Daily General Discussion and Advice Thread - February 03, 2022 Investing |
- Daily General Discussion and Advice Thread - February 03, 2022
- Meta shares plunge 20% as Facebook owner sees slowing growth
- Inverse Jim Cramer ETF may be coming soon
- Starbucks ($SBUX) union push spreads to 54 stores in 19 states
- PayPal walks back its 2021 goal of 750 million accounts by 2025, reports 426 million users
- If a Stock is plummeting and you want to sell? Who is buying it
- Interest Rates and 10-2 Year Spread
- Ford is partnering with Sunrun to allow the F-150 Lightning to power your home
- Has the Fed ‘put’ been put to bed?
- Fidelity has just released a paper about Bitcoin and why it should be be considered separately from other digital assets.
- Find newest direct listings / DPOs
- How much after Facebook's terrible earnings report did the NASDAQ crash?
- Series I Savings Bonds for 501(c)3 organizations?
- Starbucks earnings call - raising prices
- People say you cant time the market and they're right but you can recognize the signs and prepare
- What happens to redeemed shorted stock?
- Alphabet Caps Blockbuster Year With Sales Gains
- Where can I get data on the proportion of a publicly traded company’s suppliers by nationality?
- Russia introduces export ban on ammonium nitrate for two months — government
- Daily General Discussion and Advice Thread - February 02, 2022
- Block, Inc. (formerly Square) Completes Acquisition of Afterpay
- Big Business vs. Small Business -- GOOGL and PYPL Earnings
- Best Robo-Adviser for beginners
- Does anyone know how SARSEPs work?
- An Evaluation of TSLA; What Value can it Realistically Reach this Decade?
- $XOM looks to be a great play from a rotation perspective
| Daily General Discussion and Advice Thread - February 03, 2022 Posted: 03 Feb 2022 02:01 AM PST Have a general question? Want to offer some commentary on markets? Maybe you would just like to throw out a neat fact that doesn't warrant a self post? Feel free to post here! If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions, you should include relevant information, such as the following:
Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq And our side bar also has useful resources. Be aware that these answers are just opinions of Redditors and should be used as a starting point for your research. You should strongly consider seeing a registered financial rep before making any financial decisions! [link] [comments] |
| Meta shares plunge 20% as Facebook owner sees slowing growth Posted: 02 Feb 2022 02:19 PM PST Article link: https://www.reuters.com/technology/facebook-owner-meta-forecasts-q1-revenue-below-estimates-2022-02-02/ Feb 2 (Reuters) - Facebook owner Meta Platforms Inc (FB.O) shares plunged 20% late on Wednesday as the social media company missed on Wall Street earnings estimates and posted a weaker-than-expected forecast. Meta said it faced hits from Apple Inc's (AAPL.O) privacy changes to its operating system, which have made it harder for brands to target and measure their ads on Facebook and Instagram, and from macroeconomic issues like supply-chain disruptions. read more The after-hours slump in Meta shares vaporized $200 billion worth of its market value, with another $15 billion in value lost from peers Twitter Inc (TWTR.N), Snap Inc (SNAP.N) and Pinterest Inc (PINS.N). Shares of Alphabet Inc (GOOGL.O), which posted record quarterly sales that topped expectations on Tuesday, were down 1.3%. read more Meta, which has the second-largest digital ad platform in the world after Google, had previously warned its advertising business faced "significant uncertainty" in the fourth quarter. read more The company forecast first-quarter revenue in the range of $27 billion to $29 billion. Analysts were expecting $30.15 billion, according to IBES data from Refinitiv. Apple's changes to its operating software give users the preference to allow tracking of their activity online, making it harder for advertisers who rely on data to develop new products and know their market. The company's total revenue, the bulk of which comes from ad sales, rose to $33.67 billion in the fourth quarter from $28.07 billion a year earlier, beating analysts' estimates of $33.40 billion, according to IBES data from Refinitiv. Net loss from Meta's Reality Labs, the company's augmented and virtual reality business, was $10.2 billion for the full