Is Tesla’s Valuation Ludicrous? Or Is the Company About to Go Plaid?

Ed Ponsi and Jason Meshnick break down what you need to know about the bullish and bearish case in Tesla. Who's right? We'll know in the fullness of time. Until then, both Ed and Jason agree that an investment in Tesla is not something you can put on Autopilot.

Summary:

Tesla made its money selling cars, but it’s future fortunes lay in AI, robotics, and synergies across Musk’s ecosystem
But is Tesla worth buying at these prices? Shares trade at a premium price and the technologies Musk says are the company’s future are unproven.
We break down the answers to these questions and more below.

Transcript:

Jason Meshnick (00:03.702)

Okay, take one.

Hi everybody, thank you for joining us today. I am Jason Meschnick, the CEO of the Street Pro and we are here to discuss Tesla. Now before I introduce our guests, I just want to say quickly for those who are new to the Street Pro, we are the top site for news and research on stocks and investing. We have a team of 14 analysts and traders who provide their research and opinions on everything from stocks and ETFs, to geopolitics and crypto. We publish throughout the day, every day. So anytime you're looking for any sort of information, we feel that we are the best resource. Not only that, when you join the Street Pro, you are joining an amazing community of people who talk about markets with our team. So as all of our members have access to talking to people like Ed Ponzi, who is joining me today to discuss Tesla. let's start by...

Ed, do you want to introduce yourself and talk about who you are and how long you've been with the Street Pro?

Ed Ponsi (01:13.452)

Well, hey, it's good to see you again, Jason. Always a pleasure. My name's Ed Ponzi. Yes, it's my real last name. I always love it when people say, is that your real name, as if I changed it to Ponzi. No, I did not change my last name to Ponzi, I assure you. Anyway, I started trading 30 years ago.

Jason Meshnick (01:18.487)

Always a pleasure.

Jason Meshnick (01:29.327)

Ha ha.

Ed Ponsi (01:38.578)

I had no idea what I was doing at first, but I managed to get to Wall Street about 25 years ago and had a nice career on Wall Street. Much more laid back these days, enjoying the suburban life a little bit more. And one fun fact about me that you may not be aware is I used to play lead guitar in a rock band. So there you go. All right. So that's who I am.

Jason Meshnick (02:02.392)

Yes. with that, so you can't just leave it there. What's your favorite kind of music? Who's your favorite band? Who should I be listening to?

Ed Ponsi (02:11.675)

Well, those are different questions, but I would say I got started out as a teenager, listening to my older brothers, Led Zeppelin and Jeff Beck and all the great guitarists, Clapton and Hendrix and all those guys. And I sort of went down that line and started out pretty much blues. Spread out a little bit as time went on, a little bit more of a Brian May type thing, adding a little bit more classical, but it's all just for fun. But I do love music and I do love being involved in the market.

Jason Meshnick (02:54.55)

Awesome, that's great. Okay, and so how long have you been with the Street Pro?

Ed Ponsi (03:01.068)

Gosh, probably about 15 years ago, I ran into Stephanie Link in the green room at CNBC. And she asked me if I would be interested in writing, because I've written three books for Wiley Finance. And she said, you know, I could use someone who writes articles. And I thought, well, that would be terrific. And of course, I haven't spoken. Stephanie's been gone for quite a while, but I'll never forget that meeting.

It was at that same evening that same evening that I taught a presidential candidate who was also in the green room. I taught him about Fibonacci that night while we both waited to go on the air. And so that's something that I'll never forget, although the gentleman's name does escape me.

Jason Meshnick (03:47.534)

So it sounds like he did not win the election.

Ed Ponsi (03:52.416)

He was doing pretty well and then he was at a press conference and he yelled, yee-haw. And for some reason, everyone turned against him on that. Do you remember who I'm talking about?

(Editor's note: Ed was referencing Howard Dean)

Jason Meshnick (04:03.609)

that's I remember and his name is escaping me right now as well. That was very famous because he was leading. Anyway, I'm sure that someone, one of our viewers right now will write in and tell us, remind us exactly who that is. And I'll probably remember the second we hang up, if not before. Yeah. Yeah. Well, that's a great story. Okay. So what we're going to do today is we have a few questions. We're really

Ed Ponsi (04:08.756)

Same.

I'm ready.

