckerberg has grown Meta into a technology titan and is still 39 years old.
4. The world's leading cloud company
Known most for e-commerce, Amazon(NASDAQ: AMZN) doubles as a global technology giant. Its cloud platform, Amazon Web Services (AWS), is the world's leading cloud business, with an estimated 32% hold on the world's cloud service market. Analysts believe the global cloud market could grow to $2.4 trillion by 2030, compounding at 20% annually from now. Amazon would likely grow its cloud business accordingly if it can maintain its leadership position.
AMZN Revenue (TTM) Chart
AMZN Revenue (TTM) data by YCharts
Amazon maintained an innovative attitude from its early years with CEO Jeff Bezos. The company is constantly looking at building new revenue streams. It recently launched its latest healthcare offering and has grown an advertising segment that's cleared $32 billion through nine months of 2023, up 23% year over year. Plus, its e-commerce business probably isn't going anywhere -- it dominates the U.S. with a 37% market share.
5. An EV company building humanoid robots
CEO Elon Musk is a sometimes polarizing figure, but nobody can deny his success in growing Tesla(NASDAQ: TSLA) into a $700 billion juggernaut. The growth opportunities for electric vehicles (EVs) alone are known (and enticing) for long-term investors, but I'm looking at Optimus, the humanoid robot in development.
5 Tech Stocks You Can Buy and Hold for the Next Decade
Motley Fool - 59 minutes ago
Technology is a fascinating field to invest in, as you put your money into the companies building the future. But disruption can happen fast, and the investing landscape is constantly changing.
That's why looking for battle-tested leaders in growing industries can be a great way to find the right stocks for your long-term portfolio. Sometimes, swinging for singles and doubles is better than striking out looking for a grand slam.
Here are five fabulous technology winners you can enjoy buying and holding. Their persistent growth and billions of dollars in cash flow give them the tools to invest, innovate, and reward shareholders for the next decade.
1. A tremendous software company for government applications
Palantir Technologies(NYSE: PLTR) made a splash on Wall Street, weaving its custom software into the inner workings of America's government and that of its allies. Palantir's Gotham, Foundry, and AIP platforms can create and deploy software and artificial intelligence (AI) to help organizations analyze data and make better real-time decisions. Overall, Palantir gets about half its revenue from the U.S. government and is steadily building its commercial customer base.
PLTR Revenue (TTM) Chart
PLTR Revenue (TTM) data by YCharts
The United Kingdom's National Healthcare Service recently awarded Palantir a seven-year contract to rework the country's healthcare system, a deal worth potentially more than $400 million. The company has already done extensive work with the U.S. Department of Defense and military branches, so this shows the continued ability to win over deep-pocketed government clients.
2. The chip company powering the AI revolution
Semiconductor leader Nvidia(NASDAQ: NVDA) has become the de facto chip company of this year's AI explosion. Nvidia specializes in computer chips for high-compute applications like gaming and cryptocurrency mining. But that has seamlessly translated to data centers and AI models that require high-powered chips.
NVDA Revenue (TTM) Chart
NVDA Revenue (TTM) data by YCharts
Industry experts believe that Nvidia could have as much as 80% of the current market for AI chips. The surge in AI investments accelerated Nvidia's growth and pushed the stock to all-time highs. This doesn't seem like a fluke. Artificial intelligence could add trillions of dollars in economic value over the next two decades, making Nvidia an obvious choice to invest in the future.
3. A social media powerhouse
Dominating the world's social media landscape, Meta Platforms(NASDAQ: META) is behind several of the world's most popular apps, including Facebook, Instagram, and WhatsApp. Nearly 4 billion people log on to Meta's family of apps each month. Meta makes billions of dollars from showing ads to its huge audience.
META Revenue (TTM) Chart
META Revenue (TTM) data by YCharts
Meta's user numbers keep growing, and the company is just beginning to monetize WhatsApp, setting the stage for future growth. It's also investing heavily in AI and metaverse technology, which could eventually add to the stock's upside. Founder and CEO Mark Zuckerberg has grown Meta into a technology titan and is still 39 years old.
4. The world's leading cloud company
Known most for e-commerce, Amazon(NASDAQ: AMZN) doubles as a global technology giant. Its cloud platform, Amazon Web Services (AWS), is the world's leading cloud business, with an estimated 32% hold on the world's cloud service market. Analysts believe the global cloud market could grow to $2.4 trillion by 2030, compounding at 20% annually from now. Amazon would likely grow its cloud business accordingly if it can maintain its leadership position.
