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  Geico, Buybacks, and 8 More Things That Buffett Could Put in His Berkshire Letter
  Stock buybacks, succession, investments, Geico and the Alleghany deal are some of the topics that Be
  Geico, Buybacks, and 8 More Things That Buffett Could Put in His Berkshire Letter
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  Tesla: Automaker Or Tech Company? My Take And My Investing Choice
  SummaryThe big dilemma about Tesla, Inc. lies in the answer to a question: is Tesla an automaker or
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The letter will be accompanied by Berkshire&#39;s fourth-quarter earnings release and annual report. They all are expected around 8 a.m. Eastern time on Saturday.</p><p>Here are 10 topics that many investors -- and Barron&#39;s -- would like to see Buffett address:</p><p><b>1. Buybacks</b></p><p>Share repurchases totaled just $5 billion in the first three quarters of 2022, against $27 billion for all of 2021 and $25 billion in 2020. Why the slowdown? Is Buffett less enamored of the stock? Barron&#39;s estimates the stock now trades around 1.4 times book value -- in line with its five-year average.</p><p><b>2. Succession</b></p><p>Berkshire has identified Greg Abel, a Berkshire vice chairman who heads the conglomerate&#39;s huge non-insurance operations, as Buffett&#39;s likely successor as CEO. Investors would like to know more about Abel, Buffett&#39;s confidence in him and Berkshire&#39;s post-Buffett management structure.</p><p><b>3. Investments</b></p><p>Berkshire had an active 2022, buying about $20 billion of Chevron (CVX), a stake of over 20% in Occidental Petroleum (OXY) and big interests in HP (HPQ), <a href=\"https://laohu8.com/S/PARA\">Paramount Global</a> (PARA) as well as Citigroup (C). Would Buffett consider buying all of Occidental and why the purchase then quick sale of Taiwan Semiconductor (TSM) last year?</p><p>What does Buffett think of the energy sector and banks, which he has continued to sell? Buffett has long lamented the tough climate for acquisitions due to cheap money and competition from private equity. Is the game changing in Berkshire&#39;s favor? Will he ever bag what he has called an elephant-sized deal for close to $100 billion?</p><p><b>4. Todd and Ted</b></p><p>Buffett Investment lieutenants Ted Weschler and Todd Combs now manage about 10% of Berkshire&#39;s $350 billion equity portfolio. They&#39; have been in that role for more than 10 years. How are they doing? That&#39;s important since they are expected to run the entire portfolio in the post-Buffett era. Buffett told CNBC in 2019 they were both &#34;a tiny bit&#34; behind the S&amp;P 500 since they joined. Many investors would like to see an update on their performance especially given that 2022 appeared to be a tough year for them with many of Berkshire&#39;s smaller equity investments down sharply</p><p><b>5. Geico</b></p><p>The auto insurer has long been the crown jewel of Berkshire&#39;s huge property and casualty operations. But Geico has struggled with weak underwriting results in recent quarters. Geico, like others in the industry, has been hurt by rising claims costs and has been boosting rates to offset that. Geico, the No, 2 auto insurer, has fallen behind rival Progressive in its use of technology including real-time driving information to price policies. Is Geico making progress and can it catch Progressive?</p><p><b>6. Todd Combs</b></p><p>Combs was installed by Buffett as Geico&#39;s CEO three years ago in what Buffett then suggested would be a temporary role. How much longer will Combs be running Geico?</p><p><b>7. Alleghany</b></p><p>Berkshire&#39;s purchase of the property and casualty insurer for about $12 billion in October was its biggest deal since the $30 billion-plus deal for Precision Castparts in 2016. How will Alleghany aid Berkshire&#39;s P&amp;C operations and what will happen to Alleghany&#39;s appealing group of non-insurance businesses? It was Barron&#39;s view that Berkshire got a very good deal with Alleghany. And how does Buffett view rising premiums throughout the P&amp;C sector.</p><p><b>8. Joe Brandon</b></p><p>Look for Buffett to praise Alleghany CEO Joe Brandon, a veteran insurance executive who once headed Berkshire&#39;s General Re unit. Brandon could one day succeed Ajit Jain, 71, who now heads Berkshire&#39;s insurance operations.</p><p><b>9. Berkshire Breakup</b></p><p>Buffett has said that the stock likely would go up on the day after his death on breakup speculation. Buffett wants Berkshire kept intact and has gone as far as predicting that the Burlington Northern Santa Fe railroad, Berkshire&#39;s single largest operating unit, would be part of the company a century from now. Why is a breakup a bad idea for Berkshire when so many large companies including Johnson and Johnson and General Electric are pursuing spinoffs and getting more focused?</p><p><b>10. Berkshire&#39;s Future</b></p><p>How does Buffett see Berkshire in five or 10 years? Would he like his successor to actively pursue acquisitions or stick with the current structure? Can a company of Berkshire&#39;s size and complexity be competently managed without someone of Buffett&#39;s genius at helm? Berkshire stock is behind the S&amp;P 500 over the past 5 and 10 years. Can it outperform in the future?</p></body></html>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Geico, Buybacks, and 8 More Things That Buffett Could Put in His Berkshire Letter</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nGeico, Buybacks, and 8 More Things That Buffett Could Put in His Berkshire Letter\n</h2>\n\n<h4 class=\"meta\">\n\n\n<div class=\"head\" \">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/150f88aa4d182df19190059f4a365e99);background-size:cover;\"></div>\n\n<div class=\"h-content\">\n<p class=\"h-name\">Dow Jones </p>\n<p class=\"h-time\">2023-02-23 16:01</p>\n</div>\n\n</div>\n\n\n</h4>\n\n</header>\n<article>\n<html><head></head><body><p>Stock buybacks, succession, investments, Geico and the Alleghany deal are some of the topics that Berkshire Hathaway CEO Warren Buffett may address in his eagerly anticipated shareholder letter due for release on Saturday morning.