The Tesla Problem | Tesla Earnings Preview [TSLA Stock]

is it time to buy the dip on Tesla or is

there a potential price Target that I

have in mind for where Tesla really

becomes a more juicy entry point let's

talk about that in this video quick

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house.com okay let's talk Tesla so

obviously there are a lot of things to

cover here let's just keep it straight

earnings are tomorrow for Tesla this is

a big deal and right now Tesla is

trading at about a 50.7 PE ratio with

earnings estimates for the year sitting

at about

$2.7 with that kind of valuation we

should be growing EPS at about

35% which uh actually given that current

forecast sore that we're only going to

grow EPS by about

27% the downside to the stock I think

based on just this valuation metric is

probably

$123 that's probably where we go down to

to if we actually want to sit at an

accurate level with where the valuation

is based on where its PEG ratio should

be around 1.67 so 123 is kind of a

number that I'm paying attention to but

there are a lot of things and this is

what we have to talk about there are a

lot of things that could push Tesla

stock up above that 123 level or below

that 123 level and a lot of it is a

corally and almost solely based around

deliveries I know people get exhausted

when they hear me talk about just

deliveries deliveries deliveries I know

imagine that a car a Manufacturing

Company yes with technology but actually

having deliveries growth and the reason

I say this is because when we jump over

here to the spreadsheet first of all I

had to go in here and I had to drop the

price realization for FSD to $99 it's

18% realization for FSD at 99 bucks

obviously I expect it to be on the lower

side because you have to offset people

who already own it outright

International uh countries that that

don't yet and might not support FSD for

a while so you're really just looking at

the new Fleet and some existing folks uh

and you got to get that Fleet to grow

the more we grow the fleet the more we

can actually make from FSD revs again it

goes back to deliveries but what I want

you to see are these price targets here

for Tesla assuming 17.5% margin and then

various different levels of FSD and Robo

taxi I only start pricing in Robo taxi

right here at about about $3.7 billion

honestly I think the $3.7 billion is is

a little uh let's just say generous uh

for really a 2026 Target mostly because

I I think even if we have a limited

small scale kind of start of FSD it

probably wouldn't grow past the level of

wh until at least 2027 89 somewhere in

that trajectory but anyway well we'll

see when we price all these various

different things in here or various

prices we could see uh no FSD no Robo

Taxi we should be trading around uh

$163 if we can get to that 327 EPS by

2026 so that'd be a 167 price Target

going forward given that the current

price is about 140 that actually gives

us Positive Growth again about a return

of about 5.9% per year going forward so

now that the price is no longer in the

170s and we're 140 we're actually

getting consistently positive numbers

now across the board as long as we can

forecast that yes

we don't need FSD or Robo taxi we just

need to get to those 2 and A5 million

deliveries and we got to get back to

growth keep in mind my earnings growth

Target is about 30% uh 30 to 35% that's

where you want to be that enables the 60

over here now if we're only going to be

at 20% growth you're going to see these

numbers fall substantially and then you

go right back to negative uh you could

see literally we go from a price Target

in 2026 of 109 uh or we go to 12 27 if

we include 18% FSD if we include some

Robo taxi we go to 140 and if we can get

from that uh sorry that should be 2.5

million Vehicles there we go 2.5 million

Vehicles if we get to 3.1 million

Vehicles we can get up to 166 but what

we really need is growth of earnings and

deliveries drive that at least for right

now deliveries drive that massively

because again the more deliveries we get

the more we can enhance the level of SD

Revenue we're getting and uh likely the

trust for robo taxi and the expansion of

that would network more deliveries wins

across the board I'll just show you this

on the extreme here we go over here 166

on the high side for 2026 at 20% growth

if I jump this up to 4 million Vehicles

you'll see a nice move over here where

we actually go to

$26 so I pull that back out and I go

right back to where we were which was

the uh 3.1 level 3.1 level I mean you're

looking at a huge difference here $40

price difference 166 to 206 deliveries

drive this just just an extra 900,000

vehicles and I I realize that it's not

just that it's an auto company but it's

the fact that the more Autos we deliver

the more FSD we get and again the more

trust we get on the robo taxi system

because the more data it collects the

more practice it gets everything wins

from more more more production the

problem is we're probably not going to

hear anything optimistic in the earnings

call tomorrow about actually building

out Giga Mexico Giga Mexico was supposed

to undergo a substantial expansion

thanks to the model 2 ramp with a

compact car ramp well and that's also

based on an interview that uh Elon Musk

did with Sandy Monroe where he suggested

hey he's working on the line almost

every single week and he sees massive

progress on the new production line and

and that production line will get

sampled in Austin first and then it'll

go to Giga Mexico well the fact that now

Giga Mexico is on the back burner we're

delaying potential expansion to other

countries like India laying trips over

there for whatever reason uh and we're

not really expanding the company we're