Ed Ponsi (04:21.725)

Exactly.

Jason Meshnick (04:32.823)

talking, Ed, you wrote an article recently, you've written a couple of times about how you are bullish on Tesla, you actually own Tesla. I have written several times, not so much on the street pro, but I also write every week for for tip ranks, our parent company. And I have written how I am, I wouldn't say I'm necessarily bearish on on Tesla, but I'm anything but bullish. I sort of feel like it's it's an avoid. So I want to start with you.

And what we'll do is we'll talk about, you know, I'd like you to introduce who Tesla is, what the company is, what it does, and then get into your bullish case for Tesla. So do you want to kick it off with who is Tesla?

Ed Ponsi (05:14.752)

Okay, well, the way I look at it is that you and I might not actually disagree that much, except our timeframes might be different because I think Tesla, the automotive company, certainly has its share of problems, certainly has its share of issues. But the game plan to turn Tesla into a $10 trillion company is, I don't believe that's going to happen through EVs.

I think that happens through FS, through full self-driving. I think it happens through optimists. And when I think of optimists, not too many people are talking about it, but I remember I got my first iPhone. got the iPhone, my wife bought me an iPhone too many years ago. I think this is a 17 now. And when you think of all the things that an iPhone replaced, like a camera, a video recorder, a flashlight, an iPod, right? And a variety of other things that really people don't need anymore because they have an iPhone. And you wonder, you know, if a humanoid robot could become something similar in that maybe, like I could use a haircut, I'm getting a haircut tomorrow, maybe it'll learn how to cut my hair.

Maybe it'll learn how to fix my HVAC unit if it goes on the fritz, right? Or put a new roof on the house. Maybe it'll clean my teeth. You you think about all of these possibilities and it's, yes, it's a more distant future, but aim high, right? Musk sees Tesla as a $10 trillion company. Today it's $1.1 trillion. So if he's right, that's a $3,500 stock. If he's half right. It's a $1,750 stock. And that's the way I look at things. I don't assume he's going to hit his target. But I think if you aim really high, you have a chance, you know, to really go beyond, even if he makes it a $3 trillion company, it's $1,000 stock. But it's not I don't think it's going to happen from EVs. That's just it. I think the EV situation is problematic. And now you take a look at SpaceX, right?

Ed Ponsi (07:36.831)

SpaceX will go public later this year and it will probably the day it goes public it will probably have an a value of greater than 1 trillion maybe some maybe 1.5 trillion that would mean it would have a higher market cap than Tesla on day one. All right. So how does that happen? Because you're entering into an area that's wide open.

right? Rocketry, wide open. And that's where I see human humanoid robots. You know, the automotive area is too crowded. My neighbor's going to buy an F 150 every two years, no matter what, it doesn't matter what Tesla or any other company puts out. He's going to buy an F 150 every two years. He'll joke to me, yeah, the ashtrays were full, and he'll buy another F 150. And that's all there is to it.

And I get it. Ford's been making cars since 1903. GM's been making cars since 1908. Everyone has a favorite automotive company. But let me ask you, what's your favorite humanoid robot company? It's wide open. It's wide open. That's where I think the opportunity is. That's the road to becoming potentially a $10 trillion company, but maybe even a $3 trillion or a $5 trillion company. I wouldn't be sad about it.

So that's anyway, that's where I think the opportunity lies.

Jason Meshnick (09:06.688)

Yeah.

My favorite humanoid robot is Rosie from the Jetsons. So when we get there, I think that could be a good thing.

Ed Ponsi (09:13.334)

Hahaha!

Excellent.

Jason Meshnick (09:20.396)

Yeah, I think that's a good point. One thing that you didn't touch on though, you touched a little bit on SpaceX, which should be going public soon. And I've actually received calls from people I know who are not at all investors, right? know, a friend of mine who is soon to be retired this month. He's in his last days of working, you know, a blue collar job that he's held for decades.

Ed Ponsi (09:21.565)

you

Jason Meshnick (09:49.845)

And he is excited for time off, but he called me to say, hey, I got to figure out how to get in on this SpaceX thing. So there's a ton of hype and you SpaceX, you're right. It is a completely unique company. I'll say it's probably my favorite non NASA space company. It's the only one I really know. But it's also going to go public with an insane valuation, right?

Ed Ponsi (10:10.683)

Yeah.