</p><p>Buffett, now 92, has limited his public appearances in recent years and the letter will be his first major communication with Berkshire Hathaway (ticker: BRK/A,BRK/B) shareholders since the company&#39;s annual meeting last April. The letter will be accompanied by Berkshire&#39;s fourth-quarter earnings release and annual report. They all are expected around 8 a.m. Eastern time on Saturday.</p><p>Here are 10 topics that many investors -- and Barron&#39;s -- would like to see Buffett address:</p><p><b>1. Buybacks</b></p><p>Share repurchases totaled just $5 billion in the first three quarters of 2022, against $27 billion for all of 2021 and $25 billion in 2020. Why the slowdown? Is Buffett less enamored of the stock? Barron&#39;s estimates the stock now trades around 1.4 times book value -- in line with its five-year average.</p><p><b>2. Succession</b></p><p>Berkshire has identified Greg Abel, a Berkshire vice chairman who heads the conglomerate&#39;s huge non-insurance operations, as Buffett&#39;s likely successor as CEO. Investors would like to know more about Abel, Buffett&#39;s confidence in him and Berkshire&#39;s post-Buffett management structure.</p><p><b>3. Investments</b></p><p>Berkshire had an active 2022, buying about $20 billion of Chevron (CVX), a stake of over 20% in Occidental Petroleum (OXY) and big interests in HP (HPQ), <a href=\"https://laohu8.com/S/PARA\">Paramount Global</a> (PARA) as well as Citigroup (C). Would Buffett consider buying all of Occidental and why the purchase then quick sale of Taiwan Semiconductor (TSM) last year?</p><p>What does Buffett think of the energy sector and banks, which he has continued to sell? Buffett has long lamented the tough climate for acquisitions due to cheap money and competition from private equity. Is the game changing in Berkshire&#39;s favor? Will he ever bag what he has called an elephant-sized deal for close to $100 billion?</p><p><b>4. Todd and Ted</b></p><p>Buffett Investment lieutenants Ted Weschler and Todd Combs now manage about 10% of Berkshire&#39;s $350 billion equity portfolio. They&#39; have been in that role for more than 10 years. How are they doing? That&#39;s important since they are expected to run the entire portfolio in the post-Buffett era. Buffett told CNBC in 2019 they were both &#34;a tiny bit&#34; behind the S&amp;P 500 since they joined. Many investors would like to see an update on their performance especially given that 2022 appeared to be a tough year for them with many of Berkshire&#39;s smaller equity investments down sharply</p><p><b>5. Geico</b></p><p>The auto insurer has long been the crown jewel of Berkshire&#39;s huge property and casualty operations. But Geico has struggled with weak underwriting results in recent quarters. Geico, like others in the industry, has been hurt by rising claims costs and has been boosting rates to offset that. Geico, the No, 2 auto insurer, has fallen behind rival Progressive in its use of technology including real-time driving information to price policies. Is Geico making progress and can it catch Progressive?</p><p><b>6. Todd Combs</b></p><p>Combs was installed by Buffett as Geico&#39;s CEO three years ago in what Buffett then suggested would be a temporary role. How much longer will Combs be running Geico?</p><p><b>7. Alleghany</b></p><p>Berkshire&#39;s purchase of the property and casualty insurer for about $12 billion in October was its biggest deal since the $30 billion-plus deal for Precision Castparts in 2016. How will Alleghany aid Berkshire&#39;s P&amp;C operations and what will happen to Alleghany&#39;s appealing group of non-insurance businesses? It was Barron&#39;s view that Berkshire got a very good deal with Alleghany. And how does Buffett view rising premiums throughout the P&amp;C sector.</p><p><b>8. Joe Brandon</b></p><p>Look for Buffett to praise Alleghany CEO Joe Brandon, a veteran insurance executive who once headed Berkshire&#39;s General Re unit. Brandon could one day succeed Ajit Jain, 71, who now heads Berkshire&#39;s insurance operations.</p><p><b>9. Berkshire Breakup</b></p><p>Buffett has said that the stock likely would go up on the day after his death on breakup speculation. Buffett wants Berkshire kept intact and has gone as far as predicting that the Burlington Northern Santa Fe railroad, Berkshire&#39;s single largest operating unit, would be part of the company a century from now. Why is a breakup a bad idea for Berkshire when so many large companies including Johnson and Johnson and General Electric are pursuing spinoffs and getting more focused?</p><p><b>10. Berkshire&#39;s Future</b></p><p>How does Buffett see Berkshire in five or 10 years? Would he like his successor to actively pursue acquisitions or stick with the current structure? Can a company of Berkshire&#39;s size and complexity be competently managed without someone of Buffett&#39;s genius at helm? Berkshire stock is behind the S&amp;P 500 over the past 5 and 10 years. Can it outperform in the future?</p></body></html>\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","BK4570":"地缘局势概念股","LU1066053197.SGD":"HSBC GIF GLOBAL EQUITY VOLATILITY FOCUSED \"AM3\" (SGDHDG) INC","LU0368265418.SGD":"Blackrock World Energy Fund A2 SGD-H","BK4534":"瑞士信贷持仓","OXY":"西方石油","LU0266512127.USD":"摩根大通环球自然资源 A(acc)","BK4533":"AQR资本管理(全球第二大对冲基金)","LU0300736492.USD":"FRANKLIN NATURAL RESOURCES \"A\" (USD) INC","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","BK4566":"资本集团","LU0149725797.USD":"汇丰美国股市经济规模基金","LU0122376428.USD":"贝莱德世界能源基金A2","LU0300736062.USD":"FRANKLIN NATURAL RESOURCES \"A\" (USD) ACC","BK4206":"工业集团企业","LU2133065610.SGD":"JPMorgan Investment Funds - Global Dividend A (mth) SGD","TSM":"台积电","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","BK4527":"明星科技股","LU1496350171.SGD":"FRANKLIN DIVERSIFIED BALANCED \"A\" (SGDHDG) ACC","LU1496350502.SGD":"FRANKLIN DIVERSIFIED DYNAMIC \"A\" (SGDHDG) ACC","BK4501":"段永平概念","LU0742534661.SGD":"Fidelity America A-SGD (hedged)","LU0541501648.USD":"ALLSPRING  EMERGING MARKETS EQUITY \"A\" (USD) ACC","LU0980610538.SGD":"Natixis Harris Associates US Equity RA SGD-H","BK4550":"红杉资本持仓","BK4141":"半导体产品","IE00B775SV38.USD":"NEUBERGER BERMAN US MULTICAP OPPORTUNITIES \"A\" (USD) ACC","BK4503":"景林资产持仓","LU0234570918.USD":"高盛全球核心股票组合Acc Close","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","BK4207":"综合性银行","LU0264606111.USD":"Janus Henderson Horizon Asian Dividend Income A2 USD","BK4505":"高瓴资本持仓","BK4581":"高盛持仓","BK4125":"广播","BRK.B":"伯克希尔B","LU1267930227.SGD":"TEMPLETON GLOBAL BALANCED \"AS\" (SGD) ACC A","LU1280957306.