actually going into Cash preservation

mode a lot of folks are worried that

deliveries are the number one thing that

is going to slow us down even in the

face of strengthening FSD so obviously

that's what everybody's concerned about

right now the company does feel very

much to be in cash preservation mode and

that makes me a little nervous for the

next topic which would be free cash flow

we really need free cash flow to stay

positive that's operating cash less

Investments like AI chips or factories

ramping Giga Texas ramping Giga Berlin

we do not not not not not not want to

see negative free cash flow that would

be very bad tomorrow in earnings uh and

given that we're seeing such cost

cutting here in April which is in Q2

there are some people who believe we're

going to get a very disgusting free cash

flow negative surprise uh next uh uh you

know in the earnings call tomorrow and

that would be very bad I I would not

cheer that at all I would not look

forward to that uh because I think it

would be very bad to the stock or for

the stock and for the company because it

potentially be gets the question of okay

is Tesla going to have to raise money

that you don't want to hear about you

want to hear companies doing BuyBacks

when the stock is falling not trying to

raise money when the stock is falling

right so uh this would be an issue now

we did just see obviously quite a few

cash preservation plays from Elon Elon

for example uh is expected to have laid

off about 20,000 individuals in the

latest round of Cost Cuts given that

this is a company of 140,000 you're

probably looking at about 14.2% 14.3%

across the board and we just lost the ad

which you might remember but it was last

year right around this time that at the

shareholder meeting I asked Elon Musk

why don't you promote these wonderful

things that Tesla does whether it's the

special safety that other cars aren't

doing or the features that other cars

aren't doing why don't you promote these

things and tell everybody else about

this by advertising and he responded to

me and said well we'll try a little

advertising and give it a shot yeah

today he cut the entire ad team and one

of his complaints was that the ads felt

too generic like they were

too uh like they could have been

basically any uh uh car and that they

didn't specifically speak to the

features of Tesla which is actually what

originally Elon agreed to trying

advertising on is speaking to the

features of Tesla specifically and not

trying to be generic like a car company

one of the way and here you could see

that uh that tweet uh the ads were far

too generic could have been any car

company so it's unfortunate the vision

was sort of distorted a bit what I

actually did last year is I uh came up

with a strategy for uh Tesla uh ads and

we actually made a few Tesla ads as

samples and what we did is we really

wanted to contrast Tesla to other

vehicles hey here's how we compare to

the Rav 4 we basically took some

inspiration from I'm a Mac and I'm a PC

and we just ran some ads totally for

free just well like post them to to show

people hey look you know here's how we

would do it and it was like I'm a Tesla

I'm a Rav 4 and we would compare the

features and the pricing and specs and

try to find a fun way to really educate

people just like the old I'm a Mac

versus I'm a PC ads I thought that was a

great strategy and I think that would

have been a great direction for them to

go of course I'm not there running the

company or a part of the company so all

I could do is sort of give suggestions

and then if people take advantage of

those great if they don't no

problem so

uh the second thing that I really

thought Tesla needed was a spokesperson

that was not Elon somebody that uh you

know elon's divisive we know that a lot

of people absolutely love Elon the odds

are more most people watching this video

really like Elon they respect Elon but

maybe maybe some people agree he's he's

a little one-sided in his political

opinions uh we've already talked about

this before other analysts say that oh

well for every person Elon pisses off

he'll find a new like uh you know a new

new follower the problem with that idea

is it's not necessarily true because you

have to wait the odds that those people

are going to buy a Tesla right so let me

just just be blunt here if you lose a

Democrat and you gain a republican did

you net grow stay the same or lose and

my opinion is you have to weigh the odds

of a Democrat buying an EV versus a

republican buying an EV I'm not saying

there aren't Republicans who don't own

EVS I know there are I'm just saying

if uh a a republican is only 20% likely

to buy an EV and a Democrat is 80%

likely to buy an EV well then if I lose

10 Democrats then I'm down eight

potential buyers and I gain 10

Republicans then I'm up two potential

buyers so I'm now at a net loss of six

so even though like hey I I you know

lost 10 followers and I gained 10

followers you actually net loss sex

buyers right so you have to you have to

consider statistics when when people are

actively talking against potentially

your political persuasion it's very

difficult by the way to be neutral on

the internet most people will fall in

the Trap of just only going either I'm

only going to you know tweet or follow

or talk about the left I'm only going to

Tweet or follow or talk about the right

uh I think I take a very challenged

approach by going as much in the middle

as possible everybody tries to guess my

biases or whatever it doesn't really

matter I I really try my best to just

stay in the middle and try to stay out

of uh picking sides in politics mostly

because I like even though you could win

really well just leaning in on one side

that's just not me I don't do that i'

