 Hey everyone, this is Dan with my first video on Tesla. For full disclosure purposes, I'd like to let you know that I bought some Tesla shares a couple days ago. My opinions, therefore, might be biased. The good news is that for those of you who have been watching my videos and following my Twitter messages, you know that I don't ever do pump and dump, and I don't believe in a diamond hand approach. If I see trouble in the company, I will sell the stock and I'll tell you by way of my Twitter messages or YouTube videos that I believe the company is in trouble, either due to the broad market or due to internal issues within the company. I will also tell you by way of my Twitter messages when I buy and sell Tesla stocks in the near future. In this video, I will tell you what's so good about Tesla. I will also tell you what's so bad about Tesla. I will let you know what I will be watching to safeguard the money that I have already invested in Tesla. Let's get into the exciting details. First of all, let's look at how the stock price of Tesla has been moving in the last three years. The candlestick chart here is for Tesla. As you can see, it went up by an impressive 1870% in the last three years. If you look at the broad market as represented by QQQ and SPY, they went up by about 60% to 70%. Impressive, but nowhere nearly as good as Tesla. Of course, the big news about Tesla in the last few days was that after market closed on April 20th, Tesla announced their first quarter earnings. And according to Barron, they crushed the earning estimate and Wall Street is speechless. They locked at a very impressive automotive margins of 32.9%, which is almost unheard of in the automotive business. The reason why they can command such a high margin is because of the very attractive vehicles that they are offering to the customers. The Tesla share went up the following day and then by the time the market closed on the 21st, it went down a little bit because the broad market was going down. On that day, the chairman of the Federal Reserve Board, Mr. Jerome Power, made a statement that they would be raising interest rates more aggressively for the rest of the year and that certainly brought down the market. Subsequently, S&P closed down 1.5% and Dow Jones down 1.1% on that day. Nevertheless, Tesla was still up 3.2% and that tells you about the strength of the Tesla stock. And that's one of the reasons why I'm bullish about Tesla. If you look at the last 5 days, on Wednesday after market closed, Tesla announced their earnings and as you can see the stock price jumped up and it continued to go up overnight and then it reached the short-term peak of $10.92 and then it started to drift down as the broad market was heading down. Again for the long term, I'm still bullish about Tesla. Let's look at their products. Currently Tesla sells Model S, Model 3, Model X and Model Y. As you can see, they're pretty attractive modern looking vehicles. If you look at their sales, they started out very slowly from 2012 all the way through 2017 and part of 2018 then they started to pick up quickly. Also the last quarters of 2021, they reached 300,000 vehicles a quarter and of course the first quarter of 2022, they exceeded 300,000 vehicles a quarter. That's very impressive growth. If you like what you've seen so far, I'd like to encourage you to click the like, subscribe and notification button that'll enable you to receive notification when I post my next video in the future. It'll also encourage me to make more videos like this. Thank you very much. Let's continue. We have a lot of interesting things to cover. The reason why Tesla sales and production have been going up so quickly is because they have very attractive products and also because they've been expanding their manufacturing facilities very aggressively. They started out with just one factory in 2010 in Fremont, California. Then they built a factory in Nevada in 2016 to produce batteries. Then in 2017, they bought this factory as they bought the solar business. Then in 2019, they completed the factory in Shanghai which has been producing Model 3 and Model Y vehicles. This year, they recently opened the Gigafactories in Berlin and in Texas. In Texas, they have lots and lots of land to continue to expand in the near future. Then of course, they will continue to build more Gigafactories on a less needed basis. As I already mentioned, they're not only in the car business, they're also in the business of providing solar panels and batteries to buildings. Although this part of the business only make up about 5% of their total revenues. We'll talk a little bit more about that later on. In the next two, three years, they will be launching the Cybertruck which is a very futuristic vehicle and of course, that's another EV, electric vehicle. They will be introducing the Tesla Roaster, a high-performance vehicle, again an EV. They will be producing the Tesla Semi-Truck, another EV. A very interesting development is that they are designing their own chips to build the supercomputer, what they name Dojo, which will be dedicated