Tesla Stock: How LOW can TSLA stock go? Time to BUY Tesla stock?

Tesla stock is down 30% in the last month and nearly 50% in 2022! This is despite strong fundamentals and 3Q deliveries up over 40%! Why is the stock down and where do I think Tesla stock goes from here? How LOW can Tesla stock go?

Tesla stocked down about 30 percent this past month now tesla is still clearly an exceptional business the question is how low does tesla stock go from here if this is your first time tuning in my name is daniel you’re watching unrivaled investing in this video we’re going to talk about some of the latest developments from tesla as well as my thoughts on tesla stock

From here what it could take to drive potentially 200 upside from here and why has tesla stock gotten bludgeoned in the last few days and weeks and so first of all in order to understand tesla i mean you should first understand they’ve delivered fantastic results 40 plus revenue growth strong profitability now did see a little bit of a downtick in the second quarter

Due to higher input cost but still overall very strong results much better than the industry growing earnings close to 60 on a per share basis looking at strong free cash flow and sizable cash balances i mean look folks this is what i want to see with most of my companies i want to see above industry average growth i want to see fantastic hyper growth like this i

Mean this means you’re unrivaled when you see profit margins and growth rates much better than the industry you are doing something special tesla clearly is doing it elon musk clearly doing it with you know much better factories much better processes and that cash flow means it’s sustainable or it has been the question is will it be sustainable throughout the market

Cycle that’s what the market is are to argue you know shareholders are starting to wonder about now latest results on deliveries did come in a little softer than folks expected but overall still really strong so they did talk about some challenges with logistics but still 42 percent growth in deliveries plus given that some price increases you’re probably talking

About 50 growth in revenue in the third quarter give or take get the stock is down around half year to date and this is why it’s so so important to understand what drives stocks over time what drives returns three things valuation fundamentals and cash flow to shareholders now tesla you don’t have the cash flow to shareholders through strike strike one over here

So then that leaves the last two fundamentals really strong forty percent plus growth real strong profitability but valuations has gotten absolutely crushed now that’s partly because of the environment you know tighter policy from the federal reserve i’d argue it’s also gotten squeeze valuation is absolutely gun crushed because of anticipation of potentially an

Economic slower and economically slower cycle where are we going in the future we’re going to talk about that in a second now part of the reason why the stock has gotten crushes possibly due to exogenous factors to tesla such as elon musk sort of waffling i’m gonna buy it i’m not gonna buy it i’m gonna sue they’re gonna sue who’s gonna sue i’m gonna lose so instead

Of losing i’ll just say hey i’m going to reverse course and buy twitter but the question is like hey how is he even gonna finance this i mean the interest loan on this deal is going to be around 1.2 billion dollars which twitter can’t afford so elon musk is going to have to sell more stock to cover this deal and you know he’s previously said oh i won’t have to

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Sell more shares and he said that in april but arguably he’s lost some credibility because then in august he sold several billion dollars of stock so could he become a for seller worse over 50 of the stock he owns is committed to personal debt it’s unclear how much of that is tied to margin loans but you know if you have a crazy enough ride in terms of tesla stock

Price you could see for selling from elon musk i don’t know what that price trip level is he hasn’t disclosed but you know arguably it’d be a lot lower but that does make me concerned you know when you see that sort of data point you know could you see a much much lower you know price because you get sort of or selling then you get down seven percent today because

The news that hey elon musk is under federal investigation over the twitter bill this does create the unexpected risk now it’s not it’s probably not greater than 50 but the unexpected risk of like hey could you see even jail time you know maybe a fine but could you even see jail time another reason arguably why the stock has gotten absolutely beaten up is because

Their show of optimus robots sort of you know uh underwhelmed you know a lot of folks have gotten to see some amazing robot videos you know dogs doing flips you know like going up and down stairs you know robots doing some crazy gymnastics and this one like you had like three people pushing this little thing and you thought it was gonna fall over at any moment i

Personally look at this i think it’s super cool but i think investors woke up to the reality that it’s probably not going to have any material impact to the results over the next five years is what i’d argue and investors arguably look at hey what what are you gonna do for me over the next few years and will this actually be a key driver i don’t think you’re gonna

See it probably for the next five years now elon musk will probably say otherwise but let’s see the question is where does tesla stock go from here first if you’re looking to take charge of your investment journey consider unrivaledinvesting.com for compelling investment ideas real-time portfolio updates and our exclusive discord server available for annual

Subscribers in full disclosure this is not financial advice so why is tesla stock you know getting hurt so a couple of different possibilities i already talked about the prospect of foreselling i think there are some macro concerns as well such as the cost on new auto loans which is now higher than it’s been this past decade this could translate this is a real i’d

Argue a leading indicator of what could drive their fundamental results later and so this is the concern of could you see weaker fundamentals in the quarters ahead because the cost for consumers is going up so could you see a deceleration in their revenue in the quarters ahead coupled with the fact that you’re seeing several calls effectively saying yeah folks a

Recession is going to happen in 2023 you know prominent folks like jamie dimon you know who runs jp morgan you know in a sense this almost becomes self-fulfilling because when you have the major bank heads say hey we see a recession six and nine months from now they’re the ones that provide credit they’re the ones that make you know booms and busts possible so when