AMZN Revenue (TTM) Chart
AMZN Revenue (TTM) data by YCharts
Amazon maintained an innovative attitude from its early years with CEO Jeff Bezos. The company is constantly looking at building new revenue streams. It recently launched its latest healthcare offering and has grown an advertising segment that's cleared $32 billion through nine months of 2023, up 23% year over year. Plus, its e-commerce business probably isn't going anywhere -- it dominates the U.S. with a 37% market share.
5. An EV company building humanoid robots
CEO Elon Musk is a sometimes polarizing figure, but nobody can deny his success in growing Tesla(NASDAQ: TSLA) into a $700 billion juggernaut. The growth opportunities for electric vehicles (EVs) alone are known (and enticing) for long-term investors, but I'm looking at Optimus, the humanoid robot in development.
Exciting News for Tesla Stock Investors
By Neil Rozenbaum – Nov 26, 2023
In this week's video, I cover need-to-know news items related to Tesla (TSLA 0.53%) during the week of Nov. 20. Today's video will focus on Tesla's sales numbers in China and Europe, a potential new Model 3 in 2024, positive news on the next version of Tesla's full self-driving system, a possible investment in India, and a look at Tesla stock from a technical analysis standpoint.
Pedro Domingos
@pmddomingos
Threats galore to Nvidia:
- Far more efficient learning algorithms
- Tech giants using their own chips
- Chip designs much better for deep learning than GPUs
- Deep learning replaced by algorithms unsuited to GPUs
- Non-silicon computing (e.g., optical)
- AI winter
Tesla remains king in US with 50% share of EV market, as big car makers get electric shy
NOVEMBER 24, 20236 COMMENTS2 MINUTE READJOSHUA S. HILL
FILE – A TESLA CHARGING STATION IS SEEN, SEPT. 28, 2023, IN WOODSTOCK, GA. FEDERAL PROSECUTORS HAVE EXPANDED INVESTIGATIONS INTO TESLA BEYOND THE ELECTRIC VEHICLE MAKER’S PARTIALLY AUTOMATED DRIVING SYSTEMS, AND THEY HAVE ISSUED SUBPOENAS FOR INFORMATION INSTEAD OF SIMPLY REQUESTING IT, THE COMPANY DISCLOSED MONDAY, OCT. 23. (AP PHOTO/MIKE STEWART, FILE)
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American electric vehicle (EV) giant Tesla remains the dominant player in its home market, accounting for 50 per cent of EV sales in the US during the first half of the year.
Data published by energy research giant BloombergNEF (BNEF) this week highlights Tesla’s continued dominance at home, outselling its rivals to the tune of “more than double the combined share of Detroit’s ‘Big Three’: Stellantis, General Motors, and Ford.”
The discrepancy between Tesla and its American rivals is further demonstrated by the fact that the company’s biggest rival, Chinese automaker BYD, doesn’t even sell passenger cars in the United States.
“There will clearly be a fast-growing US EV market, but the automakers who flourish may not be any of the legacy companies,” said Corey Cantor, BNEF’s lead EV analyst for the US market.
“The big-name EV companies of the future in the US may very well be Tesla, Rivian, Hyundai-Kia and Volvo.”
And despite the controversy Tesla CEO Elon Musk continually with his posts to X, formerly Twitter, the three US states leading the uptake of electric vehicles are all West Coast Democrat strongholds – California, Washington, and Oregon – highlighting the growing consumer attraction for electric vehicles.
In fact, in California, every fourth car sold is an electric vehicle, and the state also boasts the country’s highest share of EVs in its passenger-vehicle fleet.
Countrywide, EV sales in the US have already crossed a million units this year, already surpassing the 974,000 that were sold in all of 2022.
And Tesla still has another ace up its sleeve, with the first Cybertruck expected to be handed over on November 30 – though full-scale production of the boxy stainless-steel monstrosity is still months away.
BNEF also credits Tesla with managing to once again beat out its rivals with the timing of its Cybertruck – competitors which have been struggling with supply chain demands as well as the recent United Auto Workers (UAW) strike.
“It is interesting that the Cybertruck launch is coming just as GM has announced a delay in its second electric-truck plant in Michigan and Ford has reduced output of the F-150 Lightning plug-in, which saw a 46% fall in sales earlier this month,” said Cantor.
“Both Ford with its F-150 EV and GM with its Chevrolet Silverado EV had been given a lot of room to grow with Tesla staying out of the popular pickup space until now.”
The only American-based competitor Tesla may therefore have to worry about is Rivian, maker of the R1T ute and the R1S SUV.