to artificial intelligence training. The supercomputer when it's completed within about a year or so, and what I heard will be the fourth fastest supercomputer in the world, but it will most likely be the fastest supercomputer dedicated to artificial intelligence training. This is what I consider to be the moat around the Tesla businesses. As you know, the moat is the body of water surrounding a medieval castle back in the medieval days so that the owner of the castle could easily defend the castle against invading enemies. Likewise, the artificial intelligence development and the Dojo supercomputer will provide the type of protection Tesla will need to fend off competitors in the future. I will explain more. As of January of this year, about three months ago, Tesla already have 60,000 volunteer customers who voluntarily allow their driving data to be uploaded to the Tesla computer system as part of the beta test for the Tesla full cell driving system. And that means every mile they drive will be analyzed by the Tesla computers. Any driver reaction will be bounced off against the computer algorithm that has been developed so far, and that means continuous improvements will be made to the algorithm. I believe up until this point among all the people who are developing the autopilot system that Tesla has the most number of miles locked by these test drivers. The closest runner up is probably Waymo by Google, but I don't think Waymo has locked nearly as many miles as Tesla. With these artificial intelligence systems, the more data you feed to the system, the more experience and the smarter the system will become. I will not be surprised if the Tesla autopilot system is the most experienced and the smartest system in the world. And if Tesla sells more cars and a lot more mileage, then this system will just be so much better than the rest of the pack. And that's how the protection, the mode will be built and reinforced for Tesla in the next few years. As of April 1st, 2022, they started to pilot the RoboTaxi service in Las Vegas. During the third quarter of 2021, Tesla published their safety data related to the autopilot system. On the bottom here, the dark blue line is a national average published by the US government, as measured in millions of miles driven per accident. Of course, the higher the number, the better. So the national average, for example, during the first quarter of 2021 is .484. And with Tesla cars, even with our autopilot and with our active safety features, it's already better than the national average at .978. But with our autopilot and with active safety features and a Tesla vehicle is 2.05. That's substantially better than the national average. And then with autopilot, it's 4.19, definitely much better. Of course, you might not believe in these numbers. Actually most of the auto insurance companies don't believe these numbers. But the Tesla engineers and Elon Musk know their numbers and they believe in them. And that's why it is a business opportunity and a profit opportunity for Tesla. They have introduced their own version of auto insurance. If you are a Tesla driver and you can purchase auto insurance from Tesla. As you might know, Warren Buffett's Berkshire Hathaway derives a lot of its profit from insurance businesses, including auto insurance. And that's why this will be a very important revenue stream and income stream for Tesla in the future. Recently, Elon Musk announced that the Tesla robot will probably be in production within a year or so. The preliminary specifications say the robot is going to have a height of 5 feet 8 inches and it will weight 125 pounds and it can lift 45 pounds. It will only walk at a speed of 5 miles per hour so that it's not threatening. I'm pretty sure they can make the robot fast if they wanted to, but initially they want to make the robot to be non-threatening. That's why it has limited strength and limited speed. Even with these limitations, based on how smart the automotive driving system is from Tesla, I believe it will be very easy to implement the same type of algorithm, not on the roads of the entire world, but just apply the algorithm to your house. Which is going to be a much more confined area than the whole wide world. And that's why it should be very easy to train the Tesla robot to navigate within your house. And along that line I believe, these are my wild guesses that the robot can easily, for example, make coffee with minimal amount of training, clean windows, fetch things for you, find your car keys in the morning, walk the dog, clean the cat litter, mop the floor, take the garbage out, watch the house when you're not there because it's got eight cameras. So it can watch a lot of things, as well as fetching information for you, who might say, well, tell me who won the Super Bowl in 1976, for example, they're just a walking computer. It will listen and it might even talk to you. So these are the exciting possibilities of the Tesla robot and that's why Elon Musk recently in the interview said the Tesla robot will be even bigger than the Tesla cars. And I won't be surprised