holy sh*t | Tesla Earnings are MINDBLOWING.

wow this is incredible for Tesla Tesla

must have been reading the room because

they basically reported bad numbers but

gave us exactly what we wanted to hear

where we wanted to hear it I was highly

concerned that margin for Tesla would

come in under 16% but margin X credits

actually came in at

16.4% better than expected

congratulations Tesla margin with the

regulatory credits 17 point .4 part of

that is not only because costs are

falling for Tesla freight costs and

input costs which is less inflationary

which is good but it's also because uh

Tesla is taking advantage of more

vehicle credits because less of the comp

competition is taking advantage of

vehicle credits so there are more

vehicle credits available for Tesla

since they're the US manufacturer

focusing on EVs and others are focusing

on Eves less now the big win from these

numbers from Tesla came down to the

potential for more affordable Vehicles

this was a really critical part of the

Tesla earnings release we can actually

see that on screen right here we have

updated our future vehicle lineup to

accelerate the launch of new models

ahead of our previously communicated

start date in the second half of 2025

and so basically what they're saying

here is hey everyone look we heard you

that you really value cheaper cars so

here's what we're going to do we are

going to push the uh the current

production capacity from about 2.3

million all the way up to about 3

million vehicles and they didn't give us

a time frame for when they want to get

to 3 million vehicles but they want to

get to 3 million vehicles or at least

close to 3 million Vehicles before they

manufacture another gigafactory so hold

your breath Giga Mexico Giga India Giga

whatever is probably not going to happen

for a while that's going to get kicked

down the road instead we're going to

take that capex money and we're going to

spend it on AI so we can get closer to

Robo taxi and rather than waiting for

the Next Generation manufacturing lineup

what we're actually going to do is we're

going to take what we've already

bettered and we are going to make the

manufacturing line more efficient now so

we could bring our costs down for

vehicles potentially then reduce prices

also with uh as we've said before

potentially these uh lower cost existing

vehicles but also potentially with lower

cost new vehicles so a big shift here

from uh from Tesla this is very good so

I do like to see this this is fantastic

now what it does is it implies and we'll

see in the earnings call what we get but

it implies that we could end up getting

getting multiple new vehicles and that

is just juicy to Tesla shareholders

Tesla shareholders want to hear that so

great news Tesla here again Tesla read

the room very very well on that uh now

something else to note about uh Tesla is

we did have uh the expectation that

Revenue growth or production growth

would be quote notably lower so that's

unfortunate so that means things are

probably still going to get worse wor in

the realm of deliveries until they get

better but at this point that might be

mostly baked into the valuation of the

company uh so instead they're going to

continue to focus on getting those costs

down stabilize their their deliveries

and production and they could end up

releasing more than one affordable model

again we'll get clarity from Elon on the

earnings call which we'll cover later

now uh it's worth noting Bloomberg

suggested that 87% of the car market

sells above $330,000

so they and this is in the United States

so they kind of suggest hey maybe you

don't even really need a $25,000 car

maybe you just need more variety at a

$30,000 car that's entirely possible

$30,000 car instead of $25,000 car now

the question is when are we going to get

that more affordable car well that

remains to be seen and so we'll see what

gets talked about in the earnings call

now as far as some negatives we did have

$2.5 billion of free cash flow though we

do have quite a pretty penny of cash on

hand and Tesla did recognize some more

FSD income because they released auto

park now I thought that was a little bit

of a funny reason to take FSD revenues

but that's what they chose to do so if

you look on their balance sheet you'll

actually see they've got about

26.8 billion of cash and then as far as

other current assets including accounts

receivables inventories and uh prepaids

which I generally don't use prepaids but

those do offset some cost uh we'll just

do 16 point uh 16 plus 3.8 puts us at

about 19.8 in receivables plus about

26.8 in cash minus 14.7 in bills to pay

minus 9.2 in bills to pay uh that does

if we do include receivables and uh the

uh um inventory that does put us

somewhere around $22 billion of

available current assets if we just

wanted to look at free cash to be a

little bit more sort of asset test is uh

this is sort of Kevin's version of it uh

we're down to about $2.9 billion of cash

which is not a great amount of free cash

you don't actually have that much free

cash at Tesla so you are doing a lot of

Bill management and if you have another

negative $2.5 billion quarter well let's

just say that free cash is going to

