As-salamu alaykum, everyone. I hope you are doing well. Today we got an even deeper discount on a lot of our favorite names. And this is a good opportunity, I think, to add And I like to take these opportunities not to just add blindly, but to remind myself of the thesis for why I bought a particular stock. And today we're going to focus on Tesla. It is front and center in our portfolio. And so I think it makes sense to review our thesis for the stock. And what exactly is a reasonable valuation for the stock? Is it overvalued? Is it undervalued? Why the massive fluctuation between close to five hundred only a couple of months ago to now less than three hundred? What's going on here? I'm going to tell you what I think. and you can make up your own mind and see if what I'm saying makes sense or not. So today we're going to talk about, as I said, the Tesla thesis. And instead of looking at next year or the year after that, let's look five years into the future in order to not be too caught up in the valuation that is justified by the business in the next twelve months, for example, or the next sixteen or twenty-four, but rather where we think things are going longer term. So what's a reasonable valuation for Tesla stock in twenty thirty? First of all, let's take note of where we are. If we look at the last five years, And we look at gold, for example, up eighty seven percent. S&P, for example, up one hundred percent. Even after the dip that we got back at below three hundred after knocking on the door of five hundred only a few months ago, Tesla is still up five hundred and fifty three percent. in the last five years not as good as bitcoin but still very impressive growth for the stock price so when you're in doubt as I always say zoom out zoom out to take a to appreciate the full picture of things and What trips investors up about Tesla, I believe, is that they neglect the S-curve that Tesla should enjoy. And by that, I mean, when you're at the beginning of this red line and you're looking at the forward PE for the next twelve months, for example, it puts you maybe over here. Right. But it doesn't put you on this steep part of the growth for the company. You really have to look. beyond the next twelve months beyond the next twenty four months even to appreciate the opportunity that tesla presents and this is why investors who don't really understand the opportunity are stuck looking at the next twelve months and saying hey if we're looking at the forward pe here is the is the valuation justified is the price justified there are a lot of other companies that are trading for cheaper and it's only when you look beyond the immediate time horizon that you can appreciate the opportunity. So the lesson one is that don't get tripped up by the S-curve. This is how people end up really missing out on great opportunities. If we want to look at the near-term catalyst for the stock, I've mentioned them all before. You have the new Model Y that is coming out and actually delivery start in March. They're taking orders. Delivery starts in March for Juniper or the new Model Y. You have the hatchback. This is, by the way, not necessarily how it is going to look, but For illustrative purposes only, the new cheaper model that should be, let's say, thirty thirty five thousand, that should come out in the first half of twenty twenty five. You have the robo taxi launching in August. I'm sorry, in June in Austin. And the extrapolation that we can do from that. You have the Shanghai Gigafactory that's going to start churning out Megapacks, which are currently the highest margin product for the Tesla business. You have Optimus that is set to start rolling off of the production lines by the end of this year, and they've already started. actually started hiring engineers and staff needed for the realization of this deadline. So you have all these near-term catalysts for the stock, even in twenty twenty five. But let's look beyond that to try and see if we can find a reasonable valuation for the stock in twenty thirty. And I'm going to send back a lot of these numbers in order to be ultra conservative. As PIF members know, I typically have a conservative base and bullish or optimistic price target for stocks. And if there was ever a stock where I would opt for a bullish target, it would be Tesla. But I'm going to go with the conservative target for Tesla. So I'm going to assume the... Their output is ten million vehicles by twenty thirty. This is for their automotive business. Now, the goal of Tesla is actually twenty million. But let's say they assume they achieve half that. And let's assume that their average selling price for those vehicles is forty thousand a piece. Right now it's around forty five thousand dollars. sorry, that should be ten million, ten million times forty thousand. That's four hundred billion at a profit margin of fifteen percent. It's a bit above the profit margin right now, but that's how things are headed, especially when you get economies of scale. And so the net income from the automotive business should be around sixty billion. Now, for the autonomous driving or robot taxi business, Let's assume here that actually there is three million robo taxis in in twenty thirty and fifty thousand dollars in revenue per robo taxi. That gets us to revenue of one hundred and fifty billion. Now, the underlying assumptions here is that there's fifty cents per mile that is earned in terms of revenue. And now this is much lower than Uber's current two dollars per mile. And we're assuming one hundred thousand miles per year or around ten hours per day of driving. Keep in mind, for the human driver, they may do around sixty thousand miles per year if they're operating as a taxi. Obviously, with robotaxis, we're going to assume that they get more miles driven per day because they don't need to stop for breaks. They don't need to sleep. But conservatively, we assume ten hours per day, even though if you ask Tesla, they're assuming something like fifteen, sixteen hours per day at a profit margin of thirty percent. That's forty five billion net income from the robo taxi or autonomous driving. And I should also mention that the the goal for Tesla is actually somewhere between five and ten million dollars. We went with three million robo taxis by twenty thirty. For the Optimus or humanoid robots, I assumed one million units sold or leased by twenty thirty. This is conservative considering the goals of the company. Revenue per unit is fifty thousand. That's thirty thousand. That's coming from sales and twenty thousand from service costs. And obviously there should be a really high margin software component to that. And So if we multiply these two numbers, one million units, fifty thousand annually, that's fifty billion with a profit margin