Well, the Tesla earnings call is over and here's everything you need to know about it. First, pretty dang common for Tesla stock to fall after earnings. not always, but pretty common. Usually an event happened, stunt goes down.

all those weenie baby speculators gotta you know, take their losses and heal their wounds and go somewhere else. But that's okay because in my opinion, the fact that Tesla stock is only down five six-ish percent after hours, which the expectation was a six and a half percent move in either direction, it's actually a sign that it ain't that bad. That is the fact that it's holding up above the 170 hopefully closes above 175 on the 20th or 20 days. SpaceX Rocket Ship Launch Day.

Hopefully that'll be a good, technically strong Wide Open Door to start a nice new rally. No guarantees though. maybe that's just Hopium, but that's okay. Let's now talk about the facts because the fact is, tomorrow, we've got a huge expiration of a coupon code, but you already know about that.

see 420 it's on the screen. Anyway, let's talk about what we learned. So first, Macro and margin. Obviously, Macro remains uncertain.

While we've reduced prices, still got the highest margin out of all vehicles out there. In fact, Elon Musk Pretty clearly defines what it takes to even have positive. PP In this business, that is positive pricing power. You got to have autonomy and you got to have an electric vehicle.

In fact, Tesla could if they wanted to sell vehicles for basically a zero gross profit because they see the lifetime value of selling these vehicles and then getting FSD upgrades is basically a 100 profit margin as a phenomenal Trojan Horse to making an insane amount of cash flow. Of course, since we're still on FSD beta and we're still ramping Austin Gega, uh, Berlin and Giga Austin we've got some work to do and as Elon says, every time the FED raises rates, it ends up being an effective price price increase for vehicles. Now Sure, we got lower margins than we were expecting. We got 19.3 percent Wall Street was looking for just over 21 21.2 percent just to be exact and so yeah, we missed here.

And just like I warned, we missed big on free cash flow. Not so great, but explains why we didn't end up seeing that buyback everybody was expecting or begging Tesla to do back in. December What matters now though is that even though broadly pricing power appears to be shrinking, which it is Tesla still got the biggest set of baby in the entire automotive industry. You look at Lucid and Rivian, they're the ones that should really be nervous as well as Ford and GM and actually in aftermarket hours, these stocks aren't even moving that much To the downside: I Expect the market to adjust for that.

Tomorrow, we'll see what happens. In other words, bad for Lucid and Rivian, we'll see. But let's talk about this. So pricey elasticity Elon has says look, ultimately it comes down to can people make the payment or not but they have to be willing to pay for it.

And Tesla basically has pricing power because we have both the best autonomy, 150 million miles of AI training data nobody else holds a candle to that, and an electric vehicle platform that cuts out the dealership model and that in theory doesn't really need servicing I rarely get my Tesla Service service. Most people who have a Tesla rarely take their cars in for service and that's because ultimately the original car model was built on. Hey, car dealerships will make money on servicing for the customer, but the best service as Elon puts it in this earnings call is no service. Phenomenal brand differentiation and a game changer for the entire Automotive space.

Berlin and Tesla Berlin and uh, Austin that is both of these still seen as a quote margin headwind until things stabilize and Elon Musk believes that things will start quote getting Sunny around spring of 2024 and things will be a whole lot better by the middle of 2024.. part of that has to do with some challenges from still high commodity prices. Yes, Lithium prices have come down 60 percent and prices probably peaked somewhere around Q2 2022. We're still dealing with elevated costs and those elevated costs, unfortunately, are still lagging whereas prices for vehicles are falling faster And so yeah, that is a shrinking PP But then again, you're seeing that at pretty much every business even Innovative Companies like Apple and Nvidia Everybody's out in the cold right now and pricing power is shrinking just a matter of who's got the largest amount of pricing powered left.

When it comes to the automotive space, nobody holds a candle to. Tesla Now Inflation on Inflation Elon Musk Expects a little bit more in the staff. expect a little bit more of an improvement in Q2 But really, most of the Improvement will probably come by 2023 to 2024, which in my opinion is a signal that really, if you're an investor in Tesla stock, you shouldn't really be caring about these day-to-day fluctuations in the stock. We tend to have these 21 day rallies and then we sell down.

