Tesla: The Next Peloton | Bankruptcy Coming. — Transcript

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1. 0:00is Tesla the next Peloton let's talk
2. 0:03about that in this video and we're going
3. 0:05to make comparisons not only between the
4. 0:07cash flows of the two companies the
5. 0:09income of the two companies but we'll
6. 0:11also be analyzing lead times what news
7. 0:13did we hear about Tesla today that we
8. 0:16need to address and
9. 0:18what about Congress what did they have
10. 0:20to do with all of this especially on an
11. 0:23election day well let's analyze if Tesla
12. 0:26is the next Peloton stock set to lose 80
13. 0:30percent of its value in just a one-year
14. 0:33time frame and boy oh boy if you look at
15. 0:37Peloton stock it's not a roller coaster
16. 0:39you would have wanted to ride down you
17. 0:41would have started at an IPO level of
18. 0:43somewhere around
19. 0:4532.26 to 32 you would have ridden the
20. 0:48wave up to 171 and dropped all the way
21. 0:51down to sub ten dollars again now that
22. 0:55is a roller coaster but it's one that
23. 0:57some say is coming for Tesla and that
24. 1:00this run that we've had for Tesla is now
25. 1:03not only in a downtrend but it's just
26. 1:05the beginning of the downtrend
27. 1:08let's analyze the differences between
28. 1:10Peloton and Tesla in this video right
29. 1:12after I mention that thank you for being
30. 1:15here I really appreciate you okay so the
31. 1:18Peloton disaster we remember that I've
32. 1:22made multiple videos about Peloton back
33. 1:24when it was around 113 dollars per share
34. 1:27talking about why I was changing my mind
35. 1:29and selling my Peloton stock
36. 1:32unfortunately I didn't sell it at the
37. 1:34top at 171 but I did sell right around
38. 1:36113. and the reasons that led up to me
39. 1:39selling Peloton stock were massive
40. 1:42inflections in the fundamentals of the
41. 1:45business first we saw that Google search
42. 1:48Trends were dropping off a cliff for
43. 1:50Peloton bikes in addition to that
44. 1:52alexa.com reviews showed that the
45. 1:55website analytics for Peloton were
46. 1:57starting to suffer we noticed that page
47. 2:00hits and average time on website were
48. 2:02both declining substantially more than
49. 2:04they previously had suggesting that
50. 2:06consumers were changing their tastes and
51. 2:09preferences maybe not being so
52. 2:11interested in exercise bikes that are
53. 2:14useful for when you're stuck at home and
54. 2:16under under lockdown or quarantine
55. 2:19so we noticed this at the same time as
56. 2:22all of a sudden peloton's lead times for
57. 2:25their bikes dropping from about 6 to 12
58. 2:28weeks all the way to one to two weeks
59. 2:31which is almost just your basic shipping
60. 2:34time
61. 2:34in addition to that Peloton slashed the
62. 2:37price of the Peloton bike from over
63. 2:39twenty five hundred dollars to the lower
64. 2:412000s and eventually under two thousand
65. 2:43today they have so many of these bikes
66. 2:46in inventory which inventory is the
67. 2:48worst thing to have because what happens
68. 2:49is inventory needs to be maintained you
69. 2:52ended up having rustgate and the
70. 2:54disasters that Afflicted Peloton
71. 2:55regarding rustgate of Peloton bikes
72. 2:57starting to rust they had not only a
73. 2:59death involving their new treadmill
74. 3:01which led to the freezing of sales of
75. 3:04their treadmill which is also not very
76. 3:05good for the company overall but the
77. 3:07there were a lot of things that
78. 3:09suggested uh oh we've got some
79. 3:11problematic headwinds ahead of us and
80. 3:14sure enough Peloton did and the stock
81. 3:16plummeted from 113 dollars down to under
82. 3:1910 dollars
83. 3:20so
84. 3:22what is similar between Peloton and
85. 3:25Tesla and then let's compare what's
86. 3:29different and the different part is
87. 3:31going to be very very important because
88. 3:32right now Tesla is trading for 194
89. 3:35dollars at the time of this recording
90. 3:36and I hate to say it their vehicles are
91. 3:39just becoming more available now while
92. 3:43it's nice that people might not have to
93. 3:44wait as long for a Tesla the biggest
94. 3:47concern that individuals have is not
95. 3:49that they won't get their Tesla soon
96. 3:51enough if they want to order a Tesla but
97. 3:53rather that going into a recessionary
98. 3:55environment or likely being in a
99. 3:57recessionary environment already and and
100. 3:59that environment being very uncertain in
101. 4:01terms of how long it'll last could
102. 4:03ultimately lead to
103. 4:05well less people buying Teslas and when
104. 4:08demand goes down obviously lead times
105. 4:10are going to go down like Peloton now
106. 4:12there is another reason lead times could
107. 4:14be going down but let's take a look at
108. 4:16what we can analyze regarding demand