year 2021, compared with a $6.6 billion loss the previous year. It was the first time the company had broken out this segment in its results. CEO Mark Zuckerberg had previously warned that the company's investment in this area would reduce 2021 operating profit by $10 billion and would not be profitable "any time in the near future." The company said on Wednesday it would this year change its stock ticker to "META," the latest step in its rebrand to focus on the metaverse, a futuristic idea of virtual environments where users can work, socialize and play. The tech giant, which changed its name in October to reflect its metaverse aims, is betting the metaverse will be the successor to the mobile internet. It did not comment on the price of a deal with Roundhill Investments, which said in January it would stop using the symbol for its Roundhill Ball Metaverse ETF. Meta's rebrand comes at a time of increasing scrutiny from lawmakers and regulators over allegations of anticompetitive conduct and over the impacts of how it handles harmful or misleading content across its Facebook and Instagram platforms. read more "If you're putting billions up front and not really expecting return for years, shareholders are going to be hesitant," ABI Research analyst Eric Abbruzzese said, referring to the metaverse costs. Disclosure: I have long positions for $FB. [link] [comments] |
| Inverse Jim Cramer ETF may be coming soon Posted: 02 Feb 2022 12:51 PM PST From Eric Balchunas of Bloomberg:
I would definitely be an investor in this just for the trolls. What is everyone's thought on a potential ETF? Would you add it to your portfolio? [link] [comments] |
| Starbucks ($SBUX) union push spreads to 54 stores in 19 states Posted: 02 Feb 2022 03:18 PM PST Bearish sign? https://www.npr.org/2022/01/31/1076978207/starbucks-union-push-spreads-to-54-stores-in-19-states Starbucks is facing a fast-growing union campaign just weeks after the first U.S. corporate store unionized in Buffalo, N.Y. Employees at 54 stores in 19 states are pursuing union elections, according to organizers. Fifteen of those stores joined the union drive on Monday, petitioning the federal labor officials to set a vote. The filing coincides with the start of contract negotiations between Starbucks and unionized workers in Buffalo. Last month, Starbucks workers at three New York stores held union elections. A majority voted in favor at two of the three locations, unionizing 64 workers. Now, some 30 Starbucks workers in Mesa, Ariz., are wrapping up their own union election by mail. Employees at three more Buffalo-area locations also begin voting this week. Starbucks workers form their 1st union in the U.S. in a big win for labor. Altogether, the union-election push affects only a fraction of almost 9,000 U.S. stores run by Starbucks. But the quick and high-profile first union victory in Buffalo became a watershed moment for the company, especially as restaurant workers are among the country's least unionized. [link] [comments] |
| PayPal walks back its 2021 goal of 750 million accounts by 2025, reports 426 million users Posted: 02 Feb 2022 03:20 PM PST https://www.cnbc.com/2022/02/01/paypal-pypl-q4-2021-earnings.html PayPal said it expects to add 15 million to 20 million new accounts this year and walked back its goal of 750 million total accounts set by the company last year. "Moving forward, we will continue to grow our users, but our focus will be on sustainable growth and driving engagement," CFO Rainey said. "To be very clear, this is a choice on our part. We could increase our spin and accelerate our net new active trajectory. However, we believe there are better ways to achieve our financial results." [link] [comments] |
| If a Stock is plummeting and you want to sell? Who is buying it Posted: 02 Feb 2022 05:23 PM PST If a Stock is plummeting and you want to sell? Who is buying it, hypothetically if a stock is doing very poor and the future of the company looks poor who would buy your stock? Are you just unable to sell [link] [comments] |
| Interest Rates and 10-2 Year Spread Posted: 02 Feb 2022 09:50 AM PST PGIM came out with this analysis last week which is very interesting. They are basically saying they dont expect the long end of the yield curve to go much higher than where it is. Looking at the spread between 10 and 2 year bonds, this can potentially be bad for financials and pretty good for growth stocks. However, historically, when the spread narrows this much, a major slowdown could be close. [link] [comments] |