like to see both sides so uh

anyway so this is an interesting comment

about the ads another thing oh yeah

regarding this this sort of spokesperson

for Tesla I think Tesla really need

somebody like a Taylor Swift or uh you

know Ry Reynolds or or somebody that's

the face to do that sort of like I'm a

Mac versus I'm a PC style ad and really

I I think that would be so great because

then you would finally make the face of

Tesla not Elon which we know it's so

connected it's done so well under Elon

but not the last few years it's it's not

been good right uh so I wonder if

there's a way you could get a neutral uh

face especially someone like a Taylor

Swift that can make this a lot uh easier

this by the way was the ad that we did

won't play it here but we did uh Tesla's

first advertisement I'm a Tesla versus

I'm a Rav 4 uh and so we uh we talked

about the uh the benefits and the

pricing uh and the differences between

the two um people really seem to enjoy

it and like it but uh anyway so um you

know having a neutral person like that I

think would be possible I also think it

would be very likely to I mean think

about Taylor Swift she she's got these

concerts going all across the world

who's sponsoring now I think it's like

it's Capital One sponsors like

everything Capital ones on all the mugs

all the banners all the tickets the

badges everything and that's a very

expensive ad campaign but uh you know

from our point of view but even if it

was hundreds of millions of dollars this

could potentially be some of the most

effective ads especially since some

argue that uh Swift fans lean more left

uh which is your demo anyway and we know

she's willing to do ads I mean she

signed her contract with FTX for example

she was going to promote FTX at all her

concerts uh you know branding signage or

whatever uh S bankman free just didn't

sign her contract back counter sign it

until the company fell apart so it shows

you uh just how broad uh that company's

uh influence

was but um boy you know uh it doesn't

sound like we're going in that direction

because instead we're going into Cash

preservation now this is a little bit

concerning because yesterday I discussed

how uh I made this analogy and I didn't

mean to compare it to Tesla at all but I

made this analogy where I said you know

there's the story of the father uh who's

running a store off a freeway and they

have a big billboard on the freeway and

the college educated son says father

we're going into a recession you better

cut spending and so the father cut

suspending by by removing the billboard

and sure enough the business fails

because your revenues collapse and then

they have to lay people off and whatever

somebody made a comment this morning

they like maybe the father was Tesla you

know maybe the father was Elon Musk Elon

daddy we're going into a

recession and he's been of this mindset

that the Federal Reserve has really had

the boot on the neck of the economy for

a long time which makes sense interest

rate sensitive stock uh so you have this

risk factor that elon's going in cash

preservation mode which is okay maybe

maybe we'll spend on AI but uh let's cut

expenses on Giga Mexico or creating a

new Giga or even expanding some of the

lines in Berlin or Texas let's cut staff

let's cut advertising cut cut cut cut

cut to survive what could end up being a

recession I'm of the mindset that if we

have some if we have a bad earnings week

this week we could have a

self-fulfilling recession that comes and

so from one point of view he's actually

doing a smart thing he's preserving cash

in the face of a potential recession

which is very scary because if you go

into recession that's you know how

companies can go bankrupt and so I don't

think Tesla is going to go bankrupt but

cash preservation is not what people

want to hear about if there's not a

recession they want to hear growth and I

don't think there's a growth story to be

heard until we get through this hard

time and people are just now going to

start waking up again to the idea that

the Federal Reserve interest rate

trajectory is probably a Miss we've been

rallying until about the middle of March

beginning of April

in markets across the board despite the

fact that rate cut bets are coming down

well the fed's going to matter again I

mean coming May 1st we have jpow again

May 1st by the way is also the deadline

to invest in house Haack read the

solicitation at house hack.com

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few of y'all have been aing us and that

