Why Tesla Stock is Cheap | TSLA to $6,000 [Full Details].

hey everyone me kevin here in this video

i'm going to explain why i'm so freaking

bullish on tesla that i have now 14 000

shares of tesla 47 of my portfolio is in

tesla i've got a few scenarios here i

want to run through with you and you're

gonna see ah okay that's how we're

coming up with a potential valuation for

tesla because right now when you look at

tesla with traditional means it feels

overvalued it feels pricey but it's very

difficult to value tesla at today's

metrics or matrices i don't even know if

that's a word but anyway because what

are we waiting for we're waiting for

batteries we're waiting for chips we're

waiting for factory capacity we're in a

phase of hurry up and wait right

and uh that is unfortunate because it

does slow down growth but it is a

blessing because it lets me keep buying

into tesla cheaper and cheaper as a

people don't realize the long run

potential of tesla and look i could be

wrong i'm just some dude on the internet

but i am so bullish on tesla and i'm so

excited to share some of these numbers

with you so i'm going to keep this

simple we're going to go through uh my

bowl case

my base case

what wall street's consensus estimate is

and how that compares and then we're

going to do a gigawatt comparison and

that's going to be special gigawatt

[laughter] okay so the easiest way to do

this

is just start with production

ramp rate and so this is my projection

for the tesla ramp rate for how many

vehicles they can deliver in 2020 we

delivered approximately 500 000 vehicles

i think that's going to go up to 950 000

in 2021.

when giga berlin austin fremont and

shanghai are at full capacity each of

these facilities will be able

fully capable of producing 1 million

vehicles each that means by 2024 we

should have a marker of 4 million

vehicles if we produce or create two

more facilities by 2025 and we start

scaling those i believe we could get to

6 million in 2025 uh or at least 2 7 7.2

million by 2026 and so on all the way up

to my bullish thesis of 16 million cars

by 2030. now that's crazy because how

does that compare to the rest of the

world well look at this

toyota in 2020 delivered uh 14.3

of the world's market share or of of the

world's vehicles delivered which of 74

million vehicles delivered toyota

delivered about 10.6

million vehicles so saying that tesla

might deliver 16 million vehicles in

2030 is assuming that tesla beats

toyota's market share it's very very

very bullish and remember this is the

bull thesis so we're going to go to the

more like nuanced theses in just a

moment and kind of see what tesla's

projections might be as well but if we

go with a bullish thesis here of 16

million cars by 2030 and the easiest way

to assume robo taxi revenue full

self-driving revenue is in my opinion

just to lump this into the car's revenue

because otherwise we're making way too

many projections over how robo taxis

gonna be monetized and full self-driving

so i'm gonna say 42 000 per vehicle

fully monetizing autonomy so if it's a

200 000 semi or a 20 000 car that tesla

ends up selling i think the average

selling price is going to be around 42

000 in my bullish thesis

this is then simple math we get we

multiply to get uh revenues we have a

general or generally around 2.7 to 3

percent of cars that get leased at tesla

we get services that are usually around

10 i'm bumping that to 12 in my bullish

thesis here uh there's going to be a

limitation or a risk factor for

batteries obviously for this expansion

but my bullish thesis is tesla easily

getting to over 130 billion dollars in

energy revenue solar batteries solar

roofs mega packs uh endless endless

opportunities for tesla and so i think

tesla's energy division will be 20 plus

percent of their car division in 2030.