Jason Meshnick (10:18.55)

But the bigger issue there is, and you've touched on this in your article, is that the bigger case for Tesla, like you said, it's not about the cars, it's about the combination of things. You mentioned in your article that had you bought, I forget how much, $25,000 worth of SolarCity back in the day, that would now be worth, I can't remember what the number was, but hundreds of thousands of dollars, right? It would have been 110 shares of Tesla, that would now be worth a significant amount of money.

So can you talk a little bit about the synergy across all of Musk's companies? And part of his goal, correct me if I'm wrong, but it's to combine XAI, which is Twitter plus his AI company, plus Tesla, plus the satellite company. That's all SpaceX, isn't it? And what's the...

the one where we get the internet through. Is that SpaceX as well or the satellite Starlink?

Ed Ponsi (11:18.206)

Starlink, which I believe is part of SpaceX. But I think that's a great point. I think one of the reasons why you see high valuations for SpaceX and Tesla is because of synergy. And it's a type of synergy that I don't think I've ever witnessed before. Because people forget that Tesla purchased Solar City

Jason Meshnick (11:23.029)

Okay.

Ed Ponsi (11:46.877)

which was, if I'm not mistaken, founded by Musk's cousins. And also that XAI acquired X, which was Tesla, well, I'm sorry, which was Twitter at one point. And it's all very intertwined. Is that, that I feel like the synergies are ridiculous. If you can even think it through, you know, you've got 11,500 Starlink

Satellites, how can we use that to benefit Tesla if there's an edge there? He will find it and he will exploit it and that's that's really the point of all of these combinations right is that there's always there's always these edges that you can exploit and So and I don't know if there's a way to properly put a valuation on that because I can't think of another company

that is an EV, if you think of it as one big company, you've got Rockets, you've got Neuralink, you've got the Boring Company, you've got XAI, you've got X, and X could become more of a banking, more like a PayPal, which was Musk's portion of PayPal was originally called X. So all of these things, I don't think they're going to be siloed.

Okay, I don't think they're going to exist independently of one another. I think any way that one of these companies can benefit from something else from one of these other companies, I think that edge will be used. And that's one of the reasons why you have these admittedly high valuations because the expectations are very high. Okay. And, and, yeah, you're also pinning it a lot of your hopes on one guy, you know, which is a little scary, right? Because, you know,

We're all just human. you know, but based on, you know, when I think of creating the largest IPO ever in US history, not in, not in global history, right? You had a Saudi energy company with a, that was a trillion dollars on day one, but SpaceX will be the largest IPO in US history, probably this summer. And

Ed Ponsi (14:13.177)

Why? Because it's that wide open space. I agree, NASA was always my favorite, but I never even heard of SpaceX until a few years ago when I was a little kid. It was all about NASA, But look at who's flying circles around NASA right now. then you've got this network of over 10,000 satellites. And how can we use that? How can we use that to Tesla's benefit?

all of it will work together. That's why I think you're getting these admittedly high valuations because the expectations are very high, but the track record I think is very good. And even though the track record is not a 100 % track record, it's like I said, you aim high. And even if you don't hit the target, say, you you aim for the moon, you might hit a star, right? Something like that. Or a star link.

Jason Meshnick (15:08.139)

Or Starlink. You might hit a Starlink.

Ed Ponsi (15:11.811)

Hahaha!

Jason Meshnick (15:13.483)

Yeah, I remember the first time I really experienced SpaceX, we were driving through the Mojave Desert on our way to visit family. And all of a sudden, was right around the time, several years ago, and the North Koreans had been saber rattling. They'd been talking about how they were going to bomb the United States. And all of sudden, we're driving, it's late at night, it's dark, and all of sudden we saw this really spooky thing flying up through the air. And then we saw explosions and it turned out, we didn't know at the time, but it turned out that it was a SpaceX rocket going up in the air. And then those little explosions that we saw were, I believe, stages of the rocket separating. Completely amazing experience. Terrifying in the moment. another thing that you mentioned, you mentioned Elon Musk.

Ed Ponsi (15:59.186)

Wow.

Jason Meshnick (16:08.837)

And you mentioned, so this really comes down to this one man who was a visionary and many other things, but he has a vision for this. What happens to all of these companies if something happens to Elon Musk?

Ed Ponsi (16:12.931)

Okay.

