wtf Tesla Stock [TSLA].

well the Tesla earnings call is over and

here's everything you need to know about

it first pretty dang common for Tesla

stock to fall after earnings not always

but pretty common usually an event

happened stunt goes down all those

weenie baby speculators gotta you know

take their losses and heal their wounds

and go somewhere else but that's okay

because in my opinion the fact that

Tesla stock is only down five six-ish

percent after hours which the

expectation was a six and a half percent

move in either direction it's actually a

sign that it ain't that bad that is the

fact that it's holding up above the 170

hopefully closes above 175 on the 20th

or 20 days SpaceX rocket ship launch day

hopefully that'll be a good technically

strong Wide Open Door to start a nice

new rally no guarantees though maybe

that's just hopium but that's okay let's

now talk about the facts because the

fact is tomorrow we've got a huge

expiration of a coupon code but you

already know about that see 420 it's on

the screen anyway let's talk about what

we learned so first macro and margin

obviously macro remains uncertain while

we've reduced prices still got the

highest margin out of all vehicles out

there in fact Elon Musk pretty clearly

defines what it takes to even have

positive PP in this business that is

positive pricing power you got to have

autonomy and you got to have an electric

vehicle in fact Tesla could if they

wanted to sell vehicles for basically a

zero gross profit because they see the

lifetime value of selling these vehicles

and then getting FSD upgrades is

basically a 100 profit margin as a

phenomenal Trojan Horse to making an

insane amount of cash flow of course

since we're still on FSD beta and we're

still ramping Austin gega uh Berlin and

Giga Austin we've got some work to do

and as Elon says every time the FED

raises rates it ends up being an

effective price price increase for

vehicles now sure we got lower margins

than we were expecting we got 19.3

percent Wall Street was looking for just

over 21

21.2 percent just to be exact and so

yeah we missed here and just like I

warned we missed big on free cash flow

not so great but explains why we didn't

end up seeing that buyback everybody was

expecting or begging Tesla to do back in

December what matters now though is that

even though broadly pricing power

appears to be shrinking which it is

Tesla still got the biggest set of baby

in the entire automotive industry you

look at lucid and rivian they're the

ones that should really be nervous as

well as Ford and GM and actually in

aftermarket hours these stocks aren't

even moving that much to the downside I

expect the market to adjust for that

tomorrow we'll see what happens in other

words bad for lucid and rivian we'll see

but let's talk about this so pricey

elasticity Elon has says look ultimately

it comes down to can people make the

payment or not but they have to be

willing to pay for it and Tesla

basically has pricing power because we

have both the best autonomy 150 million

miles of AI training data nobody else

holds a candle to that and an electric

vehicle platform that cuts out the

dealership model and that in theory

doesn't really need servicing I rarely

get my Tesla Service service most people

who have a Tesla rarely take their cars

in for service and that's because

ultimately the original car model was

built on hey car dealerships will make

money on servicing for the customer but

the best service as Elon puts it in this

earnings call is no service phenomenal

brand differentiation and a game changer

for the entire Automotive space Berlin

and Tesla Berlin and uh Austin that is

both of these still seen as a quote

margin headwind until things stabilize

and Elon Musk believes that things will

start quote getting Sunny around spring

of 2024 and things will be a whole lot

better by the middle of 2024. part of

that has to do with some challenges from

still high commodity prices yes lithium

prices have come down 60 percent and

prices probably peaked somewhere around

Q2 2022 we're still dealing with

elevated costs and those elevated costs

unfortunately are still lagging whereas

prices for vehicles are falling faster

and so yeah that is a shrinking PP but

then again you're seeing that at pretty

much every business even Innovative

companies like apple and Nvidia

everybody's out in the cold right now

and pricing power is shrinking just a

matter of who's got the largest amount

of pricing powered left when it comes to

the automotive space nobody holds a

candle to Tesla now inflation on

inflation

Elon Musk expects a little bit more in

the staff expect a little bit more of an

improvement in Q2 but really most of the

Improvement will probably come by 2023

to 2024 which in my opinion is a signal

that really if you're an investor in

Tesla stock you shouldn't really be

caring about these day-to-day

fluctuations in the stock we tend to

have these 21 day rallies and then we

sell down then we have a 21 day rally

