Hey, I’m Steven and this is Solving The
Money Problem.
If you’re new, welcome.
If you’re not new, cool.
A month ago, with Tesla stock at $339, I posted
a video called “Waiting For Tesla Stock
To Dip?
(good luck)” because dozens of you had made
comments about holding off buying until the
stock dropped.
I’ll put a link to that video in the description--I
really recommend you watch it first so this
video makes more sense.
In it, I outlined why I believe the most probable
direction for Tesla stock to trend is up.
The confidence--or perhaps arrogance--with
which I made this statement, impressed even
me.
But guess what.
The stock is up almost 40%, since that video.
Coincidence?
Yes.
Can I take credit for it?
No.
At least I hope not.
But was it the most probable outcome?
Yes.
And that’s why I was willing to make a strong
statement about a future event.
Now, a few of you missed the point of that
video.
I didn’t say Tesla stock WILL go up.
I said, let’s look at the probabilities
and determine the most likely trend over time.
This is an extremely important distinction.
Anything COULD happen to Tesla stock.
We’re talking probability, not certainty.
So, why did Tesla stock gain $130 in a month
and what’s the most probable direction for
the stock in the future?
Spoiler alert: it’s STILL not down.
So in this video, in an effort to help you
guys understand how I think and reason, plus
to show you that reasoning playing out in
the real world, it’s time for a quick update.
Q4 Breaking Records
As I predicted, Tesla reported record production
and record deliveries in Q4.
Ooh, that’s awkward.
We’ll have to wait for the Q4 earning call
in a few weeks to find out whether they also
achieved record profits and a record order
backlog but I believe the odds of both are
high.
And I also don’t believe Wall St is expecting
this.
If you can’t read between the lines, allow
me to spell it out:
If Tesla beats Wall St expectations, that
is a GOOD thing.
Got it?
The Model Y Ramp
I also mentioned how important the rumors
that Model Y ramp was almost a year ahead
of schedule were.
It shows how quickly Tesla is learning and
how fast they can now ramp production.
Well, a few weeks later and, not only did
Tesla announce Model Y production will begin
in China soon (which I also predicted) but
that they’re going to design a brand new
vehicle in China for the global market.
What are the odds of this being a compact
car?
Wall St wasn’t expecting this.
Gigafactory 3 Production
I also detailed how incredibly quickly Gigafactory
3 was ramping.
Well, a few weeks later and the first made-in-China
Model 3 customer deliveries have already taken
place.
And on top of that, we know the factory is
now ramped close to it’s annual Model 3
capacity of 150,000 units.
If you’re not up on your history;12 months
ago Gigafactory 3 was a muddy field.
Can we all just please take a moment and ask
one question together:
What.
The.
Actual.
Fuck?
It appears Gigafactory 3 was built faster
than any other factory of it size, EVER.
By a HUGE margin.
If anyone has any examples to the contrary,
please let me know.
AND it appears Gigafactory 3 has ramped vehicle
production capacity to 3,000/wk in just 3
months.
A fraction of the time taken in the US.
Tesla is learning VERY fast.
This matters.
A lot.
Wall St wasn’t expecting this.
I wasn’t expecting thins.
In fact, some analysts today are predicting
production of around 50,000 made-in-China
Model 3s for the entire 2020.
Many analysts are completely sleeping on China.
[Elon Musk said that there’s going to be
Model 3s manufactured from the China plant
by the end of 2019.]
[So far the China plant is, um, basically
an open field with some digging going on.]
[It’s harder and harder to believe that
there will be Model 3s coming out of the Tesla
China Gigafactory by the end of the year.]
[Um, but what Tesla doesn’t have right now
is a factory.
So, that’s a problem.]
Gigafactory 4
There’s almost daily updates about Tesla’s
300-hectare Gigafactory 4 site.
Progress is good news and there’s lots of
it.
Information is leaking, plans and documents
are popping up online, things are moving ahead
swiftly and I expect a steady stream of news
to come.
Site plans have shown intent for on site battery
production and future expansion
We’ve learned that Tesla is targeting initial
capacity of 250,000 vehicles per year in stage
1.
Then 500,000 in stage 2 and then 750,000 in
stage 3.
This means Gigafactory 4--once ramped---in
a single year could produce almost as many
vehicles as Tesla has in its entire decade-and-a-half
history.
Full self driving
I also discussed Tesla’s seemingly unassailable
data lead in full self-driving.
Funnily enough, a little christmas present
from Elon Musk arrived soon after: a preview
of Full Self-driving.
Users can now see more of what the software
is seeing and understanding.
Traffic lights, stop signs, disabled parking,
traffic cones--you name it.
This is a huge step forward.
Full self driving is way closer than people
think and Tesla’s gigantic data machine--it’s
fleet of almost 1 million vehicles--is soaking
up an extraordinary amount of data to improve
the self driving AI.
No one has the data.
No one has the fleet.
No one is catching Tesla.
The end.
Expect many more full self-driving milestones
to come.
The Analysts ARE Waking Up
While there’s still plenty of clueless clowns
out there, we’ve seen a very strong shift
in sentiment recently, as I predicted.
First we had Jim Cramer do a very vocal 180
and rant about Tesla on a number of CNBC segments.