insurance elon musk thinks insurance

could be as much as 25 of the value of

the company going with 15 of the value

of revenue of vehicles i'm worried this

might be a little bit too bullish

so we'll see and obviously the further

you project out the more risky things

get now including semi's robo taxi full

self-driving again in vehicle revenue

we'll talk about consensus estimates now

in a moment not so important right now

but in my opinion that brings tesla to

and this who knows i mean this could be

2030 i don't know i don't think it's

going to be 2029 maybe it ends up being

2032 but this is coming in my opinion

trillion dollar

revenue for tesla

if tesla has a trillion dollars in

revenue and we get to not even as

bullish as elon is with his margin but

we get to a 28 margin or works an

expense margin of 72 on vehicles

we could end up

using regular margins that we see for

some of these other items and 10 in

operating expenses which might end up

being a little bit high

we would end up getting to a profit for

tesla somewhere around 86 billion

dollars

take out about 20 for taxes even if

biden jacks this up to 28 we'll still

have credits and loopholes and ways of

of uh lowering our effective tax rate

depreciation and so on i would expect an

average tax rate of around 20

that would leave us a net income of

around 68.7 billion divided by shares

outstanding currently obviously that is

going to increase in the future

so that that is something to keep in

mind is there will be more shares

outstanding in the future

uh so we'll see how that ramps up but if

we just use the shares outstanding that

we have today we'll get to about an

earnings per share of around 61

with a price today at 700

this means we're only pricing tesla at

about 11 times forward earnings

in 2030 uh the dollars we're paying

today is 11 times forward earnings and

if uh tesla ends up with a p e ratio of

100 in the future would it may not

a hundred is is really growth dependent

i mean we would still have to be growing

like crazy like if if we go over here to

get a hundred p e ratio we would barely

have to be starting to see that curve of

the s curve and what i mean by that like

is if we put in let's say 17

million right here see we start getting

that s curve that flattening if we start

getting that 100 is going to start being

a little bit rich so this could be a

little bullish but

i am very bullish on tesla okay so i'm

being transparent about my bias here

but anyway in that case uh at 61 times

earn it or at 61 dollars in earnings per

share we could be somewhere around a six

thousand dollar price

in 2030 for tesla which if you invested

today at 700 would be an approximately

twenty four point two percent annual

compounded rate of return that's every

year if you buy today at twenty seven at

700 if this is true every year you'd be

printing tennies of about 24 on this

stock uh which is pretty freaking

incredible uh so this is a bullish

thesis and i realize this is very

bullish so i have to sort of dampen my

expectations a little bit and therefore

i have a base case scenario my base case

scenario basically what i do is i assume

tesla only gets to 15 market share by

2030 and i also uh because of that scale

down their energy and insurance revenues

and their leases and the others i keep

margin largely the same

and everything else pretty much the same

except i only use

70 times earnings in the future so we

have a lower eps of 45

and i project out at 70 times in the

future to get to about 3 200 per share

at a future value in 2030 which would

give me an annual compounded rate of

return of 16.44

but let's see how my projections here

compare to wall street projections

because keep in mind my crazy bull

thesis for tesla

gives tesla a market cap of almost seven

trillion dollars i know that sounds

insane but then again i'm also the dude

who has 47 of their money in tesla stock

so i better be freaking bullish

[laughter]

so yeah six thousand dollar price target

seven thousand dollar or seven trillion

dollar market cap either i've lost my

mind

or i'm gonna be close

and even if i shoot for the moon and

miss a little bit i'm still going to

have some beautiful tundies coming out

of the oven okay

but anyway

so my base case scenario just lowers

their penetration worldwide but it's

still bullish 15 that's still more than

toyota's doing today

all right let's look at what wall street

is projecting

wall street is projecting i'm i

backwards engineered this a little bit

so let me start with what they thought

with or started with wall street is

projecting a consensus estimate of 389

billion dollars in total revenues for

2030 and then they start tapering off

after 2030 they actually think

tesla revenues will start declining in

31 32 and and you won't see growth

anymore you'll actually see shrinkage

and nobody likes to see shrinkage nobody

but anyway

if we kind of reverse engineer how we

could get to this consensus which by the

way wall street estimates range from

about 250 billion dollars in revenue in

2030 up to 600 billion in 2030 so what a

trillion dollars in revenue

in my bulk basis i'm pretty high i'm

potentially a little overly bullish in

my base case scenario i'm also high i

put them at 754 billion but that's

because i think wall street

misunderstands tesla and i don't agree

with other people's estimates so anyway

if we go with wall street's numbers so

this is wall street's consensus estimate

and we give them a 70 times earnings

multiple in the future

this would be about a 1700 stock which

if you buy it today at 700 gives you

about a 9.24 return you could probably

if this ended up being true you probably

do better elsewhere you know start with

a smaller company but

i want to know what tesla's thinking so

in order to know what tesla's thinking

is i want to do some gigawatt math gig

what

[laughter] but before we talk about

gigawatts i have to quickly mention that

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stock with okay let's let's go to

gigawatts so gigawatt projections

actually come directly from tesla's

battery day and elon musk thinks that

tesla is going to produce

three

terawatts of power batteries which

batteries is the threshold for

everything at tesla if i put in an elon

discount which basically means i don't

believe that elon's going to get to

three terawatts and i take off 20

and they only get to 2.4 terawatts or

2400 gigawatts then they will have 2.4

billion kilowatts of energy in battery

packs

if i give the energy division half that

and we sell those energy products at 70

per kilowatt hour in 2030 which i think

is likely maybe it'll even go down to 50

we'll see that's only about 84 billion

dollars of energy revenue which is

actually less bullish than i am in my

bull and base case in both of them it's

less bullish

so this is important to keep in mind

because this could be tesla's projection

here right regarding gigawatts and it

depends on how much money we get per

kilowatt if this is 90 obviously it

looks a lot more beautiful if the cars

get the other half and we put about an

85 kilowatt hour on average pack in each

car some cars are going to be 30 40 some

smaller cars inexpensive city cars and

like china and india some like the semi

truck are going to be you know 400

kilowatt hour packs right anyway if we

uh do that we've got about 14 million

cars which lines up with my it's kind of

between my bowl and base case right my

bowl is 16 my base is 12 million cars

and 20 30. with gigawatts here half

going to energy and half going to cars

we're at 14 million cars for battery

capacity to be able to produce

and then if we just skip all the other

stuff everything else being consistent

we also use a 70 times earnings

multiplier not a hundred times like in

my bold case because that means we're

starting to see that s curve and we're

not going to see those bullish

projections again which that 70 could

even be high okay so there are risks in

this

anyway that would give us an eps of

about 44 which means a reasonable price

for tesla could be uh just over three

thousand dollars in 2030 which actually

aligns roughly with my base case

projection so my base case projection is

a price of thirty two hundred dollars

for tesla uh based on tesla's numbers we

should also be at about three thousand

dollars per share in 2030 which would

give you a return on your money of about

16.03 compounded every single freaking

years every single year for the next 10

years

uh if you buy it at 700 per share now uh

yes i realize i am very highly bullish

on tesla so consider the risk factors

battery technology expanding factories

competition what's lucid going to do

what's neo going to do those are all

very real concerns but if you like the

way that i do my fundamental analysis i

take a little bit of a different

approach to fundamental analysis i don't

like using discounted cash flow on these

high growth companies because it becomes

a little bit more complicated but this

is kind of doing a discounted cash flow

in reverse it's accomplishing the same

thing in my opinion in a more intuitive

way so any if you like the way i do

fundamental analysis consider my program

down below on stocks in the psychology

of money and you'll learn exactly how i

do fundamental analysis thank you very

much for watching hopefully you

appreciated this breakdown of my tesla

projections and folks we'll see in the

next

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you