Hey, what you're about to watch is an unedited one hour course member live stream where I Talk Trade Desk Tesla projections Tesla Price targets along with some Q A. This particular course member live stream did not include real estate fundamental analysis which we often also do in a course member live stream. but we spend a lot of time on Trade Desk and Tesla today and upon popular demand I've decided to publish that lecture as a free preview of what you could get if you joined the amazing programs on building your wealth. Keep in mind, all of the programs linked down below come with this incredible live stream access that you get generally every day that the market is open.

Thanks so much! And let's get into this: Remember there is a coupon code PP that expires Friday December 9th which is also the same day that I will be ringing the bell at the New York Stock Exchange Favorite Disclaimer: While I am a Financial advisor, this video is not personalized. Financial Advice: Remember live stream So today I wanted to touch on a little bit of looking into Trade Desk that I was doing this weekend and then we'll do some Q A So let's hop on in and get started with Chloride Desk. So uh. one of the things that I found really interesting about Trade Desk was that Trade Desk does the work for uh, for Disney and for Disney's connected TV Advertising unit Now advertising is a space that that's you know, getting hammered right? This is uh, this is one of the first places to cut so keep This in mind.

Uh, first place to cut in recession advertising, right? Okay, we know that. But in addition to that, we know that uh, we had NBC came out this morning I Want to see I Want to see if I can get exactly what their quote was but they had a quote and we see advertising. Oh, this morning it was really good. It was something the effect of advertising getting hit even more.

Let me see if I could find that really quick because that's always a big issue. Uh, I'll find that really quick. Okay So let me see NBC NBC Apple moving some iPad production to Ada Yeah, that's not a surprise. They've been talking about moving to Vietnam and India for a while here everybody's trying to get away from China Honestly, China's like the anchor that's hitting everyone.

Uh, it's kind of scary. but anyway, somewhere there was a comment this morning and it was sort of. It was perfect mention for this. I should have taken a screenshot of it.

but I saw a note about uh, advertising demand falling this morning and uh, that made me really think about trade desks some more as I was doing research and trade desk. uh, one of the things that's oh here it is Nbcu CEO Advertising Market Definitely getting worse advertising Market Definitely getting worse so that's interesting. And here's the Art here's an article on it. Okay, let's look at this together here.

So advertising Marketplace has been worsening, says Jeff Shell as he confirmed this morning at a conference in New York City Even so he says Comcast's Nbcu will still grow advertising year over year. For the current quarter, the advertising Market has been pretty steadily worsening for the last six to nine months. I Think it's gotten even worse really in the last month or so. It's hard to figure out whether that's because of macro condition, whether that's uh, whether people's businesses are worsening, or rather because people are just uncertain I tend to believe it's just the uncertainty.

It's much more cash than pricing because it's much more cash than pricing. That's interesting. So this: this is very typical in a recession. Is you get this this liquidity constraint, right? You get a lack of cash.

That's very, very common. So when we jump on over here, we want to write down, uh, biggest, uh. reminder. In a recession, cash is King Uh, and when cash is King Ads are easy to cut, so that's the biggest reminder to remember.

Uh, yeah. So we're gonna make a little note here just because I Think it's very interesting. Uh Jeff Shell as of these five Advertising worsening. Uh, unsure why uncertainty Biz Whatever.

It is, right? So that's quite interesting to me because it really aligns well with with what we're looking at when when it comes to advertising. And it's a really good update because one of the things That's Unique is we know that companies like Google uh have been suffering, right? So Google's had sort of flat advertising year over year. In fact, we can pull this quickly. Let's see here: I think uh YouTube was actually negative, which was quite shocking.

Let's look at this: GOOG goog earnings Last month. Here we go. Yeah, look at that. So Google's search was actually up year over year.

Four point two, five percent. but YouTube was down 1.85 percent. So basically flat to negative advertising. So we go back for a moment to this trade Desk dock.

Here, trade desk does what's known as connected TV advertising. Uh, but not just connect the TV They do. They do a whole lot of advertising that's outside the space of what they call the Walled Garden. So when you think of advertising, think of you've got uh, direct, you've got sort of Walled Garden So this is going to be your uh, your think Apple App Store right? That's that's a perfect example here of the Walled Garden Uh, to some degree you have YouTube uh, because you can only advertise on YouTube through Google Only right? So it's a type of wild card.

just like when you advertise on Apple you can only advertise on Apple through uh or in the app store. For example, through the app store or through Apple uh I ads boy I Remember when they announced Ayats were like oh, our ads are gonna be the best ever you know I've never seen a very good uh I've never seen a very good Apple ad but I remember uh back in even the Steve Jobs day how he was talking about how great I ads were gonna be. Uh, but anyway, Wild Garden uh Apple YouTube You've got obviously Linear. this is just your regular TV right? just people sort of watching.