[I gotta tell ya.
I’m dumbfounded too--dumbfounded that Tesla
stock hasn’t gone even higher!]
[Why?
Because the stock market loves growth and
this market in particular can’t get enough
of it.]
[This is a chart of growth, people.
Tesla’s growth is in spades.
Of course investors will pay up for it.]
[GM’s barely any growth.
Ford’s actually shrinking.
Nobody wants to pay for stagnation.]
[Plus Tesla’s got a rapidly expanding business
in China which is all the more impressive
when you consider that Ford’s China business
is in big trouble and GM just told us that
it’s Chinese business will be down this
year, just like last year.
It fell 15 percent.]
[People are mocking the fact that Elon Musk
did a jig last night on the Shanghai stage
where he unveiled the new cars.
I say, who can blame him?
He built a new plant that can produce 150,000
cars and he did it in just 10 months.]
[Ford and GM would be struggling to get a
similar plant up and running in 18 months.]
[They've been more in the habit of closing
factories than opening.]
[Even better.
Musk says this new plant can get its capacity
up to 250,000 maybe in a couple of years.]
[As far as I’m concerned the guy can dance
naked after those accomplishments.
I don’t care.]
[More importantly though.
These kinds of comparisons between the old
guard and the new ones?
WORTHLESS.
Wall St will always pay much more for fast
growing companies with fabulous prospects.]
[The Ford & GM vs. Tesla comparison’s just
a parlour game.]
[Tesla’s got electric vehicles.
That’s the future.]
[GM has an electric vehicle that no one seems
to want.]
[Who the heck knows what Ford’s up to?]
[Who cares?]
Then suddenly we began to hear positive comments
from guests on the finance networks instead
of endless negativity and FUD.
It’s almost as if a memo was sent out:
“Hey guys.
Urgent update.
We no longer hate Tesla.
We have changed our minds.
Has everybody got that?
We no longer hate Tesla.”
As sentiment continues to improve around Tesla,
more and more sheep will follow the herd.
This creates a feedback loop.
When one prominent analyst upgrades the stock,
those who are not independent thinkers take
notice and often follow suit.
And so it goes on.
Even the thoughtful Gene Munster (a long term,
but very reserved Tesla bull) let slip that
he sees the stock doubling in the near term.
[That would be $900 a share.]
[Ok, so like an, almost a double from here?]
[I think so.
This is not gonna be a nice, linear path there.]
[There’s gonna be a lot of chop on there
but that’s how these trends happen ]
[I mean, Craig talks about more competition
that has been happening for the last few years
and Tesla’s maintained their--call it 70%
share in the US.
That’s gonna decline over time, no doubt,
but we’re talking about 450,000 vehicles
this year in a market that’s 90 million
globally.]
Expect to see the tide continues to turn as
more analysts wake up to Tesla.
At the moment, most of them are still sleeping.
[But let’s take a look at shares of Tesla
over the last 3 months.
As the have moved higher, so have prices targets
that have been put out there by the analyst
community.
In September they were at about $270.
Now it’s up to $344.
That is, the average price target that’s
out there.]
[Since October, you know, my lack of understanding
in this stock is--it’s, it’s--palpable.
I mean, it’s ridiculous.
I mean, the stock has gone, basically from
$320 to its current levels in a straight line.
So I just want to put that out there.]
[Again, I’ll say, you know, for the last
month and a half/two months: completely lost]
I could keep rattling off reasons but feel
I’ve made my point.
In summary, Tesla stock has trended up because
a stream of good news has flowed from the
company.
They’re breaking records, surprising everyone
with their speed of execution, and basically
just doing a whole lot of winning.
Looking ahead, I see a string of positive
news on the horizon and still, very little
in the way of headwinds.
Does that mean the stock will go up?
NO.
But from where I’m standing, it seems to
me that the most likely direction Tesla stock
will tend is not down.
This is a growth story.
The only question is whether or not Tesla
can continue to execute on their plans.
They haven’t given me any reason to doubt
them.
Yet.
Let me leave you with a final question.
If Tesla does what they say they will do,
what is the most probable direction the stock
will trend over time?
Exactly.
So guys, please stop with the “I’m waiting
for the stock to dip” bulls**t.
It’s a fool’s errand.
Either you believe in the company and its
ability to execute, or you don’t.
Either it’s worth buying, or it’s not.
Use your brain, do your homework, draw your
own conclusions and act on them.
Stock investing is a long game.
Imagine being the person in November 2010,
who, having seen Amazon stock explode from
$40 to $170 in a 2 year span said “The stock’s
gone up too much, I’m going to buy when
it dips”.
Guess what.
I never did.
I’m Steven Mark Ryan, this is Solving The
Money Problem and I love you all.
Thanks so much for watching.
Let me know your thoughts in the comments
below.
Were you waiting for Tesla stock to dip?
Do you agree or disagree with any of my points?
What do you think is the most likely direction
for Tesla stock is?
And of course, if you have any ideas for future
videos, let me know.
I read ALL your comments.
p.s.
If you’re still watching, you’re AWESOME.
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Consider supporting the channel at http://patreon.com/solvingthemoneyproblem
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