A bank says hey hey we expect a recession that means they’re telling all their loan officers hey be extra prudent with your loans so that means a little bit of tightening from them themselves so then that it becomes self-fulfilling so if you see this i would expect to see recession in the next year in which case what happens to tesla’s fundamentals you know what

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Happens to their actual sales growth so i’m penciling out thinking about a hypothetical valuation framework for tesla tesla stock can go way higher way lower depends on their fundamentals also the sentiment the valuation but looking trying to pencil out a rational framework currently around 700 billion dollar market cap i triple checked the figure yahoo finance is

Inaccurate look at you know look at their growth i’m still penciling out 50 to 60 growth this year that’s partly based on their you know 60 revenue and for the first half of the year another you know let’s say 50 from their deliveries and sales increase you know price increase then the fact that they have arguably very reasonable and strong margins i’m penciling

Out 20 to 25 percent they’ve already proven that they can get there the question is will they be able to sustain it and get higher in the future you know a slap on let’s say a 25 tax rate so looking at a company that arguably could be earning you know around 14 billion dollars a year versus 700 billion dollar market cap so around 50 times earnings for a company

Growing 50 to 60 that could be very compelling the question is what’s the growth rate in the years ahead i’m penciling out 30 to 40 annualized musk has talked about 50 annualized but once again i think you needed there needs to be a musk discount for when things get achieved and you know does that actually happen um you know so i’m looking at this and i’m saying

Yeah i’m seeing a tighter monetary environment i’m seeing you know calls for a recession is it possible you actually do worse than this and that’s really the concern is that if you have let’s say a really tough recession in 2023 and growth decelerates significantly then arguably even if you’re still growing even if they’re still growing let’s say 10 or 20 that

Deceleration would result in much further compression on their valuation and i would expect to see a dramatically lower stock price even if they’re still growing throughout a recession that’s the concern but over a multi-year period if they’re able to deliver let’s say 40 annualized growth that is still a very very tough hurdle you know once again musk has talked

About 50 if they’re able to deliver 40 that means they grow from 80 billion in revenue let’s say this year to around 460 billion revenue five years from now you know slap on let’s say it 25 times earnings multiple and you’re talking about 200 upside that’s what it would take to see 200 upside over the next five years but this is what gets me concerned is that if

It’s not 40 but only 30 percent 30 still fantastic thirty percent is amazing that means they grow from 80 billion to 300 billion in revenue that is a home run from an operational perspective the problem is in that scenario assuming 20 profitability better than their last quarter and assuming a 15 times earnings multiple five years from now which you know you

Could argue maybe it should be higher maybe it should be lower i’m i’m trying to be conservative maybe you’d say hey it should be higher because they’re still growing at a fast rate i’d argue you’re looking at a cyclical company so you might want to you know pull that in a bit so i say 15 times in which case if they only do 30 growth then you’re looking at down

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Five percent over five years so that’s the challenge that i’m looking at with this investment now i do call out what i own to my subscribers at unrivaled investing but i do want to see things where it’s easier for me to pencil out let’s say 500 upside or 300 upside and i don’t have to make the assumption that hey you’re going to be growing 40 a year and this this

Gets to back to like warren buffett where he says yeah i want to find these one foot hurdles that i have to walk over for attractive returns and this is this completely flips investing on its head because a lot of folks say high risk high reward that is not what it’s about it’s about lowering your risk for high reward sort of saying hey what are the one foot hurdles

Where i can still drive dramatic upside and that’s the challenge that i face with tesla where i say hey even if you deliver 30 which would be a home run it’s very possible the stock doesn’t go anywhere over the next five years so you know i’ve sort of waffled myself about whether or not i want to own tesla stock but in this environment with a contracting monetary

Policy a tougher economy like likely in the months ahead i want to see potentially even lower valuation where i could say hey maybe you only grow 20 percent annualized over the next five years and i can still pencil out 100 or 200 percent upside would it surprise me to see tesla up 200 over the next five years no if musk is able to deliver fantastic growth i’d say

Fantastic i hope tesla shareholders get that but it’s similarly it would not surprise me to see it absolutely crumple see a much much lower valuation in the future if you do see macroeconomic pressures that result in a deceleration in their business i personally want to find things that no matter what’s going on in the cycle maybe it’s by owning you know insurance

Companies maybe it’s by owning medical companies maybe it’s by owning alternative asset managers you know earlier this month i called out brookfield asset management i own a little bit of it you know i called this out to my unrivaled investing subscribers where management you know in the full write-ups at unravel investing you know management’s penciling out you

Know four to five x over the next five years now it’s up to you whether or not you want to believe that whether or not they do that but here it is management’s saying yeah here’s how we get there and by the way we’ve done it in the past you know so that’s the type of situation that i want to see here are the hurdles for tesla just make it so hard for me to get you

Know crazy excited about despite the fact that you’re arguably getting it on sale it’s the 50 off sale because the stock price is down around 40 plus and the valuation you know the fundamentals are still quite strong they’re still growing the question is is the stock price anticipating weaker fundamentals in the quarters ahead if you have a strong opinion on tesla

I’d absolutely love to hear it if you enjoyed this video please make a point of hitting that thumbs up hit that subscribe button thanks so much for watching unrivaled investing

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Tesla Stock: How LOW can TSLA stock go? Time to BUY Tesla stock? By UNRIVALED INVESTING