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So sometimes i record videos and uh when i record those videos i’m not that super excited to record them but let me be very very clear this video i’m about to record here i’m extremely excited to record i don’t need to flip your flapjacks i don’t need a holy smoker they know joke is you today okay uh this is a video where i’m gonna give some uh points of view that
I don’t think i’ve ever given in regards to stocks in my five plus years being on youtube and that excites me and that’s why i’m excited to do this video here today because a lot of what i preach on my youtube channels is kind of the same stuff all the time right long-term investing look at the balance sheets you know think about where the company’s going over
Time future growth rates things like that right but today in this video i’m going to give a framework of thinking about stocks that’s just so much different uh than than really anything i’ve really ever taught on my youtube channels and as somebody that’s been doing this for a long long time i obviously have you know an immense amount of stuff i can give for for
Value out there right and so we’re talking about tesla stock here today because i’ve been having some thoughts about uh potentially cashing out some of my shares in january i was even talking with a friend tonight about it hey i might you know cash some some tesla in january if the stock continues to run and it led me to think well is that a smart decision right
And there’s a good saying called you know no one ever went broke taking a profit right but on the flip side you can miss a lot of money taking a profit right and so in relation to this video i want to uh talk a little bit about tesla numbers and i want to explain why tesla stock might not be as crazy uh quote unquote overvalued as a lot of folks like to say right
Now okay and we’re gonna get into kind of some frameworks on how i think about things because people are looking at this company valued at 1.2 1.3 trillion right they’re looking at a lot of folks that like us that have gotten some ridiculous gains in the stock over the past several years and they’re saying this is this is crazy like this stock has to be overvalued
Right it has to be a rip-off right and let’s talk about that so i hope you guys enjoy this video as always all asking returns they smash that like button that’s literally it guys let me know you enjoy a video like this where we’ll talk about a direct stock like tesla but i’m also just giving game out there in value from you know my uh a million years of being
You know doing this in the stock market okay so in relation to tesla first off i have them at a 1.3 trillion mark cap right now it’s actually i think technically as of recording this i think is 1.2 trillion or 1.23 trillion something like that right but let’s just assume for a moment the stock continues to go up to thirteen hundred dollars a share well at about
Thirteen hundred dollars a show this this stock will be around a one point three trillion dollar mark cap okay now let’s think for a moment about 2022 numbers right thing about this past quarter it was uh 1.6 billion if i recall something like that net income right thing about tussle over the past couple of years went from a company losing crazy money right like
Ridiculous massive losses to a company that also now is is making a billion plus net income wow that’s a that’s a big change right and so i i think in 2022 they’re gonna do around 75 billion dollars of revenue on the low end i could see them doing maybe 70 but let’s say 75 billion i don’t think that’s a crazy number to assume they’ll do 75 billion dollars of revenue
In 2022 okay assuming they’ll do 75 billion dollars in 2022 it’s not crazy at all to imagine this company doing 10 billion dollars of net income you look at the type of numbers they’re putting up this year with these current revenue numbers never mind next year right yeah i don’t think it’s crazy to imagine this company does 10 billion dollars of net income next
Year right well if we’re putting a 1.3 trillion dollar mark cap on it and we’re saying the company’s going to do 10 billion of net income they would put tesla stock at a forward p of about 130 assuming they do 10 billion right 130 so no 130 it is a big number right no doubt about that 130 30 ford p is a is a large number but for tesla that is not a large number i
Think you can expect for tesla to trade anywhere between a ford p of a hundred and potentially two hundred why is this well we know the tesla’s starting to get margins that you know were you know folks couldn’t even fathom in the past right we know tesla has multi multi years of growth ahead of this company right for so long in the future like when does when does
Tesla stop growing like no one knows when tesla stops growing but we know it’s not any time in this decade at least right so it’s not crazy to slap a 100 to a 200 forward p in the stock so if it’s at 130 that’s actually not crazy for tesla stock right if it’s coca-cola trading at 134 p there’s an issue right because those companies just don’t have the same type of
Growth right now in 2023 i think the company can do 105 billion dollars of revenue some folks look at that number especially a lot of testables and think that number’s probably low but i’d be a little conservative so 105 billion 2023 revenue right let’s say i don’t know interest rates go up or something and maybe that hurts some people from buying the cars i don’t
Know so let’s say they do 105 billion in 2023 revenue i don’t think it’s crazy to imagine this company does 20 billion dollars of net income that year remember tesla is making unbelievable strides in their profitability right now right in their margins and everything across the board so you know and as of as far as the robo taxi network we don’t know if that’s
Really going to be launched right you know i i feel like these cars are are unbelievable machines when it comes to their auto pilot programs but as far as getting regulators to actually allow it on on roads where people are picked up and things like that it might not be launched at that time so if it’s not launched at that time then i i think you have something
That’s you know not gonna hurt hurt the profitability of the business model right so i don’t think it’s crazy at all to imagine this company that’s 20 billion dollars of net income which would be you know a little under a 20 flow through okay meaning you know a little under 20 of the revenue makes its way down to net income they would put this company at about a