Tesla: Poised To Sustain Dominance In The EV Market
Nov. 24, 2023 7:30 AM ETTesla, Inc. (TSLA)TM, TOYOF, VLKAF, VLKPF, VWAGY, VWAPY1 Comment
Dair Sansyzbayev profile picture
Dair Sansyzbayev
3.45K Followers
Summary
Tesla's recent quarterly earnings showed impressive revenue growth amid the current harsh environment but a notable decline in profitability metrics.
Despite the decline, Tesla remains more profitable than industry leaders, and my analysis suggests that profitability decline is temporary and not secular.
According to my valuation analysis, the stock is substantially undervalued.
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Wirestock/iStock Editorial via Getty Images
Investment thesis
My previous bullish thesis about Tesla, Inc. (NASDAQ:TSLA) was not as successful as the initial one, as the stock underperformed the broader market over the last quarter. The latest earnings release was full of disappointment as the company missed consensus estimates, and the management indicated concerns over the current harsh environment. But I consider these challenges temporary and not secular. Revenue is still growing, and production volumes are moving in line with the company's long-term goals. Contraction in margins is also not a secular trend but is mainly caused by discounts for Tesla's vehicles, which are implemented to address the softening demand as consumers are becoming more price-conscious. Even though profitability metrics declined, Tesla is still ahead of the competition from the financial efficiency perspective, and the company's balance sheet is a fortress. This makes the company well-positioned to weather the storm without sacrificing or postponing its innovation and growth initiatives. According to my valuation analysis, the stock is substantially undervalued. That said, I reiterate my "Strong Buy" rating for TSLA.
Recent developments
The latest quarterly earnings were released on October 17, when the company missed consensus estimates. Revenue grew by 9% YoY, which is impressive given the high interest rates for car loans and leases.
TSLA's latest quarterly earnings
Seeking Alpha
Despite revenue growth, profitability metrics narrowed significantly. The gross margin dropped YoY by more than seven percentage points, and the operating margin shrank from 17.2% to 7.55%. While many investors were disappointed in the profitability decline, I would like to underline positive moments as well. Tesla's levered free cash flow [FCF] was positive at $647 million, which allowed the company to continue improving its fortress balance sheet with low leverage and strong liquidity.
TSLA balance sheet
Seeking Alpha
Despite the decline in profitability metrics, Tesla is still more TTM profitable than the industry's largest players operating at a much bigger scale. Even Toyota Motor Corporation (TM) and Volkswagen AG (OTCPK:VWAGY), selling around 10 and 8 million cars per year, fall behind Tesla across the board of key profitability metrics. This means that Tesla's operations are much more efficient compared to the automotive industry's global leaders, which will be a great asset over the long term to help the company gain the overall automotive market share.
TSLA profitability vs competitors
Seeking Alpha
Let us also not forget that the main reason for the decrease in profitability was the massive selling price discounts across models, especially higher-end products like Model S and Model X. This sounds to me because, in the current relatively early stage of the fierce EV race, physical volumes of vehicles delivered should prevail, especially given the fact that Tesla's profitability is still unmatched.
Tesla massive car discounts
autoblog.com
I believe that at the current stage of the company's lifecycle, prioritizing deliveries of vehicle growth over profitability is crucial because of the nature of the EV industry. The electric car is not just a means of transportation nowadays, but a big computer on four wheels, and upgrades to make this "computer" smarter can be installed easily on air. That said, a "land and expand" business model, which works well for software companies, is also highly likely to be successful in the automotive industry in the long run. Tesla invests billions of dollars per year in R&D to develop its software, which will likely disrupt the automotive industry multiple times in the future. During the latest earnings call, Elon Musk emphasized Tesla's progress in autonomous driving technology, FSD, which has over 500 million miles of "experience" and continues to grow exponentially. This emphasized Tesla's unmatched positioning in real-world artificial intelligence [AI].
Tesla FSD's miles driven
Tesla's latest earnings presentation
Another reason for the profitability shrinkage was substantial operating costs related to the Cybertruck development and production. There is a lot of skepticism around this highly anticipated product, primarily due to numerous release delays. The pessimism has also been amplified by recent news that just ten Cybertrucks will be delivered during the upcoming Event. But to me, the most crucial point is that the Delivery Event is finally coming next week, on November 30. This means that the company is ready to compete in a massive U.S. light truck market, where around 11 million units are sold annually. The market has been dominated by stalwarts like the Ford F-150 and Chevrolet Silverado for decades, and Tesla obviously needs to introduce a truly extraordinary product to secure a lasting foothold. The company's strong track record of innovation and evidence of its ability to disrupt the automotive industry gives me a strong conviction that the upcoming event will be a pivotal moment. Rather than viewing the delays negatively, I interpret them as the management's commitment to packing the product with unparalleled features, which will be revealed during the upcoming event.