start dipping into receivables very

quickly and while yes at this point it

seems like they've got enough money to

finance all their activities there could

be some bumps in the road during 2024 so

I don't think by any means 2024 is out

of the woods but this is clearly part of

the bottoming process for Tesla that the

stock performance has been in and

obviously the changes that are now

occurring at Tesla so those are all

things to pay attention to now something

else to consider is if we go and we'll

do a valuation model again in just a

moment but I just want to make I hit the

core of this report uh the again they're

taking the best parts of the new

production line the robo taxi they threw

up some mockups of the robo tax event

this was very good again we're we're not

getting a disclosure on solar we're

probably not getting Giga Mexico or any

other Giga for the time being and they

are expecting notably lower sales from

2023 this is not a surprise though at

all instead uh Tesla is

teasing uh this which is the robo taxi

app and this would be a whole to order

your Robo taxi they're throwing in

estimated wait time 3 minutes uh 3

minutes away you could set the climate

which is kind of cool you could set the

music you could set the volume of the

music this is actually kind of cool I

don't disagree with this I think this is

very smart I like the mockups they're

just mockups so for what they are

they're not extremely valuable right now

until we actually go into launch mode

and that is going to require the

vehicles being fully autonomous and

having regular ulatory approval which

maybe we'll get some guidance on that in

the earnings called but as of right now

the stock is up 9% which is really good

the expected move on Tesla stock today

was

8.2% and we are nicely bouncing off some

longer term Trends trend lines here uh

these have been there there's some

longer term support lines just below

where we are depending on how you draw

them some say we bounce off them nearly

perfectly uh you are sitting now at

about uh just above that 152 level next

stop for Tesla would be really to decide

are we going to stay below 160 or are we

going to go back up to

170 uh so that creates some interesting

opportunities and it's worth doing a

quick little valuation update on Tesla

so let's go get the spreadsheet and play

the valuation a little bit and I'm going

to change some of these numbers here

just so we could play with them uh

together and see where the actual value

is going to come from uh from investing

in Tesla I think that'll be super

valuable so let's jump into doing that

right now uh quick reminder we do have

the courses on building your wealth with

an expiring coupon code on April 30th

which is the day before the expiration

of the hous hack fund raise you can go

to hous hack.com

2024 here's our Tesla spreadsheet house

act.com 2024 be part of the Road show

that begins tonight next 8 days we got a

road show and then we got about a week

for that next coupon exploration so

let's play some numbers here what I'd

like to do is actually bump the Tesla

margins for

2026 I'm really optimistic about seeing

some of this cost reduction though I'm

going to go with two versions here I'm

going to go with uh a let's go play this

like this let's go move everything to 3

million Vehicles mind you that 3 million

Vehicles they did say close to 3 million

Vehicles so 1.8 * 1.3 1.3 that'd be

about 30% production growth I don't know

if we're actually going to be able to

sell that many vehic

so I'm actually going to Discount this a

little bit I'm going to go with 25 I'm

going to get rid of these headlines here

we're going to go with 2.5 million

Vehicles by 2026 actually you know what

let's go with a lower one let's go 2250

let's go 25 million Vehicles let's go

275 million vehicles and then we'll go 3

million vehicles in our more bullish

case

scenario then for robo taxi revenues

what I like to do is I like to do a

percentage of uber so what I'm actually

just going to do here is I'm going to

put about $37

billion of uh of Revenue that Uber is

able to make and we're just going to

create or use a percentage of that so

we're going to again go with uh 3 uh

37 uh billion dollars here 37 billies

there we go let's go and write that in

it's always entertaining writing these

large numbers and then what we'll do is

we'll create a percentage for each of

these so this one's going to be time

0% and what I'll probably do is grab uh

let's do this we'll probably go with a

lower percentage for each of these other

scenarios so we're going to go over here

and we'll go with

075 here we'll go with 5% of uber and I

think we could floor out at about 5% of

uber ah we shouldn't do that well let's

go with like 2 and a half% of uber there

we go how much revenue we might be able

to keep uh now the other thing that I'd

like to do is you that I'm going to go

with a 50% margin on these because you

still have to make the car you're going

to have to service them and we're only

going to

2026 obviously in the future we expect

the margin to be a lot better I also

reduced energy a little bit to about a

little under 8% because I'm not sure

we're going to get that much growth with