65 2023 forward pe once again that’s not too dang crazy right let’s say you know they did 15 billion instead of 20 billion which i think 15 billion would be a little low i’d be a little disappointed in that but let’s say 15 billion then you’re at you know maybe a 90 something like that 2023 uh forward pe you looking at it from that perspective right now in 2024 i
Have them doing about 150 billion dollars of revenue once again some folks would feel like i’m a little low on that number that’s fine and then doing 150 billion dollars of revenue in 2024. now let’s say they don’t it you know improve their net income nearly as rapidly as you know year over year basically from from 2020 to 2021 2021 to 2022 in 2022 to 2023. let’s
Say i don’t know let’s say there’s some huge competitive pressure out there let’s say you know uh all the auto companies are watching their ice vehicle sales at that time just you know tank through the floor they’re desperate they’re trying to sell evs any way possible and so they’re you know giving so many discounts and let’s say you know there’s just a lot of
Competitive pressures that’s causing tesla at that time to be in a position where they have to keep price low right just to keep market share or let’s say they launched robo taxi network at that time and that hurts margins in the short term so let’s say they just the the pace that they improve their net income goes down dramatically right from basically a double
Up to only a 50 rise when all of a sudden you add an extra you know 45 billion dollars of revenue but you only add 10 billion dollars of net income year over year so let’s say a scenario like that plays out right well that would still put the company at a 30 billion income basically looking at it from a 1.3 trillion mark cap at a 2024 pe of 43 based upon today’s
Market cap which once again is not crazy at all right and so when you start to look at all this you start to realize man you know this is a tough thing i’m like the stock has gone up so much it is very very tempting to take some profits in the stock and deploy some of that money and other stocks that i love over the coming years but the hardest part of this whole
Scenario is when you start to actually run the numbers on this right you start to actually do some of this uh let’s call it uh ipad work or let’s just call it you know uh do a little uh you know drawings on a on a notepad or something like that when you start to run some numbers these numbers aren’t crazy it’s not crazy to imagine tesla does 75 billion dollars of
Revenue next year and it’s not crazy to imagine them doing 10 billion in net income these are not crazy things it’s not crazy to imagine this company does a 105 billion of revenue in 2023 and does 20 billion on the bottom line this is not crazy right so these aren’t these certainly are not the most bullish scenarios out there they’re just not not even close to it
And so i think this is very you know very very important okay so that’s the first element i want to talk about is kind of running some numbers on this okay now next elements which might even be more important is i want to look at apple over time so when i got in the market in 2008 2009 apple was trading around 100 billion dollars or maybe a little under 100
Billion billion dollars at that time right this was a stock back then that it was you know it was pretty wild how big the market cap was on it and i remember seeing apple over the coming years go to a 200 billion dollar mark cap i remember watching apple go to a 300 billion dollar market cap and i remember when apple overtook exxon mobil as the biggest market cap
In the world that was crazy and for most of people watching this video you were not in the stock market back then so you have no clue what i’m talking about okay but i can tell you that was unreal when apple this company selling iphones overtook exxon mobil the oil and gas giant as the biggest market cap in the world that was a huge deal a huge deal and that was
Something that was just like can you believe what is going on right now like apple really just overtook exxon mobil as the biggest market cap in the world and i gotta say at that time it was it was a time period in which it was um you know it was easy to almost think like it can’t get any bigger than this right like apple can’t get any like like there’s two you know
300 billion 400 billion dollars like it can’t get any bigger than this and then i watch to hit a half a trillion dollars a half a trillion dollars the first company i ever remember doing that like absolutely insane right then they go through some problems and then they rise and then they go through some problems and then they hit the trillion dollar boys club and
Nowadays even after all the shares apple’s rebought over the past five plus years look at how many shares apple has taken off the market in the past five plus years even after they took off a ridiculous amount of shares i think they’ve taken something like i want to say like a third of the shares off the market you know fact check me for that it’s a crazy number
And the company after they’ve even taken off all those shares off the market it still trades at like a two and a half trillion dollar market cap right and so i bring this up as an example because this is the type of stuff that you just never could have thought was possible right like i said like when you when you witness this and when you when you like myself and
You participate in the market through this whole time and watched apple grow from a company that was around 100 billion or less than 100 billion which was still huge back then to watch it grow to multi hundred billions of dollars right in market cap then watch it overtake exxon mobil for the biggest market cap in the world and watch it grow to a trillion for the
First trillion dollar company and then multi trillion dollars guys that is something that just most folks could not even conceive of right and how did apple do that they did it because they executed their business model right they continued to expand the business and expand the business and even after they lost the amazing steve jobs back in what was that 2011 even
After they lost that legend they still found a way to continue to grow this business bigger and bigger and bigger over time right crazy needless to say right and so when you’re seeing things like like tesla play out here just understand this is not the craziest thing that has ever happened in the stock market one of the craziest things that have ever happened in
The stock market since i’ve been in the stock market was watching amd there’s a stock i remember you know talking and talking about with some folks back in the day okay before i was on youtube and i remember in 2015 this was a stock that was less than two dollars a share i think the lows for that stock back then was around a dollar and sixty cents technically okay