I also consider the company's Supercharger Network a formidable asset for the long term as more and more of the largest automakers like Ford, Mercedes-Benz, GM, Hyundai, and Volvo are adopting Tesla's standard. This recognition from leading legacy automakers says a lot about the strength of Tesla's energy infrastructure, which also contributes to Tesla's competitive advantage. As the global EV market is poised to continue strong growth, Supercharger's client base will also grow rapidly, which will unlock a new predictable revenue stream resilient to macroeconomic conditions.
TSLA's cost per vehicle sold
Tesla's latest earnings presentation
Finally, I greatly appreciate how Tesla balances between disrupting the automotive industry and rigorous financial discipline. During the Q3 earnings call, Vaibhav Taneja, the CFO, underlined that reducing costs is the management's top priority. The substantial and consistent decrease in the cost of goods sold per vehicle serves as a tangible validation of the CFO's commitment. That said, as the scale is expected to ramp up over the long term, there is a strong likelihood that Tesla will continue enjoying the economies of scale effect, which will build more value for shareholders.
Valuation update
The stock significantly outperforms the broader U.S. market in 2023 with a 117% year-to-date rally. Seeking Alpha Quant assigns TSLA the lowest possible "F" valuation grade because the company's valuation ratios are multiple times higher than the sector median across the board. However, considering the company's unmatched growth and profitability profile and its unique brand, I think comparing current valuation ratios to historical averages is more appropriate. From this perspective, the stock looks very attractively valued.
TSLA valuation grades
Seeking Alpha
I want to proceed with the discounted cash flow [DCF] simulation. As inflation in the U.S. is cooling down at a notable pace, the Fed's monetary policy pivot is likely to be approaching. Therefore, I use a lower 10% WACC for discounting, compared to my previous valuation analysis for TSLA with an 11% rate. I use consensus revenue estimates, projecting a 21% CAGR for the next decade. For the base year, I incorporate a shallow 0.5% FCF margin and expect a 150 basis points yearly expansion for the years beyond.
TSLA DCF valuation
Author's calculations
According to my DCF simulation, the business's fair value is slightly above $900 billion, which is 18% higher than the current market cap. That said, the stock is substantially undervalued, and my target price is $275.
Risks update
Tesla's stock price is highly volatile, and investors tend to overreact to any news about the company or its iconic CEO. We have seen last year how the stock price plummeted after Elon Musk started focusing more on Twitter after the social network acquisition. History suggests that the TSLA stock price reacted adversely to any of Elon Musk's controversial tweets or public speeches. Last December, the company's CEO sold TSLA shares worth billions of dollars to meet his personal financial liabilities, which also led to adverse reactions from investors. As the year's end approaches, Mr. Musk might start selling off the company's shares again, which can lead to another wave of investor panic.
Cybersecurity threats are elevated with the increasing integration of software and connectivity features in Tesla vehicles. A successful cyberattack could undermine vehicle safety, damage the brand's reputation, and result in financial losses.
Bottom line
To conclude, TSLA is still a "Strong Buy". The company continues to demonstrate unmatched profitability even after offering massive discounts across its automotive product portfolio. Tesla's strong financial position makes it firmly positioned to invest heavily in its innovation initiatives which will highly likely build substantial value for shareholders over the long-term. The valuation is attractive and the upside potential outweighs all the risks and uncertainties, in my opinion.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
Billionaire Israel Englander Pours Millions Into 2 Top EV Stocks — Tesla and Rivian
1.65%
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-2.9%
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It’s hardly an argument anymore – electric vehicles (EVs) are the future and are expected to be increasingly visible on the roads over the next several years.
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That said, recent times have seen this fledgling industry challenged; the tough economic backdrop has made for a difficult operating environment amid signs of waning demand. Not to mention, there’s plenty of competition, with legacy OEMs and new startups alike, vying for a piece of the cake. But that, in turn, opens up opportunities for investors, both for the casual one and the big fish.
Hardly any fish come bigger than Israel Englander. The Millennium Management founder and CEO oversees $58 billion in assets and has a net worth of 11.8 billion, and its looks like the billionaire has been busy loading up on some EV stocks recently – specifically on shares of the undisputed heavyweight of the sector and the company seen by many as its main challenger – Tesla () and Rivian (), respectively.