and then you have the non-linear channels and a big one right now is uh, connect to TV And the beauty about this about Connected TV at least advertisers say is hey, at least at least we can get some kind of demographics from people so you have some benefit. You get some form of data back where you whereas you basically get no data back uh with linear TV which is quite interesting other than what you get from like meals and surveys and that now what's fascinating here is when you look at the projections for Connected TV advertising and you add up the Disney total for 2023 and you compare that to YouTube, you can actually see that Disney surpasses both Roku and YouTube And what's really interesting is that a lot of the advertising that Disney does is actually contracted through Trade Desk now. Netflix Uh, decided to go with Microsoft and so that's important to know as well, right? So Netflix is doing their Connected TV through Microsoft which is weird because you have, you know I Want to say one of the um, like the CFO or something from Netflix is now an executive over a trade desk, but apparently that that didn't help uh, negotiate this kind of contract. But it wouldn't surprise me if in the future that door is still open for Trade Desks to potentially pick up Netflix Uh, at least some of it, some of it.

Uh, in the future. Now that's speculative. What we know with certainty is that at least the Disney and Trade Desk have have a strong partnership. It's always.

there's always a risk that you know Disney dumps trade Desk right? Risk: What if Trade Desk gets dumped? But it seems unlikely because Netflix and Disney uh have suggested that they don't want to do advertising themselves right. so they want to Outsource that's their goal is outsourcing and Outsourcing the company like either Microsoft or Trade Desk. It makes makes this a lot easier for them. so that way they can focus on contact uh, content.

But the introduction of this ad supported here uh, what? Netflix is getting into the seven dollar a month thing over here? Disney is getting into the ad supported here? The theory at least is that the pie for connected TV advertising is just going to explode that you'll have way more inventory of of slots to place And on one hand people think okay, well if you have more and this is, this is a risk factor, right? in a recession. If you have more of a pie to place these these advertisements. is there a potential risk that you're going to uh, lessen the cost per, right? So a recession is even more of a pie to place ads Disney and Netflix Uh Netflix CTV ads Uh. Does that lesson the price per and and the answer here is possibly right, especially as businesses advertise less.

But if it robs more from linear TV and provides businesses the ROI they're looking for or at least a measurable Roi which is a lot. It's a lot more difficult to measure linear TV advertising than it is to measure Connected TV then then perhaps you accelerate the move from linear to Connected TV during the recession And this is the time actually where a business like trade desk could potentially grow and flourish, right? So this explains I Think why you have a very bullish trade desk throughout their earnings called uh They? You know they talk exactly here about that shift from linear to non-uh or to to basically uh, Connected TV And they actually call this land grabbing a perfect time for land grabbing that this recessionary time that first of all, they're not seeing weakness and that instead they think this is the time for them to land grab and uh and build more. They also talk a lot about their Uid2, which is basically their replacement for cookies. It's sort of their way of saying hey, look, if we can get an understanding of what 10 of the audience's behaviors look is is like through opt-in cookies or whatever, then we can model the rest of of the 90 of people who opted out.

And we can properly Target ads to individuals based on their behavior because we know what the sample set is doing. So therefore, we expect let's restart that really quickly. Therefore, we know what what everyone else is doing. You know, Trade Desk actually coded Uid2 and then they gave it.

Uh, sort of like an open source product. uh to try to increase the amount of companies willing to use Uid2 And it's actually getting pretty popular. So when we look at the financials for a company like Trade Desk, let's do exactly that. Hold on shorter disk.

Pull these up here. Trade Desk. Here we go. What I thought was very incredible here is: you've got a company growing.

Uh, Revenue Pretty decently. Yeah, we'll look at that in just a second. Here, Their accounts receivables roughly cover their liabilities and they have almost no debt. So if we wash their receivables with their current liabilities, their accounts payable.

which I mean this is nominal what they've got. They're really sitting on about 1.3 billion dollars of cash. And let's go to their statement of cash flow because I want you to see it. So they're sitting on 1.3 billion dollars of cash from operating activities.

They're making 375 in a quarter, which is about 125. per quarter because that's per nine months over there in in cash. So we've got what I say 1.3 we've got. Yep, 1.3 So I thought this was incredible.

Say 1.3 in Cash Plus about generation of about 125 mil each quarter. Uh, from the average last nine months, right? And uh, purchase equipment. The capital expenditures are super low here. That's that's almost roughly their free cash flow.

I Mean we do have about 36 mil here in in property and Equipment but that was also that's a yeah. um I mean that works out to about 10 per quarter. Whatever. plus or minus 125 is fine.

There aren't really huge Capital Investments here. So here's a company that's got positive cash flow. You've got free cash flow. You've got a 1.3 billion and basically free cash.

Free cash, no debt, no debt, plus 125 mil coming in each quarter just from operating. Uh, and then you look at what else did we have here. You look at the growth they're seeing. This was the year-over-year growth, which which we expect.

