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"An equity shot is when something happens that we get really really excited about and then we realized which taken off of slack and put it on to the podcast. Today we're going back to the very beginning of the show. We're talking about Tesla which she asks. I know it's not a private company. But if you go back episode one of equity. We're talking about Tesla reason too much of money because fascinating firm. I Have Danny Crichton with me. Danny how are you? I'm doing good although I think we should call it an equity shot. It's more like an equity joint because I am so high on this high stock price. The I did not see that joke coming. But I'll take it. You'll unless of course famously. Smokey joint on some podcast. I forget what it was called. But we're here today because Tesla share price is up yet again looking like it's going to close at an all time record. High currently above nine twentieth share up over seven percent amd we're going to go through the kind of bullish take care the bearish take care. What's going on and I'll talk a little bit about the fundamentals behind the company and how they've really honestly improved so any rate time ready as we said before the show if you go back in time to roughly. I think it was last June. You could buy Tesla for about one hundred. Eighty five dollars shares magically masterfully. They're up to nearly a thousand dollars a share and you know when you think about Tesla and its financial improvements over the last couple years. It's had some but certainly not to the extent of rescinded share price. Changing my impression is that there's enthusiasm going on here. That may not be tied to fundamentals with autism. It's all multiple expansion here so I think people are getting really excited about the potential electric cars. Certainly not as in the United States but around the world to for instance I think Singapore just last week said that they wanted to be the first country to only have electric vehicles. Mean like the next decade or two right. So there's these huge initiatives around electric cars and then you've got batteries. You've got a lot of the supply. Didn't stuff that that Tesla's in and then you have just the general called marketing stick. I mean I think we we used to follow invidia. Quite a bit early is to focus on. Invidia quit a bit and retail shares stocks called a Robin Hood share right. Everyone who has a Robin Hood account is like following video news day to day and I think that that's been replaced by Tesla Tesla for sure. Amd will also hot for a long time back. In the CRYPTO currency boom. There's been a lot of companies that are kind of come and gone but I think Tesla's probably the kind of the granddaddy of them all from that perspective but more data about the trading world. This isn't actually Tesla's all time intraday high it. My research holds up that was actually back in February fourth when Tesla had an insane range of eight hundred and thirty three dollars a share to nine hundred sixty eight I think kind of sets the stage for understanding Tesla's price movements which is at their wild and they seem to be based on competing warring religious cults people that are obsessed with Tesla and the future of battery tech and electric cars and getting off a fossil fuels and you know loving Elon. Musk and then people who care more about fundamentals even as Tesla's windmills have honestly improved over the last eighteen months quite a lot. You know absolutely and I. It's crazy is if you look at it. Post Two thousand thirteen from twenty thirteen to twenty nineteen that the stock was essentially flat. I mean they're gonNA has ups and downs and typical gyrations but it was sort of a a wait-and-see stock I mean what's grits. Nuts is just in the last couple of months like four months. It's gone from a low of just below two hundred dollars a share to now we're looking at it as a recording it at two. I'm sorry nine twenty eight and so I mean we're looking at a four X. in three month return profile. I mean look we talk about South Thank Vision Fund on equity all the time but this this is sort of what they were looking for right. It's like literally it's not even a private company. It's a public company. Just bought again with Robin Hood. I don't think you can actually open a Robin Hood Account. Though the hundred billion in cash that would play break. Something in the Robin Hood Landscape but just put this in perspective. Everybody of what we're kind of thinking about. We pulled up. Tesla's financials and so we're going to bore you with a couple of numbers and then we're GonNa talk about what can driving hand today's movement but the reason why this price movement feels so fantastic and so fascinating to watch is because even though Tesla has improved. It's it's profitability. It's cash position it's cash flow. It hasn't grown that much. And if you go back in time looking at the year ending. December twenty eighteen Tesla had total revenues of twenty one. Point five billion give or take and if you look at this last year it was twenty four point six so some growth to be clear but certainly not a lot and in q four q four. Eighteen Tesla had seven point two million in revenue and Q. Four of nineteen seven point four so just Mata Games of growth and improve profitability. Is the difference here so it could be a mixed shift in what they're selling. It could be optimism about the battery market. And there's a lot of possibilities driving this boom. I Tesla but I'm