doesn't work because we don't get enough

information so then they have to bounce

back and then it takes multiple days and

you have to send a wire anyway you got a

wire anyway so thank you though for for

investing so um deliveries are obviously

an issue margin you know a lot of people

Wall Street seems to think we're going

to be in the 16 17 range in the course

member live stream this morning we came

we we wrote sort of a spreadsheet on

like you know what's bullish what's

bearish uh and and uh some ideas around

Tesla one of the big things that we

wrote down was hey we want to see

margins over the 15 handle but we did

just get Troy teslik suggest that he

thinks margins are going to come in at

14.6 which is not great uh that would be

very very bad and that's mostly because

margins drive into free cash flow so you

really want to see positive free cash

flow margin over

15% and you want to hear some positive

growth commentary unfortunately we're

probably only going to get Robo taxi

commentary which I know a lot of people

are very excited about Robo taxi and

even Ed llows like hey look they're

they're renting some really cool neural

Nets in New York that have really good

progress and the progress is incredible

and that you know even Elon Musk

mentioned on Twitter the the or an ex

the FSD that we see on the street is

like 3 to 6 months old so when we get a

new version it's like 3 to 6 months old

and they're on the bleeding edge of FSD

but Elon Musk said something that I

thought was actually very important uh

and and he mentioned that you know yes

what you have on the street is probably

3 to 6 months old and part of that is

because when uh you have uh these new

artificial intelligence models come out

you end up getting uh FSD that's better

in certain cases like it will have

several breakthroughs but then dozens of

bugs where it performs much worse and

then it takes a few months to fix those

bugs so the problem with that is it's

very challenging to continue to train

these neural Nets over and over again

and then you're fixing some problems but

you're cre creating other problems we

got to get rid of creating the other

problems now one of the ways you can do

that is training with more data well

guess what that requires a larger Fleet

it requires more people on FSD and guess

what it requires more computing power

well to stay ahead of your competitors

you're probably going to have to jump

from the h100s to nvidia's latest chip

or maybe the next Generation chip pretty

soon so you're probably going to have to

regularly go through these Nvidia

upgrade cycles and keep buying the

latest and greatest chips because if

Tesla you know has a competitor that all

of a sudden gets their hands on a good

set of data or they steal it from Tesla

the data or you know they buy it from

Nvidia or or whatever the Chinese figure

it out whatever if somehow the the data

is being collected through nvidia's or

in chips or whatever and that can be

licensed out and then somebody else some

other schmuck buys a bunch of Blackwell

chips and and starts training well that

is a risk factor now I don't think it's

highly realistic because you know

Tesla's data is so Centric to the cars

and specific to the cars uh it's so you

probably have a moat there but at some

point if you have these Nvidia orange

chips and cameras on other cars somebody

is going to collect all of that data and

that data is going to be very very

valuable even if the data collector

themselves doesn't use it like a bunch

of companies collect the data and then

sell it and license it to some other FSD

Building Company that data has a lot of

value heck maybe even Elon Musk will

sell some of the data which would be

shooting yourself in the foot because

then you'd be giving away your mode I

don't think you should do that I I also

wasn't the biggest fan of giving away

the mode on the supercharger Network

because quite frankly now you made it

acceptable to own any other EV when

quite frankly you had such a glorious

moat to only own a Tesla because the

other supercharger networks suck and now

you're also kind of harming the

availability of superchargers for Tesla

owners because well now there are more

people clogging the spots you know

you're going to have more demand before

you have more infrastructure and so

you're just going to go through years of

longer Waits at the supercharger