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQUITIES \"AUP\" (USD) INC","BRK.A":"伯克希尔","BK4548":"巴美列捷福持仓","LU0128525689.USD":"TEMPLETON GLOBAL BALANCED \"A\"(USD) ACC","LU0234572021.USD":"高盛美国核心股票组合Acc","BK4170":"电脑硬件、储存设备及电脑周边","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","LU0572939691.SGD":"Janus Henderson Horizon Asian Dividend Income A2 SGD","SG9999000418.SGD":"Aberdeen Standard Global Technology SGD","BK4176":"多领域控股","LU0310800965.SGD":"FTIF - Templeton Global Balanced A Acc SGD","LU0251142724.SGD":"Fidelity America A-SGD"},"source_url":"","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2313090527","content_text":"Stock buybacks, succession, investments, Geico and the Alleghany deal are some of the topics that Berkshire Hathaway CEO Warren Buffett may address in his eagerly anticipated shareholder letter due for release on Saturday morning.Buffett, now 92, has limited his public appearances in recent years and the letter will be his first major communication with Berkshire Hathaway (ticker: BRK/A,BRK/B) shareholders since the company's annual meeting last April. The letter will be accompanied by Berkshire's fourth-quarter earnings release and annual report. They all are expected around 8 a.m. Eastern time on Saturday.Here are 10 topics that many investors -- and Barron's -- would like to see Buffett address:1. BuybacksShare repurchases totaled just $5 billion in the first three quarters of 2022, against $27 billion for all of 2021 and $25 billion in 2020. Why the slowdown? Is Buffett less enamored of the stock? Barron's estimates the stock now trades around 1.4 times book value -- in line with its five-year average.2. SuccessionBerkshire has identified Greg Abel, a Berkshire vice chairman who heads the conglomerate's huge non-insurance operations, as Buffett's likely successor as CEO. Investors would like to know more about Abel, Buffett's confidence in him and Berkshire's post-Buffett management structure.3. InvestmentsBerkshire had an active 2022, buying about $20 billion of Chevron (CVX), a stake of over 20% in Occidental Petroleum (OXY) and big interests in HP (HPQ), Paramount Global (PARA) as well as Citigroup (C). Would Buffett consider buying all of Occidental and why the purchase then quick sale of Taiwan Semiconductor (TSM) last year?What does Buffett think of the energy sector and banks, which he has continued to sell? Buffett has long lamented the tough climate for acquisitions due to cheap money and competition from private equity. Is the game changing in Berkshire's favor? Will he ever bag what he has called an elephant-sized deal for close to $100 billion?4. Todd and TedBuffett Investment lieutenants Ted Weschler and Todd Combs now manage about 10% of Berkshire's $350 billion equity portfolio. They' have been in that role for more than 10 years. How are they doing? That's important since they are expected to run the entire portfolio in the post-Buffett era. Buffett told CNBC in 2019 they were both \"a tiny bit\" behind the S&P 500 since they joined. Many investors would like to see an update on their performance especially given that 2022 appeared to be a tough year for them with many of Berkshire's smaller equity investments down sharply5. GeicoThe auto insurer has long been the crown jewel of Berkshire's huge property and casualty operations. But Geico has struggled with weak underwriting results in recent quarters. Geico, like others in the industry, has been hurt by rising claims costs and has been boosting rates to offset that. Geico, the No, 2 auto insurer, has fallen behind rival Progressive in its use of technology including real-time driving information to price policies. Is Geico making progress and can it catch Progressive?6. Todd CombsCombs was installed by Buffett as Geico's CEO three years ago in what Buffett then suggested would be a temporary role. How much longer will Combs be running Geico?7. AlleghanyBerkshire's purchase of the property and casualty insurer for about $12 billion in October was its biggest deal since the $30 billion-plus deal for Precision Castparts in 2016. How will Alleghany aid Berkshire's P&C operations and what will happen to Alleghany's appealing group of non-insurance businesses? It was Barron's view that Berkshire got a very good deal with Alleghany. And how does Buffett view rising premiums throughout the P&C sector.8. Joe BrandonLook for Buffett to praise Alleghany CEO Joe Brandon, a veteran insurance executive who once headed Berkshire's General Re unit. Brandon could one day succeed Ajit Jain, 71, who now heads Berkshire's insurance operations.9. Berkshire BreakupBuffett has said that the stock likely would go up on the day after his death on breakup speculation. Buffett wants Berkshire kept intact and has gone as far as predicting that the Burlington Northern Santa Fe railroad, Berkshire's single largest operating unit, would be part of the company a century from now. Why is a breakup a bad idea for Berkshire when so many large companies including Johnson and Johnson and General Electric are pursuing spinoffs and getting more focused?10. Berkshire's FutureHow does Buffett see Berkshire in five or 10 years? Would he like his successor to actively pursue acquisitions or stick with the current structure? Can a company of Berkshire's size and complexity be competently managed without someone of Buffett's genius at helm? Berkshire stock is behind the S&P 500 over the past 5 and 10 years. Can it outperform in the future?","news_type":1},"isVote":1,"tweetType":1,"viewCount":85,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9957831959,"gmtCreate":1677145524172,"gmtModify":1677145964614,"author":{"id":"4140243436439842","authorId":"4140243436439842","name":"37f79525","avatar":"https://community-static.tradeup.com/news/default-avatar.jpg","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4140243436439842","authorIdStr":"4140243436439842"},"themes":[],"htmlText":"ok","listText":"ok","text":"ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":8,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9957831959","repostId":"2313059413","repostType":4,"repost":{"id":"2313059413","pubTimestamp":1677226034,"share":"https://ttm.financial/m/news/2313059413?lang=&edition=fundamental","pubTime":"2023-02-24 16:07","market":"us","language":"en","title":"Tesla: Automaker Or Tech Company? My Take And My Investing Choice","url":"https://stock-news.laohu8.com/highlight/detail?id=2313059413","media":"Seeking Alpha","summary":"SummaryThe big dilemma about Tesla, Inc. lies in the answer to a question: is Tesla an automaker or ","content":"<html><head></head><body><h2>Summary</h2><ul><li>The big dilemma about Tesla, Inc. lies in the answer to a question: is Tesla an automaker or a tech company?