Tesla Stock in Crisis | Why & Should you Buy.

we need to talk about a Tesla stock

Tesla's evaluation is it worth buying

what did Elon Musk just say what the

future potentially holds and there's a

lot in this first let's review some

click Clips here from Elon musk's

interview with Larry cudow now remember

Larry cudow was Mr v-shaped recovery guy

and the first thing that I want to start

with is I love that Elon starts with

humor at the beginning of the interview

but boy by the end of the interview it

starts feeling a little dark let me show

you both of those clips and you can kind

of get a sense for the frustration that

Elon is feeling at the department of

governmental efficiency how it's

potentially Weighing on his other

businesses and the difference between

expectation full of Hope and enthusiasm

and the reality of the nastiness of

government and politics I'll tell you it

makes me really second guess ever

wanting to get involved in politics it's

it's pretty ugly there settings fir to

various uh Tesla charging stations near

Boston uh shots were fired at a Tesla

dealership uh in

Oregon various nonviolent shots fired

not a metaphor shots fired yes um

downtown New York um marching marching

against the Tesla uh showroom your stock

is way down you've been criticized left

and right but look on the right side I

mean why why are you doing this

always always look on the bright side of

life

yes okay that's the happy opening but

look at how he transitions into the

depressing portion yeah um you giving up

your other stuff I mean what you how are

you running your other

businesses uh with great

difficulty

um yeah I mean but there's no turning

back you're saying

I'm just here trying to make uh

government more efficient uh eliminate

waste and fraud

and so far we're making good progress

actually so well unfortunately even this

great progress at doge is Highly

Questionable so first of all that clip

of the interview there really makes you

question what is elon's involvement at

Tesla anymore is he actually still able

to lead and Inspire it's important for a

leader to be there and Inspire even if

he can't be there every single day it's

obvious that he's working and busy but

if he's distracted on something that's

actively hurting the business it turns

into something that demoralizes

employees which isn't good it's totally

fine if he's working on something that's

helping the business which is frankly

what a lot of investors thought elon's

involvement with the government would

bring would be more regulatory Clarity

for things like full self-driving or

Optimus robots or rockets in the future

or you know know electric vehicles or

green energy or whatever unfortunately

that optimism has been flipped on its

head we've given up all of the

postelection Tesla stock rally but it's

more than that

because people are starting to question

well if Elon Musk is spending so much

time on Doge and he's making mistakes

there is he also potentially overly

optimistic on things at Tesla I'll give

you a couple of examples the first

example comes from this clip in the

interview where Elon Musk says that the

Biden Administration was responsible for

putting together a report that found

half a trillion dollars of fraud in fact

there was a report uh issued by by the

ga GAO at the government accountability

office um last year so J during the

Biden Administration which estimated the

the federal government fraud to be uh uh

half a trillion dollars so just to be

clear that's that's not a trump

Administration thing that's a Biden

Administration thing but wait a minute

Elon Musk you said that this data was a

Biden Administration thing not a trump

Administration thing no that's not true

this is a report that was released

during the Biden Administration in

2024 but it actually covers a lot of

trump years here see Trump was elected

in 2016 he took office in 2017 his

second year in office was 2018 third

year 2019 fourth year 2020 okay then

Biden had 21 and 22 that means three 3

fths of the years of this fraud were

actually Trump Administration years so

wait a minute Elon did you read the

report now there are going to be people

that are like Kevin you're just trying

to hate on Elon no I'm not I and

honestly it doesn't really matter if you

think I'm trying to hate on them or not

it doesn't matter I don't have shorts or

Longs on this it doesn't matter here I'm

going to give you valuation on Tesla St

in a

moment but I want to do this to provide

you with perspective and insight because

I think it's important when Elon Musk

says he has 100 people working at Doge

and he can't read reports that he's

quoting during media interviews

correctly then he loses credibility and

if he loses credibility by

misprescribing

it's the same thing as when we hear the

same argument that Donald Trump says

that oh there are 20 million people that

are dead on Social Security this has

been studied and reviewed so many times

yes there are 20 million dead people on

the Social Security roles that is

they're on the logs but that's different

than them receiving payments the reason

they're not removed from the logs is

because it's been estimated was cost the

government $9 million to go through and

individually remove those people that

aren't REM receiving payments but that

are still on there and they're dead so

yes they're dead names on the roles that

doesn't mean they're getting paid