There's the potential that this could slow down right? 394 divided by 301. That's that puts them at about 30 Revenue growth here. Their GNA expense popped a little bit due to one-time performance stock based comp. so I'm not terribly worried about that GNA because that you you just that is typical on Wall Street and they talk a bit about their growth.

Let me see if I can find quickly where they talk about their growth here, what their projection is. So I went through this pretty detailed here. oh I Loved it when one of the analysts replied to them and said hey, like, but what if people who were watching connected TV are like you know, multiple people watching connect to TV and they're like, yeah, that's the same thing that happens in regular TV except with regular you can measure nothing. At least we can measure something.

It was such a great counter. it was awesome. Uh, so for Q4 uh, pretty steady. What we see is 31 Revenue growth up off relatively hard comps last year of 39 and the political ramp uh, where's the political ramp in Q4 falls off? So that's actually good.

So you're maintaining that 31-ish percent growth. so you're really growing in that that 30 region here. Not bad. And they give us a a bit of a heads up here that our Automotive vertical has seen a bit of a Resurgence for for advertising I Thought that was very interesting.

So remember that Autos advertised less when there were supply shortages. Now we're going into oversupply, right? Something to keep in mind. There we go. Uh, and this is one of the things to remember is that when companies have to spend more money on oops, Oh I did that when companies have more Supply Uh and this this was the thesis before we realized oh my gosh, we're heading into a recession.

Generally, when you have an oversupply, what do you do? You advertise, you spend more to sell more, and you cut prices Like those, Those are the two big things you generally do. The recessionary dynamic makes that a little bit more challenging because it does make you wonder. Okay, well, well, how much is just going to turn into? Well, let's just cut prices and not advertise, But there's a danger of that because at some point you you know it makes sense for companies to advertise because you don't want to be in a position where you're not advertising. Uh, and now you're just cut cutting and nobody knows about it.

Uh, and what really happens is you're now cheapening your brand value, right? So that's something else to consider is companies shouldn't only cut prices because that cheapens the brand. Advertising can solve that. Even in a recessionary environment, that means there's a limit. Okay, there's a limit to how much you can cut prices.

It's worth noting that that doesn't change that you have advertising getting cut. but it makes you wonder. Is it possible that when the NBC you guy? why what's the U that's NBC Universal right? I'm pretty sure I'm 90 sure that as Jeff shall let me let me see exactly who this is. Uh, uh, Jeff shell CEO of NBC Universal Yeah, that's it.

Okay, a subsidiary of Comcast Ah yeah, yeah yeah. Okay, all right, that's really interesting. Is it possible that when Nbcu a subsidiary of Comcast which is a huge linear TV Advertiser right Is it? and like I remember I used to run ads as a real estate agent on TV with Time Warner which Time Warner Cable was bought by Comcast Well let me fact check that I'm pretty sure attempted purchase Oh is an attempt. Did it never happen? That's why I was wondering Time Warner Cable Hold on.

maybe Maybe that never happened. Wait Spectrum Content Spectrum Charter before it was bought by Charter oh Charter ended up buying them. Interesting. Okay, well there was competition for it.

Fine, fine. so they were bought by Charter which is a competitor to Comcast. There we go. So uh, but there was in 2014 an attempt by Comcast That's what.

I remember because that's also when I was advertising I was like right in the middle of my advertising contract and all of a sudden I hear this this, uh, this this talk about uh yeah, you know all of a sudden you have uh Time Warner Cable potentially being bought by Comcast and I remember like panicking I'm like oh my gosh, what's gonna happen with my ad contract But anyway, is it possible that when the Nbcu CEO a subsidiary of Comcast which is a huge linear TV Advertiser says hey, we're buying um, well let me say this when they say hey, advertising is worsening, That's what they said. advertising is worsening going into December Is it possible that that actually means that AKA Maybe regular TV Advertising is worsening to the potential benefit of Trade Desk, right? That's possible. Now this Trade Desk earnings call where they were still talking about 31 growth. This occurred on November 9th.

So keep in mind it is possible that things have deteriorated since then. Trade Desk earnings call was uh, Nov9. so potentially things have deteriorated since then. That is a potential.

What else? Uh, okay. good. So that's Trade Desk. Can't think of what else to cover with Trade Desks.

Today we have questions. Let's let's do that. Let's talk about, um, some Q A here. So shoot me some Q A Especially if you have Q A on Advertising We'll talk Tesla in a moment, just wait on the sidelines.

Uh, appears. uh, what? Why don't we just yeah, until politicians start buying stocks again, right? Yeah, No kidding. No kidding. Yeah.

So Roku runs their ads, you know? I It's really interesting. I've always thought it was weird how they do it, but they're trying to run ads. like almost. Kind of like while you're on your your standby screen.

Let me I Wanna I'm gonna do a little bit more look into their advertising platform I Think that's a good idea. Let's look at that together. How does their revenue? How's their revenue up in net income loss? Was that because of the Uh. stock based comp? Let me see.

