**Critical** Game Changer for Tesla Stock [Must Watch]

holy smokes we got a lot of color from Elon Musk last week from the Tesla earnings call earnings report and quite frankly what we saw in the stock movement I don't think anybody can argue that movement was insane in fact historically it was insane the largest move ever in the last 10 years for Tesla stock in just one day up 22 percent really incredible and when you look at the numbers the numbers were rightfully so incredible but in this video we're going to go into detail we're not only going to talk briefly about what we heard from the actual earnings and earnings calls and some of the numbers but we're actually going to dive into the valuation of the company we're going to talk about what is a fair price for the company today in 2026 in 2027 is it fair to include robotaxi or not and what do the numbers look like if we do include Robo taxi let's do that as well as speculate on what are these lower cost vehicles that are going to be introduced in 2025 let's talk about all that in this video but first did you know and this is just a fun fact and it's about Tesla did you know that in 2014 Tesla introduced convertible bonds that paid just a quarter of a percent per year in interest people might ask themselves who the heck would in invest in a convertible bond that just paid a quarter of a percent of Interest like why even pay interest at all it's because convertible bonds are actually really amazing they give you the opportunity to participate in an upside with yield and you get preference in Liquidation in fact take a look at this Forbes article here that shows you in 2021 when this article was written these convertible bonds converted to shares worth 800% more than what people invested in those convertible bonds for so it really goes to show that these long run bets on Tesla they do tend to pay off so congratulations to the people who made a lot of money on those convertible bonds and hopefully that continues for the long-term future for Tesla if you haven't heard yet though I did take inspiration from Elon Musk and exactly this right here we created convertible bonds over at hous hack that's my startup if you haven't heard of them yet go to househ hack. com you can learn all about them it's a 5% convertible bond which means you get paid 5% not one quarter of a percent you get 100% of the stock upside with downside protection and you get paid interest on a monthly basis it's pretty awesome go check it out over at house hack. com we're also running at a Q4 annualized profit which means everything we raise goes into what we do best wedge deal real estate and yes while we're no car company I think we're a killer real estate company and yes we use AI in our work as well you've all seen my wedge finder and it's awesome with that let's hit some of the numbers okay adjusted epsb 20% this is remarkable Tesla's not generally known for beating and then beating by this magnitude amazing the adjusted earnings per share were great uh 72 cents versus 60 cents remember adjusted usually adds back in things like stock based compensation but still 72 cents versus 60 it's a 20% beat amazing and margins honestly fantastic excluding credits the market was expecting a 14.

9% uh Automotive gross margin and we ended up getting 17. 1% like I'm just stumbling over those words because it's so good now I estimate that about 1% of that was likely due to enabling full self-driving on the Cyber Tru I think a lot of the early C Iber truck adopters were anxiously waiting for FSD and there you probably almost have a 100% take rate on FSD for the cybertruck early adopters these are like your mega mega mega Tesla fans so I would bet that about 120 basis points uh of that beat was due to other aspects and about 100 basis points was because of cybertruck FSD enablement which does mean there were still cost improvements from battery costs coming down or better Manu manufacturing efficiency the cybertruck turning to gross profit as opposed to last quarter being uh a gross loss this is pretty good so congratulations this is really really good this means now a new vehicle like the cybertruck that is so unique to build and and so unheard of quite frankly is actually creating a profit for Tesla on every single vehicle that they make from the Cyber truck that absolutely impressive in fact in the last quarter Tesla earnings report if you look at my earnings video I say you know what when you remove the Cyber truck the Tesla margins are actually pretty good and the reason I removed the cybertruck is because it was still a low uh sort of volume vehicle the fact that it's already at gross profit and now it's contributive w that's freaking amazing let's go this is really good also in the prior reports I was a little jaded that they weren't actually going to fully build out this semif Factory facility and at this point at least it looks like they are actually walls up and prepping out the semick factory so congratulations Tesla these these are very good things now not everything is good but these so far are very good things uh we're getting up to 50,000 h100 uh chips Nvidia chips online by October although Elon Mak makes it clear that we're not really compute constrained here we're actually more and this was sort of a humble brag constrained by the lack of finding problems in FSD in other words Elon was basically like yeah