curious Danny. What is your favorite of the various hypotheses that are bouncing around? I think it's a huge expectation around future product lines right so if you look at the units delivered by Tesla over the last two years being Tesla really has expanded writer was just a couple of years. Ago Is under twenty five thousand units a quarter in Q. Four twenty nine thousand dollars. According to Teesta it was well over one hundred thousand one hundred. Fifteen thousand units were delivered quarter. So it has. It has sold more cars. You know four or five act so that that's part of the number here but I think you start to look at like cyber truck which is entering a much more higher margin part of the vehicle market in the mid to large size semi trucks. And the I think the challenges is like. There's there's this gap of like you know. Yes there were one hundred thousand or have cyber trucks were supposedly preordered Alex nor is a fifty eight billion based on how many tweets stupidity excitement. Yes yes but you know the challenges that those were not full deposits right like there are no cars to be sold and they're not going to be cars to be sold for a long period of time and so. I think there's just this huge which we saw the same thing with Softbank. Which is there's this huge prediction of like well look assuming everything goes right over the next four to five years then we will buy into the valuation as if everything was being sold in two thousand twenty three. Unfortunately there's so much risk coming up. I mean it was crazy to me. Is we talking about apple and Amazon? A bunch of others AIRBNB who've been suffering from chronic virus but tesla's a huge Chinese market. I mean we were talking about the Shanghai gigafactory or gigafactory for their new battery which just launched what two three months ago and is now sort of been hit? Hard by by the virus. What what other issues art is Tesla? GonNa come up within the next couple of years that that to me is a huge open question. Well the operating points pretty good if you look back. Tesla's latest earnings investor presentation for example You go to page eighteen following along at home. They show have a rolling twelve month delivery number and in Q. Four trailing twelve months of deliveries reached over three hundred fifty thousand for Unit. So they have always a hit material scale global scale. And so when you bring up these new models to me. They've actually proven their ability to do that. And at increase scale and all that a similar level of quality which means that they can watch model. Why cyber truck that really fast roadster that they showed for four minutes and never did anything with put that out please? I want to go bankrupt. So tell me one she please does. I want to stay married. That's more I hear. The roadster does super well New England winters. Yeah it's designed actually for Rhode Island's a narrow cobbled streets and I think the cyber trucks tank like atmosphere is what you're looking for for Rhode Island. Well especially the kids. I'll need those unbreakable windows. Okay but going back to today and what's driving this one day shift and Tesla's stock price drove us. Mad is looking at what's going on. There was a new analyst. Note coming out. Invesco strategist Tim. Horace Bra talked a lot. About how the Fed's decision learned. The quantity was helping drive momentum stocks of which is of course one. Alex Potter an analyst with the Piper Sandler raised his price target for Tesla to above nine hundred bucks a share. A little late given that already is but hey you know better late than having a one hundred ninety nine target which is what seen in business and then of course. There's also some rumors going around that In China to tinkering with a new kind of cobalt free battery which is supposed to be important. Even though I will admit I was a chemistry. So a couple of things confluence that I've picked up Enthusiasm momentum and this is the best for the Washington this is like the old bitcoin. We seventeen when bitcoin was hot. And you can watch it every day and it was fun. That's Tesla's stock today. I don't know what that means for the company but I'm having a hell of a time just watching this stuff happened absolutely and I think I think another statistic I would use on this front. Which would take into account allow this news which is the percentage of Tesla's shares held by institutions? Actually pretty low. I it's fifty five percent. Suit is a COP apple obviously pretty well known company at sixty three percent right and in many cases those institutions held for a long time so Tesla's largest shareholder baillie Gifford. We interviewed a Charles Plowden. Who HEADS UP THE PRIVATE MARKETS? Investing at Baillie Gifford for extra credit last year and they've been the company for more than a decade of our call and part of what I think the magic is for Tesla is you have this base of very long-term acid holders who believe in the company and have been holding a long period of time. And then you have this controversy in the retail market of people. Saying we'll do. Do I see two thousand going even higher right? And so the the debate between long and short ends up driving so much attention to the shares. That it's the dinner party stock conversation that you're hearing on. God's a bit of a carnival atmosphere to it you know Elon. Musk And grinds Elon. Musk and Joe Rogan Elon. Musk and this and that I mean he's become a celebrity in such a way that it's rare to see and the ruggedly buttoned up world of business. I