The Tesla Stock Explosion.

wow Tesla blew it out of the park with

manufactured vehicles in China 66 051

manufactured vehicles in China up 18.4

percent from December byd still beat

Tesla though shipping

150

164 vehicles but remember byd ships a

vehicle that is about a half as

expensive and only about half of their

vehicles are actually fully electric uh

you've got a lot of hybrids in there and

still a lot of traditional ice Vehicles

the overall passenger uh vehicle Market

in China is sitting at about 1.24

million cars uh produced production is

expected to ramp back up in China as

about 80 percent according to the

economist of Chinese have been exposed

to or have caught covid and folks are

expecting to be well back to work uh the

current targets for production in at

Gago Shanghai at Tesla are somewhere

around 20 000 units a week starting in

late February or March Lee

Otto xping emoters and Neo all had

monthly and year-over-year declines uh

in in sales uh and I that might be

because Tesla's price cuts are putting

substantially heavy pressure on other

manufacturers which are not profitable

or are barely profitable now I got a lot

of heat when I started talking about

this on tick tock on Tick Tock I made a

video talking about how rivian from a

gross profit point of view takes or it

costs rivian 271 bucks to generate 100

bucks of Revenue that's disgusting from

a gross profit point of view that

basically means you've got about 1500

bucks being spent to make somewhere

around like 580 bucks rough math okay

it's insane how much money they spent

just on a gross profit point of view

don't even look at net income because

you know rivian's losing money like

crazy Tesla on the other hand right now

when they bring in 100 bucks of revenues

looking at somewhere around twenty

dollars of uh 20 to 25 dollars of gross

margin and maybe around fifteen to

Seventeen percent of net uh and that

depends on how conservative you want to

be on the estimates right technically in

the last quarter we were closer to a

gross margin of 25 but we've gotten some

heads up warnings that we expect that to

compress a little bit but the point is

Tesla is wildly profitable while other

companies are not byd bringing down

about a buck 40 to the bottom line and

their earnings relative to Tesla as

we've said somewhere around 17 to 20

bucks it's insane now I got in a little

bit of heat on Tick Tock for rivian

because people like oh well when rivien

was small and just doing 7 000 vehicles

or when Tesla was small just doing seven

thousand Vehicles they were losing money

too and then what I did is I went back

to the 2014 number which roughly aligned

Tesla sold and manufactured around 7 300

vehicles and rivien did about seven

thousand six hundred seven thousand

seven hundred in the last quarter so

when you align that you're like okay

they're roughly a similar manufacturing

stage well we already know that rivian's

gross from profit margin is an abject

failure are you looking again at

spending 271 bucks per 100 of Revenue

gross I'm not talking Opex here I'm not

talking about advertising or SG you know

SG uh selling in general administrative

expenses or research and development I'm

not talking about your Opex I'm talking

about gross profit abject failure gross

profit well if you look at Tesla back in

2014 when they were manufacturing just

as many vehicles as rivian was guess

what their gross profit was then

remember rivian right now negative 271

per 100 bucks Tesla per 100 bucks still

bringing 20 bucks to the bottom line in

2014. so I made a follow-up take talk

talking about that and guess what the

morons in the comments said then oh sure

pick the quarter where that makes sense

and I'm like you I picked the

quarter where the production aligned

relative to the most recent quarter for

rivian it's like some of these people

have their heads so far up their own

behinds I think they're just blind bag

holders who don't understand the basic

premises of fundamental analysis people

don't get it I look if you are an

investor you should so Crystal clearly

be able to divide fundamentals from

technicals and if you don't understand

the differences you should probably not

be investing in stocks start with

something easy like real estate even

though the irony is probably at least

half of you don't actually own real

estate but that's okay because I think

when you watch my channel eventually

you're going to get convinced by real

estate not for me it's not like I'm

trying to earn a commission off you but

because I think that's actually going to

help you substantially catapult your

wealth unless of course you already have

a net worth of over a million bucks

so with that said I think smart people

realize that why did Tesla have this

horrible price uh a correction last year

nothing to do with fundamentals or maybe

nominally the biggest thing was was the

easiest Trend ever to short because Elon

was selling like crazy thanks to Twitter

and there was no end in sight in terms

of how many Tesla shares Elon was going

to dump just to fund Twitter

so the easiest short hour the technical

from the technical point of view once

you start the short Trend guess what

happens the Algos and the institutional

hedge funds managing those Algos they

come out not even just the hedge funds

all the institutions they come out and

go easy short oh okay going into

recession what should we do oh okay

y'all let's go buy uh Costco and