</li><li>In this article, I would like to share how I have come to find the answer.</li><li>I will share my investing choice, talking about Tesla&#39;s current valuation and potential investing alternatives.</li></ul><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/43d9444e059df9e26126c6a2ea34e297\" tg-width=\"1080\" tg-height=\"720\" referrerpolicy=\"no-referrer\"/><span>coffeekai</span></p><h2>Introduction</h2><p>Tesla, Inc. (NASDAQ:TSLA) is one of those stocks - and companies - very difficult to write about without being caught in the fight between fans and haters. This is why, though quite interested in the automotive industry, I have been hesitant to writeabout it. In truth, there has been a lot of buzz about electric vehicles (&#34;EVs&#34;), and I think it hard to deny Tesla was a stock that experienced a lot of hype, leading to extreme valuations. This has made me cautious about it, as I know buzz and hype can be exciting but can lead to rash investing decisions.</p><p>To be clear from the beginning of this article, I am no Tesla detractor. However, I am no Tesla investor, either. I do think Tesla is a great company, whose future is probably going to be quite bright. On the other hand, thereare a few things about the stock that rule it out of my portfolio where I actually own three other automakers.</p><p>In this article, I will share for the first time my view on Tesla, hoping to present my thesis as objectively as possible. At the same time, I would like to show why I am currently building up a position in what seems to me an underestimated competitor of Tesla.</p><h2>The big question about Tesla</h2><p>The first question I had to find an answer to assess Tesla was the following: what kind of company do I think Tesla is?</p><p>We generally find two answers that revolve around these two concepts:</p><ol><li>Tesla is a tech company</li><li>Tesla is an automaker.</li></ol><p>I know things can be more complex, but as far as my research goes I really think this is the crossroad where two different investing views and strategies diverge.</p><p>I find myself agreeing with the second answer: Tesla is an automaker. This is somewhat supported by what the company states in its 10-k.</p><blockquote>We design, develop, manufacture, sell and lease high-performance fully electric vehicles and energy generation and storage systems, and offer services related to our products. We generally sell our products directly to customers, and continue to grow our customer-facing infrastructure through a global network of vehicle service centers, Mobile Service, body shops, Supercharger stations and Destination Chargers to accelerate the widespread adoption of our products. We emphasize performance, attractive styling and the safety of our users and workforce in the design and manufacture of our products and are continuing to develop full self-driving technology for improved safety. We also strive to lower the cost of ownership for our customers through continuous efforts to reduce manufacturing costs and by offering financial and other services tailored to our products.</blockquote><p>To be fair, these words are not only about electric vehicles manufacturing, as Tesla also claims to be focusing on energy generation and storage systems as well as on developing full self-driving technology (&#34;FSD&#34;). However, I see these other activities as necessarily linked to the manufacturing one. Tesla is indeed disruptive, and it has been a true pioneer, but I see it as the one company that redesigns what all other automakers will need to become to survive and thrive.</p><p>Why do I think it important to answer this question? Simply put, it tells us what industry we think Tesla is a part of. This is quite important when we do a valuation of Tesla, as we need to look at the multiples of the industry.</p><p>Tesla&#39;s financials support this view, too. In fact, if we look at the income statement streams chart, we clearly see how auto sales have the lion&#39;s share of total revenues, with $67.2 billion out of the total $81.5 billion (82.5%). If we consider the auto segment as a whole, including leasing and regulatory credits, Tesla earns 87.7% of its total revenues through activities linked to electric vehicles.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/27e4e531b8126431a0d311e3260e386c\" tg-width=\"1280\" tg-height=\"800\" referrerpolicy=\"no-referrer\"/><span>created by incomestatementguy on reddit.it</span></p><p>In addition, it seems like Elon Musk himself thinks about Tesla as a &#34;volume carmaker&#34; in the &#34;automotive market,&#34; words he used during the last earnings call.</p><h2>Tesla&#39;s financials</h2><p>It is hard not to like Tesla&#39;s financials, especially if we look at their unfolding through the past decade. We have a CAGR revenue growth of almost 45%, while gross profit grew at a CAGR of 46.5% and EBITDA saw a stunning 81.6% CAGR from 2013 to the end of 2022.</p><p>In recent years, the company has turned profitable, and since 2020 its net income has moved up from $721 million to $12.56 billion, which is a CAGR of 317.31%. This is what happens when a company finally reaches scale.</p><p>Its balance sheet is strong, with just $1 billion of long-term debt and more than $22 billion in cash and short-term investments.</p><p>Free cash flow (&#34;FCF&#34;) is also strong, with $4.2 billion generated at the end of 2022 vs. the -$32.5 million reported at the end of 2013. The only flaw is that Tesla paid $1.56 billion in stock-based compensation (&#34;SBC&#34;), which actually makes the real free cash flow available to investors just $1 billion. In fact, as of now SBC is added to net income to calculate the final FCF, but, in reality, it is an expense that should be moved down to financing activities and be accounted for as an expense. Therefore, we have to subtract the amount spent on SBC twice to offset the current accounting rule that sees it as an addition, and then to subtract the real expense from the previous amount.