networks and as a customer I feel a

little slapped in the face by that now I

don't really use the supercharger

networks because I barely drive so which

I'm grateful for I really despise

driving but uh yeah I mean that's that's

certainly a consideration now another

consideration too is elon's comp plan

now elon's comp plan is coming up for

vote most of the Tesla Bulls are arguing

that oh well if elon's comp plan is uh

is denied then he's going to quit Tesla

and Tesla will be leaderless and

whatever whatever whatever I don't I

don't think he'll quit Tesla I think

they'll just come up with a new comp

plan which honestly at this point is a

very real reality given that Tesla's

market cap sitting around 450 right here

450 billion you've already lost the last

three tranches of of elon's comp plan

actually last four tranches over here

you you're teetering on losing the fifth

trunch so uh a lot of people are saying

well Elon should be paid what he's owed

because this plan was you know approved

by 73% of shareholders uh and that's

fine I'm not here to take a stance on it

I'm just here to say uh and I know some

people like Kevin you should be

advocating for the comp plan and other

people are like oh Elon shouldn't get

the comp plan that's free money the

judge said it wasn't fair I'm not taking

a position on this uh I I don't think

it's uh my obligation to advocate for

for or against this I think it's really

up to you to determine this uh I think

that uh people should read the judge's

decision they should read what the comp

plan was and then they should make their

own decision right I actually went

through the judge's decision uh Elon

Musk meet Kevin 50 billion Compensation

Plan judge uh I did a whole video

breaking it down yeah here it is uh the

it's a 53 minute uh long video we did

this right here it's Elon loses $55

billion pay package Tesla stock down now

you can see Tesla stock was down over

here at 187 so quite a bit higher this

was a couple months ago and I actually

went through the comp plan and explained

the different aspects of that lawsuit so

you can understand what actually is in

there uh and you can see some live

commentary as well you could see some of

my thesis on this uh so so this this is

you know I I think some a pretty good

video to watch and then you could see

sort of the thoughts and questions that

I have in terms of realities if you're

interested in that I don't think it's

worth regurgitating here because it

would just take too long I've already

spent enough time on it so uh then uh

you know I do think we're you know EPS

is expected to come in at 52 cents Troy

thinks it'll be 46 cents some people

think it'll be a little higher I think

the biggest wild cards honestly for

tomorrow are going to be how much does

Elon Musk brag about Robo taxi uh how

close it is that could move the needle

of the stock uh I do expect that he's

going to ignore commentary about

deliveries and expectations for the

future growth of the company mostly

because he'll probably just sort of

blame Jerome Powell and then move on but

the idea of this purpose built Robo taxi

instead of a $25,000 car A lot of people

are debating about this and they're

freaking out about this some people are

like well what if it's both the robo

taxi and the 25k car and other people

are like no he's only going Robo taxi

and he's killing the 25k car and and

then other people are like they were

always the same thing look I don't think

it really matters what was or like what

what we speculate now I think what

matters most is what is and what matters

most in my opinion is that you do have a

mass Market vehicle so you can increase

deliveries increase growth of earnings

for the company get more fsds on the

road and therefore have more training

data and promote the company's growth

that way so I'm a big fan of a cheaper

car 25k car I'm a big fan of that uh and

a new 25k car like you know I'm not

talking about like a used model 3 that

sells for 25k I'm talking about a new uh

uh compact car that sells in that 25k

range I think that's a game changer for

Tesla and that was priced into Tesla uh

and I think that should be if it's built

on the same platform as robotaxi

fantastic but it should uh they should

both exist if that idea is dead and

basically the new model of vehicle is

only the robo taxi well now we have to

kick the can down the road on earnings

