Stocks - The Best Buys 2

[flylock shox]

The week is off to another toilet-bowl of a start for equities.



Picked up a little BTCC for DCA purposes, and finally dipped a toe into LAC. Both are down big on the day, but both are prone to wild swings.



Anyone seeing any good value stocks among these plunging prices?

[Enoch Root]

Fun with numbers....

Total vehicle sales for Rivian: 2,425 as of March 8th (that is TOTAL, not 2021)

In 2021, they sold 920.

Total vehicles sold by Audi in 2021: 1,680,512

Total electric vehicles sold by Audi in 2021: 81,875

Total electric vehicles sold by Porsche in 2021: 41,296

Total electric vehicles sold by VW in 2021: 369,000

So in total, VW (the company) sold roughly 500,000 electric vehicles in 2021, vs Rivian selling 920. And that ignores the millions of ICE vehicles that VW also sold.

And people were excited to buy Rivian at twice the valuation of VW.

[Enoch Root]

What is a 'reasonable' target for sales for Rivian by, say, 2025?

Let's say they can sell 100,000 vehicles per year. (I think that is wildly optimistic)

And let's say they can make $10,000 profit per vehicle (also optimistic)

That means $1B/yr in profit. That means - if the stock does nothing from here until then, it would still have a P/E of 25X.

In other words, it is still extremely difficult to justify this price. Even looking at (hopeful) numbers, several years out.

[opendoor]

I imagine people are (or were) willing to take a risk on the chance of investing in another Tesla. Tesla's market cap roughly matched VW's when they were selling under 20K vehicles a year and it has gone up 15x since then (while VW has lost about half its value in the last year), so people who invested at what was then seen as a crazy valuation were proven right. Not saying I'd invest in Rivian at all, but based on sales numbers and P/E ratios, Tesla was wildly overvalued even before the stock went up 20x over a 3-year period.

[Enoch Root]

Originally Posted by opendoor

I imagine people are (or were) willing to take a risk on the chance of investing in another Tesla. Tesla's market cap roughly matched VW's when they were selling under 20K vehicles a year and it has gone up 15x since then (while VW has lost about half its value in the last year), so people who invested at what was then seen as a crazy valuation were proven right. Not saying I'd invest in Rivian at all, but based on sales numbers and P/E ratios, Tesla was wildly overvalued even before the stock went up 20x over a 3-year period.

Yes, of course. But Tesla was first. And first is worth a lot. Also, Tesla has other irons in the fire.

The thing, now, is that EVERY manufacturer is/will be selling EVs. Rivian has no advantage over other manufacturers, the way Tesla did. They will be fighting for market share with dozens of other suppliers. And that means 1) sales are limited, and 2) (more importantly) profits are limited

[Enoch Root]

More interesting numbers...

Tesla sold 936k vehicles in 2021, compared to VW with 500k. I doubt anyone thinks of VW when they think of EVs, and yet they are already a very real competitor for Tesla.

I have been saying for a long time that, as soon as the other manufacturers get up to speed, things are going to be very different for Tesla. Those days are fast approaching.

[DoubleK]

SPY just broke through 400.

[zamler]

Originally Posted by Enoch Root

I have been saying for a long time that, as soon as the other manufacturers get up to speed, things are going to be very different for Tesla. Those days are fast approaching.

I've read 100x versions of the competition is coming yet Tesla continues to grow sales and revenue faster than anyone else. But as I always say if you have conviction then buy shares in the companies you think are going to overtake Tesla. The headline alone would spike said companies stock.

Truth is saying company X is going to best Tesla is wish fulfillment not based on fundamentals. Been that way for at least 5 years.

[Samonadreau]

Ya if Tesla's piece of the pie gets smaller, the pie is also getting waaaay bigger so they are still going to grow and likely be the biggest.

Plus the side projects like the Tesla phone could be a boost.

[CPK80]

Originally Posted by Samonadreau

Ya if Tesla's piece of the pie gets smaller, the pie is also getting waaaay bigger so they are still going to grow and likely be the biggest.

Plus the side projects like the Tesla phone could be a boost.

- When looking at numbers, they are starting to lose the very high end... I think Porsche now sells more of there EVs than Tesla sells of there high-end S "Series".
- At this time they are not looking at the entry level market. Though rumors of this 2 model.
- While they have announced there truck.. It looks like Ford/Dodge/GM are all going to beat them to market with trucks.
- They do dominate the mid market with both there 3 series and Y series but that is were the competition is going to get tough.

And isn't the phone more of a wish by Tesla fans and every time something comes about it, it is proven fake.

Also I read a great tweet how Telsa could be like Blackberry... Excellent product, pretty much first to market.. But got distracted trying to do other things.

[Enoch Root]

Originally Posted by zamler

I've read 100x versions of the competition is coming yet Tesla continues to grow sales and revenue faster than anyone else. But as I always say if you have conviction then buy shares in the companies you think are going to overtake Tesla. The headline alone would spike said companies stock.

Truth is saying company X is going to best Tesla is wish fulfillment not based on fundamentals. Been that way for at least 5 years.