they're just being left there but Don

and Donald Trump and Elon haven't put in

the effort to dive into that research

and it's not that hard you can research

it yourself but it's fine let's get past

all this political mumbo jumbo uh and uh

let's get into something that is not

divisive at all like Ukraine and then

Tesla's valuation oh wait okay quickly X

was attacked today and this really does

relate to Tesla okay because the more

people Target Elon Musk the more people

Target Teslas

Teslas are targets for vandalism people

are beginning to get afraid to park

their Tesla vehicles around different

parts of the country which is really bad

because it's expensive to fix vandalism

let's say you've wrapped Tesla and you

really care for it and somebody Keys the

snot out of it or damages it it could

cost you three four $5,000 it might be

excluded from your insurance coverage

you might have to try to fix the damage

yourself or out of pocket people just

don't have that extra money lying around

to fix these problems quick note a lot

of insurance policies do cover vandalism

but then it comes down to the deductible

that you chose you chose a $5,000

deductible you may as well fix it out of

pocket even $1,000 is a big hit we know

that over 70% of Americans don't have an

extra, available if an emergency were to

pop up the consumer is suffering today

people bought Teslas to save money not

to potentially have to pay more money

and crime is crime it shouldn't be

happening but it is frustrating in

because so now all of a sudden trying to

make an economic or C cons conscious

decision and and buy a money-saving car

like a Tesla uh from the point of view

of Maintenance or gas savings turns into

into basically walking around with this

exploding option for somebody to hit you

with $3 to $5,000 of damage out of hate

for Elon that similar hate for Elon is

what we just saw targeted against uh X

where X went down at least on the east

coast and Midwest via a Cyber attack

this morning

Elon Musk suggests that Cyber attack

originated from Ukrainian IP addresses

there was a Cyber attack on X today

which shut it down and may have been

foreign sourced it's a big story you

want to give us a moment on that uh well

we don't we're not sure exactly what

happened but there was a massive Cyber

attack to try to bring down the EOS

system uh with the IP addresses

originating in the Ukraine area see it's

entirely possible that those Ukrainian

IP addresses were actually just VPN

addresses so in other words the attacks

were funnel through a VPN which

everybody has access to these days I

mean insert a VPN ad here okay I don't

actually have a VPN ad but what's

fascinating is it's entirely possible

that Russia could have actually attacked

X made it look like it was coming from

Ukraine to again get Elon pissed with

Ukraine getting him yelling at Trump to

reduce funding for Ukraine so it's sort

of like oh let's manipulate the useful

Elon let's get into Tesla's valuation

all right so the first thing that you

have to know is the PEG ratio has fallen

for Tesla which which is nice this is

this is useful because it makes it a

little bit less overvalued right eps4

2025 is projected to be

$288 however revisions are coming down

on Wall Street usually as a stock goes

down Wall Street estimates follow it

down this is unfortunate for a stock

because it means institutions are really

like you when your price is going up and

they don't like you when your price is

going down so there's somewhat of

momentum in these price Target changes

that actually leads you in the wrong

direction right it makes you buy when

it's at all-time highs it makes you sell

when it's at lows so just take some of

these estimates with a grain of salt

Wall Street is estimating just $288 of

projected EPS for 2025 part of that is

because there's the potential of having

the clining deliveries in

2025 which at this point uh absent new

models that are not just refreshes of

things like the model y it seems likely

Tesla's EPS growth thereafter should be

pretty good looking at potentially

somewhere between 35. 59% uh next year

then 28% then 20% Then 40.6 uh 26% over

the next four years that works out to

about

29.86 uh in adjusted earnings per share

growth per year so if we take that

growth that average growth of call it

30% and divide it into the PE Ratio that

we have for Tesla now of 78.2 is uh you

end up with a PEG ratio of just

2.63 now that's actually a relatively

Fair valuation for a service-based

company so let's say Tesla was uh you

know essentially a full self-driving

company with Robo taxis and they were

providing a service a 2.63 multiple is

entirely reasonable a multiple of 1.67

would be more reasonable for a

manufacturer of cars and Energy Products

like Solar Products or inverters or

otherwise and face it selling for way

cheaper than that they're less than one

but that would put their fair value at

closer to $113 at the estimates which is

way lower than what we had in our

previous numbers because the projections

for Tesla's vehicle growth have

plummeted uh and and their sales growth

their EPS growth this is problematic

because

it does make you wonder okay so at

today's price we're basically still

fully pricing in FSD and at least some

degree of Robo

taxis but we don't know that artificial

intelligence is going to be good enough

to get us across that Finish Line are we

