Q1 2022 hedge fund letters, conferences and more
In their recent episode of the VALUE: After Hours Podcast, Brewster, Taylor, and Tobias Carlisle discussed Tesla On Path To Dominate S&P 500 By 2030. Here’s an excerpt from the episode:
Tobias: There’s a presentation doing the rounds that predicts Tesla will be a very significant part of the S&P 500 in 2030.
Bill: Is that the guys from Worm?
Tobias: I wasn’t going to name them, but yeah, that’s one.
Bill: They put it out. You can name them.
Tobias: I didn’t get all the way through it, because the PE– [crosstalk]
Bill: They are quite good. I liked them as analysts. It’s not rude.
Tobias: I couldn’t get to the part, where I couldn’t find the substance of it. I went through the first dozen pages or so and I couldn’t find what– I just saw the claims. I didn’t see the supporting information.
Bill: Look, the Gigafactory all that stuff, it’s super interesting. It may work and if it does, that’d be sweet. I think I said to you guys when Ho Nam, he said, “If the US looks like Silicon Valley, Tesla’s going to have a huge market share.” The only thing that I would say back to that is, if the US looks like where I live F150s, their electric one are going to dominate. So, I don’t know.
Maybe the West Coast, East Coast arbitrage thing is real and maybe it does it again. I don’t understand why Mercedes, the EQS doesn’t just look like an S class. It baffles me why they made the front look like it does. Maybe someday they’ll figure it out, maybe they won’t. But yeah, I don’t know. It’s possible. I don’t even know how to assess the odds of anything. So, who am I?
Jake: [laughs] This isn’t tough.
Tobias: Well, I think you don’t have to necessarily assess the odds of it happening. You just have to find a place, where you’re getting a bet that predicts that it won’t happen and then you just have to take the bet the other side. You just trying to find a way to shape the bet, so you’re getting some free optionality in a bet. I don’t think that Tesla’s got thousand bucks as free optionality. I think you’re almost assuming that it happens at that point.
Bill: Well, I think they would argue that part of why it can go a lot higher, just because there’s people like us that don’t think you can.
Jake: That’s fair.
Bill: It’s the overhang. I don’t know.
Tobias: The valuation works if you can get 50% growth a year to 2030. I fully acknowledge that. If Tesla can do 50% a year until 2030, then it’s undervalued here. It’s 50% undervalued.
Bill: Yeah, they can maybe do it. What kind of multiple do you put at the end of it?
Tobias: I was just assuming terminal of normal 5% for 10 years. I just put in a normal terminal.
Bill: Yeah, but 20 times, we’re going to argue on a car manufacturer. Although, I guess, it’s a car manufacturer that has a monopoly– [crosstalk]
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Article by The Acquirer’s Multiple.