So, let’s see why Englander finds them both appealing right now. At the same time, we ran these tickers through the , to get a wider feel for general Street sentiment toward these names. Let’s see what the data and some analyst commentary show us.
Tesla
Say EVs, then naturally Tesla is the first name that comes to mind. This is the industry trailblazer, the company that changed the game and remains at the forefront of the EV revolution.
Say what you like about Elon Musk, EVs probably would not be the talk of the town without the Tesla CEO’s vision and drive. Musk forged ahead with his world domination plans even as the industry laughed off his seemingly ridiculous ambitions of turning the auto industry on its head. But no one’s laughing now, with Tesla valued above any other automaker, even though its sales are still nowhere near the industry’s true big hitters.
And while Tesla’s rise once seemed unstoppable, the company has had its fair share of issues recently, not least a dud of a Q3 report, which showed the company coming up short on both the top and bottom line. In the quarter, Tesla generated revenue of $23.35 billion, representing an 8.9% year-over-year uptick, yet missing the consensus estimate by $790 million. Auto gross margins (GM ex credits) also disappointed, hitting 16.3%, thereby falling shy of the Street’s 17.6% forecast. The end result was Adj. EPS of $0.66, a figure $0.07 below the analysts’ forecast.
Tesla also issued a warning of difficult times ahead, but Israel Englander evidently has faith in Tesla’s long-term prospects. He bought 407,695 shares in Q3, upping his stake considerably with his total holdings now standing at 523,087 shares. These currently command a market value of $122.66 million.
While Tesla is still seen primarily as an automaker, its ambitions are much bigger than that. The opportunities that lie elsewhere form a major part of RBC analyst Tom Narayan’s bullish thesis and could fuel the company’s next leg of growth.
“We think Tesla could be embarking on a strategic transition from being a car-maker to becoming a tier 1 supplier,” Narayan wrote. “First, we expect all North American automakers to eventually join its Supercharger network. Next, we could envision Tesla selling power electronics to other OEMs like Lucid with Aston Martin or Mercedes with Ferrari. Tesla is the biggest maker of these components in the world. We also could see Tesla selling batteries to other OEMs especially given its 200gwh expansion underway subsidized by the IRA. These efforts could be a profit center or could be sold competitively, so the company can sell FSD (full self-driving), which we think ultimately is the prize.”
These comments underpin Narayan’s Outperform (i.e., Buy) rating on TSLA shares, while his $301 price target makes room for 12-month returns of 28%. (To watch Narayan’s track record, )
However, not all on the Street are quite as confident on Tesla. Based on a mix of 14 Buys, 13 Holds and 6 Sells, the stock claims a Hold (i.e. neutral) consensus rating. The forecast calls for 12-month returns of a modest 5%, given the average price target stands at $247.29
Billionaire Ken Griffin Loads Up on 2 Chip Stocks — Nvidia and AMD
Technical Pattern Suggest Generous Price Target for Tesla
Russell Shor Written by Russell Shor 7 mins ago
Tesla (TSLA.us) is trading around $241. This is around 40% lower than its all-time high of $414 reached in November 2021. However, the Tesla (TSLA.us) weekly chart is showing interesting potential.
The stock is trading in a bullish flag pattern.
Theory suggests that "flags fly at half-mast."
This being the case, the measured move gives a generous upside target of $488, which is more than double Tesla's current price.
Measured moves are academic, in nature, and may or may not be hit.
Nevertheless, the measured move does connote an underlying bullish potential.
For Tesla to move towards the flag's target, the pattern, at least, needs to complete with price breaking out of the pattern at C
There are some technical positives that suggest a pattern breakout is imminent. Firstly, price is above its black 30-week exponential moving average, and the EMA has turned up (at A). Moreover, the RSI's black trendline has been broken to the upside at B. This suggests an expansion in the underlying bullish momentum.
Tesla has declined since the middle of September, but the on-balance volume indicator shows a positive divergence and is higher than its September value (green arrows). This indicates that Tesla (TSLA.us) is being accumulated by portfolio managers in anticipation. Accumulation has been particularly strong during this month of November.
Barron's cites a few reasons for a stronger Tesla:
Tesla is distributing a new version of Full Self Driving (version 12), its driver-assistance software, which has several improvements. This may be purchased for $12,000 or $199 per month. Tesla wants FSD to become so advanced that drivers will be able to stop paying attention to the road.
Electric vehicle growth has been positive, with European registrations growing by 30% annually in October. Tesla's market share here has expanded from 13% to 18%.