and then we sell down this is just the

nature of Tesla if you can't stand the

volatility get out it's really no

problem average selling price is down to

just about forty seven thousand dollars

which actually on my 2025 projection

some of them have been going with 45 000

Kathy Wood goes with 45 000 but I just

pulled up my 2025 numbers and I hate to

say it but I've actually been using 47

000 here and it doesn't look like we're

going to hit that 2 million vehicle

threshold in 2022 though in the earnings

call there was some hope that that is a

possibility though it's more likely

we're gonna hit a safe number like 1 0.8

maybe slightly beat that there was talk

about expanding into the lithium

refining in Corpus Christi Texas

breaking ground in May next month on

investor day we were told that Tesla had

already broken ground so this is a

little weird and we hear that the

delivery event for the Cyber truck is

expected to be in Q3 and that will

really get to mass production in 2024

that could be a pretty exciting time

Elon Musk calls the Cyber truck a hull

of Famer which is great and really if we

look at the numbers here 2025 even if we

drop this margin and margin makes a big

hitsy ditzy over here it sucks but let's

say we go back all the way down to an 80

cost structure and we just don't make it

to that 30 number in fact hate to say it

but they actually revised the 30 Target

down to mid 20s this cycle maybe 30

percent will come back in the future but

right now they're looking at mid-20s and

what will probably happen is they'll say

ah we'll get to 3 30s including FSD in

the future fine but if we go to a 10

take rate on FSD at full pop whether

it's financed at acquisition or paid for

in cash we go for a forty seven thousand

dollars per vehicle at 4 million

Vehicles because after all we do expect

average selling prices to continue to

fall especially since those Model S's

and X's are becoming a whole lot less

popular hate to say it but here are the

model S and X deliveries and

base plummeting now they plummeted in

early 2021 as well but then we were

going under uh line upgrades and so

they've been rising since those upgrades

but then again falling uh cash flow we

already saw missed widely lower than in

Q2 2022 that's when Shanghai was shut

down it's a big deal but anyway what do

we got over here so if we actually look

at the projections then we'll go through

some other things that were talked about

really nothing's changed here what does

change is probably we could bump the

expectations for revenue from energy

because the energy segment is honestly

booming much faster than probably most

of us had anticipated in fact in the

last energy present or in the last

earnings presentation from Tesla we saw

that energy storage specifically the

storage deployed segment Rose 58 quarter

over quarter that's not 50 a year

that's quarter that's really really

remarkable and when we actually look at

the margins for energy which we can do

by going to the financial statements we

can see those right here we got energy

generation and storage we're already

sitting at 15 29 million that's

1.529 billion dollars from energy I mean

I hate to say it but look at this I had

right here total revenue from energy 1.8

for 2025. this is taking off this is

remarkable now Services might be a

little elevated but Services we have at

super low margin here anyway yeah

Services I have at just five percent

margin so this doesn't make so much of a

difference but we might drive that down

let's kill this to five percent Drive

Services down to five percent Tesla did

say they took some additional warranty

adjustments and some one-time

adjustments in this first quarter which

hurt margin a little bit more maybe

we'll get a recovery in Q2 on that and

they didn't take as much of FSD right up

because Elon Musk calls it a two-step

forward one step back now that's fine

and hopefully that sets up for a better

Q2 but still hits the stock in the short

term but let's change this energy

segment here because if we have

compounded annual growth here of uh even

let's call it a double because we're

growing 50 and a quarter here let's go

energy generation and uh storage here

and let's go with a uh a double for the

uh for the year so if we go uh for the

quarter we're at one five times four

we're at about six Billy for the year

and let's double it and then double it

again let's get to about 24 billies by

uh 2025. let's see if that's a little

too extreme here let's go with that's

going to be closer to ten percent all

right let's go with 10 energy that's

18.8 Bill fare okay so we'll play with

18.8 Bill here we cut Services down now

margin on energy isn't fantastic right

now obviously we expect it to expand in

the future but right now we're looking

at at a energy storage sitting at

1837

1361 divided by

1837 uh sorry 15 29 1529 those surface

yeah we're about 11 margin I think I

have them at 10 here on energy oh no had

him too high so let's drop that to 89.