if it does generate more revenues and net income than the car business for Tesla in the next few years. This is very exciting. Now had you told me three years ago that Elon Musk would build a robot, I wouldn't have believed you. But after what he has done with SpaceX and what he has done with Starlink and the accomplishment they have achieved with the autopilot system, I firmly believe that a Tesla robot will be possible and it will be available within the next couple years. There are several businesses that are not financially linked to Tesla but they are under Elon Musk's management and I'm pretty sure in the future there will be joint projects and synergy among these companies. They include SpaceX, Loring Company that has been drilling tunnels below Los Angeles and a few other major cities to provide public transportation effectively and efficiently, Neuralink that has the potential of allowing people who are paraplegic to be able to walk again, for example, among other things and Starlink, the satellite company. And recently you might have heard that Tesla is in the process of acquiring Twitter and by the way I bought some Twitter shares and found this news. I want to be honest with you, not everything is rosy with Tesla. There are some dangers ahead. For example, these are the dangers. According to the Inside EVs online magazine, there are already 107 vehicles in the market in the US in 2022 competing against Tesla's EVs. Just a few years ago, there were only a handful of vehicles or EVs that competed with Tesla. Now we have 107 of them and of course in China they also have a lot of competitors and in Europe many competitors. If you look at these vehicles, they're made by Audi, BMW, Cadillac, Ford, Kia, Hyundai, Mercedes, Nissan, all these major manufacturers including Porsche, high performance vehicles. So they will be facing some pretty formidable competition. Although, as I mentioned previously, there's a mode around the Tesla business, which is their artificial intelligence system, the autopilot system. And hopefully that'll ensure Tesla will have a healthy piece of the market share in the next few years in spite of all the competitions that are coming into the market. And that's why for me to continue to hold on to Tesla shares or even buy more Tesla shares, I would definitely be monitoring the Tesla sales and market share very diligently in the next few months and in the next few years. Let's talk about valuation. This is from their 2021 10k report, the annual report, they filed with the SEC. If you look at the revenues, they derive from the automotive segment and from the solar segment. They derive 95% of their revenues from the automotive business and only 5% from the solar business. And that's why the auto business is really the main business. Geographically, in 2021, they derive 45% of the revenues from the US, 26% from China and 29% from other regions in the world. Now 26% of China, that's a high percentage. That means they will be exposed to some geopolitical risks in the future. And I'll be monitoring that very carefully as well. If you look at the first quarter financial statements, they generated the net income of $3.28 billion. Thus of 2021, they generated $5 billion for the entire year. For the first quarter of $3.28 billion, if you just multiply that by four, they could possibly make $13 billion for 2022 or even more since their sales and revenues have been growing in the last few quarters. I will just be very conservative and assume that they will be generating $10 billion in net income for 2022. And I'll use $10 billion in my calculations in the next couple of minutes. So let's talk to $10 billion in the back of our mind for now. I'll show you some charts from the Better Investing Stock Selection Guide database. This chart shows the annual sales of Tesla. As you can see, ever since 2013, the sales has been growing pretty much along the straight line. And the slope of the straight line is a little bit better than 50%. That's why Elon Musk recently said they will be growing at 50% rate for the foreseeable future and based on the historical performance, I believe him. If you look at their earnings per share, they have been having negative earnings until 2020. And then after that, their earnings have been picking up quickly. Based on the first quarter earnings for 2022, they might end 2022 at this point. That means it will probably allow us to draw a trajectory like this. But for now, I'm just taking a very conservative assumption. And I will assume that the earnings will be growing at 39% per year for the next three to five years. But actually, they will most likely be growing faster than that with the EPS. The debt-to-equity ratio looks pretty good. They've been paying off the debts very aggressively since 2019. As you can see, of course, the lower the number, the better. If you line them up against the competitors, if you look at the legends here, they're definitely better than Toyota, better than General Motors, better than VW, and better than the industry average. So Tesla is a very strong company with their