we find problems so rarely with full self driving that now we're kind of just sitting around going like like where is the problem for us to solve and I'm like okay that's a pretty pretty clutch humble brag I actually dig it uh mega pack Factory expected to ship mega packs in q1 2025 just to give you perspective as to what that means laop produces about 40 gwatt per year Shanghai is expected to get to 20 gaw which would be a 50% increase in the energy business for the mega pack side and that's phenomenal and the mega pack and energy business makes money it is like I mean you're talking over 30% gross margins when I mean we used to celebrate Tesla for having 30% gross margins on cars during the stimulus days they have that in the batteries it's so amazing that it is absolutely crushing nphase to the point where nphase is complaining about Tesla in their earnings calls if you read the last two earnings calls from Tesla or sorry from nase in both of the last two earnings calls they are complaining about Tesla they don't name them in the prior one but they do in this one uh but they reference Tesla in the prior one by going you know and unnamed competitor it's is bad like nface is getting smoked by Tesla and it kind of makes sense like if if you're going to buy a battery would you rather an end phase battery or a Tesla battery like come on anybody watching this video is like no man come on give me the Tesla battery okay they got the that's peee okay they got pricing power in that aspect that's great now obviously with pricing power you have to also consider valuation which we'll talk about but I have to say this was pretty good so then we got into some of the things where I'm like okay so we got the good out of the way here we get into the okay where are you going with this Elon so Elon forecasts 20 to 30% vehicle growth and this is what I think is really interesting he talks about no $25,000 car that basically a $25,000 nonroot taxi car will not happen so he's officially 100% killed the $25,000 nonroot taxi car it's over now that exactly aligns with what Reuters told us and everybody said was fake news it's just fake news Reuters back at it again or whatever but he literally says right here yeah well we're not making it okay so so however we want to look at it there is no $225,000 nonroot taxi car now is it possible that that the robo taxi is the $25,000 car yes in fact that's what Elon says he says the $25,000 car is the robo taxi that is the robo taxi now of course they do plan to have more affordable models now this is what I think is really interesting because I'm thinking myself wait so if you're not doing a $25,000 car and the $25,000 car is just the robo taxi then how are you going to have more affordable models and let me show you this in the actual earnings call so regarding the vehicle business we are still on track to deliver more affordable mod models starting in the first half of 2025 you know this is I think probably people are wondering what they should assume for vehicle vehicle sales growth and at the risk of you know a rough estimate we think it'll be 20 to 30% blah blah blah BL blah okay we think with our lower cost vehicles with the Advent of autonomous something like 20 to 30% growth next year is my best case okay all right let's unpackage this because this is where things start getting a little bit nuanced where you kind of have to put your Elon hat on a little bit and go all right what are you saying because this the initial takeaway is got it no $25,000 Robo taxi vehicle but you're going to have new lower cost cars wait did he say new lower cost cars now forgive me for being jaded here but I want you to read this line right here so regarding the vehicle business we are still on track to deliver more affordable models oh okay with our lower cost vehicles with the Advent of autonomy wait hold on a sec is it possible then that what Elon is saying is we're going to have the 25k Robo taxi okay that's going to be on one side of the equation and on the other side we're going to have more affordable existing models notice he did not say more affordable new models we've already seen Tesla vehicles lose 20% of their value basically uh based on just new vehicle price Cuts in uh well frankly this year in 202 four that's a lot that's a substantial amount of hits uh and on top of that you've got elevated inventory right now so when you factor in elevated inventory 20% price Cuts some on Wall Street call literally you're calling Tesla right now quote the worst auto brand in terms of resale value because of these price cuts and the likelihood of more price Cuts coming a lot of folks look at this and go oh we're just going to get a lot more price Cuts that's what we're going to get so now this starts making sense okay fine then so if the more affordable models are not new models they're just existing models that are going to be cheaper then if you're potentially in the market next year for a model 3 or model y you should potentially expect lower prices next year now that doesn't necessarily have to be a bad thing for Tesla because a lot of folks expect that Tesla is going to continue this 30-day free trial push where every time they have a new software update they give you a 30-day free trial on FSD they try to hook you into FSD and then they try to get you to Fork over eight grand to pay for FSD and frankly it seems to