McDonald's which are you know like

McDonald's is an abject joke as well to

be investing in but it's performed a lot

better year over year than Tesla why

because oh yo technicals say let's go in

a recession from growth to Staples and

then eventually we'll go it's very

simple okay it's so that way when they

answer the phone to their complaining

customers about us going into a

recession the pension fund managers the

hedge fund managers the institutions the

banks the Morgan stanleys whatever able

to go ah don't worry we're going into a

recession we have moved from growth to

Staples because obviously you still have

to buy toothpaste in a recession right

oh yeah that makes sense it's so dumb it

is so dumb in the short term the kind of

technical movements that you get in the

stock market the good news is in the

long term the fundamentals tend to shine

through much kind of like we just heard

two nearly two years later after the

April of 2021 fatal crash in Texas where

two dudes launched a Model S on a small

roadway hit a turn took the turn too

fast car drives into a tree burst into

flames what happens after it bursts into

flames the dude in the front climbs to

the back because the car catches fire in

the front who knows what happened if he

was injured or whatever couldn't get out

both of them died which is terrible

turns out the guy was drunk while he was

driving and I don't mean like you had a

beer like eight hours ago the guy tested

twice the legal limit that's that's deep

okay that's really drunk I mean look

this is not to at all justify like no

nobody should ever drink after having

alcohol right uh but let's just be real

I would venture to say 80 of adult

drivers who are not Mormons or who don't

otherwise just not drink have probably

had a beer or a glass of wine at a

dinner somewhere and then have driven at

some point thereafter okay but this guy

was this was much more it's twice the

legal limit you're talking about like

probably six to nine shots of alcohol

for a dude okay to be twice the legal

limit I mean you are plaster to be twice

the legal limit you probably couldn't

even walk at all if you wanted to uh

okay maybe even not that extreme but but

it's it's gonna you're gonna have a

hangover the next day let's put it this

way anyway so anyway the guy's drunk

drives into the tree you think burst in

the Flames they die the big media story

that comes out around it is Tesla

crashes into train bursts into flames no

one is in the driver's seat must have

been the guy showing off autopilot and

because the guy showed off autopilot and

autopilot failed clearly these poor

people died thanks to Elon musk's

autopilot that was literally the news

story two years ago you had scumbags

like the LA Times say Where are The

Regulators why are cars allowed to drive

themselves with nobody in the passenger

seat which I just said a lot of things

so let's unpackage that for a moment I

had an hour and a half long interview

with the editorial Board of the Los

Angeles times when I ran for governor

and guess what all it was was a

90-minute opportunity to find any

opportunity to write a hit piece on me

so they could prop Gavin Newsom up on

the pedestal there was a zero abject

interest and actually understanding the

perspectives that I was sharing scumbags

don't like that it's rude and it's wrong

it's not what consumers and voters in

California deserved but that's the

mainstream media for you they got to

keep stroking the guy in charge so that

way they get invited to his press

conferences it's ridiculous

okay the LA Times allegation out of the

way let's go back to what they wrote so

what did they wrote or what what are the

mainstream media right oh where are The

Regulators where are The Regulators

Tesla crashes into tree people dying in

Flames where are The Regulators oh wait

what comes out now oh wow uh no

self-driving uh or any autopilot

features were actually enabled the car

crashed without any

automated or Adas support systems

activated finally we find that out two

years later but that's after the story

already broke that's sad but not only is

that sad

you have no one well with the exception

of some folks on Twitter doing doing uh

you know God's work so to speak uh you

have nobody uh no no mainstream media

admitting uh the disgustingness of their

headlines suggesting that without any

conclusion oh okay well because the guy

was found in the back it must have been

autopilot even though that's not how

autopilot works like you have to you

have to somehow be able to engage the

steering wheel to actually be able to

function on autopilot

mainstream media doesn't want to take

the L for it because it's embarrassing

anyway here you go NTSB reports uh in a

report released Wednesday showed

evidence indicated that the driver of

the Tesla Model S hadn't engaged any of

the Adas features before crashing in

Houston in April of 2021 two cars

occupants died initially a local

Constable said he believed the model S

had operated without anyone in the

driver's seat when he crashed into a

tree but that was also very quickly

dispelled because the fire department

realized wait a minute the steering

wheel is damaged implying the person

wasn't wearing a seat belt true with the

seat belt uh but anyway uh they the

damage on the steering wheel implied

that when the impact happened the person

probably hit their head on the steering

wheel which is pretty crappy uh but uh

but anyway