fundamentals. If you look at the return on equity, they started out low. Now they are doing a little bit better than industry average. Overall, Tesla's financials look pretty strong. Let's get to the calculations. First, I look at the top automotive companies and compare their market cap and PE ratios. As you can see, Tesla has by far the largest market cap at a little more than a trillion dollars. The next run up is Toyota with only about a quarter of the market cap of Tesla. And the main reason why is because Tesla has very high PE ratio of 205. And actually, that's another potential danger. That's a very high PE number and the reason why the PE number has been so high is because Tesla has been growing rapidly. And with the products that they've lined up, I believe they will continue to grow very impressively and will continue to be able to support a high PE ratio. Now if you look at Toyota, for example, it has a PE ratio of only 9.81 and Salantas, a PE ratio of only 2.88, which is really low. I'll probably be buying Salantas share pretty soon. But that will be another video. For now, let's focus on Tesla. For the rest of my calculations, I'm taking a little bit more conservative approach. I'm assuming that the PE ratio of Tesla will be just at 140 for 2022 and 2023. And as I mentioned about a minute ago, I assume the annual earnings growth of 39%, which is another conservative estimate. And then I use the current figures for 2021. I remember that I was going to assume that they can generate a net income of $10 billion for 2022, but when in fact, they could probably generate more than $13 billion. But that's because, conservative for now, use a $10 billion of net income for 2022. PE ratio assumption of 140. And with those, I calculated the stock price of about $1354. And then based on the 39% annual growth, I calculated the figures for 2023 and arrive at a stock price for 1882 for 2023. And out of this range, I decided to set my target at a very conservative number of $1,200 a share to be reached by the end of April 2023, about a year from now. The main reason why is because I believe the market is going to go down a little bit due to the rate hikes from the Federal Reserve Banks. But after that, hopefully inflation will go down and the market will start bouncing back again. And that's why I'm not taking these very aggressive numbers for my target for the Tesla stock. Let's look at the other annual subpoenas. Again, the Tesla price as of last business day, it closed at $1,005. My target is $1,200 by the end of April next year. So that'll be about a 20% increase from today's price, which is pretty good. And Yahoo Business gives them a buy rating, $2.5 out of $5. High target is $1,620. Average target, $980. And low target is $6,700. TipsRang.com, moderate buy, high target of $1,580. Average target, $1060. And low target, $6,700. TheStreet.com gives them only a C-plus hold rating without any target price. I'm comfortable with the $1,200 target. And you'll start a calculation. And I've taken some very conservative assumptions at this point. Let's recap. My target is $1,200 a share to be achieved by the end of April 2023. And the all-time high for Tesla was $1,243. At this point, I'd like to encourage you to also subscribe to my Twitter account in addition to subscribing to my YouTube channel. For example, on March 17th, I tweeted that I bought TMV shares. And as of today, it's up 26% already. On April 20th, I tweeted that I bought Tesla shares. And actually up until now, it's down about 1.8%. But I'm not worried it will eventually bounce back up because Tesla has all the competitive advantages that we looked at in the last few minutes. And then on April 22nd, I said I sold LUV shares and locked in 6% of profit for batch of shares. I bought on January 4th and locked in 10% profit for another batch of shares I bought on March 16th. I'm still bullish on LUV, which is Southwest Airlines, except because of the bearishness of the market in the last couple of days, I decided that I would lock in my profit for now. And then I will expect to buy LUV again in the next few days at a lower price. And that's fairly typical when I do swing trading with some of the stocks that I have kept in my portfolio. And I will most likely do the same with Tesla. And of course, when I buy or sell Tesla shares in the near future, I will share that information with you by way of my Twitter messages. Again, I'd like to encourage you to click the like, subscribe and notification button. You can like what you're seeing. And as usual, I will very much appreciate your comments, questions and suggestions. I'd like to remind you that I'm not a financial advisor. Share my stock trading strategies and analyses for educational and entertainment purposes only. If you want to buy or sell stocks, you should make your own decisions and you should definitely consult with your financial advisors before you do so. This wraps up my video for now. I will chat with you again in the next few days. In the meanwhile, I'd like to wish you the very best of luck with your financial investments.