I mean you might. What do we have here? I mean because I see net income. It's small, right? It fell and a lot of that was because of stock based comp. It was like 70 mil of that with stock based comp.

All right. So let's hop in over here for Roku So their thought was that they run ads over here and try to help dictate. at least that's what I Remember from their earnings calls, they want to try to help dictate um, what you click on next, right? Uh uh. I'll say one sec.

Sorry. All right. so what do we got here? American Eagle Walmart Which doesn't Trade desk? Let's Walmart as well. Trade Desk: Let's see.

Okay, really. Trade Desk: Oh come on. Google Trade Desk: The Trade desk. Oh that's annoying.

They should buy like the domain Trade desk. Oh well. and I saw Walmart over here as well. Okay, no, maybe not.

Wall Street Journal Anyway, so I I Want to see where their ads are? but I remember in an earnings call they were talking about how they had this disability to uh uh, guide people to what they wanted to watch next. and advertising was supposed to be good for that. Like this. like see, look at that presented by Verizon over here I'm covering up the little presented by Verizon Parts See this So it's kind of like while you're on your menu thinking about what do you click on next I Honestly think it's dumb.

Okay, this is annoying trying to put this on silent. uh uh. there we go. Okay, so here we go: Create ad experience is built for: TV advertise on award-winning original content so you can put ads in the actual content or like before, the content better.

TV Viewing starts with Roku free and premium content backed by Roku data Roku insides blah blah blah yeah I don't know I don't I don't know that terribly much about Roku I Lost a lot of respect for Roku when they said they wanted to get into TV manufacturing. They they said that about a year ago. Oh, we're gonna get into TV manufacturing as soon as I heard that I'm like you guys are morons, sell like you do not get into TV manufacturing. we're about to get into an inventory surplus of TVs and Manufacturing is like the hardest thing to get into.

So and I'm like, come on man, companies like what is it? what's the one the TCH or whatever uh, they make TV so cheap in the Amazon TVs it's insane Yeah I mean unless you're gonna just like private label with them I mean that's different then you're not actually getting into the manufacturing. but anyway, it'd be interesting just to see some exact uh, actual Roku ad examples Roku Had examples uh, how? Baskin Robbins Made interactive T Okay, well this is interesting. What do we have here? Let's see this: how: Baskin Robbins Made interactive coupon offers When you advertise on Roku you can make every TV ad more creative I Mean this is what Apple used to say back in the day. brand ad airs overlay overlay instantly delivered to the screen.

user enters mobile number offer is sent to mobile number program returns from ad break and that sounds like a headache. But okay, I mean that's interesting, right? Like you click a button on the screen and it lets you, uh, send that beam the text the the coupon to your phone Because what's remarkable about this is now. Not only they do they collect that, you're somebody who's willing to interact with the TV ad, but you just gave them your number as well. Uh, interesting.

Okay, direct to Product interactive ad shows a product oriented overlay on top of the creative. That's interesting. Okay, Advertise on Roku Frequently Advertisers on Roku frequently use direct to Product ads to reveal product announcement, coupon or other. Okay, all right so you get these little overlays.

Yeah, that's not terrible. Direct to store Interactive It shows the address. streamers can add the address to their phone. would you eat mango ice cream every day? Polling ads to help re-engage users.

Okay, interesting, You know I I think I would let the Roku numbers speak for that itself. Uh, rather than Roku then speculate on it. But I think that's always the best thing to do is just let the numbers tell the story. Let's see here.

Yeah, exactly. Uh. picking up pennies? We? we actually just talked about that about 10 minutes ago. Uh, which? I Understand that you may have joined after.

But yes. so here's Roku and 670 divided by 582 is 15. See, that's 15 platform growth year over year. So that's about half of what Trade Desk is doing in growth.

Okay, and what was the nine month growth 1990 divided by 1581? That was 25.8 So a D cell on nine months. so you have a deceleration here while at the same time, your the margin actually looks like it in. Oh no, that's plot. Oh sorry, that's player here.

Platform: Okay, what's the margin? 269 Oh sorry. 296 divided by 670. That's a cost of about 44 percent cost. And then what was that? It was Eight, Eight, Five, Nine divided by 1990 43 percent cost.

Okay, so that's relatively stable. That's fine. Up: X 503 divided by 295 70 increase in Opex With a lot of that, the sales and marketing side. this doubled.

Yikes. Why? Sales and marketing doubled I Think is interesting. Let's what did uh, what did Trade Desk do I Think their increase in sales and marketing was actually in line? Yeah, see. Here's their sales and marketing expense went to 85.

from 59, they went up 44 percent whereas Roku just doubled their advertising to grow 15. See, that's an interesting note, right? Look at that. Roku doubled their advertised I wonder if they're advertising on Roku Roku doubled their advertising to increase Revenue 15 Trade desk increased advertising 44 to increase Revenue 30 percent. Interesting difference, right? So, but okay, so they still grew revenues 15 but like but they're also losing money I mean they're It Looks like they were profitable last year before their SG A exploded and their R d Yeah now all of a sudden we went to a money loser.