Then we have a 21 day rally and then we sell down. This is just the nature of Tesla If you can't stand the volatility, get out. It's really no problem. Average selling price is down to just about forty seven thousand dollars, which actually on my 2025 projection, some of them have been going with 45 000.

Kathy Wood goes with 45 000, but I just pulled up my 2025 numbers and I Hate to say it, but I've actually been using 47 000 here and it doesn't look like we're going to hit that 2 million vehicle threshold in 2022, Though in the earnings call, there was some hope that that is a possibility. Though it's more likely we're gonna hit a safe number like 1 0.8 Maybe Slightly beat that. There was talk about expanding into the Lithium refining in Corpus Christi Texas breaking ground in May next month. On investor day, we were told that Tesla had already broken ground.

So this is a little weird and we hear that the delivery event for the Cyber truck is expected to be in Q3 and that will really get to mass production in 2024. That could be a pretty exciting time. Elon Musk calls the Cyber truck a hull of Famer which is great. And really, if we look at the numbers here 2025, even if we drop this margin and margin makes a big hitsy ditzy over here.

It sucks, but let's say we go back all the way down to an 80 cost structure and we just don't make it to that 30 number. In fact, hate to say it, but they actually revised the 30 Target down to mid 20s this cycle. Maybe 30 percent will come back in the future, but right now they're looking at mid-20s and what will probably happen is they'll say ah, we'll get to 3 30s including FSD in the future. Fine, but if we go to a 10 take rate on FSD at full pop, whether it's financed at acquisition or paid for in cash, we go for a forty seven thousand dollars per vehicle at 4 million Vehicles because after all, we do expect average selling prices to continue to fall, especially since those Model S's and X's are becoming a whole lot less popular.

Hate to say it. But here are the model S and X deliveries and base plummeting. Now they plummeted in early 2021 as well. but then we were going under uh line upgrades and so they've been rising since those upgrades.

but then again, falling. Uh, cash flow we already saw missed widely lower than in Q2 2022. That's when Shanghai was shut down. It's a big deal.

but anyway, what do we got over here? So if we actually look at the projections, then we'll go through some other things that were talked about. Really, nothing's changed here. What does change is probably we could bump the expectations for revenue from energy because the energy segment is honestly booming much faster than probably most of us had anticipated. In fact, in the last energy present or in the last earnings presentation from Tesla we saw that energy storage.

specifically the storage deployed segment Rose 58 quarter over quarter. That's not 50 a year. That's quarter. That's really, really remarkable.

And when we actually look at the margins for energy, which we can do by going to the financial statements, we can see those right here. We got energy Generation and storage. We're already sitting at 15 29 million. That's 1.529 billion dollars from energy I Mean I Hate to say it, but look at this.

I had right here. Total revenue from energy 1.8 for 2025. This is taking off. This is remarkable now.

Services might be a little elevated, but Services we have at super low margin here anyway. Yeah, Services I have at just five percent margin so this doesn't make so much of a difference, but we might drive that down. Let's kill this to five percent Drive Services down to five percent Tesla Did say they took some additional warranty adjustments and some one-time adjustments in this first quarter, which hurt margin a little bit more. Maybe we'll get a recovery in Q2 on that and they didn't take as much of FSD right up because Elon Musk calls it a two-step forward.

One step back. Now that's fine and hopefully that sets up for a better Q2 but still hits the stock in the short term. But let's change this energy segment here because if we have compounded annual growth here of, uh, even, let's call it a double because we're growing 50 and a quarter here. Let's go energy generation and uh, storage here.

and let's go with a Uh a double for the Uh for the year. So if we go uh for the quarter, we're at one five times four, we're at about six Billy for the year and let's double it and then double it again. Let's get to about 24 Billies by Uh 2025. let's see if that's a little too extreme here.