Although Tesla has embarked on significant price cuts throughout the year, transaction prices in the US increased by 5% in October from September. This is the first monthly increase this year which will likely be celebrated by investors.
A Toyota Camry new in India costs $48,000 so a $25,000 Tesla might do quite well
I wouldn't do that but to each his own
Tesla to gain access to 1 billion potential customers; Will TSLA stock skyrocket?
Tesla to gain access to 1 billion potential customers; Will TSLA stock skyrocket?
Andreja Stojanovic
Andreja Stojanovic
STOCKS
Nov 21, 2023
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While 2023 was marked by a slowdown in the EV market and a price war initiated by the major manufacturers to try and offset the lessened demand, Elon Musk’s Tesla (NASDAQ: TSLA) has proven its considerable resilience.
The company not only managed to continue increasing the number of vehicles produced and delivered, but its stock also experienced a 117.95% growth since January 1st. Now, the EV maker is likely to find a new avenue of expansion as it is close to reaching an agreement with the Indian government, per a Bloomberg report from Tuesday, November 21.
The deal could provide Tesla with access to a new market boasting well over 1 billion potential customers. It would also entail the building and opening of new factories within the country. Once Tesla vehicles start rolling off the assembly lines – rumored to be made in Gujarat, Maharashtra, or Tamil Nadu – they may sell for as little as $20,000 per car.
The agreement is likely to be officially announced in January at the Vibrant Gujarat Global Summit, and the new factories could open within two years, according to Bloomberg’s sources.
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Currently, Tesla is refraining from importing its vehicles directly to India due to the country’s large tariffs that go as high as 70% on vehicles that cost less than $40,000 and as high as 100% for those costing more than $40,000.
Previously, the Financial Times reported that Tesla is in talks with the Indian government on possible tariff cuts. Tesla’s expansion into the Asian country’s market could offer significant growth potential to the EV maker due to the immense number of potential customers.
However, it is important to note that the demand for electric cars is currently relatively low in India, with only about 1.3% of all passenger vehicles sold in the country last year being EVs. This could change, however, should the price of an Indian-built Tesla be as low as $20,000.
Such a price reduction is likely made possible by recent construction innovations achieved by Elon Musk’s firm that are expected to lead to the making of a €25,000 ($27,365) model in the Berlin factory already in 2024.
Tesla stock price analysis
The expansion into the Indian market has the potential to significantly bolster Tesla’s already impressive stock market performance this year. The company’s stock stood at $235.60 at the time of publication, meaning it rose 0.55% in the last 24 hours.
TSLA 1-day price chart. Source: Finbold
Additionally, Tesla’s performance throughout the year has been strong as it is not only up 117.95% year-to-date but is also 11.09% in the green in the 30 days and 24.74% up in the last 6 months.
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3 Reasons Tesla Stock Could Still Make You Richer
November 21, 2023 — 07:11 am EST
Written by Will Ebiefung for The Motley Fool ->
Over the last 10 years, Tesla (NASDAQ: TSLA) stock has returned a jaw-dropping 2,900% to its long-term shareholders, making many millionaires -- and turning its largest shareholder, CEO Elon Musk, into a multibillionaire. And while few people will ever be lucky enough to get in on the ground floor of such a life-changing investment opportunity, Tesla's bull run looks far from over. New business verticals like lithium refining and artificial intelligence (AI) could eventually help power another long-term surge of growth and value creation, even if its automotive operations mature.
A license to print money?
Vertical integration can sometimes lead to new revenue streams for a company. Amazon.com is a perfect example. In the early 2000s, the e-commerce giant started what would become Amazon Web Services primarily to handle its internal data storage and processing needs. Now, that business has grown to provide most of its operating income. Tesla might pull off a similar feat with its investments in lithium refining.
Lithium is a key component of electronic vehicle (EV) batteries because of the energy-storage density it allows. But while lithium is fairly abundant in nature, it is difficult to refine, leading to high prices and short supply. Tesla aims to partially address these challenges with a new facility in Robstown, Texas, that Musk says will produce enough refined lithium to make batteries for 1 million EVs by 2025.
Musk has described lithium refining as a "license to print money" -- referring to its profit margins, which he likened to those found in the software industry. But while it's premature to expect Tesla's lithium business to be as important to it as cloud computing services became for Amazon, the venture will almost certainly reduce the EV makers' manufacturing costs by freeing it from a reliance on expensive imported lithium -- a competitive advantage that its EV rivals will struggle to replicate. The company could also sell its excess production to other manufacturers for extra revenue.