They were profitable and then they spent money like like crazy and now they're losing money. So they went from profitability to not I don't know like that, it just it. That seems odd to me, right? So like I I have red flags without Roku it. To me it's like uh, went from profitable to not not even close.

Uh, I mean you're you're down 147 mil in the quarter, right? We could look if those are one time. That's that's one thing that bothers me. The management decision to get into TVs blows my mind. Uh, uh.

White Label would be better or private label I'll say private and um, yeah, the double of AD spend to increase Revenue 15 like those are. those are three red flags. So which, let's look at their cash flow here for a moment. Yeah, here's their cash flow and their cash flow from operating activities.

There was that. It actually came out positive. So that's actually interesting What happened then. Oh wow.

Okay, the stock based comp was 255. from a cash point of view. so that's where a lot of expense went. So it makes you wonder how much of that was one time, right? That's possible.

255 in in stock based comp? A lot of that could be one time, but it'd be worth looking into that. uh, stock based comp? How much was one time? So that's interesting. Very interesting. Uh uh.

comparison there. Let's see if we can do a quick search here. Stock based? Uh, uh. there's any kind of comment on it here.

Comments, comments, comments. Yeah, the last nine. Well, but that was in nine months. In nine months, it was 255.

So that means per quarter, it was actually only 255 divided by three. It was 85 per quarter in nine months. So about 85 mil per quarter I mean that you're still at a loss then. So even if you add back the average, you're still at a loss.

Uh, that leaves me a little bit of loss. Anyway, let's go ahead and get back to a little bit of, uh more here. Roku Probably had a hiring spree just like every other company. Probably Tesla's running ads in China like a full-on commercial.

Are you serious? Uh, Tesla I Mean it sounds like China is just hell right now Tesla Model 3 Chinese commercial I See this from 2020. it looks like they've actually been advertising in China for a while. Even in 2016, they made an ad. All right.

What else do we have here? Could restocking the Strategic oil reserves, drive up oil prices and cause the second Peak inflation? Um I don't think so. I Understand the idea of that. It's like you're taking it out of production. The the point is not to restock the oil the Strategic oil.

Reserve while increasing prices. You know you you restock it when prices are falling and ideally production should be going up. which it is going up. it's going up very slowly.

very slowly. I Want to let me see quickly what the dollar is doing because I'm pretty sure that's been falling. Oh yeah. Oh, finally.

Finally, the dollar sees liftoff. Look at that. We've been on a on a surge for about six weeks or so now. Six seven weeks.

It's a slow mover, but it moves, you know? Amazon Fire runs their ads on their home screen? Yeah, exactly. That's that's uh, that's around that. Roku Why would a firm be down 10 percent? Oh, is it really? uh, that's actually quite interesting? It's it's a oh wow, probably. uh, fear of the consumer quite frankly.

Uh yeah, today it's a it's a bloodbath out here today. What's up? volatility I Love it when you sort to see what's up and the only thing that's basically up is volatility. Oh man, that's dirty. Who watched my video on Open Door this morning? Oh oh dude.

Open Door was. oh that rumors true. They were so bankrupt and if you look at the financials for Open Door it is so bad. I Hope you watch my video where I go through the these numbers on open door because it is so bad.

Like if you want to see what a company looks like when they're going bankrupt, you need to watch that video I posted this morning about Open Door You know I'm not trying to use this as an opportunity to advertise, uh, other videos, but it's so bad Anyway, you know it's You know it's bad when people are comparing Tesla the tattooed chef. It's all right. You know everybody always beats up on you when your stock is down. You know I mean that's normal how has Revenue up and they had a net income? Okay, yeah, we answered that question.

Okay, so so let's move on now from trade Desk to Tesla So we've talked trade desk. uh, let's just have a serious convo about Tesla you know, um, it's pretty wild. I I Part of me just wonders how much of this is localized to China because I I do think that China is in a terrible position. Let me grab uh something here.

let me grab the last. Tesla So I could just write my notes on it so it's in a place where it makes sense. Feel free. You're welcome to ask Tesla questions as well.

So where's my Tesla earnings call? That's odd. Hold on I'll just get it I'll get a new one. Oh that's right I Watched the Tesla earnings call live. So I don't actually have the earnings transcript because when I watch it live I take notes in a different place duh I'm like, why don't I have the test like usually I'm really good about sorting my PDS like where my Tesla earnings call like.

