Tesla: The Next Peloton | Bankruptcy Coming.

is Tesla the next Peloton let's talk

about that in this video and we're going

to make comparisons not only between the

cash flows of the two companies the

income of the two companies but we'll

also be analyzing lead times what news

did we hear about Tesla today that we

need to address and

what about Congress what did they have

to do with all of this especially on an

election day well let's analyze if Tesla

is the next Peloton stock set to lose 80

percent of its value in just a one-year

time frame and boy oh boy if you look at

Peloton stock it's not a roller coaster

you would have wanted to ride down you

would have started at an IPO level of

somewhere around

32.26 to 32 you would have ridden the

wave up to 171 and dropped all the way

down to sub ten dollars again now that

is a roller coaster but it's one that

some say is coming for Tesla and that

this run that we've had for Tesla is now

not only in a downtrend but it's just

the beginning of the downtrend

let's analyze the differences between

Peloton and Tesla in this video right

after I mention that thank you for being

here I really appreciate you okay so the

Peloton disaster we remember that I've

made multiple videos about Peloton back

when it was around 113 dollars per share

talking about why I was changing my mind

and selling my Peloton stock

unfortunately I didn't sell it at the

top at 171 but I did sell right around

113. and the reasons that led up to me

selling Peloton stock were massive

inflections in the fundamentals of the

business first we saw that Google search

Trends were dropping off a cliff for

Peloton bikes in addition to that

alexa.com reviews showed that the

website analytics for Peloton were

starting to suffer we noticed that page

hits and average time on website were

both declining substantially more than

they previously had suggesting that

consumers were changing their tastes and

preferences maybe not being so

interested in exercise bikes that are

useful for when you're stuck at home and

under under lockdown or quarantine

so we noticed this at the same time as

all of a sudden peloton's lead times for

their bikes dropping from about 6 to 12

weeks all the way to one to two weeks

which is almost just your basic shipping

time

in addition to that Peloton slashed the

price of the Peloton bike from over

twenty five hundred dollars to the lower

2000s and eventually under two thousand

today they have so many of these bikes

in inventory which inventory is the

worst thing to have because what happens

is inventory needs to be maintained you

ended up having rustgate and the

disasters that Afflicted Peloton

regarding rustgate of Peloton bikes

starting to rust they had not only a

death involving their new treadmill

which led to the freezing of sales of

their treadmill which is also not very

good for the company overall but the

there were a lot of things that

suggested uh oh we've got some

problematic headwinds ahead of us and

sure enough Peloton did and the stock

plummeted from 113 dollars down to under

10 dollars

so

what is similar between Peloton and

Tesla and then let's compare what's

different and the different part is

going to be very very important because

right now Tesla is trading for 194

dollars at the time of this recording

and I hate to say it their vehicles are

just becoming more available now while

it's nice that people might not have to

wait as long for a Tesla the biggest

concern that individuals have is not

that they won't get their Tesla soon

enough if they want to order a Tesla but

rather that going into a recessionary

environment or likely being in a

recessionary environment already and and

that environment being very uncertain in

terms of how long it'll last could

ultimately lead to

well less people buying Teslas and when

demand goes down obviously lead times

are going to go down like Peloton now

there is another reason lead times could

be going down but let's take a look at

what we can analyze regarding demand

first we notice that the model y

performance has a November potential

estimated delivery date we can see that

right here the long range has a December

estimated delivery date that essentially

means if you wanted to get a model y you

could get it within the next month the

model X has a little bit more extended

lead times if you want the regular model

X all going all the way out to March

before these become available that's

about five months but that's where the

lead times end all of the other lead

types for the model X plaid all of the

Model S's available and the model 3s

available all have lead times that

include potential delivery in November

which means they're essentially

immediately available and If there are

Teslas that are immediately available we

would expect there would be some kind of

existing inventory under existing

inventory in this tab which there didn't

used to be an existing inventory this

used to be zero a few weeks ago there

were six cars available within 200 miles

of my ZIP code now unfortunately when I

click on model threes there are over 20

model threes available within 200 miles

of my ZIP code not only that though if I

type in

33324 which is a South Florida ZIP code

I also get vehicles available about six

if I go to let's go to Chicago we throw

in a Chicago zip code what do we get we

also get about seven Vehicles available

so we're starting to see more

availability of vehicles

on Tesla's website and Lead times for

new vehicles that aren't just hanging

out are also coming down substantially

and this is leading a lot of people to

say that's it Tesla's the next Peloton

he's going down

but what's different between the two

companies and that's really important

and we're going to talk about that

difference right now talk about

spreadsheets and the big differences I

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what's different between Peloton and