of forty percent. Again, this should be a high margin, very software heavy business line. The net income here is around twenty billion. We also have the energy storage. Now, this is growing like weeds. They really started only ramping up last year, and they had ten billion in revenue in twenty twenty four. I actually think. This annual revenue number could be really understated. They're selling everything that they can produce right now. Let's assume that they are able to ramp up to a hundred billion by twenty thirty at a profit margin of twenty five percent and the income is twenty five billion. So if we add up all these different lines of business, we come out to total net income in twenty thirty of around one hundred and fifty billion. Now, for the PE ratio, even though typically Tesla stock trades between sixty and eighty PE. It's very seldom below that. Sometimes it gets to a hundred PE, but let's assume that the PE ratio tempers a bit, even though it actually might be a lot higher. Considering I don't think the opportunity for things like Optimus or Robotaxi will be anywhere near saturation by twenty thirty. And so still they will be able to grow at a very high rate. And with economies of scale, they should have really strong margins and improving margins. So actually, you know, maybe we trade at eighty, ninety P.E. even five years from now. It's possible. Certainly, if you look at companies like Amazon, they've been able to sustain high PEs for a very prolonged period of time. But let's assume PE ratio of forty just to be conservative. So with the income, net income of one fifty billion times forty, we come we get the six trillion shares outstanding right now are three point two billion. I'm assuming here that shares outstanding is going to decrease. The reason why I'm doing this is because. It has been the case that the company is producing enough cash to not only pay its bills as profitable, but also enough to cover its capex and then some. And its cash pile is just growing. So I don't see any need for dilution. anytime soon. And in fact, there has been talk about buying back the stock. I actually am not a big fan of buying back the stock, but I think it's probably going to happen in the next five years. I would much rather the company continue to invest aggressively and grow aggressively. So if you take these numbers, six trillion divided by three billion, you come out to two thousand dollars per share. Now, right now it's trading at two ninety. So this is around the seven X. So to achieve a seven X in five years, you're talking about around a fifty percent compound annual growth rate. Now, if we assume that actually the PE is not forty, the PE is. is closer to eighty for example as it has been for a long period of time then you'd have to double that price target so we'd be talking about a four thousand dollar share more than a ten x opportunity from here And that's just, if we look to to certainly a and we stop, obviously at people are gonna be thinking, oh, well, what's gonna happen in the next year, two, three, five, right? And extending their valuations forward from that point in time. This is what gives me confidence in, so this is, I understand this sort of back of the napkin math, but I think it's more or less as good as you're gonna get with a five-year outlook. And this also, I should mention, there are certain lines of business that were completely ignored. For example, insurance, in-car entertainment, the Dojo supercomputer training that could become a business that other companies use, and other lines of business that may pop up from the main lines of business that Tesla is engaged in. With all of that being said, my confidence level in this company remains extremely high. My conviction level in this investment remains extremely high. As I always say, ignore the noise. Focus on the fundamentals. There's a lot of noise in the market right now. Every time the president opens his mouth, he throws a new risk onto the pile of risks that investors need to think about. But this situation, I believe, will not sustain indefinitely. Eventually, we will get clarity. Eventually, the level of nervousness around this new administration will fall. And eventually, fundamentals will win out. We just have to be patient and make sure that we're sticking to the truth, reminding each other to stick to the truth of the matter. With that being said, let's take some questions very quickly. Sales and stocks are... All right. Interesting comment. Stocks are crashing faster than a three-day coke ketamine binder. All right. A bender, I think you mean. But... Yeah, never experienced that, but I'll take your word for it. Assalamu alaikum wa rahmatullah wa alaikum salam. Any relief soon? Well, another way to frame your question is, how long will this sale last for me to accumulate at these prices? And I think if you reframe how you're looking at it, inshallah, it will be much easier to experience. Hamid says, I hope you're doing well. Yes, my favorite miners are the ones that we have in our portfolio. You are correct. I understand, say, if your concerns about Elon, but as I always say, we are invested in Tesla, the company, not Elon, the person. If tomorrow Elon, you know, resigns as the CEO and says, oh, well, you know, I want to focus on Doge or do something else. Instead, I don't think that would take the company from comfortable to uncomfortable or vice versa. Hey, Salam alaykum, nice to see you. Thank you for moderating our discussions as always. Wraith, one UK says, are you still expecting, Malik says, are you still expecting a dip of dips or shall I continue buying Tesla? I think dollar cost averaging into Tesla, assuming you have a long enough time horizon is a good idea. Thank you, Ashad. You're welcome for all the updates. And yes, become a PIF member if you aren't already. Um, when I have anything to say about discounts, I will say it. Uh, Musa says, do you think Tesla stock will drop more? It's very tough to say. All I can say is that where it is trading at right now is very attractive. I still think that we could see a seven handle this year on Tesla stock, given all those catalysts that I enumerated at the start of the life. And even if it doesn't get to seven or a seven handle. um I think you know the next twenty four months are going to be extremely exciting for this company and for investors and shareholders so yeah I think if you have the right time horizon if you're convinced with what I just said about its prospects then I think it's kind of a um almost a no-brainer, I would say, at these prices. All right, so if you enjoyed this live, do leave a like. I'd really appreciate that. Become a PIF member. Until next time, make sure to take care of yourself. As-salamu alaykum and peace be upon you all.