Hey guys, it's Sasha Everyone got very excited on Thursday last week because Tesla stock exploded by a massive 10 which meant that Tesla has now gone back up to a price we haven't seen all the way since. Back on Tuesday in the two weeks since Elon Musk bought Twitter Tesla stock fell by 22 before the recovery at the end of last week and that recovery was really all down to the stock market celebrating the end of inflation which has absolutely definitely 100 completely disappeared and gone away forever. Inflation is only up 7.7 year on year and up 0.4 just in the last month, which is basically zero if you round it to the nearest fifty percent. So the obvious question for anyone who is a Tesla shareholder or who follows Tesla stock is what is going on. Is the Tesla story over? Is the stock going to go down a lot more? Is this the beginning of the end for the biggest bubble in stock market history? Or is the Tesla stock today maybe massively oversold? Is the company going going to do all right? Well, I am going to break it down for you on apologies in advance, because if you are a Tesla Fanboy wearing roast into spectacles, you might hear things that are not consistent with your blinked worship of Tesla and Elon Musk And if you're a Tesla hater I am so sorry. You might just get smacked in the face with facts and numbers and data which I know can be very difficult to understand if you don't like basic investing decisions based on actual analysis. I Know that I would probably get a million more views if I joined either the Tesla bull or the Tesla Bear Club because people only want to hear their favorite Echo Chamber Circle Jerk content. but here is me just spitting facts and sharing things as I see them and before we get started. An important reminder: I am not your financial advisor I am a random guy on YouTube sharing my opinion so please take it for what it is. it's probably wrong. and I'm also a Tesla shareholder. Tesla is the biggest position in my portfolio, so my take on the company May Well be biased now. Elon Musk Spent the majority over the last two weeks in New York and San Francisco because that's where Twitter's offices are located. Since the acquisition at the end of October, Elon seems to be exclusively focused on Twitter and a lot of Tesla investors are concerned. Elon's introducing new blue check marks that are different to the old blue check marks, then introducing new gray check marks, then taking away the great check marks, then giving back some of the great check marks, then taking away the blue check marks and saying he'll reintroduce blue check marks in the future. And Elon's busy optimizing the lunchtime menu in the cafeteria of the San Francisco Twitter office as well. So on the one hand, Tesla investors do have a pretty good reason to be concerned. Elon Musk has proven in the past that he is capable of spinning more than one plate while with running SpaceX Tesla the boring company neurolink and fathering 69 kids. but in the Twitter acquisition is a massive gamble according to Elon himself who just last week told the Twitter staff he hasn't fired yet that there is a very real accounts that Twitter will go bankrupt now. I don't expect Twitter will go bankrupt Elon has pushed way too much money into it already and I'm sure he will find more if needed. Just a few days ago Carl Icahn said that he would give Elon one billion dollars if he just asks. hey, nobody ever called me to go in I might have done it if you call me and I'm sure that some of the ideas Twitter is implementing will actually work, but Elon is known to get very obsessive with pulling his companies out of holes. He famously slept on the factory floor when Tesla was in financial trouble working every hour to get the Model 3 production going and Twitter right now is in a massive hole and that may mean that Elon Musk is going to be paying undue amounts of attention. A bunch of advertisers have just left the Twitter platform according to Elon Twitter was losing 4 million dollars a day and even more advertisers have pulled out since and Elon has gone all out to try and change the company's fortunes. This will invariably come at the expense of focus on Tesla. What's even worse is that there were reports that Elon Musk brought 50 of his best Engineers from Tesla over to Twitter to review the code, refocus Direction and begin implementing changes and while those Engineers are sitting in San Francisco they are not working on Tesla software, they're not working on the developments of the Cyber truck or FSD or anything else Tesla related. and in the last few days Elon Musk sold about 4 billion dollars worth of Tesla shares without answering any questions as to why he did it or what he's using the money for while all this is happening Elon waded into U.S Politics encouraging people to vote Republican in the midterms and posted some odd conspiracy Nut Job articles about the attack on Nancy Pelosi's husband which also seems to have alienated some investors a few days ago Dan Ives The Managing director of Wedbush slashed his Target price for Tesla to 250 and took the stock off their best ideas list primarily based on the noise that's happening around Tesla and I think there are a lot of other investors who like Dan are concerned. but I can't help looking at all of this noise and being amazed at how many people are making significant long-term financial decisions. investing decisions based on their feelings based on short-term noise, based on whether they personally like or dislike someone or whatever other. BS If you zoom out of reading minute by minute updates on what's going on on, Twitter Tesla's execution