| Ford is partnering with Sunrun to allow the F-150 Lightning to power your home Posted: 02 Feb 2022 11:01 AM PST Here's a link to the media release: https://media.ford.com/content/fordmedia/fna/us/en/news/2022/02/02/f-150-lightning-power-play.html Hopeful to see this kind of innovation going forward. Interesting that they released this today, before earnings come out tomorrow. Take that for what it's worth, but Ford is making huge waves in the EV space. Demand is up, batteries will be created by Ford in their new plants in Kentucky and Tennessee, and they will be starting a recycling plant for lithium ion batteries as well. I've seen a lot of people bash Ford in the past on here, but haven't heard much talk about their new direction since the new CEO (Jim Farley) started in October. [link] [comments] |
| Has the Fed ‘put’ been put to bed? Posted: 02 Feb 2022 07:56 PM PST The writer is chief investment strategist at Charles Schwab via ft.com (non-paywall link here):
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| Posted: 01 Feb 2022 12:52 PM PST Why Investors Need to Consider Bitcoin Separately From Other Digital Assets https://www.fidelitydigitalassets.com/articles/bitcoin-first Once investors have decided to invest in digital assets, the next question becomes, "Which one?" Of course, bitcoin is the most recognized, first-ever digital asset, but there are hundreds and even thousands of other digital assets in the ecosystem. One of the first concerns investors have regarding bitcoin is as the first digital asset it may be vulnerable to innovative destruction from competitors (such as the story of MySpace and Facebook). Another common consideration surrounding bitcoin is whether it offers the same potential reward or upside as some of the newer and smaller digital assets that have emerged. In this paper we propose:
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| Find newest direct listings / DPOs Posted: 02 Feb 2022 09:59 AM PST Hello everyone I am interested at investing into new, direct listed, companies. Unfortunately, I find it quite hard to find a service where I can see the newest or maybe also upcoming DPOs. The only way I became aware of new direct listings was through the media and I have the fear that I could miss a direct listing. I am also quite sure that I am missing some DPOs. Services like this can easily be found for IPOs but not for DPOs. Does a feature like that exists? Am I missing something? I would be very thankful for some advice [link] [comments] |
| How much after Facebook's terrible earnings report did the NASDAQ crash? Posted: 03 Feb 2022 01:45 AM PST The NASDAQ was up on Wednesday, February 2nd, 2022, but as soon as they came out with Facebook earnings at 4:00 PM at market close, it took a huge dump in after-hour trading. Somebody who invests in an inverse ETF, like SQQQ must be making some money from this. How soon does a drop like this happen after earnings announcements? With a minute, or maybe within a split second? There must have been a number of people in Wall Street that heard gossip about the terrible earnings of Facebook (META) and made money on it by buying inverse ETF's in the NASDAQ or just shorting the META stock itself. How does a regular investor get into the action of huge responses of either really bad or good earnings reports? https://www.nasdaq.com/articles/time-to-short-nasdaq-with-these-inverse-etfs-2021-09-29 https://www.cnn.com/2022/02/02/tech/facebook-earnings-q4-2021/index.html [link] [comments] |
| Series I Savings Bonds for 501(c)3 organizations? Posted: 02 Feb 2022 07:38 PM PST TLDR: Is it possible for a 501(c)3 to purchase Series I bonds and what organization type should we use. Treasury Direct Account Creation Options I'm on the board of a non-profit benefiting our local public school. We are fortunate to have build a small reserve fund and would like to start earning interest on it to help offset inflation (short term) and some of the annual amount we need to raise (long term) (currently earning 0 at a bank savings account). We learned about Series I bonds from Reddit. I read on their website that entities can also hold these bonds with a TIN (which we have). However, when we went to sign up, the options under "Business or Organization" didn't seem like a good fit. We were wondering if anyone here had experience setting up a Treasury Direct account for a 501(c)3 organization and could suggest what the right option would be to signup under (or how to figure out what the right option is). Separately, we'd welcome any other no-risk options for investing our reserve! Thank you! [link] [comments] |