109. 4:18first we notice that the model y
110. 4:20performance has a November potential
111. 4:23estimated delivery date we can see that
112. 4:24right here the long range has a December
113. 4:27estimated delivery date that essentially
114. 4:30means if you wanted to get a model y you
115. 4:31could get it within the next month the
116. 4:34model X has a little bit more extended
117. 4:36lead times if you want the regular model
118. 4:39X all going all the way out to March
119. 4:41before these become available that's
120. 4:43about five months but that's where the
121. 4:45lead times end all of the other lead
122. 4:47types for the model X plaid all of the
123. 4:50Model S's available and the model 3s
124. 4:53available all have lead times that
125. 4:55include potential delivery in November
126. 4:58which means they're essentially
127. 4:59immediately available and If there are
128. 5:03Teslas that are immediately available we
129. 5:04would expect there would be some kind of
130. 5:06existing inventory under existing
131. 5:08inventory in this tab which there didn't
132. 5:10used to be an existing inventory this
133. 5:12used to be zero a few weeks ago there
134. 5:14were six cars available within 200 miles
135. 5:17of my ZIP code now unfortunately when I
136. 5:20click on model threes there are over 20
137. 5:24model threes available within 200 miles
138. 5:27of my ZIP code not only that though if I
139. 5:31type in
140. 5:3233324 which is a South Florida ZIP code
141. 5:34I also get vehicles available about six
142. 5:37if I go to let's go to Chicago we throw
143. 5:41in a Chicago zip code what do we get we
144. 5:43also get about seven Vehicles available
145. 5:45so we're starting to see more
146. 5:48availability of vehicles
147. 5:50on Tesla's website and Lead times for
148. 5:54new vehicles that aren't just hanging
149. 5:56out are also coming down substantially
150. 5:59and this is leading a lot of people to
151. 6:01say that's it Tesla's the next Peloton
152. 6:04he's going down
153. 6:05but what's different between the two
154. 6:07companies and that's really important
155. 6:10and we're going to talk about that
156. 6:11difference right now talk about
157. 6:13spreadsheets and the big differences I
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211. 8:25what's different between Peloton and
212. 8:28Tesla look at this Peloton was losing in
213. 8:31the quarter ending September 30th 2021
214. 8:35four million dollars per day
215. 8:38and in the quarter ending September 30th
216. 8:40this year they're still losing four
217. 8:43million dollars per day from operations
218. 8:46they can't figure out how to make money
219. 8:49on top of that they've had a CEO
220. 8:51transition and they're totally clueless
221. 8:54in terms of how to manage their cash
222. 8:57because they have so much inventory that
223. 9:00they're burning their inventory almost
224. 9:03at an opera well they are an operating
225. 9:05loss just to try to figure out how to
226. 9:09keep the Pelton system spinning
227. 9:12this is really different from Tesla
228. 9:14instead of losing four million dollars
229. 9:16per day Tesla's cash provided in Q2
230. 9:20which is when Shanghai their most
231. 9:22productive Factory was shut down was
232. 9:24about 25 million dollars per day and in
233. 9:27Q3 when Shanghai came alive again it
234. 9:29bumped up to about 50 million dollars
235. 9:33per day in cash that Tesla is generating
236. 9:37operating profits not losses and these
237. 9:41numbers are getting better and expected
238. 9:44to be even larger in the fourth quarter
239. 9:46this is phenomenal and even if you
240. 9:49subtract out the amount of money they're
241. 9:50investing into factories like the 1.8
242. 9:52billion dollars they spent in Q3 they
243. 9:54still had over three billion dollars of
244. 9:55free cash flow left over so already
245. 9:57you've got two massively different
246. 9:59companies one that actually prints money
247. 10:02Tesla and one that doesn't Peloton now
248. 10:06sure lead times are going down for
249. 10:08Teslas but that could be for a good
250. 10:11reason see Elon Musk has told us he
251. 10:13thinks the wait times are actually
252. 10:15really bad for Tesla because they just
253. 10:17encourage somebody to go buy another
254. 10:19electric vehicle from another dealer or
255. 10:21another manufacturer because hey people
256. 10:24don't want to wait for the for a new car
257. 10:26when they make the decision to buy a new
258. 10:28car they want a new car now so they can
259. 10:31go buy a fuel efficient Prius from
260. 10:33Toyota they might go do that instead of
261. 10:36waiting for a Tesla now maybe they'll
262. 10:39buy a Ford Maki or they'll buy a pickup
263. 10:42truck or whatever they want to buy so
264. 10:43this is where some are saying that
265. 10:45Tesla's falling lead times are actually
266. 10:47just going to enable Tesla to expand the