and performance are currently off the charts at a time when every single company is reporting massive drops in revenues, drops in demands, drops in customer numbers including the car companies that Tesla is competing with. Tesla's revenue and Q3 grew by 56 year on year. Tesla's car production in Q3 grew by 54 year on year on the 1st of October Giga Berlin reached a production rate of 2 000 cars per week and the rumored plan is to try to then push to about 5 000 cars per week by the end of this year, going into next year on September 17th, Giga Texas made their ten thousandth car and just a few days ago on October 30th, they made their 12 twenty thousandth car. This averages at around Seventeen hundred cars a week during that period, which probably means that the factory is now also making over two thousand cars per week. Production in T4 across the four factories is likely to hit around 440 to 450 000 cars, and we're going to be seeing increases from that in 2023. and this skating and production is making Tesla a money printing machine. Their operating margin in Q3 was 17.2 percent, which is Bonkers for a car company. Tesla's financial position has never been stronger as they've paid down debt and built up a massive war chest off cash. You can see there's 21 billion dollars worth of cash. sitting in the balance sheet while debt has gone almost to zero. and you can also see that although Elon Musk sold 19.5 million shares in the recent filings that I just mentioned, it still happens during over 14 of all Tesla stock. And thank you so much to Simply Wall Street for sponsoring this video. Simply Wall Street is a great online tool where you can get all the information you want about a stock in a super easy way. You've got everything from this inside either trading data that you can see here to Financial Health of the company past performance data, analyst forecasts and expectations, and the company valuation, and you can see that Tesla is currently valued at 55.3 times earnings. but as Tesla is growing its earnings at a ridiculous rate at the moment, this may not be the most relevant data point as I'm recording this video, Tesla is valued at 600 billion dollars and the net income in the last quarter was just 3.3 billion. and if you annualize that, the stock is currently trading at 45 times earnings without accounting for revenues going up in the next three quarters. By the way, you can go and create a completely free account with simply Wall Street and get access to useful information about Tesla or any other companies that you're interested in. I'm going to put a link to this Tesla data if you want to go and see it for free in. the description below simply: Wall Street is free to use forever. But if you want to get access to more data, use the stock screener and analyze more companies. The first 100 people to sign up for the Enemy Limited plan Using my link in the description will get a 40 discount, so make sure you go and check it out. the link is in the description. To me, all of the reasons that Tesla stock has collapsed in the last couple of weeks are noise. They are not in any way related to long-term Optics to long-term fundamentals to shift in the long-term projections for the company. Things that would actually affect my company valuation: Elon is probably going to fix what he needs to fix with Twitter. Maybe it'll take a few more weeks, maybe it'll take another month. I Don't care, but eventually he'll start the ball rolling and then he is going to have more time to push on with Tesla and other concerns that he has and Tesla is not exactly standing still while Elon is not in the building. Next year, Tesla will be ramping their two new factories, a process that they started this year. They have recently started to work in both Austin and Berlin to build Factory extensions in both locations, so production growth in both of those is going to be coming for some time at the same time. Tesla Previously mentioned that they are looking at multiple other new Factory locations as well and we have the Cyber Truck starting production next year. The Giga press for the Cyber truck made by Idra. the Italian company was completed two weeks ago and is now being shipped and installed in Austin. My model has Tesla producing almost 2.3 million cars in 2023 because of the ramp of these two new factories and the upgrades that just came in in Shanghai And the biggest question is is Tesla facing a demand Cliff Just because they could produce the cars doesn't mean that they can sell them. After all, Tesla's cars are on the expensive side. real wages are falling, people are cutting back on spend and wait times for Tesla have dropped around the world. In the UK the cheapest Model Y has an estimated delivery of November to December, so pretty much no wait time at all. The long range of Performance models are set for January to March, so around two to four months wait, this is a lot less than it was just earlier this year across Europe The picture is also similar: Expected delivery ranges from November to March in China. Tesla has slashed their prices in recent weeks to allow for more more of the models to qualify for government incentives, but wait times are still very short. The base Model Y has a one to four week wait time, while the long range of Performance models have four to eight weeks to wait. And if you set a random zip code somewhere in Eastern Kentucky wait times again look roughly the same December to March for the long range in November to December for the performance version. So there is a growing number of analysts who look at this data and conclude that Tesla's demand is