here's just another sort of um

finally after two years finally some

relief and justification showing that

Tesla once again was not at fault but

that that doesn't make for a good media

story uh anyway now it's worth looking

just briefly since we've gotten over

some of the anger around Tesla and the

mainstream media it's worth looking a

little bit at the fundamentals because

yes Tesla has officially broke 200 or

now one of the things that is

fascinating is myself and the team just

a few days ago when we were in the race

for uh you know to see if we could hit

200 before the expiration of the coupon

code for the programs on building your

wealth uh which which

um uh you know we just hit 200 but

anyway we were talking about this belief

that we have that once Tesla breaks 200

uh it would probably rip past 200 and in

pre-market right now it's sitting at

208. I think today will be the test to

see now that we have officially closed

past 200 yesterday at 20129 will we rip

past 200 uh that is just a belief that

we have as it's bounced basically

straight up off of this Fibonacci curve

uh and so we'll keep an eye on it in the

past Tesla used to have these like 27 to

30ish day runs of uh the stock market

being open what does that put us at now

one two three four five six seven eight

nine 10 11 12 13 14 15 16 17 18 19 20 21

22. hey based on uh old school history

we should have at least another five

days

which is interesting because you've got

CPI coming up next week but anyway let's

look at some fundies for a moment so

going back to fundies I haven't really

changed anything here I'm taking about a

10 take rate on FSD which is extremely

low but I'm doing that on purpose uh on

the 10 take rate on FSD for 15K because

there is the monthly software as a

service option where basically you can

pay a monthly fee for FSD and so I'm

lowering the cash that goes into Tesla

basically right out of the gate for uh

2025. my 2025 projection is a million

Vehicles fewer than what Kathy Wood is

projecting although she's got some

pretty uh pretty ambitious targets let's

just say there's no shade on Kathy okay

I love Kathy I think she's a brilliant

marketer uh but but I think some of the

numbers are too ambitious but that's

okay maybe I'm just being a little bit

more conservative and that's okay

everybody can have a different point of

view Revenue per vehicle I'm at about 47

000. I think she's right around 46 000

so we're pretty close on that but anyway

I put in about a 10 from FSD I don't put

in any revenue for Insurance semis Tesla

bot Auto taxis or or you know

self-driving taxis I don't put anything

in for that I do put in about 10 for

services which mostly gets costed out

because the margin's very low on

Services although it's finally going

positive uh and uh for for energy I just

put in basically one percent of total

sales uh represented by about energy

which could end up being low if I go

with like a terribly low margin of 80

which we should not be at a 20 gross

profit margin in 2025 we should

realistically be back at 25 so we'll

change that number in a moment but if we

leave it at 80 percent uh you're looking

at a future price Target based on a PEG

ratio of 1.67 at 30 percent assumed EPS

growth so if you think EPS is growing at

30 in 2025 six seven eight then then and

then you assign a 1.6 Peg very very

traditional very normal you should be at

at least 400 bucks uh in 2025. now if I

change this margin

to uh 75 so a 25 gross margin you can

see that quickly jumps to 511. uh so

somewhere between 400 and 511 by 2025

seems very reasonable but one of the

downsides though is that the present

value has been skyrocketing that is the

ironic downside of the price going up is

that your rate of return now on Tesla

from what I've been previously making

these videos is has dropped almost in

half uh it's dropped almost in half

because the price is so much higher now

now don't get me wrong it's still a

phenomenal number even in in the uh

worse worse ER case scenario I don't

think that's a word uh but even if at

the 399 price target for 2025 you're

looking at uh somewhere around a 24

compounded annual rate of return now

keep in mind while I think what I'm

talking about is financial and some

people may see some of this as advice I

want to be very clear I I'm not giving

you personal advice okay I think I

provide great advice on the channel but

I'm not providing personalized advice I

am a financial advisor but that's a very

important difference is I'm not

providing anyone anyone I don't do it

personalized advice I don't look at what

the heck is going on in your world and

your portfolio and go you should

rebalance this to this okay that should

be obvious okay uh but anyway some

people don't recognize that that's

obvious so anyway uh but I think this is

this is still very very good this is

where the worst case scenario number

here 24 year over year uh but however uh

Tesla's going to get to the point where

where this is going to start looking

less attractive right let's say this

gets to 350 this year right so say Tesla

runs to 350 this year all of a sudden in

your more worst case scenario you're

only looking at a four percent

compounded annual rate of return at that

point it makes sense to just dump

everything and go all in on house hack

for me not personalized Financial advice

just saying now if if I go with a a

different margin and I go a little bit

let me go more ambitious here okay let