| Starbucks earnings call - raising prices Posted: 01 Feb 2022 09:56 PM PST I listened to the sbux earnings call and they said they're raising prices again for a third time in several months. They raised it in October of 2021, January of 2022 and now they're planning additional price increases across the board for 2022. I get that they're considered a premium coffee brand but as shareholder I'm a little nervous that at some point demand will drop off at a certain price point for a cup of coffee. Did anyone else think the same thing or am I over thinking this? I do think there's a lot of competition in the coffee space at the moment and it makes me nervous that raising prices several times in a small period of time like that could drive people to another place. I was thinking about buying stock but now I'm thinking about holding off. Anyone that's wiser then me have any thoughts on this or are my concerns warranted? [link] [comments] |
| People say you cant time the market and they're right but you can recognize the signs and prepare Posted: 02 Feb 2022 11:33 PM PST This downtrend may take a while before we see huge losses on any exchange BUT the markets will redistribute until it starts to collapse and it will likely see high volatility up and down until its blood red https://ibb.co/XsZfnwB Im not saying the crash is imminent as no one truly knows when institutional selloffs will fully occur but Im sure many know the markets are being propped up and many individuals will realize "buying the dip" does not pertain in the coming months because it will continue dipping. We've had a long bull run and a "serious" correction is bound. In fact correction will do no justice this will likely be one of the largest bubbles bursting in the coming year and long term investments may gain from a reduced position. Many are trying to sluff it off as "the boy who cried wolf" since it has been predicted for years but the signs are alot greater than they once were a year or 2 ago. This will likely lead to a 50% reduction for the S&P from its all time highs but take it as you may. Just dont be a 'blind bull' is all im saying. In otherwords blue chip tech isnt even safe. Reverse repos is at an all time high, the feds are printing money like crazy to keep everything propped up. They can't do this forever and the raising of interest rates may be the catalyst that sets off a bigger play in motion. Im not saying Im a guru but if you dont have your finger on the pulse theres no excuse for complaining why your down and out in a bear market. Stay focused because some big name tech stocks just took a heavy dump this week and even if people buy the dip thinking it will rebound, it will likely be the sign of whats to come in a downtrend [link] [comments] |
| What happens to redeemed shorted stock? Posted: 02 Feb 2022 10:36 PM PST Recently with many deSPACs, redemptions and shorting interests are high. In the likely hood that a SPAC has high redemptions, I've started seeing many complain about shorted shares that they have, automatically making them take a loss on. For example, people think MCMJ (I'm one of those people) that it'll squeeze. So I bought shares. In researching MCMJ and determine that short interest was high, I realized it would be a good play. (Still waiting for the ticker change after the vote, but it got approved to merge yesterday). Anywho, I saw postings of people complaining that they shorted MCMJ and can't close their short positions be their shares have been redeemed. Is that a thing? One complained that they actually closed the short but was still assigned a long for the price they closed it, and had end up selling it and taking the difference between $10 (the NAV) and the closed position, causing a loss. So I'm curious, I'll probably never short a stock, too risky, but what happens in this one off case. Disclosure I'm long MCMJ, if redemptions are high, it'll squeeze for sure like every other despac as of late [link] [comments] |