That's right, that's the one company I don't actually do the transcript for I Just listen to it All right? So let's make some notes here. Okay, so uh. what? We know. We know that Q4 was indicated to show slightly slower than 50 percent growth via the earnings call and we know that China is hell right now.

when Apple is fleeing China you know things are bad in China uh uh. Apple Today even announced iPad production is moving to India which isn't the easiest to Launch factories in. So I think you have severe like I I think that this is this in my opinion is China's Great Depression I Think their numbers are cooked right, their GDP is totally cooked. uh.

and I think that their housing blow up is destroying consumption. absolutely crushing it. Because think about it. Household net worth.

We know this household net worth plummeting leads to lower consumption. More so in real estate declines than in stock declines. And remember that in January We've been saying this for like almost a year now. In January 2022, the Chinese consumer was already saving 4X more cash than they were in January of 2021..

Notice: notice how different Americans are okay. like Americans are totally different Americans let's borrow more and keep spinning baby. Okay, very different culture. very different.

The Chinese uh and I I knew this as a real estate broker as well are really good with cash. I Found the Chinese really respect cash and risk. Now this is this is like drawing with a with a broad brush brush here, right? So it's it's it's stereotyping is what it's doing. Uh, And then that's not going to be true for every Chinese person, right? But you have a very big shift happening.

You have this this respect for cash and risk At the same time. you have a disdain uh of the younger generation for factory assembly style work, right? So you have this gigantic uh Jai gigantic cluster F of changes in China from the housing implosion to consumption to companies pulling out to trade Wars to covet zero uh to uh, to poor vaccination campaigns for the elderly uh, and now you have more popularized uh, dissent like the protests you're seeing, right? Which leads to a lack of respect for the CCP This is this is literally the definition of hell in China Uh, in my opinion, like you, you could not ask for more. Okay, like the reason the reason oil is falling like plummeting right now, plummeting after the EU price caps is because of China lack of demand. That's a problem.

China is Huge. It's the second biggest economy in the world, and this, ironically, actually reiterates something that I've talked about before. and this is that China is an anchor or China will be an anchor for inflation. So look at this: China is an anchor for Global growth.

As a result, China will be an anchor for inflation. I Believe that I Really believe that? So I think that if China is an anchor for inflation, then we're We're probably more likely than not to see energy costs continue to decline, which unfortunately, energy costs declining do lead to less desire, lower desire for clean energy which is actually inflationary. So you know if gas prices fall less need to buy EV for example, right? Uh, there was like the EV transition will still happen. But remember that in China if you have less need for an EV although Byd is doing great right.

but still, if you have less need for an EV across the whole pie, uh, and you have serious growth concerns along with cash hoarding, you're setting up for what you're seeing with Tesla Uh, uh, Shanghai Cuts I Actually think the Shanghai cuts are going to happen? This is this is Kevin's opinion, right? I am a big believer of that. Where there's smoke, there's fire and when you look at the Google search trends for Teslas they're going down. the lead times are going down, the backlog is being burnt. uh you know obviously the insurance incentive and price cut incentive and China didn't help.

insurance and price incentive in China didn't help. So then you get into this phase where okay I guess we're just done in China You know, like for now maybe China just grinds to a hole and then you wonder. Can Shanghai move to more export only because they batch these right? I mean if you manufacture a car, a car manufactured for the Chinese market belongs in the Chinese market. It's got the Chinese manuals, the labels are Chinese everything's Chinese right? I Want to give you this anecdote.

Uh, the Norwegian Cruise Lines wonder of the Seas Okay, guess where that sucker was going to go first that launched in 2020. Guess where it was going to go? Does anybody have a guess where the Wonder of the Seas I just went on it in a Caribbean cruise? Okay, I was just on it. Guess where that sucker was supposed to go Smurf nailed it China It was fully labeled for China everything was Chinese and they had to re-label the entire ship. They relabeled the entire ship because China's economy just isn't profitable right now.

Keep in mind, the Wonder of the Seas right now. is the largest cruise ship that exists and he was going to go to China and they're like no thanks, we's going to the Caribbean we go into five Sam Bankman Prime Okay bookings. Watch this. Bookings in the Caribbean uh I can't I cannot spell that.

bookings in the Caribbean are 105. These are the loads load value you look at. Europe these suckers are like 80. China has to be much worse.

It's crazy. It's crazy. So uh, you know this. this uh, this shift in China I think is is very very much.

uh, not a I don't think this is A and I Want to be careful because I don't want to be like blindly bullish right? like I'm not trying to explain this away. This is bad I Think it's bad. It's very bad. Like Tesla Having a demand crisis is the worst thing that could happen for Tesla In fact, it's exactly what I've been saying ever since I started buying.

Tesla I Go As soon as Tesla's demand story goes away, the stock crashes. I Mean, it's already followed a lot, but it just gets worse. I Don't know though, that that issue is contagious to the rest of the world, right? So that's the question. If you're a Tesla investor, you have to ask yourself: is the demand contagion in China contagious to the rest of the world? Uh I Do expect excess demand to evaporate this I Do expect I Do think excess demand in Europe and U.S excess demand should evaporate in recession.