</p><p>However, on a positive note, Tesla seems to be reducing its SBC, since in 2021 it paid over $2.1 billion for this. But, still, the dilutive effect is sensible.</p><p>In terms of profitability, the company is best in class. Here I would like to show one of my favorite graphs Tesla shares with investors. We see that, while the average selling price (ASP) moves down and then stabilizes around $55,000, the operating margin goes steadily up, coming in at 17%.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/6750ec65a212dc9254efea6c82c89a41\" tg-width=\"640\" tg-height=\"263\" referrerpolicy=\"no-referrer\"/><span>Tesla Q4 2022 Shareholder Deck</span></p><p>This is another way to prove how it was vital for Tesla to reach scale, as it has done in recent years. Now, every dollar of additional revenue is more valuable because of increasingly good operating efficiency.</p><p>Tesla reported 1.31 million cars sold in 2022 and expects to sell 1.8 million vehicles by the end of this fiscal year. Its plan was bold, targeting a 50% CAGR from 2020 to 2023. It is rather easy to think Tesla seems able to reach this goal.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/c79730c77c37c3638501639b6d53d9ab\" tg-width=\"640\" tg-height=\"261\" referrerpolicy=\"no-referrer\"/><span>Tesla Q4 2022 Shareholder Deck</span></p><p>So, if everything is so bright, why am I not investing in Tesla?</p><h2>Why I am not a Tesla shareholder</h2><p>I have some perplexities about Tesla&#39;s expectations for the future, which inevitably impact my view of its valuation.</p><p>Before we move on, let me state once again that I am no Tesla bear, nor do I think the stock should be shorted, even though it may have indeed reached a recent peak. However, this is not my investing style, since I look for companies to hold for a decade or two.</p><p>Let me share what I am thinking about Tesla&#39;s upcoming years.</p><p>The first thing I wonder about is linked to what automotive segment the company wants to address. We saw how Mr. Musk considers Tesla a volume carmaker. But we don&#39;t know exactly what kind of volume carmaker Tesla wants to be. Does it aim at being an 8 million one, like Volkswagen (OTCPK:VWAGY), General Motors (GM) or Toyota (TM)? Does it aim at selling between 2 and 3 million vehicles per year, like Mercedes (OTCPK:MBGAF) or BMW (OTCPK:BMWYY) do? The answer to this question is quite important for a forecast.</p><p>Currently, Tesla manufactures four vehicles: the Model 3, Y, S and X. While Model 3 and Model Y have a base price for mass-market appeal, the other two don&#39;t. Still, both Model 3 and Model Y have a starting selling price between $40,000 and $60,000, which is not exactly the price range to address all consumers. The other two models have a starting selling price around $100,000.</p><p>Tesla has written more than once that it is committed to making its manufacturing process more efficient to bring down the average selling price. However, there are other automakers that are able to sell electric vehicles at more affordable prices. Tesla may start manufacturing subcompact vehicles, but this would benefit mostly volumes over margins, as that segment is highly competitive and many automakers are already or will soon be producing electric cars for this market.</p><p>The other option is that Tesla turns into a premium volume automaker. This will make it compete with brands such as Mercedes, BMW, Audi, Lexus and others. While this is a higher margin segment, volumes are a bit lower, with Mercedes and BMW selling about 2 million vehicles per year. Tesla may do a bit more, but I don&#39;t see it grabbing away from brands with such a strength all their market share.</p><p>In fact, Mercedes&#39; electric car portfolio seems to be already richer than Tesla&#39;s.</p><p>In other words, I have a hard time thinking Tesla will be able to grow significantly among premium brands without finding hard competition with well-established and highly-appreciated brands.</p><p>On the other hand, Tesla has the advantage in that it doesn&#39;t have to cannibalize its old models, while all other OEMs do. However, while we are seeing the same thing happening with Netflix (NFLX) and its other streaming competitors, where the latter have to cannibalize their profitable cable business to build up their own streaming platform, in the case of automakers, the shift toward EVs is actually generating higher profitability.</p><h2>My take: The issue with Tesla&#39;s valuation and what already I own instead of it</h2><p>It may not sound that original saying that what keeps me from investing in Tesla is its sky-high valuation. But let&#39;s recall that oftentimes the easiest and most renowned investing principles are forgotten when buzz and hype take place. For sure, Tesla is exciting and this is why we should double down and caution.</p><p>On my side, I don&#39;t immediately run away from a stock because I see a high P/E or a high P/FCF multiple. For example, staying within the automotive industry, I own Ferrari (RACE). I would never compare Ferrari to Tesla. They are too different. But it is just an example to show how I am willing to pay a higher price when I think it is worth it.</p><p>However, the big difference I see between Ferrari and Tesla is that Ferrari&#39;s future results are much more predictable than Tesla&#39;s. Still, a jewel like Ferrari trades a lower multiples compared to Tesla: Ferrari trades at a 39 fwd P/E vs. Tesla&#39;s 58, its fwd EV/EBITDA is 21.4 vs. Tesla&#39;s 31, its P/FCF is 37.3 vs. Tesla&#39;s 44.8. And this happens while Ferrari&#39;s profitability metrics are better than Tesla&#39;s: 24% EBIT margin vs. 16.8%; net income margin at 18.4% for Ferrari while for Tesla it is at 15.4%, return on equity of 40.6% for Ferrari and at 32.5% for Tesla.