| Alphabet Caps Blockbuster Year With Sales Gains Posted: 01 Feb 2022 01:51 PM PST Alphabet (GOOGL) reported Q4 earnings of $30.69 per share late Tuesday, up from $22.30 per share a year earlier. Analysts surveyed by Capital IQ estimated $27.28 per share. Revenue for the quarter was $75.3 billion, up 32% from the year-earlier period. Analysts surveyed by Capital IQ estimated $71.8 billion. The parent company of internet search giant Google announced a 20-for-1 stock split for its class A, B, and C shares, effective July 15 for shareholders of record July 1. The split is subject to shareholder approval of increases in the authorized number of shares. https://www.wsj.com/articles/google-alphabet-googl-q4-earnings-report-2021-11643655993?mod=mhp [link] [comments] |
| Where can I get data on the proportion of a publicly traded company’s suppliers by nationality? Posted: 02 Feb 2022 09:32 AM PST I'm working on a project that involves measuring the amount publicly traded companies spend on each suppliers (or percentage of the total supplier spend). I'm a bit flexible on the specific data about the suppliers but I'd like to get the nation of origin of the suppliers. My overall goal is to do a breakdown of each companies suppliers by country of origin. I have access to SP CAPITAL IQ And a few other databases via my school. Would those work? Any thoughts on where I could find this? Thanks in advance. [link] [comments] |
| Russia introduces export ban on ammonium nitrate for two months — government Posted: 01 Feb 2022 05:16 PM PST
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| Daily General Discussion and Advice Thread - February 02, 2022 Posted: 02 Feb 2022 02:01 AM PST Have a general question? Want to offer some commentary on markets? Maybe you would just like to throw out a neat fact that doesn't warrant a self post? Feel free to post here! If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions, you should include relevant information, such as the following:
Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq And our side bar also has useful resources. Be aware that these answers are just opinions of Redditors and should be used as a starting point for your research. You should strongly consider seeing a registered financial rep before making any financial decisions! [link] [comments] |
| Block, Inc. (formerly Square) Completes Acquisition of Afterpay Posted: 01 Feb 2022 02:07 PM PST Block, Inc. (NYSE: SQ) and Afterpay Limited today announced the successful completion of the Scheme of Arrangement under which Block has acquired all of the issued shares in Afterpay. This transaction aims to enable Block to better deliver compelling financial products and services that expand access to more consumers and help drive incremental revenue for sellers of all sizes. "We're excited to welcome the Afterpay team to Block and are eager to get to work," said Jack Dorsey, Block co-founder and CEO. "Together, we'll deliver even better products and services for sellers and consumers while staying true to our shared purpose of making the financial system more fair and accessible to everyone." The acquisition furthers Block's strategic priorities for its existing Square and Cash App ecosystems. Together, Square and Afterpay intend to enable sellers of all sizes to offer 'buy now, pay later' (BNPL) at checkout, give Afterpay consumers the ability to manage their installment payments directly in Cash App, and give Cash App customers the ability to discover sellers and BNPL offers directly within the app. Today, Square also launched its first integration with Afterpay, providing Afterpay's BNPL functionality to sellers in the United States and Australia that use Square Online for e-commerce. This new omnichannel commerce tool can help sellers attract new shoppers and drive incremental revenue from day one. For more information on this announcement, read the press release here. Afterpay co-founders and co-CEOs Nick Molnar and Anthony Eisen have joined Block and will help lead Afterpay's respective seller and consumer businesses, as part of Block's Square and Cash App ecosystems. Block will release financial results for the fourth quarter and full year 2021 on February 24, 2022, after the market closes. [link] [comments] |