me go 30 to see opportunity cost fomo

wise what you would then potentially

miss out on go back to a 30 gross margin

potentially now you could be at a future

value of 623 right and so you're you're

compounded anywhere in return would then

be 21 so my expectation would have to be

greater than that for investing in

something else

which I think could be reasonable

especially since that is that is

probably a little bit more hopium maybe

you're closer to that 25 level it's

about a 13 annual compounded rate of

return for about three years so anyway

depending on how you play the numbers uh

should in my opinion guide your your

investing thesis and your plans for the

for the company and for your Investments

obviously I think that fundamentals are

the most important thing when it comes

to investing uh and uh let me give you

another a brief brief example okay when

it comes to growth rates because this is

very important uh some folks asked me

yesterday they're like heaven you know

end face had these great numbers why did

it sell down and I I think people don't

you know objectively really look at the

fundamentals I think generally people on

the internet uh look at the headlines

and then when they look at the headlines

they what make a conclusion based on

those and don't actually pull up the

financials so I was asking and this is

this is valuable for Tesla as well okay

so I was asked yesterday hey what's

going on with end face so I tweeted this

uh you just follow me totally for free

at realme Kevin over here right why is

end face plummeting after great earnings

with a quadruple beat Top Line bottom

line margin and guidance that's quad

beat okay simple well

I wrote after hours trading is often low

liquidity and undereducated training

headline reading not fundamentals that's

because after hours end phase was up

like 10 percent

but what did end face close at yesterday

well end face closed like down four

percent yesterday

so why is after hours so different from

when the market is actually open oh wow

surprise surprise because you actually

have people with you know Big Boy money

uh making decisions based often on

fundamentals but not always uh could be

based on technicals right but anyway

here are the problems what the fundies

show

you have a company whose growth rate

used to be thirty percent a quarter

twenty percent a quarter fourteen

percent a quarter and you ended with 724

million dollars of Revenue in the fourth

quarter of uh 2022. the projected

revenue is expected to be 720 for the

first quarter that's the midpoint could

be higher could be a little lower well

that represents a negative growth rate

quarter over quarter and we understand

there's a massive seasonal difference

between going from Q4 to q1 but

especially in the Solar world but at the

same time your costs are going up by

somewhere around 1500 basis points and

you're expecting a lower gross profit

so all of a sudden you have a company

that's growing like crazy not growing

like crazy anymore and this is where if

you go back to the Tesla fundies and you

look over here and you go well if if the

growth rate it falls from 30 on earnings

per share and let's say that growth rate

just uh I don't know let's say it goes

down to 10 okay well 10 times 1.67 means

you should only be trading for about a

16.7 times p e ratio which that brings

your your price that you're you're able

to pay for the company to 170 bucks

which means you should sell it today

right but nobody actually believes that

Tesla's only going to grow at 10 on an

earnings per share basis for the rest of

the decade that'd be crazy if you

believe that do not invest in Tesla

right so that that's the point of having

some form of stable PEG ratio 1.67 which

then you adjust based on EPS to find out

what kind of multiple you should be

using for the company you know the

reason you have companies like Ford and

GM selling for these incredibly low

multiples is because their growth is

like nothing or negative or because the

CEO of Ford is a complete idiot well

maybe I shouldn't say he's a completely

idiot well let's just put it this way I

tweeted the other day and again another

reason you should follow me at realme

Kevin on Twitter doesn't cost you

anything follow me over there uh but I

tweeted the other day this uh this clip

of a Ford CEO Jim Farley on the earnings

call and I was so blown away because

he's bragging about how they're going to

make lots of money going forward that's

that's what he was bragging about how

are we going to make lots of money going

forward uh in uh in basically uh

automotive and he's asked by an analyst

hey do you think you could get to a 20

gross margin which is Tesla's worst case

scenario by the way right in other words

an analyst is going to forward and going

yo do you think you could make it to

Tesla's worst case scenario

and the CEO has the following to say

about getting to the worst case scenario

basically he starts off by saying well

no basically not on the car because

we're still figuring out the

manufacturing process even though we've

been manufacturing for over 100 years we

can't figure out how to make an electric

vehicle profitable and we probably won't

be profitable on electric vehicles until

2026 but here is where we can make real

money okay this was just embarrassing

even the way he said it okay ready for

this listen to this not our batteries

not the EV platforms but our new fully