A $500 billion opportunity in artificial intelligence
Lithium refining isn't the only exciting non-automotive growth driver Tesla has up its sleeve. Artificial intelligence (AI) could also create boatloads of shareholder value. The company is tackling that opportunity through its Full Self-Driving program, which is unique because it relies on computer vision and neural networks, a type of machine learning designed to emulate the human brain.
Kids playing with money
Image source: Getty Images
Tesla's self-driving software is already installed on at least 285,000 cars -- all of them generating vast amounts of user data that can be used to train and refine the system. The company aims to manage all this through a supercomputer called Dojo, which will feature in-house designed chips. And as with lithium refining, this project could help vertically integrate Tesla's operations while generating non-automotive revenue.
According to analysts at Morgan Stanley, Dojo could add a whopping $500 billion to Tesla's market cap by giving it an advantage in self-driving technology while also opening up other addressable markets like machine learning-related software and services. While these forecasts may prove somewhat grandiose, they do give investors an idea of what the new business could be capable of, even if it only achieves a fraction of its projected growth.
Don't forget about the core EV business
Tesla's investments in lithium refining and artificial intelligence are exciting because they open up the possibility for new revenue streams. But they could do even more for Tesla's EV business by reducing costs and enhancing its economic moat. Long-term Tesla investors have a lot to look forward to, and the stock remains a buy.
I can't find anyone collaborating story, probably fake news
The top three institutional holders of TSLA stocks are: VANGUARD GROUP INC with ownership of 1.3 billion shares, which is approximately 8.2579%. BLACKROCK INC., holding 1.04 billion shares of the stock with an approximate value of $201.66 billion in TSLA stocks shares; and BERKSHIRE HATHAWAY INC, currently with $177.59 billion in TSLA stock with ownership which is approximately 5.7994%. link: https://dbtnews.com/2023/11/20/wall-street-analyst-initiated-tesla-inc-tsla-what-else-is-wall-st-saying/
That was quick
Sorry, I thought you responded too the other one that I did write 😄
One thing is sure, we're getting a new 52 week high by eod tomorrow
The larger problem is they base it on history and investors buy the future
Wednesday
Wall Street Analyst Says Tesla Full Self-Driving Could Be Huge. Time to Buy the Stock?
Motley Fool - 50 minutes ago
Tesla (NASDAQ: TSLA) stock is worth roughly $750 billion today, but with sales growth slowing and margins compressing as it lowers prices, it's become increasingly clear that much of the company's valuation is related to its AI and self-driving potential, rather than its existing electric vehicle (EV) business.
Ark Invest's Cathie Wood, arguably Tesla's biggest bull, sees robotaxis making up a $9 trillion market by 2030 with Tesla as the leader. Her investment firm believes that Tesla's leadership role will help drive its stock price to $2,000 per share by 2027, representing a gain of nearly 1,000%.
Now, Wood has some company in her bullish long-term forecasts for the EV leader. Goldman Sachs analyst Mark Delaney recently issued a note on Tesla's artificial intelligence (AI) and full self-driving (FSD) opportunities, estimating FSD is already generating $1 billion to $3 billion in annual revenue, and believes the software opportunity for the company, mostly in FSD, would be worth $10 billion to $75 billion in revenue by 2030.
Tesla now charges EV customers $12,000 for FSD or offers it on a subscription basis from $99/month to $199/month, depending on the vehicle's current autopilot system. However, FSD is still in beta, and the company says that the driver should be alert with their hands on the wheel at all times while FSD is being used.
In his note, Delaney said, "We believe that Tesla's software-related revenue could be tens of billions of dollars per year by 2030 (mostly from FSD). These scenarios suggest that in an upside case, FSD could account for tens of billions of revenue per year."
The Tesla Cybertruck set up for camping.
A Cybertruck set up for camping. Image source: Tesla.
The 2030 Tesla forecast
Delaney also estimated that Tesla's services and other revenue, like the Optimus humanoid robot and supercharger network, could bring in $75 billion to $100 billion in revenue, see $30 billion to $50 billion in energy generation and storage revenue, and $200 billion to $400 billion in vehicle revenue.
In total, Delaney estimates the company will bring in $315 billion to $625 billion in revenue by 2030, with an operating margin between 13% and 22% and earnings per share between $9.84 to $31.91. The base case calls for revenue of $465 billion, operating margin of 16.5%, and earnings per share of $18.08.