be working because their margins are going up and I have to give them credit for this they are converting people and you know me like FSD is good I've been using FS since 2017 do I think it's ready for full autonomy no are there still bonehead things that happen yes but they have been further and farther between every single time I use it and so I have to give credit where it's due and congratulations like it it is going great so I think this 20 to 30% vehicle growth even though we didn't really get color on where this vehicle growth is coming from I do not think there is a new model I actually think it's just the existing models with lower prices and potentially more credits from you know whatever uh tax credits State credits you name it so we'll see now obviously the election could have some impact on that we'll talk about this but uh I do think there was a lot of confusion around this and I think that my thesis clears this up because Elon also makes it very clear that the nonroot taxi $25,000 car would be pointless that the future is a autonomous and frankly Elon is right when he says you should not invest in Tesla if you believe that autonomy is not going to happen at Tesla in other words the only reason to invest in Tesla is if you actually believe Robo taxis and full autonomy are going to happen now I personally am of the mindset that you don't actually need to get to full autonomy to make Tesla extremely profitable you just need everybody using FSD and you need to print as many affordable Vehicles as possible which maybe that's what Elon is also doing he's saying like let's just cut the price on the three and Y as much as possible to print as much of those suckers as possible to get as many FSD revenues coming in as possible in the meantime we're just going to develop the 25k car and honestly to that cheers I don't really think you need a new model I mean don't get me wrong I'd love a larger model but I don't think you're going to get it I think it's all going autonomy so don't expect a new model from Tesla that's it any of the new models are just solely autonomous that's my take so uh let's uh let's touch on a little bit more obviously he mentioned things like energy is on fire Optimus showed massive improvements in dexterity movement on 1010 I thought it was actually really funny that he said Optimus showed massive Improvement on dexterity movement yeah because we know we didn't get to see autonomy on autonomous on on robot toxy day or I Robot day we robot day whatever what we saw was human controlled robots and we did see fantastic dexterity which I covered in my live stream as well I'm like yeah this looks really really good it shows the function but these are all human controlled that should be obvious at this point I also think the FSD Vehicles were you know on their own version of FSD we already know they were on hard on on um better Hardware way overbuilt Hardware but I think they were basically on a pre-programmed path and this was really like a Disney World ride which forgive me I just came from Disney World we we had a wonderful time by the way we did a VIP tour and uh we did um all four parks in a day I don't recommend that we got all the great rides in uh but uh it is it's a little quick dang though that Guardians ride really solid really really really big fan and if you haven't seen yet not sponsored Universal uh the new universal theme park in Orlando Florida is opening Memorial Day and and I already pre-order tickets to be there like ASAP when it opens so I'm kind of excited for that I have a big like theme park fan but anyway uh let's let's get into like numbers and valuations here so this is all overall very exciting uh and I I you know I don't know where I stand with elon's 20 to 30% growth for next year especially with some of the pain that we're seeing in Europe and I think some of that pain is going to extend to the United States now don't get me wrong I know Volkswagen is Legacy but Volkswagen is echoing what Tesla is also seeing in Europe which is a warning that quote the car market in Europe is stagnating and will not recover in the foreseeable future and that there is a worsening economic situation in Europe and when you combine that with what I think is coming for the United States and really what's going on in China outside of the stimulus that's going on I'm not the biggest fan of the global economy and and some of the valuations where are but let's just actually get to some of the sheets and numbers and understand where valuations are so we're going to do a few things uh the first thing that we're going to do is uh I'm going to show you the spreadsheet we're going to go through this spreadsheet in a moment but before I hit the spreadsheet I want you to have the Wall Street version so the Wall Street projected next 4-year EPS growth rate is 29% now that could be low but basically if you take earnings per share at the end of 2024 and you look at the next four years you have a 29% growth rate in earnings per share projected if you look at Tesla's current PE ratio price to earnings ratio it's at 112 that's simply today's price like 270 divided by you know 240 or whatever the end of year estimates are for EPS so that means your PEG ratio right now is 3. 87 which is really really high based on wall Street's projected next four years if Tesla is a software company I think their Fair Peg would be 2.