Uh, However, it should match production. That's the thesis, right? Thesis: Uh, China Collapsing It really suggests uh, probably an adjustment needed in in manufacturing. uh, in their manufacturing plans and their exporting plans. So I think what? what means The following for Tesla means the following for Tesla All right.

So first of all, we have to know this: Shanghai Note: Shanghai has the highest margins for Tesla Keep that in mind. So Shanghai collapsing I think means the following one they have to plan for: Less Chinese Production and more exports. But there's a limit. There's a limit here.

You don't necessarily have the supply chains to get all of the production out of China Yet that's trucks. That's boats. Etc When I say boats, it's obviously ships. Let me change that because some people get mad at me when I make tiny little mistakes.

Um, ships. The cost. This is beautiful. Actually, the cost to ship a container from China to La is now sub two thousand dollars.

It used to be twenty thousand dollars. So the uh, the the potential. The potential should be there to eventually export. Worst case, a hundred percent you? You wouldn't right? But the potential should be.

Worst case, you export 100 of production out of China. Ideally, you keep as much local as possible, but not enough to cheapen the brand, right? So I Imagine this is what Tesla's figuring out right now is: how much can we get out of China and how much can we just incentivize people who are in China But this Chinese slowdown is bad and uh, it's it's going to create a growth fear that I personally don't believe extends to the US and China and I think this actually reiterates. by the way, this this sends like a bat signal to the Fed and we'll see what CPI says. but I think this is this is a clear signal why Elon is shouting at the FED to lower rates I mean you're you're financing cars today.

Car financing today is like seven and a half percent. It's so expensive to finance a car. When I bought my model X it was 1.49 on my Model X that's insane like that's crazy. Right on top of that, yeah you add the Twitter issue.

Oh my gosh, yeah yeah, Tesla's not quite at 40 margin. but but yeah, I mean you know I think anybody would rather see Tesla eat it a little bit on margin. but but keep that those deliveries up. Disney Channel is shutting down broadcasting in Russia this month.

Yeah, that's okay. I don't think Elon's gonna take Tesla private uh uh yeah yeah, you know it's gonna be a while before I could really look into something like Amara for uh for crypto. Why? like if you watch my crypto video yesterday I got like the most hate ever on a crypto video on that crypto video yesterday. but that's just what I believe like uh I don't think I'm wrong of course I'm willing to be wrong.

that's what I think what is unique about the videos I make is I'm willing to have an opinion and be wrong. uh you know I'm not afraid of that. but uh yeah I got 1.49 a few years ago on my lease to buy out and sold a car last year for 1K under the new MSRP Oh my gosh, isn't this a bigger problem for all other manufacturers? of course everyone. what would you need to see in Tesla to make you sell? uh Uh Kevin we getting killed in the streets? yeah um you know I I always think I definitely think that the proper allocation to to Tesla for me is is uh is much closer to to like a quarter like 20 25 I think that's a very good uh allocation to Tesla For me, it's not a recommendation for anyone else.

uh although I you know I think in in certain circumstances if you had to pick sort of a basket of stocks uh I you know that argument could be made as well for somebody else I don't know I don't know anybody else's situation. but I think Tesla has a lot a lot of real power. The problem is they're not as resilient in this recession as hoped. Mostly what appears to be because of China And that's very unfortunate.

So uh yeah, I was thinking about making a video on the Twitter Biden thing. I I I Don't really know what to say. It's yeah, can't test, yeah, but there's there's a limit to how much you can lower prices, right? because uh, you know if if, uh, if they drop prices, say ten thousand dollars in China then it cheapens the brand across the world Right then they're like, why am I overpaying for that car here in America right? So it's not that easy. Your thesis supports further downside risk at Riven and Lucid Oh yeah.

Oh yeah. uh oh yeah. my allocation is way bigger at the moment. Yeah, yeah, it is.

Um, well, that's that's my. allocation is much larger right now because I believe that Uh, at some point within the next, uh, year or two, Uh, Tesla itself could be in a substantially stronger position. Uh, in in terms of its stock, right? Uh, But also also the company uh, I mean I think the you got to get in a year? Think about this. Think about where we'd be in a year from now.

All right. So I I Think that's just worth brainstorming. Uh, uh. let's see here.

we actually have that. Not here. Hold on. Where are the production numbers stand by here? So these are the capacities, right? It's not where we are now.

I mean Shanghai is. but let's say 750 000 750 plus 250 Plus 250 Plus 550 Plus 100. So we're at roughly 1.9 Call it two mil. Okay, so in a year from now, uh, in one year, we should be at around two mil of vehicle production for Tesla If we hit 2.1 that would be about the 50 percent growth trajectory.