And so needless to say it was uh under a two buck chuck stock and what went on over it with amd over the coming five six years is a stock went from a dollar something a share to becoming a 130 billion dollar behemoth that went on to you know take on intel in a serious way and here today this company trades at 157 billion dollar market cap right that’s you know
I understand like how amazing like this whole tesla story is but you’re going to understand like the amd story is even crazier this is a this is a more epic story like amd was completely done and forgotten about and now this company is is arguably more respected than intel a company that you know back six years ago you couldn’t even contemplate that right and the
Stock price i mean you know if this stock goes like i said back in 2015 i remember the stock being a dollar and 60 cents specifically if this stock hits 160 a share that’s a hundred x a hundred x in a matter of like six seven years like absolutely crazy right and so this is some more food for thought that you gotta understand like epic things happen in the stock
Market needless to say companies turn around companies do things that you could never have even conceived of these things happening okay let’s talk about mr amazings on for a minute amazon right so i remember looking into amazon back in maybe 2000 i don’t know 11 10 something like that and back then amazon probably had a 50 billion dollar mark cap on a 70 billion
And i even remember looking at amazon at some point in time right and i used to be a walmart shareholder back in the day because if you know anything about my early journey i was into a lot of safety stocks right remember i started in the the great recession which was the scariest time of starting so everybody was like don’t even invest in the stock market so i
Was kind of like brainwashed to go to safety stocks back then right so i was invested in a lot of companies like kimberly clark canagra foods uh walmart these were my stocks in the early days right and so i remember being a walmart investor and i remember looking at amazon after i even sold out of my walmart investment right i remember looking at and and amazon
Was starting to climb to like 100 billion dollar mark cap and it was like this is ridiculous like you know walmart’s trading at 200 billion or whatever it was at that time and then you had amazon trading at almost half its value and starting to approach walmart’s market cap and it was like this is ridiculous like amazon like they’re nothing compared to walmart
Like this is this is insane and then and then i remember vividly the day they covered it on cnbc as with all these things i remember the day amazon overtook walmart for market cap i remember that day i remember um you know if i recall i was at my apartment back then and that was just a a huge deal amazon overtakes walmart for biggest market cap out of those
Two because people had compared them for a long time and uh the fact that amazon overtook them from market cap was a massive massive deal and once again this was something you could not even fathom in the past right like walmart is this unstoppable giant i remember they would do documentaries on walmart and how it was bad for a small business and how they run
Everybody out of town and that was a monopoly that could never be beat and then all of a sudden amazon you know now look at the amazon like people don’t even like it’s like a joke you can’t even compare amazon and walmart these companies aren’t even in comparison man like amazon it’s on a whole amazon’s playing on mars and like walmart’s playing like uh i don’t
Know under the ocean or something like that like you can’t even you can’t even you can’t even compare those two companies now right and so just in my stock market journey of being in this this game for 12 plus years i’ve witnessed some of the most shocking stuff and i could go into i i mean we could make this video six hours long i’m sure some of you guys would
Probably enjoy that i’m just going through example of example of example after stock after stock after stock of some of the craziest things you’ve ever seen in the stock market and these are just some really big examples you know i just pulled up apple amazon amd and so i bring these examples to you guys so you can understand and you can when you look at a stock
Like like tesla or any stock in the future when it does some crazy stuff you really got to run the numbers and you really got to break it down and don’t just listen to what people say and really just run numbers and try to figure out is this crazy or does this make sense okay because sometimes you gotta understand it’s not as crazy as it looks just because a stock
Price went up a ton does not mean necessarily that stock is massively overvalued or anything like that okay and so when it comes to me with tesla in my decision to if i’m going to take any profits in that stock come january what it will come down to is really looking at where the valuation is at at that time versus where i expect growth to be in the in the future
Versus where i think i would get a better return on investment whether i think i’d get it better over here or over there that’s what it’ll come down to not because it went up a lot not because of uh somebody that’s uh you know doesn’t own the stock that never was part of this journey it says it’s overpriced right because it’s very easy to get jaded about these
Things and and if you’re you’re not part of the journey just ah it’s so overpriced it’s ridiculous right it’s very easy to say that right i could say that about netflix i’ve watched netflix go from now so perfect another example i remember netflix 2000 probably 11 12-ish sometime around then there was uh you know netflix was moving to a streaming model a lot of
People disbelieved in netflix future and you know it’s very easy i never was one that participated in the all those games netflix stock got despite even being a customer at different points in time right and in regards to netflix that’s a shock that it’s very easy for me to say it’s overvalued it’s a rip-off but remember i was never part of that journey anyway so
It’s very easy for me to say that because i was never even on that train right so it’s very easy for me to hate on it right food for thought there guys so i really hope you guys enjoyed a video like this hope it gave you some good insights on kind of you know some things out there in the market appreciate you guys as always all asking returns that you smash that
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Transcribed from video
SELLING TESLA STOCK WITHIN 60 DAYS By Financial Education