Let's go with that's going to be closer to ten percent. All right, let's go with 10 Energy that's 18.8 Bill fare. Okay, so we'll play with 18.8 Bill Here we cut Services down. Now, margin on energy isn't fantastic right now.

Obviously we expect it to expand in the future, but right now we're looking at at a energy storage sitting at 1837 1361 divided by 1837. Uh, sorry, 15, 29, 1529 Those surface, yeah, we're about 11 margin I think I have them at 10 here on energy. Oh no. had him too high so let's drop that to 89..

There we go, making some adjustments here together. We'll do that together. so we're going to keep four mil, 20 25. Let's drop the 47 to 45.

So let's reconcile some of the changes we've made here. We've changed Revenue per vehicle Down 2 000. we left number of vehicles. we reduced Services by nine bill, but we increased energy by a lot.

We added about 16 Billies to energy, which should add about 1.6 ish to the bottom line at around a 10 11 margin, right? So really it, it shouldn't be adding too terribly much. Uh, given that our profit's gonna be around 35 mil. So really the energy adjustment there or 35 Bill the energy adjustment there makes a difference of around four and a half percent that we made. So a smaller adjustment bigger adjustment is going to be on that vehicle margin.

and let's see what we get over here. so if we still assume what do. We got here. a uh growth here, what do we have? we have.

We're going to go with not 15 growth. That's really a worst case scenario. In my opinion, this would be horrible. 15 growth on EPS This would be really bad and that's why you could see 206 price Target I Mean you'd be growing at today's share price.

you'd be growing about 6.7 percent per year to get to that. But let's go with actually a 30 growth Target That's going to bump on a PEG ratio 30 times 1.67 That'll bump us to about a 417 price Target It's shy of that 500, right? So you're looking at 413. you're still looking at a pretty nice return though at a 30 growth on EPS I'm not even I'm not going with 50 I'm not going with 3 35 40 God Just looking for thirty percent growth here. Uh, and honestly, in this sort of environment, not that bad.

That still brings us to 413, That's still a pretty damn good deal. And honestly, if the market ran to to 400 by 2024, probably be uh, you know something where you scratch your head and go. Hmm did I just price in the next two years already right after cyber shark launches and you get some real juicy juicies. Of course if margin then Trends up as rates come down.

Watch this if we drop margin to a 26 margin again, what happens is oops I went the wrong way. sorry I increased the cost for percentage points. Let's bring that to Uh 74 26 margin. Let's go 25 margin brings it midpoint, right? Boom! That brings us to 520..

So that shows you everything's in that margin. and if we bottom out somewhere around uh, you know, 20 percent I mean right now, we're at 18.3 so hopefully it's up from there right. As margin costs come down, we start getting a little more. FSD Hopefully that's the bottom.

If we bottom out around 20 and we get these numbers, we're looking good for 400. Uh, if we end up bottoming out around 15, Uh, so that would be Uh 85 cost Structure: that's not going to be so great. 85 cost is going to shave another 100 bucks off the stock. So not great.

Still good upside. But come on man, we were at 306 like a year ago, right? So we want to be better off than that. Uh, so this shows you how important that margin is. very, very important now.

Elon does expect margin to expand by next year. He does believe storage will expand significantly Global Inventory, however, did rise from 13 days to 15 days. Uh, so and of course we had that. FSD Or sorry, a free cash flow Miss Uh, still ramping on the 4680s Chargers 60 of them are open to only TVs without extra waste times.

and there was a fatality at the Giga Shanghai facility leading local government there and an investigation to uh, demanding essentially Tesla to be punished while at the same time you've had uh, now some pain in terms of uh, not just this investigation, but also workers getting their bonuses cut in Shanghai So um, comes at the same time as Elon Musk says Shanghai is the most profitable Factory that exists potentially in the world. So I don't know Uh to me when it comes to Tesla it's gonna be a hurry up and wait. You're probably looking at a diamond hand in this sucker for another year before we're partying with Tesla tequila. Until then, consider subscribing.

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