going to have you know crew Chevy Cruise

style controllers trying to remote

control Teslas if they break down or

they miss an edge case scenario probably

not because this is supposed to be a

vision based system then you have AR

arcial intelligence folks uh who say

Tesla's not going to be able to solve

this until we get to artificial general

intelligence because there are too many

Edge case scenarios and as we know most

Tesla drivers do take over driving the

vehicle in Edge case scenarios which

actually means you're providing less

Edge case scenario data to a lot of

these training alos now of course you

could use the the human input and the

recorded input from the human but that

seems to be less valuable than actually

showing that the AI can handle the

situation

who knows the point is Tesla's valuation

on a service and FSD basis has fallen to

reasonable levels this is a good thing

if you see Tesla as just a

manufacturer it's still overpriced by

about a factor of two it should be about

$113 now if you see it as an FSD Robo

taxi service it's decently priced right

now it actually might be a good price to

buy if that's your opinion especially

since you're not really incorporating

into that price any of the Future Hope

on Optimus robots and you're

incorporating a lot of hate you know the

the swastica cars that are getting

graffitied shots fired against Tesla

stores cyber trucks you know getting lit

a blaze there's a lot of pain let's get

into some more fundamentals and

financials all right fundamentals from a

fundamental point of view the company

has a lot of cash their margins have

obviously compressed substantially I

mean if you look over here we we can see

total revenues in 2024 were about

$97 billion that's quite a lot of money

their gross profit was about $17 billion

well in

2022 their revenues were actually about

$16 billion lower and their gross profit

was about $3 billion higher this is what

happens when there's margin compression

okay we've already seen that margin

compression the stock has already

acknowledged that we know margin

compression occurs when there are

companies that have a lack of pricing

power it's actually one of the inspiring

factors that we hadn't talked about

before that uh I closed an ETF that I

had which I started at the bottom of the

market in November of 2022 great time to

start we return somewhere around 24 25%

for investors uh now close that in

February because I'm looking going there

just no pricing true pricing power

opportunities walking into a potential

recession now all of a sudden you've got

NASDAQ selling off you've got the S&P

500 selling off you've got Tesla down 15

something perc uh and so it's no

surprise I mean look look at this timing

I wish I had a an option on this timing

look at this timing meet Kevin pricing

power ETF a year to dat actually had a

return whereas the NASDAQ lost 7% CU it

just falls off everything fell off a

cliff at the end or at the beginning of

March here which In fairness we have

been warning Could Happen we've been

saying this for many months now that we

need to watch the beginning beginning of

the year data to see if hope actually

turns into reality and so far that hope

isn't actually turning into reality uh

but what else do we have in terms of the

financials well I want to say the

balance sheet is really strong you

should already know this about Tesla the

balance sheet is fantastic you can't say

anything negative about this you've got

$ 36.5 billion in cash $1 billion of

inventory $4 billion of receivables no

cash issue here because you only have

25.5 in payables so if I mean you've got

free cash here if I add this together

here 36.5 + 12 + 4 obviously uh

inventory and receivables aren't cash so

we need to Discount those let's discount

that by about four so say they have 48.5

billion of free cash we've got

25.5 of

um total current liabilities due by the

end of the year that leaves us about $23

billion of free cash well we could build

a couple gigafactories with that like

the the cash Tesla has available is

great this is a fantastic uh situation

because it makes it less likely that

Tesla's going to be forced to raise

money in the stock market to

issue now if you look at their cash flow

uh statement you could see on cash flows

they certainly create less cash flow

than they previously did look at 2022

they brought in uh cash from investing

activities of about 14 sorry cash from

operating activities of about $ 14.7

billion and then they spent about seven

on uh Capital expenditures so that's

like seven over $7 billion of free cash

flow it's amazing you can see that's

narrowed for the entire year the entire

year that's narrowed to about $3 billion

so it's it's certainly compressed quite

a bit about $3.5 billion but still

that's a 50% compression in free cash

flow again they don't need it so it's

okay it gives them cushion to sell cars

for less money and keep those volumes up

the problem is estimates for Tesla

deliveries aren't doing so freaking hot

now a lot of people were referring to

the model y refresh is slowing down some

of these deliveries and a lot of people

refer to Australia as potentially a sign

that there's infinite demand for Teslas

because you can't get the rear wheeel

drive uh model wide we went into this in

detail in the course member live stream

this morning so I don't want to go into