| Big Business vs. Small Business -- GOOGL and PYPL Earnings Posted: 01 Feb 2022 02:23 PM PST It's absolutely astonishing looking at Google's earnings the last few quarters. Their stock is up 8% after hours. Google has nearly doubled revenues since 2018; $258B in 2021 vs. $137B in 2018. They've somehow fended off antitrust regulation in the process. PayPal's stock is down 15% after earnings, and that is from a low level b/c this stock hasn't done well for months now. Their CEO says its b/c of weakness in small business, as well as the eBay thing but we've known about that for a while now. Since the pandemic started, people began theorizing big business would thrive and small business would struggle. It's exactly what we're seeing through the lens of massive companies like Google and PayPal. [link] [comments] |
| Best Robo-Adviser for beginners Posted: 02 Feb 2022 09:32 AM PST I just come to learn that Robo-Adviser exist. You select an investing strategy and the robo adviser provides splits your investment in Equity/ETFs, Real Estate, Bonds etc. Any experience with that? Recommendation for the US? I have very little experience with investing but was always a fan of ETFs. I imagine with a robo adviser you could have at least market performance and at the same time have low costs. At the moment I just don't know how to identify the right one for me. Investment goal would be long-term for retirement, kids education in 15 years, pay house loan etc. [link] [comments] |
| Does anyone know how SARSEPs work? Posted: 01 Feb 2022 07:50 PM PST Hi everyone I just became eligible for a SARSEP retirement account at my company. No one offers these anymore. I was grandfathered in through my company. The account is at Wells Fargo. I got the first monthly contribution in my account. I couldn't see a way to place orders online. So I called our company's advisor. He said that we have to place orders through him and that Wells Fargo charges a $7 fee each time. He said there is no way for us to invest our funds without him or another advisor. There is no way to do it online and no way to set up an automatic purchase. $7 every month seems cost prohibitive. Any gains in asset value would get eaten up by this fee. It sounds like the only way around is to place one order at the end of the year. Meanwhile the cash is just sitting there getting eaten by inflation and missing out on any potential gains. This seems like a really shitty deal. It seems like it would be better if I just put my contributions in my regular ROTH IRA. Does anyone know anything about these or have any advice? Thank you [link] [comments] |
| An Evaluation of TSLA; What Value can it Realistically Reach this Decade? Posted: 01 Feb 2022 03:41 PM PST There's so much to cram into this DD/model that I'm going to try to keep each point brief. Table of contents: 1) First, what are the risks; Quick Notes 2) Master equation 1) I'll start with the risks to my valuation model: In my opinion, the biggest risk to Tesla is failing to execute on the growth plan. The biggest hindrance I can see for Tesla's valuation will be failing to achieve their 50% YoY growth targets. If there's an actual economic recession where consumers have to drastically cut back spending, then Tesla would definitely suffer. But this risk is obvious, and probably applies to 99% of growth stocks. Side note: Tesla currently makes such good margin on their EVs, that they have the flexibility of dropping prices to meet demand; however, this would greatly cut into earnings and reinvesting into growth. And of course there's the silly, but still very valid, risk to the valuation of companies that the market takes an irrational dive of 20%+, and investors lose confidence in stocks for the foreseeable future. However, Tesla's growth target might still be attainable in this economic environment. I do *NOT* see new EVs from other companies entering the market as a risk to Tesla. There are 80M auto sales globally every year. My model calculates that Tesla obtains 12.1M of the sales (in 2027). This leaves plenty of room for legacy automakers and new EV manufacturers to sell millions of their own EVs. Quick Note: This model is based *only* on EV sales. This does not include solar and energy storage, AI, robotics, or FSD. I see 2027 as the peak year of profitability for Tesla EV sales (we'll see why in my model in section 2ai) Another Note: My model below has a base case (based on 50% YoY growth as Tesla aims for), a bear case (based on 40% YoY growth), and a bull case (based on 60% YoY growth) i.e. in the event that Tesla fails to execute on 50% YoY growth, achieving only 40%, then the bear case shows how the numbers could be affected 2) I'd like to start with a simple equation, and expand on the details of the equation. This is for year 2027: $12,000 gaap earnings per EV * 12,100,000 EVs delivered * 50 P/E = $7.2T market cap or approximately $7000/share Sections 2a, 2b and 2c will be the reasoning behind $12k gaap earnings per ev, 12.1M EVs delivered, and 50 P/E respectively 2a) This gaap earnings per EV metric will be the most difficult to explain. I'll start with my model and an explanation 2ai) Here's my model: https://docs.google.com/spreadsheets/d/12_Qp2gXP1HV3EC5UOWBytx6Kn5dfNftqkTo0EwP0Ua8/edit?usp=sharing Note: non-gaap earnings per EV through 2021 by quarter: $5628, $8060, $8622, $9208 Explanation of model: Warning, this is incredibly detailed. I'm going to try to keep the explanation as simple as possible, and I'm more than happy to answer any questions. Note: I wrote this DD before Q4 earnings came out, and I decided to leave that data point so you can actually see that my prediction was $2.48 non-GAAP earnings (not bad, huh? actual was $2.54) The black numbers are known numbers (from 2020 Q3 to 2021 Q3). The red numbers are unknown, but projected numbers. From known numbers in the ER reports I was able to calculate ASP (average selling price, i.e. total auto revenue/evs delivered), COG per EV (cost of goods per EV, i.e. ASP*(1- gross margin)), earnings per EV ((non-GAAP EPS*outstanding shares)/EV delivered), and I was also able to calculate a sort of "operational/manufacturing cost per EV" by this equation: ASP - COG per EV - earnings per EV = "operational" cost per EV Here's a beautiful illustration of this equation: So now that we have ASP, COG per EV, earnings per EV, an "operational" cost per EV and EVs delievered.. how do I project to get the red numbers? I extrapolated using exponential decay. Based on the rates that ASP, COG per EV and "operational" cost per EV were already falling, I took that rate and extrapolated out using an exponential decay model. I also assumed 50% YoY growth in EVs delievred (or 10.66% QoQ compounding). The math for exponential decay was pretty annoying. For anyone interseted, here's the recursive equation: P1 = (P0 - b)*(1 - r) + b where P1 is one iteration past P0, b is the asymptote and r is the rate of decay. Solving for r gives r = 1-(P1-b)/(P0-b), and so I calculated the average r from the past 4 or 5 iterations to "use" the existing rate of decay. Interesting fact, I had to assume some 'asymptotes' for ASP, COG per EV and operational cost per EV, but if you look at my bear, base and bull cases where I've modified them, you'll see a very little difference in the outlook. The main difference between the base, bull and bear cases is simply growth of sales. So now that I've extrapolated ASP, COG per EV, "operational" cost per EV and EVs delivered.. I can now calculate the project non-GAAP earnings per EV via the equation I used above: earnings per EV = ASP - COG per EV - "operational" cost per EV this one: https://imgur.com/a/9vJcx0u After finding earnings per EV, divide by the projected EVs delivered, and then by outstanding shares and you have the non-GAAP EPS estimates. Now for some interesting (but not very pretty) graphs. Again, take 2029 and 2030 with a grain of salt. The S-curve will flatten ASP graph: https://i.imgur.com/PtWtRqT.png COG per EV graph: https://i.imgur.com/KM49p60.png Operational cost per EV graph: https://i.imgur.com/8OEoUO8.png This is my favorite graph. Through no design of my own, but only from exponential decay extrapolations of other metrics, the non-GAAP earnings per EV graph tops out in 2027 as the year we'll see peak profitability per EV. non-GAAP earnings per EV graph: https://i.imgur.com/jD9KdaR.png non-GAAP EPS graph: https://i.imgur.com/ZlEz6rV.png ok, so why do we see dropping ASP, COG and operational costs? 