</p><p>Coming down to a more realistic comparison, so that we don&#39;t risk to mix apples with oranges, let&#39;s look at Mercedes and compare it to Tesla (in bold is the better result between the two):</p><p><img src=\"https://static.tigerbbs.com/419bc889efd58b6e8e2d7b158e5d56b1\" tg-width=\"407\" tg-height=\"332\" referrerpolicy=\"no-referrer\"/></p><p>Tesla is the winner, but Mercedes is not very far behind, especially as we move down the income statement. Now, let&#39;s see how the market prices Tesla&#39;s leading position compared to Mercedes:</p><p><img src=\"https://static.tigerbbs.com/8e9e9e951f1e5f0e7649a9c1478da748\" tg-width=\"378\" tg-height=\"263\" referrerpolicy=\"no-referrer\"/></p><p>To me, the difference is too wide, especially if we consider Mercedes&#39; high-quality strategy that is effectively managing to increase the company&#39;s profitability.</p><p>This is why I actually own Mercedes as my favorite pick among premium luxury automakers.</p><p>My third pick - even though, as I have tried to explain, I think we are once again at risk of comparing chalk and cheese - is Stellantis N.V. (STLA). If we look at automakers that produce affordable vehicles truly addressed to customers without deep pockets, then I think the Stellantis bull case almost speaks for itself as soon as we look at its financials and at its multiples. We are talking about a double-digit margin automaker, with incredibly skilled management, lots of tailwinds going for it (i.e., synergies), low geopolitical risk, etc. trading at unreasonable multiples of a 3 fwd P/E, a 1.2 fwd (EV/EBITDA) and a 2.3 P/FCF. I am not kidding. The company trades as if it were to go bankrupt tomorrow, while it is swimming in cash.</p><p>Let me share my discounted cash flow (&#34;DCF&#34;) model on Tesla, just to check if my thesis may be supported by future cash flow. Even projecting a 5 year free cash flow (&#34;FCF&#34;) growth rate of 45% and then assuming a 9% perpetual growth rate (very generous assumptions), I still find TSLA stock should not trade over $150.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/c07f13a52a88af371a1b262a496e9e32\" tg-width=\"640\" tg-height=\"205\" referrerpolicy=\"no-referrer\"/><span>Author, with data from SA and own future forecast</span></p><p>As I said, it is not my investing style to short a stock or make short-term trades. I am in for the long term. But I think Tesla, Inc.&#39;s stock got a bit ahead of itself, especially given the fact that it has reached such volumes that will make it harder for the company to keep on growing at the fast pace investors are expecting. Many investors have for sure gained a lot of money with Tesla stock, while many other have lost a ton of it. As for me, I keep on studying Tesla, Inc. as an investor interested in the industry, but I don&#39;t see TSLA stock as appealing as other opportunities. This is why I rate Tesla, Inc. as a hold.</p><p><i>This article is written by Luca Socci for reference only. Please note the risks.</i></p></body></html>","source":"seekingalpha_fund","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Tesla: Automaker Or Tech Company? My Take And My Investing Choice</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTesla: Automaker Or Tech Company? My Take And My Investing Choice\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-02-24 16:07 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4580350-tesla-automaker-or-tech-company-my-take-and-my-investing-choice><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryThe big dilemma about Tesla, Inc. lies in the answer to a question: is Tesla an automaker or a tech company?In this article, I would like to share how I have come to find the answer.I will ...</p>\n\n<a href=\"https://seekingalpha.com/article/4580350-tesla-automaker-or-tech-company-my-take-and-my-investing-choice\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LU1861558580.USD":"日兴方舟颠覆性创新基金B","LU1861220033.SGD":"Blackrock Next Generation Technology A2 SGD-H","LU0820561818.USD":"安联收益及增长平衡基金Cl AM DIS","BK4511":"特斯拉概念","BK4099":"汽车制造商","LU1551013425.SGD":"Allianz Income and Growth Cl AMg2 DIS H2-SGD","BK4548":"巴美列捷福持仓","LU1861215975.USD":"贝莱德新一代科技基金 A2","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","LU0316494557.USD":"FRANKLIN GLOBAL FUNDAMENTAL STRATEGIES \"A\" ACC","LU0943347566.SGD":"安联收益及增长平衡基金AM H2-SGD","LU1720051108.HKD":"ALLIANZ GLOBAL ARTIFICIAL INTELLIGENCE \"AT\" (HKD) ACC","LU2357305700.SGD":"Allianz Global Artificial Intelligence ET H2-SGD","LU0234570918.USD":"高盛全球核心股票组合Acc Close","LU1861559042.SGD":"日兴方舟颠覆性创新基金B SGD","LU1839511570.USD":"WELLS FARGO GLOBAL FACTOR ENHANCED EQUITY \"I\" (USD) ACC","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","LU0823411888.USD":"法巴消费创新基金 Cap","LU0082616367.USD":"摩根大通美国科技A（dist）","BK4534":"瑞士信贷持仓","LU1551013342.USD":"Allianz Income and Growth Cl AMg2 DIS USD","BK4585":"ETF&股票定投概念","TSLA":"特斯拉","LU0056508442.USD":"贝莱德世界科技基金A2","BK4555":"新能源车","BK4533":"AQR资本管理(全球第二大对冲基金)","LU0719512351.SGD":"JPMorgan Funds - US Technology A (acc) SGD","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","LU0820561909.HKD":"ALLIANZ INCOME AND GROWTH \"AM\" (HKD) INC","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","LU2249611893.SGD":"BNP PARIBAS ENERGY TRANSITION \"CRH\" (SGD) ACC","LU0234572021.USD":"高盛美国核心股票组合Acc","BK4581":"高盛持仓","BK4527":"明星科技股","LU2063271972.USD":"富兰克林创新领域基金","BK4588":"碎股","BK4550":"红杉资本持仓","LU0823414478.USD":"法巴经典能源转换基金","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0097036916.USD":"贝莱德美国增长A2 USD","BK4574":"无人驾驶","LU2087621335.USD":"ALLSPRING GLOBAL FACTOR ENHANCED EQUITY \"A\" (USD) ACC","BK4551":"寇图资本持仓","LU0689472784.USD":"安联收益及增长基金Cl AM AT Acc","LU1852331112.SGD":"Blackrock World Technology Fund A2 SGD-H","LU1720051017.SGD":"Allianz Global Artificial Intelligence AT Acc H2-SGD","LU0198837287.USD":"UBS (LUX) EQUITY SICAV - USA GROWTH \"P\" (USD) ACC","LU1548497426.USD":"安联环球人工智能AT Acc"},"source_url":"https://seekingalpha.com/article/4580350-tesla-automaker-or-tech-company-my-take-and-my-investing-choice","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2313059413","content_text":"SummaryThe big dilemma about Tesla, Inc. lies in the answer to a question: is Tesla an automaker or a tech company?In this article, I would like to share how I have come to find the answer.I will share my investing choice, talking about Tesla's current valuation and potential investing alternatives.coffeekaiIntroductionTesla, Inc. (NASDAQ:TSLA) is one of those stocks - and companies - very difficult to write about without being caught in the fight between fans and haters. This is why, though quite interested in the automotive industry, I have been hesitant to writeabout it. In truth, there has been a lot of buzz about electric vehicles (\"EVs\"), and I think it hard to deny Tesla was a stock that experienced a lot of hype, leading to extreme valuations. This has made me cautious about it, as I know buzz and hype can be exciting but can lead to rash investing decisions.To be clear from the beginning of this article, I am no Tesla detractor. However, I am no Tesla investor, either. I do think Tesla is a great company, whose future is probably going to be quite bright. On the other hand, thereare a few things about the stock that rule it out of my portfolio where I actually own three other automakers.In this article, I will share for the first time my view on Tesla, hoping to present my thesis as objectively as possible. At the same time, I would like to show why I am currently building up a position in what seems to me an underestimated competitor of Tesla.The big question about TeslaThe first question I had to find an answer to assess Tesla was the following: what kind of company do I think Tesla is?We generally find two answers that revolve around these two concepts:Tesla is a tech companyTesla is an automaker.I know things can be more complex, but as far as my research goes I really think this is the crossroad where two different investing views and strategies diverge.I find myself agreeing with the second answer: Tesla is an automaker. This is somewhat supported by what the company states in its 10-k.We design, develop, manufacture, sell and lease high-performance fully electric vehicles and energy generation and storage systems, and offer services related to our products. We generally sell our products directly to customers, and continue to grow our customer-facing infrastructure through a global network of vehicle service centers, Mobile Service, body shops, Supercharger stations and Destination Chargers to accelerate the widespread adoption of our products. We emphasize performance, attractive styling and the safety of our users and workforce in the design and manufacture of our products and are continuing to develop full self-driving technology for improved safety. We also strive to lower the cost of ownership for our customers through continuous efforts to reduce manufacturing costs and by offering financial and other services tailored to our products.To be fair, these words are not only about electric vehicles manufacturing, as Tesla also claims to be focusing on energy generation and storage systems as well as on developing full self-driving technology (\"FSD\"). However, I see these other activities as necessarily linked to the manufacturing one. Tesla is indeed disruptive, and it has been a true pioneer, but I see it as the one company that redesigns what all other automakers will need to become to survive and thrive.Why do I think it important to answer this question? Simply put, it tells us what industry we think Tesla is a part of. This is quite important when we do a valuation of Tesla, as we need to look at the multiples of the industry.Tesla's financials support this view, too. In fact, if we look at the income statement streams chart, we clearly see how auto sales have the lion's share of total revenues, with $67.2 billion out of the total $81.5 billion (82.5%). If we consider the auto segment as a whole, including leasing and regulatory credits, Tesla earns 87.7% of its total revenues through activities linked to electric vehicles.created by incomestatementguy on reddit.itIn addition, it seems like Elon Musk himself thinks about Tesla as a \"volume carmaker\" in the \"automotive market,\" words he used during the last earnings call.Tesla's financialsIt is hard not to like Tesla's financials, especially if we look at their unfolding through the past decade. We have a CAGR revenue growth of almost 45%, while gross profit grew at a CAGR of 46.5% and EBITDA saw a stunning 81.6% CAGR from 2013 to the end of 2022.In recent years, the company has turned profitable, and since 2020 its net income has moved up from $721 million to $12.56 billion, which is a CAGR of 317.31%. This is what happens when a company finally reaches scale.Its balance sheet is strong, with just $1 billion of long-term debt and more than $22 billion in cash and short-term investments.Free cash flow (\"FCF\") is also strong, with $4.2 billion generated at the end of 2022 vs. the -$32.5 million reported at the end of 2013. The only flaw is that Tesla paid $1.56 billion in stock-based compensation (\"SBC\"), which actually makes the real free cash flow available to investors just $1 billion. In fact, as of now SBC is added to net income to calculate the final FCF, but, in reality, it is an expense that should be moved down to financing activities and be accounted for as an expense. Therefore, we have to subtract the amount spent on SBC twice to offset the current accounting rule that sees it as an addition, and then to subtract the real expense from the previous amount.However, on a positive note, Tesla seems to be reducing its SBC, since in 2021 it paid over $2.1 billion for this. But, still, the dilutive effect is sensible.In terms of profitability, the company is best in class. Here I would like to show one of my favorite graphs Tesla shares with investors. We see that, while the average selling price (ASP) moves down and then stabilizes around $55,000, the operating margin goes steadily up, coming in at 17%.Tesla Q4 2022 Shareholder DeckThis is another way to prove how it was vital for Tesla to reach scale, as it has done in recent years. Now, every dollar of additional revenue is more valuable because of increasingly good operating efficiency.Tesla reported 1.31 million cars sold in 2022 and expects to sell 1.8 million vehicles by the end of this fiscal year. Its plan was bold, targeting a 50% CAGR from 2020 to 2023. It is rather easy to think Tesla seems able to reach this goal.Tesla Q4 2022 Shareholder DeckSo, if everything is so bright, why am I not investing in Tesla?Why I am not a Tesla shareholderI have some perplexities about Tesla's expectations for the future, which inevitably impact my view of its valuation.Before we move on, let me state once again that I am no Tesla bear, nor do I think the stock should be shorted, even though it may have indeed reached a recent peak. However, this is not my investing style, since I look for companies to hold for a decade or two.Let me share what I am thinking about Tesla's