these higher interest rates assuming

obviously we don't go into a recession

everything changes if we go into a

recession because interest rates will

come down substantially faster now I

want to run this two ways I'm going to

run this one time at 18% margin and then

one time I'm going to run this at uh 80%

margin and you'll be able to see some

differences here quick fact check we got

50% on margin for robo taxi 82% on the

expenses for uh the actual vehicle sales

19% tax rate okay fantastic this gives

us a price Target on the low side the

bearish side with a 20% earning earnings

growth of about

$150 now I think that might be a little

low let me see here that would yeah

that's probably a little low we probably

need to be closer to 25 maybe even

honestly 30% Revenue growth so 30 gets a

little stretchy but let's go with it

let's say if I go 30% Revenue growth

over here I could get to

225

2026 in the more bearish case so

actually decently bullish if I stick at

20% we're kind of where our pricing is

now so you kind of bottom out around

this 150 level based on these

fundamentals here uh and then of course

everything beyond that is icing on the

cake that's usually how I like to invest

I like to look at my leftmost figure and

then we grow from there obviously if we

could get to a 30% earnings growth and

we get uh the highest level of

deliveries with a good margin here we're

going 18% in this case we can knock on

the door of that 358 again now if we can

then hop on over and get margin to like

80% or something like that well then we

could really get these numbers to move

up even more from $250 to about $400 per

share so not bad now do keep in mind

this also includes FSD revenues at 18%

recognition for the three most numbers

it includes nothing for the leftmost

number so if I include the leftmost

number and I include expenses on

AI oh let's see here AI FSD okay these

numbers I'm sorry we're going to have to

move this up uh we're going to have to

move up the expenses on FSD those

expenses are way too low we're going to

spend way more than uh $267 Bill million

on this so I'm actually going to go with

honestly 50% is also probably kind of

low until 2026

but let's roll with let's go with 70%

expenses that's going to have our annual

remember these are annual numbers annual

expenses at just under $2 billion we

just spent 2 and a half billion on capex

uh and I think it was like a billion on

AI in one quarter so I'm going to I

think 70% is probably the best we really

want to go here that is going to lower

some of our numbers but again there's

still actually pretty dang decent so I

have to give credit where credits do

here these are this is good and

depending on what we hear from Elon here

on lower cost Vehicles will really sort

of dictate what direction Tesla ends up

moving here uh so overall I have to say

these numbers are much more impressive

than feared uh I am obviously concerned

about a large negative free cash flow

I'm concerned about how quickly we can

realistically get to robotaxi because uh

that's the other thing I want you to

keep in mind this model we just made

does assume we're going to Robo taxi if

I go in here and I go ahead and just

kill robotaxi for 2026 let's say Robo

taxi just doesn't fly okay uh oh and

that was at 20% margin and we go back to

the 18% margin this is probably your

more bearish case right so 18% margin uh

and and uh the um Robo taxi sector gone

with a lot of FSD Revenue being spent on

commute you're still at a low of about

229 unless of course the EPS growth rate

sucks and then you're at a floor of

about 152 so I think you floor out

probably about 152 which is roughly

around where the stock is trading right

now so uh that's good this is definitely

better than expected I'm a data person I

I like these numbers now is it possible

that Elon Musk is going to say something

Looney on the earnings call duh is it

possible that we end up going into a

recession duh so uh these are things

that we're going to have to contend with

along with the fact that rates are

likely going to stay higher for much

longer than we've previously anticipated

and those create some other risks for

the market as well uh so uh next we're

going to have the Tesla earnings call

and we'll cover that next but just

remember on April 30th the stocks and

ssy course will have an expiring coupon

code I want you to uh take a peek at one

of the trade alerts we sent today uh I

made some money on it as well uh and it

had everything to do with this 140 line

we drew 145 line we drew on Tesla and

just the reject ections we were getting

you can actually see us talk about this

live in the course member live stream uh

this morning so we do those every day

the market is open so check those out uh

before April 30th and email us at staff

ATM kevin.com should you have any

questions advertise these things that

you told us here I feel like nobody else

knows about this we'll we'll try a

little advertising and see how it goes

congratulations man you have done so

much people love you people look up to

you Kevin pafra their financial analyst

and YouTuber meet Kevin always great to

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