Tesla look at this Peloton was losing in

the quarter ending September 30th 2021

four million dollars per day

and in the quarter ending September 30th

this year they're still losing four

million dollars per day from operations

they can't figure out how to make money

on top of that they've had a CEO

transition and they're totally clueless

in terms of how to manage their cash

because they have so much inventory that

they're burning their inventory almost

at an opera well they are an operating

loss just to try to figure out how to

keep the Pelton system spinning

this is really different from Tesla

instead of losing four million dollars

per day Tesla's cash provided in Q2

which is when Shanghai their most

productive Factory was shut down was

about 25 million dollars per day and in

Q3 when Shanghai came alive again it

bumped up to about 50 million dollars

per day in cash that Tesla is generating

operating profits not losses and these

numbers are getting better and expected

to be even larger in the fourth quarter

this is phenomenal and even if you

subtract out the amount of money they're

investing into factories like the 1.8

billion dollars they spent in Q3 they

still had over three billion dollars of

free cash flow left over so already

you've got two massively different

companies one that actually prints money

Tesla and one that doesn't Peloton now

sure lead times are going down for

Teslas but that could be for a good

reason see Elon Musk has told us he

thinks the wait times are actually

really bad for Tesla because they just

encourage somebody to go buy another

electric vehicle from another dealer or

another manufacturer because hey people

don't want to wait for the for a new car

when they make the decision to buy a new

car they want a new car now so they can

go buy a fuel efficient Prius from

Toyota they might go do that instead of

waiting for a Tesla now maybe they'll

buy a Ford Maki or they'll buy a pickup

truck or whatever they want to buy so

this is where some are saying that

Tesla's falling lead times are actually

just going to enable Tesla to expand the

number of customers they could have at

Tesla and actually capitalize more

market share during the recession than

any other Electric Vehicle Manufacturer

can during the recession think about

that from an exciting point of view that

basically means Tesla could eat the

competition alive

while printing cash taking more market

share in a recession while the other

companies can't even produce a

profitable electric vehicle look at Ford

for example they don't have a profitable

electric vehicle they ate it they lost a

lot of money on the uh Mach e model and

they're still losing money that's scary

contrast that with Tesla it means Tesla

can just continue to make more cars and

hopefully take away customers from

companies like Ford or GM or other

electric vehicle companies and then when

we come out of this recession and it's

boom time for everyone again Tesla's now

already so much further ahead because I

truly believe once people get into the

Tesla ecosystem they don't leave it's

kind of like you get into apple and then

you feel like you're stuck I don't see

people trading out of a Tesla once they

own a Tesla and this brings up this idea

that maybe in the short term we're

seeing a little bit of fun because some

believe a republican-controlled congress

which could potentially happen might end

up trying to unwind the inflation

reduction act which promises large tax

credits for electric vehicles with

certain conditions and electric

batteries and so on as well as solar

panels and everything starting in 2023

which could also be a big Catalyst for

more sales however as long as Joe Biden

as president I don't believe that Biden

will actually sign something to overturn

the inflation reduction act so I

actually don't believe that's a very

good reason to suggest that that EV

stocks are falling because Republicans

might try to end the inflation reduction

act which again has has a large uh

energy tax credit component to it but

what you do have is fud from a recall

this morning yet another recall led to

yet some more fud over at Tesla and and

the world of people who like to bag on

Teslas take a look at this tweet that I

sent this morning I sent this tweet

headlines everywhere Tesla steering

failure recall stock drops Tesla down

five percent panic and then those are

like the headlines I mean look at some

of these headlines okay recall plagued

Tesla calls back another 40 000 cars

over possible steering issue

then none of these say this in the

headline but when you read the actual

article you see a little note at the

bottom of all these fud stories that say

this is a voluntary recall that requires

an over-the-air software update

could you imagine seeing all of these

alerts when Apple sends you a software

update for your phone

recall plagued Apple requires users to

install update

voluntarily

it's quite sad honestly it's quite sad

so what do we actually think for Tesla

like bottom line what do we actually

think for Tesla well I actually think

this is a phenomenal opportunity

to understand that the market is

emotional the market is like a little

child it's stupid in the short term in

the short term it's gambling that's all

the market is is in the short term it's

just gambling it's a casino

in the long term we can actually

evaluate what true fundamentals are and

my belief is that you don't even need to

give any dime of credit to full

self-driving revenues from Tesla

uh you give some obviously in the

revenue per vehicle but you don't have

to give anything to semis cyber truck

insurance Robo taxis the the bot that

can't walk which I'm actually really

optimistic on uh but you know people

like to make fun of it you don't have to

give any credit to that as long as Tesla

can maintain about a 29

uh profit margin gross profit margin on

on the sale of vehicles

Tesla should be worth

should be worth about 481 dollars at the

end of 2025.

and since Tesla right now is trading for

about 190 bucks that would represent a

26 percent compounded annual return over

the next four years

that's actually pretty incredible 23 24

25 wait a minute

that's only three years away oh oh I'm

gonna change that to three years that

would represent a

36.3 percent compounded annual rate of

return and if Tesla can get that margin

back and maybe even above 30 percent

let's change this to uh 31 margin so 69

expense oh my gosh Tesla stock could

shoot up to 546 dollars per share a

compounded annual rate of return over

the next three years of 42 every single

year this is phenomenal this is

phenomenal now what could hurt this is a

lower p e ratio but I don't believe that

Tesla's p e ratio in the future can

really be lower than their growth rate

in fact their p e ratio could be as high

as two times their earnings growth rate

and right now we expect Tesla earnings

to be growing roughly at about 50

percent so about 1.1 times for a PEG

ratio Tesla has pricing power Tesla has

substantial growth and it makes little

sense to see that Tesla's p e ratio

would converge anytime soon to levels as

low as what you see with Google or Apple

which Apple's usually around you know 27

to 30. Google's uh relatively low but

then again their growth has slowed

substantially they're somewhere around

12. we don't actually expect to see

numbers like that or like the stagnant

vehicle manufacturers who are around

like nine times earnings right

uh we don't expect to see that for Tesla

uh until probably in the 2030s when

Tesla's growth actually slows but in the

short term there are a lot of fears that

Tesla is not a good company to invest in

during a recession because people won't

buy cars and so far that's being

evidenced by lower lead times I think

that is a reasonable concern

but I actually think

these lower lead times are a huge

benefit to Tesla and the Tesla Community

because this recession is going to be

the time where Tesla just eats up all

the competition obviously not all of it

but I expect their market share to

substantially increase during the

recession whereas other companies will

likely see their market shares decline

during the recession as they panic

because of recessionary costs and losses

which Tesla doesn't have they're

printing money so have I changed my

opinion on Tesla not at all if anything

it looks even juicier right now than it

did at you know 210 or 220 or 230 or 240

but hey you know what that's what the

market does it goes up and down

and folks thank you so much for watching

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