there we go making some adjustments here

together we'll do that together so we're

going to keep four mil 20 25 let's drop

the 47 to 45. so let's reconcile some of

the changes we've made here we've

changed Revenue per vehicle Down 2 000.

we left number of vehicles we reduced

Services by nine bill but we increased

energy by a lot we added about 16

billies to energy which should add about

1.6 ish to the bottom line at around a

10 11 margin right so really it it

shouldn't be adding too terribly much uh

given that our profit's gonna be around

35 mil so really the energy adjustment

there or 35 Bill the energy adjustment

there makes a difference of around four

and a half percent that we made so a

smaller adjustment bigger adjustment is

going to be on that vehicle margin and

let's see what we get over here so if we

still assume what do we got here a uh

growth here what do we have we have

we're going to go with not 15 growth

that's really a worst case scenario in

my opinion this would be horrible 15

growth on EPS this would be really bad

and that's why you could see 206 price

Target I mean you'd be growing at

today's share price you'd be growing

about 6.7 percent per year to get to

that but let's go with actually a 30

growth Target that's going to bump on a

PEG ratio 30 times 1.67 that'll bump us

to about a 417 price Target it's shy of

that 500 right so you're looking at 413.

you're still looking at a pretty nice

return though at a 30 growth on EPS I'm

not even I'm not going with 50 I'm not

going with 3 35 40 God just looking for

thirty percent growth here uh and

honestly in this sort of environment not

that bad that still brings us to 413

that's still a pretty damn good deal and

honestly if the market ran to to 400 by

2024 probably be uh you know something

where you scratch your head and go hmm

did I just price in the next two years

already right after cyber shark launches

and you get some real juicy juicies of

course if margin then Trends up as rates

come down watch this if we drop margin

to a 26 margin again what happens is

oops I went the wrong way sorry I

increased the cost for percentage points

let's bring that to uh 74 26 margin

let's go 25 margin brings it midpoint

right boom that brings us to 520. so

that shows you everything's in that

margin and if we bottom out somewhere

around uh you know 20 percent I mean

right now we're at 18.3 so hopefully

it's up from there right as margin costs

come down we start getting a little more

FSD hopefully that's the bottom if we

bottom out around 20 and we get these

numbers we're looking good for 400. uh

if we end up bottoming out around 15 uh

so that would be uh 85 cost structure

that's not going to be so great 85 cost

is going to shave another 100 bucks off

the stock so not great still good upside

but come on man we were at 306 like a

year ago right so we want to be better

off than that uh so this shows you how

important that margin is very very

important now Elon does expect margin to

expand by next year he does believe

storage will expand significantly Global

inventory however did rise from 13 days

to 15 days uh so and of course we had

that FSD or sorry a free cash flow Miss

uh still ramping on the 4680s Chargers

60 of them are open to only TVs without

extra waste times and there was a

fatality at the Giga Shanghai facility

leading local government there and an

investigation to uh demanding

essentially Tesla to be punished while

at the same time you've had uh now some

pain in terms of uh not just this

investigation but also workers getting

their bonuses cut in Shanghai so

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um

comes at the same time as Elon Musk says

Shanghai is the most profitable Factory

that exists potentially in the world so

I don't know uh to me when it comes to

Tesla it's gonna be a hurry up and wait

you're probably looking at a diamond

hand in this sucker for another year

before we're partying with Tesla tequila

until then consider subscribing get your

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folks we'll see in the next one thanks

so much for being here really appreciate

you and cheers to 4pm coffee

or is it coffee

that depends

yeah it's coffee

hey who's gonna go skiing with me one

day

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