drying up. You used to have to wait six months, sometimes nine months depending on the time and the geography for a car, and now the wait is just a few weeks and soon there will be no wait time at all. Tesla is having to cut prices, demand is still not picking up, and on the surface it does kind of look that way. But here is some important context and Analysis in the United States a new incentive kicks in at the start of 2023. Coming from the inflation Reduction act, there is a price Gap in place for cars that qualify in cars have to be made in the United States to qualify as well as a supply chain for the battery being based in the US a relatively difficult thing to fulfill, and Tesla's Fremont and Austin factories are in the US and most of Tesla's sourcing in the US is U.S based, so all Model 3 versions, except the performance will qualify for being under the 55 000 cap at current prices and presuming that the model Y qualifies as an SUV something that I think is yet to be determined. Most Model Y variants will also qualify because SUVs have a higher eighty thousand dollar threshold. A few days ago, a new bill was introduced into the US Congress called the Affordable Electric Vehicles for America Act which removed some of the hurdles and sourcing materials for Batteries Etc to qualify for the higher tax credit. But whether or not that bill passes anyone buying a Tesla in the U.S starting from January is going to get a discount, so it is naturally going to be a drop in demand in anticipation of that from anyone who's happy to delay their purchase. And the fact remains that even right now, with all the Palestinian growth around Tesla Tesla's market share of new vehicles sold is only around 2-3 three percent depending on the region. That means that the vast majority of cars sold right now are still not electric, because very few other car makers produce any meaningful numbers of EVS Volkswagen and Hyundai Kia do make some Byd and some others make some in China as well, but everybody else hasn't really got started where right now? at a point where if you're buying a brand new car, it is fast becoming very difficult to justify an Ice car that is about to become obsolete. It's a bit like buying a Motorola flip phone back in 2011 four years after the iPhone came out. three days ago, Tesla released a version 11 of their full self-driving software at the moment only going out to employees, but coming to that 100 000 odd eligible people in the US shortly. And for some people, a car is a thing that gets you from A to B like a phone is for making phone calls and sending text messages. But the reality is that this is about to change in a very fundamental way. It is right in front of you. You can go and watch videos on YouTube to see for yourself. If people don't understand what getting an extra hour two hours of free time per day is going to do to people's productivity to people's ability to do other things is going to be pretty interesting. My opinion is that the adoption of electric cars is only just getting started. We are still right at the beginning of the S-curve Any company making electric cars is going to sell every single one for the foreseeable future. not just Tesla Any company making electric cars. They are better in every single way. They cost less over their lifetime. They save you time because you don't have to go to the gas station. Anyone charging at home will never have to waste time going to charge their car unless you're going on a long road trip. They are quiet, they don't require maintenance, they have way more space inside, they have more storage space, and Tesla is leading the pack. Shorter wait times mean higher demand. This is not a linear relationship, something that's very important to understand and sure if the economy takes a massive beating in the next few months, it is possible there will be short-term headwinds. Tesla might even have to start having cars available immediately in their inventory to buy right away. It could happen, but there are around 2 billion non-electric cars on the road today that will eventually have to get replaced, and every non-electric car being sold today is a dinosaur that will also have to be replaced. and they're making way more of those than they are of the cars that will replace them. My valuation model for Tesla only has them reaching around 10 million cars a year in 10 years time roughly the same as what Toyota and Volkswagen did before Covet arrived. And my model does not have robots. It has relatively moderate energy assumptions. cars are the primary source of revenue for the business. You can see that full self-driving becomes relatively important in the model. It makes 10 of the revenue from car sales. but I don't have any Robo taxi fleets in here either. And even with these massively pessimistic assumptions, I have a Target price, which is ridiculous. It's one thousand dollars for Tesla stock in the long term. That's my personal take. It's been pretty much the same Target for the last two or three years. I Adjust this model every quarter as always I share the full details in my Discord so if you're interested in that discussion to get those updates. updates discuss why they're happening. Feel free to sign up to my patreon. My link is in the description and this is why: I continue investing in Tesla This is why I continue buying shares as and when I can and I will continue doing it I Am far more interested in the long-term weighing machine of the stock market than the short-term noise that everyone plays up and down. Thank you so much for watching I Really appreciate it and as always I'll see you guys later Thank you.