69 which gives them a fair value today of $187 if they're a manufacturing company they have a fair value today at a $ 1. 69 Peg of $159 which means yes there is a lot being priced in now if I go to the end of next year as a Manufacturing Company I'm at 159 on a peg basis if I'm a software company at the end of next year I'm at 251 so I'm we're still pulling forward a lot here that's based on wall Street's numbers we're going to go into my spreadsheets which helps solve for some of this in a moment but that's based on wall Street's numbers I think this is Tesla pulling forward software like valuations but also frankly you're really pricing in Optimus and autonomy and probably more energy growth than is already being priced in and I'm putting in a lot of energy growth in this already so do consider that there there is a lot of enthusiasm being priced into this and so if you've been really really happy with what's been going on with Tesla lately and you want to diversify just a little I'm not saying you have to sell everything I'm not even making any recommendations to you I'm not a personal adviser for you unless of course you hire us over at stock act. com but if you do want to diversify consider the 5% convertible Bond over at house hack because you get all the upside in the stock and you get downside protection and you get paid 5% interest every single year for a minimum of five years now this video can't be a solicitation and that offer does expire December 13th Taylor Swift's birthday probably coincidental but anyway go check it out at house.

com okay now let's go through my valuation and and I want to be clear this reconciles some of the Wall Street problems so I'm not as much of a bear as Wall Street is I I actually consider myself pretty excited uh for Tesla okay here we go $40,000 per average vehicle selling price that's roughly where we sit now we're going to go with 3 million Vehicles produced this assumes the best case of elon's best case scenario because he said 25 to 30% for the next 2 years compounded so that gets us from about 1. 9 million vehicles to about 3 million Vehicles not including any Robo taxi vehicles in this estimate I will in the 2027 estimate I uh include at $18 billion for energy keep in mind right now on energy we at about 2. 3 billion per quarter so sits about 9.

2 per year annualized that sits about uh 18 would be about a double in two years okay very very generous I feel like on energy and that that's high margin very high margin on energy I'm going to go with 18% vehicle margin I think that's generous because I do think we're going to see higher FSD I do think we'll see probably stable energy credits worst case a little lower uh but I do think that uh prices will come down so I think 18% you know we're around 177% X credits now 20% with credits I think 18% is reasonable 31% gross margin on energy let's assume they keep that Services leases these are nominal I'm including FSD Revenue in vehicle over here so I've moved that up here no Robo taxi income or or Fleet income or anything like that Opex leave it at 6% okay fantastic so this brings me to almost $5 of eps which is about 80 cents more than wall stre estimates for 2026 so my price targets are going to be higher than where Wall Street sits so with uh for an auto business with my earnings per share at the end of 2026 I put this at a $248 stock well since the price of the stock today is about 270 that does give you over the next 2 years a about NE -4% compounded annual rate of return of invested return obviously not great it basically means you full fully priced in through the end of 2026 however if you don't give them a 50p ratio which is basically taking the growth rate of 29% time 1. 69 which gets you to 50 PE that's for automotive and Manufacturing uh if you go with the software side which is taking a 2. 69 PEG ratio multiplying it by their growth rate of 29% you get to 78 times multiple if I change this to a 78 times multiple you get to 388 that's where the money is look at that 19.