mean I mean not to bring up. We were just you know owners Lee. Belykh Adam Newman had a touch of the celebrity to him in the semi that you must does. Though a fraction of what you Llaneras and normally we see people when they become wealthy and powerful retreat into their shells but like the Google founders. And how they kind of step back from the public light incrementally and now entirely from their company. Ilan doesn't give it you know dealing with throw. A rocket is truck and shutters. Window will just do it again. I mean talk a bow different. And that's that's the that's entertainment on a more serious note before we go to any One other thing we didn't touch on that could be driving enthusiasm. Sentiment and share price. Surges is Tesla's solar panel stuff. And I say stop because I'm reading today. That the solar roof that they brought out years ago and never really. Kinda put on the market is ramping up. And so we're seeing Tesla differentiate not in the automotive space but also outside of that in the in the ultrasound generation and storage space which some people believe could be a huge growth opportunity for the company. And I don't know how you feel about Ciller but I think that's probably true I think is probably the economics have gotten a better for solar and I again. I I think the magic of the share today is do you believe in each of the expansion opportunities for each of these different business lines and I think I think when you let me give you a comparison. Bordier a Canadian company who used to make snow. Mobiles expanded into planes trains jets and all kinds of other categories over the last couple years just this morning announced it was selling off its trained business to Allston French large Train manufacturer and really it was a story. overexpansion right. Here's a company that sort of got out of what it knew what to do. It got into jets trains and get it all these different spaces and so the question is do you believe in the musk magid. I mean that's sort of the bet that everyone has to believe in which is look. It's not just going from model to model three. It's not just going to cyber track. Meets still car at the end of day. Now you're getting into solar panels. Now you're getting into battery construction for not just homes but also at like a nation state scale kind of battery technology and I all. These are just technical. Risk that up like every single one of these is a completely new product. So I think you know. That's the bet that everyone has to make and that's why it's so exciting. Yeah Yeah Yeah. I totally agree with that but the all throughout there is that incomes tesla. It feels less of a musk better than it used to be. Because the company no longer bleeds so much cash at once. You stop bleeding. Cash and can begin to generate material consistent operating cash flow and free cash flow and more strict metric. You're willing Rome destiny and you have more space to make mistakes before it. Always only Tesla was on a tightrope if they missed this launch. That factory blew up. That tech. Didn't sell whatever that was. GonNa be the end of the company. They made a series of all. In bets of your poker player. Was My impression watching the company for years now with trailing operating cash flow positively and free casual Timothy. The company's kind of okay generated over the last four quarters over a billion dollars in free cash flow and just I believe did a placement of shares for a couple of billion at very high share price which is super smart. You know getting anymore taught so you know the first thing that we learned on this show was Jason Lincoln telling us that Elon. Musk is better at raising money than anyone else in the history of the world. He's that he's able to go out there and get cash and here again. He's doing it twice once running the company last and two from the share price surge. So Tesla is in the best shape it's ever been. I don't know if it's worth nine hundred twenty dollars. But the days of four twentieth funding secured certainly are behind us. And Danny. I'll give you the last word. I think the thing to pay attention to again as I think mosques the magic here but it goes beyond that I I do think marketing if you look at GM Ford you know. The large automobile manufacturers a huge part of their cost structure is marketing right. Like the amount of money you see it when you watch The Super Bowl. You'll see this when you watch different kinds of sports games. There's massive marketing budgets to push cars off the dealership at Tesla. Has this magic with a person who basically gets free advertising every single day on the business pages on the front cover of magazines or seeing must. You're seeing Tesla. All that is free business and so again you have cool cars. You have great marketing. You're not paying for any of it. You have free cash flow. It's clearly a more stable coming in. There was a couple of years ago. And there's this huge kind of expansion opportunities on the horizon coming up. You know that all up together I understand the lungs. I also understand the shorts but I guess we'll sort of see where it all comes together in the next couple weeks. Yeah and by the good call on the importance of free marketing. For Tesla as we're sitting here squeezing an extra equity episode just fine on Tesla because we found so entertaining so it's not nefarious per se is just if you care about financial markets and companies and growth. You can't not be watching"
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