for multiple years and as a very

long-term investor it doesn't matter but

as a short-term investor is it going to

hurt yeah you know the more Elon talks

tomorrow about you know we're we're not

focused on a new vehicle right now we're

just focused on all in on Robo taxi and

uh you know I don't think I think he'll

say something like today is not the day

for product announcements come back on

August 8th that's because he you know

you really want to kick the Hope can

down the road so the stock doesn't

completely sell off because if he gave

everything today the stock would just

tank even more or on earnings call but

uh you know it would be nice to see

what's going on with gigga Mexico what's

going on with Manufacturing in Giga

Texas and uh and and are we actually

still trying to grow production or are

we just trying to fill up that demand

pool right now right now it seems to be

fill up the demand pool so what we're

seeing are interest rate subsidies and

price Cuts again which that's why the

stock's down 3 and half% today because

you know we had this price increase on

April 1st people were like Yay the

bottom for Mar Marin is in and then we

get a $2,000 price cut which you know

there were a couple two $1,000 price

increases so you're basically the same

but again it goes to show wow okay back

to the old method no advertising and uh

no uh you know no price increases

instead its price Cuts now you do have

some people on uh Twitter or X that are

like well uh what a surprise uh Twitter

or um Tesla starts advertising and uh

they have the worst quarter ever I don't

think that's one and the same like I I

don't think you can argue that because

they advertised their delivery sucked

even more I don't think that's

realistic uh I mean unless their

advertising was like offensive right

like I I think the biggest driver is is

really just you have this big pull

forward of people buying electric

vehicles when interest rates are low and

there are some people left over who

hadn't bought yet and now they're

they've bought and now you're just

running out of buyers at at these high

interest rates so I think that's why

Tesla is trying to focus on getting

interest rates down by doing interest

rate buy downs but again that's

expensive that costs Tesla money so

they're just sort of reallocating where

they're trying to spend their money uh

so you

know everybody can argue about the ads

whether they were good or bad or this

out or the other the one thing we can

say I think with certainty

is they're in cash preservation mode and

again for a Growth Company it it's not

great you you're you're not Growth

Company when you're in cash preservation

mode uh and so hopefully hopefully uh

that uh that long-term changes and uh

I'm very optimistic for Tesla in the

very long term but um short term I'm

still barish you know I thought I would

have re-bought by now honestly but the

news just keeps getting worse so I'm

curious to see what will happen with

earnings I do think uh with earnings I

mean it almost feels like you're going

to have a big move up or a big move down

which kind of makes spread seem somewhat

interesting but I don't know now what I

do know is with

certainty tomorrow we will be

beginning the investor Road Show for

house hack so if you want to learn more

and you've got questions you're an

accredit investor make sure you get your

accredited investor letter from invest

ready the deadline to invest is May 1st

that is coming up very soon that's jpow

day it's next week so in other words

we're closing this round in a week uh

and we're doing a little road show you

can ALS o download our investor

presentation this is obviously very

different from investing in stocks it's

investing in in a private real estate uh

company that we think can be bigger than

uh you know Open Door uh Invitation

Homes American home for rent American

homes for rent uh roof stock fundrise

all of that we think we can blow it all

out of the water no guarantees obviously

so read the risk factors and the

disclosures and thank you so much for

watching we'll see you in the next one

and I will be covering Tesla earnings

live so we'll see you there goodbye why

not advertising 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 PA there financial analyst and

YouTuber meet Kevin always great to get

your

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