TTM

Big Changes in the Auto Industry as Chip Shortages, Supply Chain Issues, and Rising Input Costs Complicate Matters; Tesla and Ferrari Our Two Favorite Names

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Image: Ferrari’s fundamental momentum has been strong of late. Image Source: Ferrari N.V. 2022 Globe Newswire By Brian Nelson, CFA The auto industry perhaps has changed more than any other industry the past five years. First, it was Ford (F) that said it wouldn’t make passenger cars anymore, except for its iconic Mustang. Then, the European Union said that it would eventually end the internal combustion engine (ICE) by 2035. Then, Tesla (TSLA) reached over $1,200 per share and over a $1 trillion market capitalization. Can you imagine a world where Ford is not making sedans, the once modern-marvel of the internal combustion engine is dying, and where one car maker is worth as much as the next nine car … Read more

Net Cash Rich Tesla Reports Solid Free Cash Flow, Closes Out 2021 on a High Note

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Image Shown: A look at Tesla Inc’s new ‘Gigafactory’ manufacturing facility in Austin, Texas, that is currently under development. Image Source: Tesla Inc – Fourth Quarter of 2021 IR Shareholder Deck By Callum Turcan On January 26, Tesla Inc (TSLA) reported that it had produced ~306,000 vehicles and delivered ~309,000 vehicles during the final quarter of 2021. The electric vehicle (‘EV’) and battery maker beat both consensus top- and bottom-line estimates in the fourth quarter as it continued to successfully ramp its production capabilities. We plan to fine-tune our cash flow valuation model covering Tesla to take its latest earnings report into account, but we still expect the point fair value estimate to be below where shares are trading at … Read more

Tesla Scaling Up Nicely

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Image Shown: Tesla Inc is steadily working towards bringing another manufacturing facility online in the US, this time near Austin, Texas. Image Source: Tesla Inc – Shareholder Letter Covering the First Quarter of 2021 By Callum Turcan Electric vehicle (‘EV’) giant Tesla Inc (TSLA) continues to impress as it smashed past consensus top- and bottom-line estimates when it reported first quarter 2021 earnings on April 26. The company delivered 184,800 vehicles (182,780 Model 3/Y variants and 2,020 Model S/X variants) and produced 180,338 vehicles in the first quarter of this year, though we note that Tesla only produced Model 3/Y variants last quarter and Model S/X vehicle deliveries were met via its inventory. In the first quarter of 2021, Tesla’s … Read more

Who’s Driving Who: The Future of the Automakers

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Image Source: HimmelrichPR Let’s dig into some recent developments surrounding the auto market, and how technological and strategic innovation could reshape the future of the space. By Kris Rosemann There have been a number of interesting developments related to the auto space recently, from Theresa May and the UK government triggering Brexit to pressure on the US used vehicle and auto lending markets to the seemingly inevitable proliferation of autonomous vehicles. Such progressions should not come as a surprise; in fact, we outlined some potential concerns with the long-term health of the US auto market in July 2016, “Sharp Curves Ahead for US Auto Market?” The cyclical US auto market may be plateauing after multiple years of tremendous sales levels … Read more

Sharp Curves Ahead for US Auto Market?

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“Auto is clearly a little stretched, in my opinion…Someone is going to get hurt…We don’t do much of that.” — JP Morgan CEO Jamie Dimon, Yahoo Finance, June 2016  The month of May saw many major automakers report significant declines in sales in the US. Could the effect of pent-up demand for autos finally be slowing? An overheated loan market is adding concern to the situation. By Kris Rosemann Major automakers will be forced to make some important decisions in coming months. The US auto market is clearly slowing from the breakneck pace it set last year, particularly late last year, as total US auto sales fell 6% in May 2016 from May 2015. The strength of the rally in recent … Read more

Investing Versus Speculating: Ford, GM, Tesla

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Ford is making some changes at the top, but we still like General Motors. Tesla’s stock remains “uninvestable,” in our view. By Brian Nelson, CFA There are many definitions of investing and speculating that run the gamut from the views of investor Benjamin Graham to famed trader Jesse Livermore, but I have rather simple definitions of investing and speculating. Investing involves estimating a company’s intrinsic value and buying a stock when one thinks the price is far below intrinsic value and holding that security until price reaches intrinsic value, or through the high end of an informed fair value range, for example. This definition of investing and the art of intrinsic value estimation are core and vital to the Valuentum … Read more

The Electric Vehicle (EV) Market Is Hot and Getting Hotter

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Image Shown: A look at Tesla Inc’s new Gigafactory factory (Model Y body shop) in Shanghai, China. Image Source: Tesla Inc – Third Quarter of 2020 IR Earnings Presentation By Callum Turcan The electric vehicle (‘EV’) market is hot and getting hotter. Aided by a combination of supportive government policies such as subsides for EVs (purchase tax credits, manufacturing tax credits), plans to ban the sale of automobiles powered by internal combustion engines (‘ICE’) in the coming years, and shifting consumer preferences (households preferring to appear “green”), the long-term outlook for EV sales is quite bright. Tesla Inc (TSLA) is the posterchild of the EV boom given its first-mover advantage, though competitive headwinds are rising. Legacy auto manufacturers are looking … Read more