You are treating this like a sporting event and you are rooting your favourite team. That is not how it works with stock prices.

Their stock price has built in A #### TON of growth. I am saying that growth rate is going to be severely challenged, a lot quicker than some people think.

That doesn't mean they won't keep selling cars. It doesn't mean they won't keep growing. But in order to justify the current stock price, their growth has to continue to be exponential. And that is becoming increasingly unlikely, as other manufacturers bring more and more EVs to market.

Look at VW's numbers - they now have EVs on multiple platforms, and covering the spectrum with respect to price point. And their market share is expanding very rapidly (500,000 EVs last year, when they were all but non-existent, 4 or 5 years ago).

And that is just one company. EVERY company is entering the market. It is simple math - the growth that is priced into Tesla's stock, is just not going to be achievable.

The fact that people have been saying it for a long time is not proof that it won't become true.

[Enoch Root]

Originally Posted by Samonadreau

Ya if Tesla's piece of the pie gets smaller, the pie is also getting waaaay bigger so they are still going to grow and likely be the biggest.

Plus the side projects like the Tesla phone could be a boost.

Again, this isn't a question of whether they will continue to grow. It is a question of whether the stock price is justifiable.

[Enoch Root]

Originally Posted by CPK80

- When looking at numbers, they are starting to lose the very high end... I think Porsche now sells more of there EVs than Tesla sells of there high-end S "Series".
- At this time they are not looking at the entry level market. Though rumors of this 2 model.
- While they have announced there truck.. It looks like Ford/Dodge/GM are all going to beat them to market with trucks.
- They do dominate the mid market with both there 3 series and Y series but that is were the competition is going to get tough.

And isn't the phone more of a wish by Tesla fans and every time something comes about it, it is proven fake.

Also I read a great tweet how Telsa could be like Blackberry... Excellent product, pretty much first to market.. But got distracted trying to do other things.

And the high end is where the real profit is. Porsche has already dented Tesla's dominance in that space. And now Audi has entered the market. Mercedes too. And Lucid and Polestar are coming to market.

And soon every other manufacturer will have a high-end vehicle for sale.

Porsche proved that Tesla is beatable, with their very first attempt. As the marketplace gets more crowded, it is only going to become more difficult.

[Fuzz]

Looking at Tesla's sales:

https://insideevs.com/news/558255/te...raphed-2021q4/

It's kind of amazing how few S and X they sell. Pretty much everything is in the 3 and Y. Will those sales continue? They are not all that interesting of vehicles, which leaves competitors room to catch consumers' imagination.

What's coming? The Roadster, which is going to be low volume as well. They've got the semi, which already has competition in that space. So that leaves the Cybertruck ,which will also be up against the Ford, Chevy and Dodge. Ford beats them to market, with a huge built in customer base. It's also a pretty polarizing design. They'll sell them to big Tesla fans, but does the typical consumer want to be seen in that thing? I''m not so sure.

So the current lineup doesn't have a lot of exciting high volume designs in the pipeline. They'll continue to grow sales of the 3 and Y, but if those drop off, they could be in trouble. I don't see the Cybertruck doing anything near those volumes.

[Enoch Root]

Model S and X at 25,000 vs Porsche at 41,000

And in 12 to 24 months, there will be at least a dozen more competitors in the luxury space

[Ashasx]

Isn't the Model S pretty long in the tooth at this point? I know they keep updating the motor, but exterior and interior styling have remained pretty much unchanged for a while now.

The Taycan is the new fancy German toy.

[Table 5]

I think they really erred with the Cybertruck. While I admire them taking a chance with the design, they went too far and made it so impractical that it will only ever be a niche product.

They really should've made it more like the Rivian. It's the perfect combination of new tech and real-world practicality. I think something like that with the Tesla badge could've been a massive hit and would've helped to keep the forward momentum going.

[Enoch Root]

Originally Posted by Table 5

I think they really erred with the Cybertruck. While I admire them taking a chance with the design, they went too far and made it so impractical that it will only ever be a niche product.

They really should've made it more like the Rivian. It's the perfect combination of new tech and real-world practicality. I think something like that with the Tesla badge could've been a massive hit.

Completely agree. If Tesla built the Rivian, and got it to market, it would be killing right now.

The Cybertruck is a fringe novelty (if it is ever built)

[Jason14h]

The generation that mostly can afford high end luxury cars didn’t grow up with Tesla as a brand

So Teslas high end market is effectively high earning young IT professionals

We will see in a decade if the next generation of high earners buy a Tesla, Mercedes or VW product

[Enoch Root]

Originally Posted by Jason14h

The generation that mostly can afford high end luxury cars didn’t grow up with Tesla as a brand

So Teslas high end market is effectively high earning young IT professionals

We will see in a decade if the next generation of high earners buy a Tesla, Mercedes or VW product

They will buy all 3 (as well as everything else)

But the devil is in the details, and if you want to justify a trillion dollar stock price, you better be able to generate interest with all generations - especially the largest and wealthiest one.