terrible detail uh right now but it's

worth noting that there are exchange

rate issues uh there are luxury vehicle

taxes uh that you have to deal with the

gsts you have to deal with stamp duties

you have to deal with byd is actually a

competitor in the Australian Market as

well uh it's also worth noting that you

have cars that need to be configured to

drive on the left side of the road which

is a little bit more challenging to

manufacture for Australian and New

Zealand clean car discounts expired so a

lot of things actually hurting demand

for Tesla's overall in Australia leading

current numbers for Australia to show

that Tesla sales are down 71% year-over

year but why are the model yse sold out

then well mostly because as they they

introduced the rear wheel model as

available in Australia and manufactured

and China what you found was Tesla threw

in almost every incentive Under the Sun

lowest priced vehicle free supercharging

and other benefits including full

self-driving to make it a steal of a

deal it's kind of like a pull forward of

demand and an expiring coupon code

essentially to try to get people excited

speaking of coupon code there's no

coupon code right now but uh we are

listening to your feedback some folks

are looking for a less expensive maybe

pay over time or just a monthly

subscription service where you can kind

of sign up and if you don't like the

courses the course member live streams

the alpha Port whatever you could just

cancel right so like you pay one month

at a time or maybe you pay Upfront for

six months or whatever right and so that

way it's a lot more manageable in these

harder times to be part of the research

that we do together every morning in the

course member live streams uh so anyway

this this you know idea that Australian

demand is is you know such a sign of

global demand just doesn't line up with

the data uh it doesn't line up with the

data in Europe it doesn't line up with

the data that we're seeing in California

with registrations and it just doesn't

align with the estimates that we're

seeing from people like Troy Tesla uh

teslik Troy teslik just wrote uh just

about a week ago that Tesla deliveries

this quarter are expected to be the

lowest that they have been in the past

10 quarters TR teslik also suggests that

Tesla's facing severe competition in

China with Brands such as zomi having 34

to 37 week wait time for their model

while their production is running at

alltime highs for the zomi vehicles well

at the same time the model y Juniper

model yeah it has a little bit of a

weight but it's like 2 to four week not

great so there's something else

potentially driving competition in China

The Wall Street Journal had a piece out

on this where they argue that when it

comes to buying cars in China people are

not brand loyalists they just pick the

cheapest car that gives them the best

bells and whistles a lot of competition

from byd and others

in fact Bloomberg uh surveillance had a

research report that Tesla may have lost

about 26% in brand value after Elon Musk

got involved with his government Affairs

and unfortunately that is a shot heard

around the world okay now let's get into

the spreadsheet we've talked about the

spreadsheet many times before in the

past and I have not updated it since we

last did our update and what you'll see

in my last update is I give them a PEG

ratio multiple of uh about 1.67 which is

a PE ratio of 50 at about a 30% growth

growth rate that gives them a reasonable

price target for the end of 2026 of

244 but this is based on 3 million

vehicles to be delivered in

2026 if I make the present value oh

that's funny the present value I wrote

last time was hey you should aim for

$200 well now it's about $221 at the

time of this recording this projection

would only give you about a 5% return on

investing in the stock for the next 2

years well through the end of 2026 so

slightly less than 2 years that's a 5%

compounded return that is okay but

that's based on 3 million vehicle sales

the problem is if we're at negative

growth this year in 2025 and we only end

up getting you know 1750 cars you know

1,750,000 cars then we're at a slight

negative in terms of production how are

we going to go from 1750 to 3 million

that doesn't seem realistic anymore

because that would be 7 1% growth so

let's go with

1750 1.75 million Vehicles produced

let's give them a the assumption that

we're going to go back to 30% growth 1.3

okay cool well 1.3 would look like

two 275 so

2,275 uh th000 cars produced okay if we

leave everything else the same 18%

margin energy sales still massive at 26

billion this is a huge Bump by the way

we still leave uh margins that we have

uh as set for some of these other items

you can pause and see that on screen

that would bring Tesla down to a

valuation of about

$23 so this is obviously significantly

higher than just taking a PEG ratio

multiple of the Wall Street estimates

right this is a rebuilding of of the

estimates based on how many vehicles we

think they could

deliver that said it relies on this

boost in energy see if I take this

energy boost back down to about 15

billion because you know we're in a

recessionary time all of a sudden the

future value at the end of 2026 might

only be about

$170 and if we just can't get to vehicle

growth and we're we should be happy with

getting to Just 2 million Vehicles A

Year Without a price reduction you're