9% growth compounded over the next two years with a price target of 388 that's actually pretty sexy that's pretty good now I personally would put my you know my base case at more of a of a 50 and I'd rather buy it at a discount to that now no guarantees we're going to get that but there is a chance that in the face of regulatory Turles or any kind of Hiccup or some kind of recessionary fear or shock there is a case where you do get a sub 200 shot at Tesla again and that's where you're going to start building in your margin of safety now no guarantees that that could happen but that's where you build in your margin of safety in fact maybe even sub 150 now again I know this sounds crazy and I'm not saying this is going to happen but I what I want you to see is let's assume no vehicle growth for a moment kill the vehicle growth because there's a session or whatever and leave the energy grow growth in some of the other factors but now all of a sudden if I go 150 and I assume Automotive margins well 150 still gives me 10% growth in the worst case scenario over 25 and 26 assuming we stay flat with vehicle deliveries so that's really where you want to be uh I if you really want to be more recessionary bare case right okay now let's go 2027 now this is fun so I reduced the revenue per vehicle to 35,000 here and that's because you introduce the robo taxi vehicle which they then sell to Consumers rather than running as a fleet themselves it's easier to run the math this way I go with a $25,000 car I leave margins the same however I do reduce the revenue per vehicle because we have a $25,000 car I assume 1 million Vehicles by the end of 2027 this could be 2 million but I'm going to go with 1 million this assumes regulatory approv as well and I give a little bit more of a boost to energy as well I bump it to 20 billion okay same margins over here 18% 31% on energy uh operating expense goes up a little as is natural with higher income uh and so what I get over here is $5. 7 of eps for the end of 27 at a 50 for automotive margins I get this stock to about 287 which doesn't give you much upside from where we sit today you really have to price this company as a software company to get upside from today if I pump this to 78 uh that's when you get to the 450 price Target there's that 18 19% compounded annual uh rate of return continuing for another year so again to really see the substantial upside from here you have to price the company as a software company you have to assume Perfection and execution and that regulatory approval I do think think those things are risky because I don't think we're going to get that regulatory approval as quickly as a lot of folks are hoping and I do think we still face substantial recessionary risks and so I personally think the valuation is on the high side right now and again I'm looking for more of a manufacturer's PE ratio which if I go into a recessionary mode here let me go ahead and pull off the uh I'm going to go flat on the regular vehicle growth so I'm going to go 3 million drop that here to three for more of a recessionary model I'm going to go with 50 for 2027 I really want to be sub 230 for my 27 model so recessionary case for 2026 I want to be sub 150 for 2027 I want to be sub 200 non recessionary best case scenario Elon growth mode uh I on the automotive side hey you know I want to be certainly sub 230 and uh over here on this spreadsheet if I again I go back to that 3 million in growth over here I want to be on the automotive side ideally under uh the future value here of 248 where I'm actually getting a return so probably closer to 200 uh again excellent excellent work here in Tesla they've done some great work in selling the vision of the future of autonomy you really have to believe that the future is autonomous to go all in here and Future's pretty good I have to say I think they are on the right track like there will be autonomous vehicles in the future the question is are they going to be in 2026 and 7 or are they going to be in 2030 or 2035 I don't know I bought a Tesla in 2017 and it's been 7 years and we're we're still not full self-driving right we are way closer than we were in 2017 but if we were 85% of the way there in 2017 maybe we're 98% of the way there it shows you the vast slowness I mean even elon's now saying it's hard to kind of keep training the model because we're running out of issues to solve but we're still not fully autonomous so on one hand it's sort of like we're close but on the other hand it's kind of like n but we're not so it's interesting because the edge cases those are the be going to be the ones you have to perfect to really get the regulatory approvals uh so we'll see but anyway I have to say overall very very impressive uh Elon it was a great call it was a great vision that was painted on 1010 it was a great great demonstration uh I I know the robots were remotely controlled and I know the cars are I believe the cars are on their own sort of new you know pre-programed software that's fine the vision was beautiful and that's what's being priced in the stock right now I also think there was a massive short squeeze and they might pull it off frankly if anybody's going to pull it off I think Tesla will pull it off anyway thank you so much for watching this video I'm going to add a quick note here on house hack just keep in mind yes house hack it's not a car company so while I compare to Tesla's convertable Bonds in 2014 that paid a quarter of a percent in interest and yes we're paying 25% sorry we're paying 5% over 5 years that would be 25% not compounded right uh but we're paying 5% per year think about it this way we're a company that buys homes we renovate them we rent them out and then after we've held them for a few years and we get to where we can exchange them to avoid paying taxes we could flip them flip them on the open market flip them to institutionalsales we're real estate brokerage on top of that and basically we Milk Money by not paying taxes so consider that uh uh for our model for house act that's the really quick elevator pitch and if you're interested in investing in that upside or if you have questions email us at IR house. com otherwise consider that 5% convertible at house act.