upcoming years.The first thing I wonder about is linked to what automotive segment the company wants to address. We saw how Mr. Musk considers Tesla a volume carmaker. But we don't know exactly what kind of volume carmaker Tesla wants to be. Does it aim at being an 8 million one, like Volkswagen (OTCPK:VWAGY), General Motors (GM) or Toyota (TM)? Does it aim at selling between 2 and 3 million vehicles per year, like Mercedes (OTCPK:MBGAF) or BMW (OTCPK:BMWYY) do? The answer to this question is quite important for a forecast.Currently, Tesla manufactures four vehicles: the Model 3, Y, S and X. While Model 3 and Model Y have a base price for mass-market appeal, the other two don't. Still, both Model 3 and Model Y have a starting selling price between $40,000 and $60,000, which is not exactly the price range to address all consumers. The other two models have a starting selling price around $100,000.Tesla has written more than once that it is committed to making its manufacturing process more efficient to bring down the average selling price. However, there are other automakers that are able to sell electric vehicles at more affordable prices. Tesla may start manufacturing subcompact vehicles, but this would benefit mostly volumes over margins, as that segment is highly competitive and many automakers are already or will soon be producing electric cars for this market.The other option is that Tesla turns into a premium volume automaker. This will make it compete with brands such as Mercedes, BMW, Audi, Lexus and others. While this is a higher margin segment, volumes are a bit lower, with Mercedes and BMW selling about 2 million vehicles per year. Tesla may do a bit more, but I don't see it grabbing away from brands with such a strength all their market share.In fact, Mercedes' electric car portfolio seems to be already richer than Tesla's.In other words, I have a hard time thinking Tesla will be able to grow significantly among premium brands without finding hard competition with well-established and highly-appreciated brands.On the other hand, Tesla has the advantage in that it doesn't have to cannibalize its old models, while all other OEMs do. However, while we are seeing the same thing happening with Netflix (NFLX) and its other streaming competitors, where the latter have to cannibalize their profitable cable business to build up their own streaming platform, in the case of automakers, the shift toward EVs is actually generating higher profitability.My take: The issue with Tesla's valuation and what already I own instead of itIt may not sound that original saying that what keeps me from investing in Tesla is its sky-high valuation. But let's recall that oftentimes the easiest and most renowned investing principles are forgotten when buzz and hype take place. For sure, Tesla is exciting and this is why we should double down and caution.On my side, I don't immediately run away from a stock because I see a high P/E or a high P/FCF multiple. For example, staying within the automotive industry, I own Ferrari (RACE). I would never compare Ferrari to Tesla. They are too different. But it is just an example to show how I am willing to pay a higher price when I think it is worth it.However, the big difference I see between Ferrari and Tesla is that Ferrari's future results are much more predictable than Tesla's. Still, a jewel like Ferrari trades a lower multiples compared to Tesla: Ferrari trades at a 39 fwd P/E vs. Tesla's 58, its fwd EV/EBITDA is 21.4 vs. Tesla's 31, its P/FCF is 37.3 vs. Tesla's 44.8. And this happens while Ferrari's profitability metrics are better than Tesla's: 24% EBIT margin vs. 16.8%; net income margin at 18.4% for Ferrari while for Tesla it is at 15.4%, return on equity of 40.6% for Ferrari and at 32.5% for Tesla.Coming down to a more realistic comparison, so that we don't risk to mix apples with oranges, let's look at Mercedes and compare it to Tesla (in bold is the better result between the two):Tesla is the winner, but Mercedes is not very far behind, especially as we move down the income statement. Now, let's see how the market prices Tesla's leading position compared to Mercedes:To me, the difference is too wide, especially if we consider Mercedes' high-quality strategy that is effectively managing to increase the company's profitability.This is why I actually own Mercedes as my favorite pick among premium luxury automakers.My third pick - even though, as I have tried to explain, I think we are once again at risk of comparing chalk and cheese - is Stellantis N.V. (STLA). If we look at automakers that produce affordable vehicles truly addressed to customers without deep pockets, then I think the Stellantis bull case almost speaks for itself as soon as we look at its financials and at its multiples. We are talking about a double-digit margin automaker, with incredibly skilled management, lots of tailwinds going for it (i.e., synergies), low geopolitical risk, etc. trading at unreasonable multiples of a 3 fwd P/E, a 1.2 fwd (EV/EBITDA) and a 2.3 P/FCF. I am not kidding. The company trades as if it were to go bankrupt tomorrow, while it is swimming in cash.Let me share my discounted cash flow (\"DCF\") model on Tesla, just to check if my thesis may be supported by future cash flow. Even projecting a 5 year free cash flow (\"FCF\") growth rate of 45% and then assuming a 9% perpetual growth rate (very generous assumptions), I still find TSLA stock should not trade over $150.Author, with data from SA and own future forecastAs I said, it is not my investing style to short a stock or make short-term trades. I am in for the long term. But I think Tesla, Inc.'s stock got a bit ahead of itself, especially given the fact that it has reached such volumes that will make it harder for the company to keep on growing at the fast pace investors are expecting. Many investors have for sure gained a lot of money with Tesla stock, while many other have lost a ton of it. As for me, I keep on studying Tesla, Inc. as an investor interested in the industry, but I don't see TSLA stock as appealing as other opportunities. This is why I rate Tesla, Inc. as a hold.This article is written by Luca Socci for reference only. Please note the risks.","news_type":1},"isVote":1,"tweetType":1,"viewCount":134,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"defaultTab":"posts","isTTM":true}