updatable electric architecture because

what we've learned on Pro is we can make

real money on software did you hear that

we can make real money on software I

mean first of all it sounds extremely

creepy the way he said it uh but but

it's because they're sucking it's insane

and sure Mr Steve look you know what I

appreciate you Mr Steve Mr Steve here

says and look look we love Steve he's a

course member Steve and I we're gonna

have great beer together one day uh when

my plane is back to Flying because it's

going under a war it's under a warranty

upgrade right now we're gonna do great

stuff uh Steve here says GM is securing

the battery supplies needed Tesla's

liking that that's fantastic

and so is Ford Ford is also securing the

supplies that they need to be able to

make the vehicles that they need for the

year Ford said exactly the same thing

that does not make them profitable

though on EVS GM won't segment out their

EVs and their EV profitability because

they're not profitable so you can secure

the supply chains all you want uh I'd

rather I'd support your argument in

saying that EV Supply chains are

probably going to have more of an issue

right

but uh that doesn't mean you're actually

going to be profitable and this idea

that Ford's manufacturing quality is

better than Tesla I mean this is like an

age-old argument uh Tesla has panel gaps

and stuff like that let's talk about

Ford's manufacturing though but you know

what rather than me make an argument uh

about Ford's manufacturing potential and

quality or whatever let's just look at

what Ford's CEO said about their quality

here okay

uh so uh let's see here okay here we go

the real future profitability on uh EVS

is basically what they call second Cycle

Products this basically means we suck at

manufacturing EVs and once we figure out

what we're doing wrong then we'll be

able to finally be profitable maybe keep

in mind and you can just Google this

nobody expects Ford to be profitable on

EVS until 2026. that's three years from

now potentially three and a half years

from now if you look at the end of the

year or would be like 3.75 but anyway

we didn't know when we designed our

first electric vehicles that we had

basically wiring for our cars

that was one mile or 1.6 kilometers

longer than it needed to be

we didn't know that it's 75 pounds

heavier than it needed to be we didn't

know that we under invested in braking

technology oh that sounds fantastic so

look I get it manufacturing is an

iterative process but you're taking an

old dog and you're trying to teach them

new tricks uh look don't get me wrong

some of the old school Fords were great

uh uh I should I wish I could find that

anecdote maybe I could find it really

quick there was an anecdote yesterday

and I realized it's an anecdote so it's

not uh it's you know certainly not

something that we could say is is a is a

fact right now but let's look at four

recalls there was this dealer

who yesterday on Twitter was uh

complaining about Ford's quality and

again I realized this is an anecdote

okay I hate it when people do that in

politics and they don't flag that it's

an anecdote where they're like oh well

this is how it is because so and so says

so it's like well it's an anecdote okay

it's an antidote but it's just something

to pay attention to so uh a car

dealership guy great guy you should

follow him uh oh I don't know why I'm

not following him there we go I followed

him but anyway car dealership guy great

guy uh hey he follows me uh anyway so uh

he here he writes Ford dealer unhappy

with Ford in 2012 Ford had 1.1 million

recalls in 2022 Ford had 9.8 million

recalls Ford should only have one goal

to build the best quality car in the

world word of mouth would sell it not

rebates and not advertising in my entire

career the quality can't be any worse

and we are told it is now being

addressed why wasn't it addressed 10

years ago and he talks about the stat we

just talked about blah blah blah I don't

know I don't know again like you know I

don't want to come across as cherry

picking I don't think the car dealership

guy is like abjectly like you know only

for Tesla he writes some pretty neat

things as well about uh about like

carvana he pays a lot of attention to

what's going on with carvana uh car

auctions and session we'll talk about

this a little bit more later uh so I I

think he's worth the follow-up

um you know I'm trying to I'm trying to

get him to do an interview so we could

get a face reveal but but he thinks that

uh face reveal would end up hurting his

ability to have people actually want to

follow him

um so I I don't know I love the

self-deprecating humor but uh uh you

know anyway so

that is my thesis my thesis on uh Tesla

no Steve I'm sorry I'm sorry okay

Steve's like haha I just got wrecked no

no I'm sorry Steve okay okay like again

it's an anecdote maybe that's not

actually what's happening I don't know

right it's just something we want to pay

attention to uh and and I guess the way

I look at it is the frustration that I

see by the CEO in the earnings call kind

of reiterates a little bit of some of

the issues that they have here right uh

and and this this uh this idea that uh

you know they won't they don't even

expect themselves to be profitable I

think in the long term that's more

important I think ultimately companies

will probably get to the bottom of their

quality issues but who knows maybe not

anyway uh that's my take on Tesla