267. 10:52number of customers they could have at
268. 10:54Tesla and actually capitalize more
269. 10:58market share during the recession than
270. 11:00any other Electric Vehicle Manufacturer
271. 11:03can during the recession think about
272. 11:05that from an exciting point of view that
273. 11:07basically means Tesla could eat the
274. 11:10competition alive
275. 11:12while printing cash taking more market
276. 11:15share in a recession while the other
277. 11:17companies can't even produce a
278. 11:20profitable electric vehicle look at Ford
279. 11:22for example they don't have a profitable
280. 11:24electric vehicle they ate it they lost a
281. 11:27lot of money on the uh Mach e model and
282. 11:30they're still losing money that's scary
283. 11:34contrast that with Tesla it means Tesla
284. 11:36can just continue to make more cars and
285. 11:38hopefully take away customers from
286. 11:40companies like Ford or GM or other
287. 11:42electric vehicle companies and then when
288. 11:44we come out of this recession and it's
289. 11:46boom time for everyone again Tesla's now
290. 11:48already so much further ahead because I
291. 11:52truly believe once people get into the
292. 11:54Tesla ecosystem they don't leave it's
293. 11:57kind of like you get into apple and then
294. 11:59you feel like you're stuck I don't see
295. 12:02people trading out of a Tesla once they
296. 12:05own a Tesla and this brings up this idea
297. 12:07that maybe in the short term we're
298. 12:10seeing a little bit of fun because some
299. 12:11believe a republican-controlled congress
300. 12:13which could potentially happen might end
301. 12:16up trying to unwind the inflation
302. 12:18reduction act which promises large tax
303. 12:20credits for electric vehicles with
304. 12:22certain conditions and electric
305. 12:24batteries and so on as well as solar
306. 12:26panels and everything starting in 2023
307. 12:29which could also be a big Catalyst for
308. 12:30more sales however as long as Joe Biden
309. 12:33as president I don't believe that Biden
310. 12:37will actually sign something to overturn
311. 12:40the inflation reduction act so I
312. 12:41actually don't believe that's a very
313. 12:43good reason to suggest that that EV
314. 12:45stocks are falling because Republicans
315. 12:47might try to end the inflation reduction
316. 12:48act which again has has a large uh
317. 12:51energy tax credit component to it but
318. 12:54what you do have is fud from a recall
319. 12:58this morning yet another recall led to
320. 13:00yet some more fud over at Tesla and and
321. 13:03the world of people who like to bag on
322. 13:05Teslas take a look at this tweet that I
323. 13:07sent this morning I sent this tweet
324. 13:09headlines everywhere Tesla steering
325. 13:12failure recall stock drops Tesla down
326. 13:16five percent panic and then those are
327. 13:19like the headlines I mean look at some
328. 13:20of these headlines okay recall plagued
329. 13:23Tesla calls back another 40 000 cars
330. 13:27over possible steering issue
331. 13:30then none of these say this in the
332. 13:33headline but when you read the actual
333. 13:34article you see a little note at the
334. 13:36bottom of all these fud stories that say
335. 13:39this is a voluntary recall that requires
336. 13:42an over-the-air software update
337. 13:44could you imagine seeing all of these
338. 13:46alerts when Apple sends you a software
339. 13:49update for your phone
340. 13:51recall plagued Apple requires users to
341. 13:54install update
342. 13:57voluntarily
343. 14:00it's quite sad honestly it's quite sad
344. 14:03so what do we actually think for Tesla
345. 14:07like bottom line what do we actually
346. 14:09think for Tesla well I actually think
347. 14:11this is a phenomenal opportunity
348. 14:14to understand that the market is
349. 14:16emotional the market is like a little
350. 14:18child it's stupid in the short term in
351. 14:22the short term it's gambling that's all
352. 14:24the market is is in the short term it's
353. 14:26just gambling it's a casino
354. 14:28in the long term we can actually
355. 14:30evaluate what true fundamentals are and
356. 14:32my belief is that you don't even need to
357. 14:35give any dime of credit to full
358. 14:38self-driving revenues from Tesla
359. 14:42uh you give some obviously in the
360. 14:44revenue per vehicle but you don't have
361. 14:46to give anything to semis cyber truck
362. 14:48insurance Robo taxis the the bot that
363. 14:53can't walk which I'm actually really
364. 14:54optimistic on uh but you know people
365. 14:57like to make fun of it you don't have to
366. 14:58give any credit to that as long as Tesla
367. 15:00can maintain about a 29
368. 15:02uh profit margin gross profit margin on
369. 15:05on the sale of vehicles
370. 15:07Tesla should be worth
371. 15:10should be worth about 481 dollars at the
372. 15:14end of 2025.