That may sound like a bullish forecast, as those are big numbers implying annual operating income near $80 billion, but surprisingly, Delaney isn't particularly bullish on the stock, as his team rates Tesla a hold with a price target of $235, implying flat share price growth over the next year.
The base case above and the price target assume Tesla will reach a terminal value of $800 billion to $1 trillion in revenue by 2040, with a mid-teens operating margin. Forecasting the company's 17 years from now is mostly academic.
Valuation is a problem for Tesla
The biggest challenge for Tesla stock right now is that so much of the company's potential in AI and full self-driving is already baked into the stock price. At this point, Tesla has to succeed in FSD in order just to keep the stock from falling, as the $750 billion market cap isn't sustainable based on the current trajectory of its EV business, with sales growth slowing to single digits and profits falling.
Yes, the company will increase production, and Cybertruck deliveries are expected to begin soon, but overall demand for EVs appears to be waning, and pricing pressure should continue. Delaney's EPS forecast shows how much optimism is priced into the stock now.
Based on Delaney's base-case EPS forecast of $18.08, Tesla is currently trading at a price-to-earnings ratio of 13 based on 2030 earnings, when the EV market is likely to be much more mature than it is now. That valuation is still higher than what most auto stocks trade at today based on current earnings.
Tesla could end up with another breakthrough in full self-driving and robotaxis, but considering the challenges in the EV sector right now, including slowing demand and increasing competition, a lot has to go right for the stock to be a winner from here.
I wrote it. That line was meant to mean people tired of the attacks of the man and his quest for free speech will support him by buying the stock
The Road to $1000: Tesla's Multifaceted Rise Fueled by Cars, Energy, AI, and a Devoted Community
Introduction:
In the ever-evolving landscape of the stock market, few companies have captured the imagination of investors and enthusiasts alike as Tesla has. The electric vehicle (EV) pioneer led by Elon Musk has become a symbol of innovation, sustainability, and resilience. Despite facing media scrutiny and market volatility, there are compelling reasons to believe that Tesla's stock price could reach $1000 within the next 12 months, driven by factors ranging from their groundbreaking cars and energy solutions to their advancements in artificial intelligence (AI) and a steadfast community support in the face of mainstream media challenges.
Dominance in the Electric Vehicle Market:
Tesla's electric vehicles have revolutionized the automotive industry. With a strong focus on design, performance, and sustainability, Tesla has captured a significant share of the growing EV market. The company's commitment to innovation, exemplified by the Model S, Model 3, Model X, and Model Y, positions Tesla as a leader in the transition from traditional combustion engines to electric power.
Energy Solutions and Sustainability:
Beyond electric vehicles, Tesla has been at the forefront of renewable energy solutions. The acquisition of SolarCity and the development of solar panels and energy storage solutions showcase Tesla's commitment to a sustainable energy future. As the world shifts towards cleaner and greener alternatives, Tesla's comprehensive approach to energy, from generation to storage, gives it a strategic advantage in a rapidly changing market.
Artificial Intelligence Integration:
Tesla's commitment to AI is not confined to self-driving capabilities; it extends to the overall user experience. The Full Self-Driving (FSD) technology, despite facing regulatory hurdles, remains a cutting-edge feature that positions Tesla as a pioneer in AI integration within the automotive industry. As AI technology continues to mature, Tesla is well-positioned to leverage its expertise for further advancements, providing a competitive edge.
Elon Musk's Vision and Media Backlash:
Elon Musk, the enigmatic CEO of Tesla, has been the driving force behind the company's success. Despite facing criticism from mainstream media, Musk's vision and leadership have resonated with a growing community of supporters. Tesla's stock has shown resilience in the face of media challenges, with a dedicated user base that sees beyond the noise, focusing on the long-term potential of the company.
Community Support and Grassroots Movement:
Tesla has cultivated a passionate community of supporters, often referred to as "Tesla fans" or "Elon stans." This grassroots movement has not only contributed to Tesla's brand loyalty but has also served as a counterforce against negative media narratives. As more users advocate for Tesla, share positive experiences, and engage in social media campaigns, the company benefits from organic, word-of-mouth marketing that transcends traditional advertising.
Conclusion:
Tesla's journey to a $1000 stock price within the next 12 months appears to be grounded in the company's multifaceted approach to innovation, sustainability, and community support. The electric vehicle market's continued expansion, Tesla's leadership in energy solutions and AI, coupled with the unwavering support of a devoted community, collectively contribute to a compelling case for Tesla's continued success in the stock market. As the world embraces a more sustainable and technology-driven future, Tesla stands at the forefront, ready to drive change and redefine the automotive and energy industries.