This though assumes a lot. One can we sell those Vehicles Number two, Can we ramp Austin three. Can we ramp Berlin four? It's probably going to require Uh will will commodity prices cooperate right? decline and uh And and then we'll We'll interest rates decline, cheaper purchasing, right? So I believe the answer here is yes I Believe the answer here is yes I Believe The answer here is mostly mostly and likely right. So if you have a different answer to these questions, Tesla stock might not be for you.

You know you have to determine that yourself. But in a year from now, if you can get out of this 2022, hell, uh, to 2023, boom, then then I believe you're in in a position uh, where Tesla stock should be substantially more valuable. Let me see here. So if we do I want to compare to I'm going to do my own number here in a moment.

But if we look at Doomberg, so Doomberg's forecast for the end of next year is 554. Doomberg is at 5 or sorry, 559 in Eps and then Kevin at 2.1 Let me see if I can get that spreadsheet really quick. Let's see here. Okay, so if I change this to 2.1 Vehicles two three one two three and then I go to zero for energy just for giggles and a margin.

Uh, well, no. I'll keep that at a lower percent. I'll keep that alike one percent. Yeah, one percent.

That's fair. Okay, and then I go to an expense margin of let's I'm going to increase their margin a little bit to 72 percent. That's their expense margin I Know you can't see anything on screen right now. Hold on.

Crime Shares: Outstanding. Okay, that's that's fine. Hold on. That would get us to try to figure out how do they get this Eps? this might.

It might take me a moment to put this together. Hold on a sec. Number of vehicles shares outstanding to confirm that. Yeah, that's that'd be about a hundred.

No, because they're projecting about 114 bill in rev. Oh right. but if you consider leases in that altogether, that's fine. I'm at 119 bill in Revs.

That's fine. Okay, I went ahead and fixed the issue. Uh, at the end I had an issue with a spreadsheet I wrote here on Discord that I fixed it and that's because Tesla's Opex was set to 2025 levels, which is twice as high as they actually are trending today. Once I fixed this I was able to project a one-year price target of at least 328.73 Upside for Tesla at 2.1 million Vehicles produced at a 30 margin and fifty three thousand dollar average revenue per vehicle including any FSD Although I do think that uh, we we could be substantially including a lot of margin of safety here.

semi trucks additional FSD Revenue Insurance Revenue Energy revenues although I am including some energy revenues I try to include as much of a margin of safety as possible. this would be at a 50pe ratio assuming 50 EPS that would be a one peg and usually Tesla trades for one and a half to two. Peg So I believe that is an additional margin of safety. Uh at a reduced four and a half million in 2025 in a 6K reduction in Revenue per vehicle despite FST with 30 margin again FSD included per vehicle I use a 45pe 45 EPS growth rate one peg Again, margin of safety here since usually we could reasonably be at one and a half or two for 2025 I get to about 565 as a price Target or about 43 per year return compounded for the next three years as a projection estimate, not a guarantee.

Obviously, these numbers can unlikely will collapse if margin collapse is less likely or demand collapses. Uh I believe personally only China which I believe is solvable. The growth rate also assumes Uh, the Cyber truck inclusions and FSD supporting margins. The next phase of growth comes from a potential smaller model, which unlocks growth over five mil production annually in my opinion.

So in other words, it's really to get above 5 million units a year. I Think we need to have a cheaper model I Also wrote that I believe at the end of 2023 3. It makes sense to substantially diversify down my personal Tesla Holdings which right now is depressed because of a Twitter and B China and I will eventually diversify into househack. And and ETFs Do keep in mind that if you believe in for example, Kathy's ability to rebalance for you, there's some significant tax benefits by having somebody else in an ETF be able to rebalance for you, because since you're holding the ETF ticker, you can actually have a portfolio that gets rebalanced without necessarily incurring the crazy tax penalties of rebalancing a portfolio yourself.

These are what the attachments look like that I attached, uh, they. They actually don't come through very large here, which is quite odd. Let me go ahead and pull those up a little larger here and then that way you can kind of take a screenshot of these that I'll show you. The first that I'll show you is the 2023 sheet and then the second one I'll show you is the 2025 sheet.

So I'll go ahead and let you pause the video on this here. this is the beginning of the 2023 sheet and when we get to the second half of the sheet you can get here. it actually looks like I'm gonna have to divide this into three halves. There we go, that is the 2023 sheet and then here's the 2025 sheet that I have which I'll go ahead and drop on down here and then we'll drop on down over here.

Keep in mind there's likely to be some additional dilution unless of course there's a stock buyback. So I kind of kept the share uh, shares Outstanding. Uh, the same. but again, I think I'm being conservative with my PEG ratio sticking at one as I do believe historically they sell for substantially higher uh PEG ratio.

There you have it. Oh, leave me a comment. Let me know what's stopping you from joining the courses on building your wealth. The prices are not as high as you might think they are.

For example, you can get into the Elite Hustlers course which gives you access to both live streams for just 407 dollars at the time of this recording. Thanks for watching, We'll see in the next one. Goodbye.