373. 15:16and since Tesla right now is trading for
374. 15:18about 190 bucks that would represent a
375. 15:2126 percent compounded annual return over
376. 15:24the next four years
377. 15:26that's actually pretty incredible 23 24
378. 15:2925 wait a minute
379. 15:31that's only three years away oh oh I'm
380. 15:34gonna change that to three years that
381. 15:36would represent a
382. 15:3836.3 percent compounded annual rate of
383. 15:41return and if Tesla can get that margin
384. 15:44back and maybe even above 30 percent
385. 15:46let's change this to uh 31 margin so 69
386. 15:50expense oh my gosh Tesla stock could
387. 15:54shoot up to 546 dollars per share a
388. 15:58compounded annual rate of return over
389. 15:59the next three years of 42 every single
390. 16:02year this is phenomenal this is
391. 16:04phenomenal now what could hurt this is a
392. 16:06lower p e ratio but I don't believe that
393. 16:09Tesla's p e ratio in the future can
394. 16:12really be lower than their growth rate
395. 16:14in fact their p e ratio could be as high
396. 16:17as two times their earnings growth rate
397. 16:19and right now we expect Tesla earnings
398. 16:21to be growing roughly at about 50
399. 16:23percent so about 1.1 times for a PEG
400. 16:27ratio Tesla has pricing power Tesla has
401. 16:31substantial growth and it makes little
402. 16:34sense to see that Tesla's p e ratio
403. 16:37would converge anytime soon to levels as
404. 16:41low as what you see with Google or Apple
405. 16:43which Apple's usually around you know 27
406. 16:46to 30. Google's uh relatively low but
407. 16:49then again their growth has slowed
408. 16:51substantially they're somewhere around
409. 16:5112. we don't actually expect to see
410. 16:53numbers like that or like the stagnant
411. 16:56vehicle manufacturers who are around
412. 16:57like nine times earnings right
413. 17:00uh we don't expect to see that for Tesla
414. 17:03uh until probably in the 2030s when
415. 17:06Tesla's growth actually slows but in the
416. 17:09short term there are a lot of fears that
417. 17:11Tesla is not a good company to invest in
418. 17:14during a recession because people won't
419. 17:16buy cars and so far that's being
420. 17:17evidenced by lower lead times I think
421. 17:19that is a reasonable concern
422. 17:22but I actually think
423. 17:24these lower lead times are a huge
424. 17:27benefit to Tesla and the Tesla Community
425. 17:28because this recession is going to be
426. 17:30the time where Tesla just eats up all
427. 17:33the competition obviously not all of it
428. 17:35but I expect their market share to
429. 17:37substantially increase during the
430. 17:38recession whereas other companies will
431. 17:40likely see their market shares decline
432. 17:42during the recession as they panic
433. 17:44because of recessionary costs and losses
434. 17:46which Tesla doesn't have they're
435. 17:47printing money so have I changed my
436. 17:50opinion on Tesla not at all if anything
437. 17:53it looks even juicier right now than it
438. 17:56did at you know 210 or 220 or 230 or 240
439. 18:02but hey you know what that's what the
440. 18:05market does it goes up and down
441. 18:07and folks thank you so much for watching
442. 18:09check out those programs on building
443. 18:11your wealth down below especially the
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445. 18:15next one