2aii) Dropping battery costs can be summed up with Wright's Law (Cathie Wood was one of the early TSLA investors that spoke of Wright's Law). Battery costs were as high as $1000/kWh** when Tesla first started building the original Roadster. It has since dropped to $100/kWh, and is expected to drop to $50 or less per kWh. **reference to $1000/kWh: J.B. Straubel, former CTO of Tesla, interview: https://youtu.be/aWR5-mo8f1g?t=1520 Here is an excellent reference to declining battery costs as presented by Tony Seba. This presentation was centered around upcoming innovative and disruptive technologies: https://youtu.be/Kj96nxtHdTU?t=405 2aiii) "Tesla isn't profitable!" we heard for years. This is because they were burning cash for R&D. They've made their manufacturing more efficient with innovations like the structural battery pack and gigacasting, and with 2 new factories we'll see even more benefits from Economies of Scale***. Also, as Tesla opens Austin to serve the east coast US, and Berlin to serve Europe we'll see decreased shipping costs. This will cause the "operational/manufacturing" cost per EV to drop. ***https://www.investopedia.com/terms/e/economiesofscale.asp 2aiv) regulatory credits were 13% of earnings in 2021 Q3, and 11% of earnings in 2021 Q4. But I'm not sure I need to make a bull case for collecting free money. 2b) Will Tesla deliver 12M EVs in 2027? This is a fundamental risk for my model, as stated above. If Tesla maintains their 50% YoY sales growth, then they will sell 12M in 2027. We'll see. However, one thing for certain will not change Tesla sales: 2bi) Competition. Tesla has *always* had competition. They had competition in 2013 to their Model S, and they have competition today. It's the ICE car, and Tesla is still managing to sell every EV they make. A couple points to make here: I wont get into this point too much. It took Tesla 5 years from their first mass produced EV until they managed positive Free Cash Flow (2013 Model S until 2018). It's not exactly a one-to-one comparison for other companies, but Ford, GM, Rivian, Lucid and others will need at least a couple years to achieve positive free cash flow on the EV segment of their business. But let's say all of them succeed in making a nice commercially viable, and profitable EV.. My next point is that the EV market is expanding *rapidly*. New EV models will not likely take sales from Tesla. They will take sales from the Toyota Corolla, RAV4, Camry, Honda Civic, Accord, Hyundai cars, Volkwagen cars, etc. as we've already witnessed. There's no reason to believe that any new EVs entering the market will take meaningful sales from other EVs instead of gas cars. 2c) The P/E ratio will always be a guess. Tesla will be a company with a presence in EV sales, solar and energy storage, large commercial power storage, and potentially FSD software subscriptions and AI driven bots. I believe (assuming a bull market) that there will still be enough frenzy surrounding Tesla to see a 100 P/E in 2027. The conservative side of me calculates these numbers with 50. By the time the S-Curve flattens, the P/E could be 30.. or maybe 60 like Amazon? It's hard to say where Tesla will be in 2030, but they've always innovated and come up with new ideas. There is one thing I confident about though; Tesla should *never* be trading at Toyota, Ford, or GM's P/E ratios. The ICE car is a dead technology, not dropping in price like the EV, and is proving to be far inferior to EVs in every way. Plus legacy automakers are not growing (some have *lost* sales for the last 2 years). It took Tesla investing billions over a decade to bring down battery costs, and make the EV commercially viable. Something legacay automakers have never done. Anyway, I hope you guys liked this DD. I'll try to have discussion with you guys in the comments if you'd like. If you have a bearish counterpoint, then I'm all about discussing it; however, it will help me (and both of us) if you point out which part of this equation it affects: $12,000 gaap earnings per EV * 12,100,000 EVs delivered * 50 P/E = $7260/share so that we can establish the point of disagreement. Thanks for reading! [link] [comments] |
| $XOM looks to be a great play from a rotation perspective Posted: 01 Feb 2022 01:42 PM PST Exxon's stock has been on a tear since mid December. Today's earnings were great and so the stock went even higher. Exxon's stock price may be weighed down by ESG bound funds, leaving rooms for less picky investors to get in. Last, while this article highlights the company's sizable debt the market seems to like the stock. https://www.wsj.com/articles/exxon-mobils-gusher-of-cash-means-harder-decisions-ahead-11643743811?mod=markets_lead_pos11 [link] [comments] |
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