sitting at about 155 to really go

bullish here what you need is you

need the revenue Boost from energies $26

billion of of V which is very bullish

that doesn't assume a recession

and you need some lower cost vehicle

that's really going to get us somewhere

to maybe like 4 million Vehicles

produced which would be fantastic and

who knows maybe that'll come out so far

it seems like we're just getting lower

cost refresh versions like a refresh

model Y which we've ever seen or refresh

Model S or X at a lower price basically

ways of trying to get pricing power

back which is hard to do in this sort of

environment when people don't have extra

capital or money for Capital

expenditures what do you end up with

well I mean then you can get to a $300

price Target in which again is is much

more reasonable than some of the insane

numbers that Tesla stock has been

trading for after the Trump rally but

the Trump rally we knew was detached

from fundamentals now we're actually

having a fundamental discussion again so

the numbers are actually such that

they're getting juicier

again they're still rich but they're way

better than where they were again it

just comes down to what what do you

think do you think we can double the

number of vehicles Tesla is going to

produce but 2026 or the other thing that

you do is you go to like let's say 2030

and you assume that they're going to

sell you know 5 million rooc cabs at uh

you know some kind

of large margin larger than they have

now you go to maybe instead of an 82%

expense ratio you go with um an expense

ratio of only uh I don't know let's go

with uh 78 this will give you 22% profit

margins you know High profit margin car

assuming there's not substantial

competition and everybody wants this

hell you know what go even to 75 okay so

the expenses are only 75% to produce the

car so if they sell a car for $30,000 a

rooc cab their expenses would be 225 and

their profit would be $7,500 including

the FSD and everything people throw this

into the fleet okay great now we can get

to a $500 price target with 5 million

Vehicles sold by

230 and a 25% margin you know now you

want to get really excited throw uh

throw some Tesla bot Revenue in here so

let's assume they have a 30% margin on

the Optimus robot which would be great

they sell 34 billion dollars of Tesla

Bots and they have uh you know expenses

of 24 bill that gives them an extra 10

billies uh of uh of income basically

which is absolutely fantastic right uh

so let's sum this all up here let's see

total expenses let's make sure we have

our total expenses in here let's make

sure we have total revenues to include

include the Tesla bot there we go so

total revenues now include the Tesla bot

we added total expenses now include the

uh you know 30% margin over on the

Optimus bot right

here and uh we scroll down what do we

get to we get to about a $600 Target you

know and that's on a manufacturing

multiple so if you want to go to a

service multiple sure I could take this

to the moon and and you can make some

delicious returns between now and 2030

but you could see there's a lot

of of real work to be done here we're

not in a place yet where we have Optimus

robots for sale how am I supposed to

project to 2030 you know what if we

can't solve the FSD problem what if we

can't get Tesla sales up uh in the near

term it's just going to take a while to

see where these things move now I'm

optimistic on the Tesla bot but near

term wall Street's going to have a

headache trying to do valuations on this

when their sales are still negative for

uh uh for their vehicles and the margins

are not this high so that does become a

little bit more

challenging and uh and that is what

keeps Tesla stock probably you know at

uh $200 at closer to a 2026 price

Target got a couple years to go through

for that now how would Tesla respond in

a recession well in

2022 there were plenty of jobs available

and If We Had A recession a real

recession in 22 my thesis was that more

people could buy Teslas because rates

would be lower and higher income white

collar workers would have plenty of

discretionary income to buy

Teslas the problem that came after that

was we ended up having you know two more

years two and a half three or more it's

actually probably more like three years

of growth now up to the beginning of

2025 here and so the recessions

basically coming 3 years later after

people have spent all their extra

discretionary excess savings and the

jobs Market is harder now this means

Tesla is now actually uniquely more at

risk of a recession so how do you buy

Tesla well my take is if you don't think

there's a recession you could probably

think about buying the dip for that

longer term Optimus future and and maybe

full self-driving

future but there are a lot of risks that

come with that including AI development

can we actually get to that or do we

have to wait for AGI which we're nowhere

close to uh

alternatively if we

recession you probably have to ask

yourself how much is a recession

actually being priced in and right now

that answer seems to be very little

anyway these are just some of my

thoughts on Tesla stock hopefully it's

helpful to you and we'll see you in the

next one goodbye and good luck do not

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 P right there financial

analyst and YouTuber meet Kevin always

great to get your take