Ed Ponsi (16:24.453)

That's the gamble. In my opinion, that's the gamble is that, you know, either there's so many things that can happen to us as we grow older, you know, I mean, I think the older you get, you know, your best friends become doctors, you know, there's so many things that can happen. It's a shame, but it's true. know, everyone goes through it. So that that's my greatest concern for Tesla is that, you know, if

It's like Steve Jobs at Apple, right? It's the closest comparison that I can think of. And Apple has done well after Steve Jobs, but we really don't know. know, Apple's one company. And I think that would be my greatest fear, quite frankly, is that something would happen to his health over time. You know, so yeah, that's...

You know, if you're a bull, I think that's your Achilles heel, so to speak. That's what you're worried about the most is that something happens to him physically or otherwise. And, you know, and that's that's there's no getting around it. There's no getting because again, you have we talked about the synergy of all these different companies, but all these different companies are basically, you know, at the heart, they're one guy. And that's scary. That's a scary foundation.

Jason Meshnick (17:53.674)

It is, yeah. Yeah, the amount of power and control that he has through these and of these companies. Yeah, he really is the leader and visionary in so many different ways. Okay, so with that, one of the things I think is a risk too is that, and I think you're really talking about this, is that the company is basically a startup, right? So you've got Tesla, this company that's now,

I don't know how long it's been public for more than 10 years. And so they've been successful as a car company. They really changed the automotive landscape. These Chinese companies like BYD that are making some of, apparently I've never driven one, some of the best EVs out there with some of the most innovative technologies, must have really changed the automotive landscape in so many ways.

Ed Ponsi (18:27.203)

Mm-hmm.

Jason Meshnick (18:52.331)

But now Musk is, and you're saying this too, that the automotive landscape or the automotive business isn't really the key for Tesla going forward. It's all these other businesses and all these other things that he's layering in. So it really makes this company the most expensive startup out there. What do you think of that?

Ed Ponsi (19:14.902)

I think that it's a fair point, you know. I think really it comes down to how much you have faith in the vision for optimists, which Musk believes will be the most popular product of any kind ever invented. And hence, that's why I was discussing earlier about how the iPhone changed the world and it changed the way, you know, so many different things and it made so many things obsolete. you know, if, if Optimist, know, people see Optimist folding shirts and they say, that's not really very exciting. And I'm not going to pay, you know, a hundred thousand dollars or however much they are going to cost to have to have something do my laundry. But, you know, once it starts to do your landscaping, it gets a little more interesting, right? And why not? You have to think it will progress over time. You know, it's going to, I think you know, that it's going to do more than just your chores. think maybe it does after a while, maybe it can do minor household repairs. At night while you sleep, it guards your house. mean, it could, I just think that the potential is greater than people give credit. We just have to use our imaginations a little bit and think, well, you know, if you were Elon Musk and you were creating a humanoid robot, what would you make it do? You know, I'm not very handy. You know, if my HVAC goes on the fritz, I want it.

I want to put a new roof on my house. You know what I'm saying? you know, I imagine it doing a lot more, I think, than probably what we give it credit because it's going to take time. And there might be a gulf there, right? There might be a gulf where the stock suffers because it's going to be a difficult transition and it's going to be a long transition. But, even you mentioned BYD.

Jason Meshnick (20:46.771)

Right.

Ed Ponsi (21:09.641)

Even BYD is having its problems. It's a tough business. Companies like Tesla and BYD might get a little boost from the price of oil being a little bit higher now. May have hurt sales over the past year or two because the price of fuel was down. price of fuel going up, people are very conscious about that. because I guess it's because you drive down the road and you see that price lit up everywhere you go.

So I think it's just part of the consciousness and people say, well, maybe I should get a Tesla or a BYD or something that doesn't burn fuel in the same manner that my Ford F-150 does. now you drive a Tesla,

Jason Meshnick (21:58.613)

I'll say I have a Tesla, my wife drives it and she loves the car. The things that she loves about it, she does love EVs and I'll say as a car person, I love EVs as well. love gas burning cars too, but for very different reasons. For all my day to day, know, and I drive one of my favorite cars I've ever owned. I have a two or three year old Mini Cooper EV.

So it's small, it's built on the Cooper S chassis, so it's nimble, but I love the fact that I can park it. I love the fact that it's almost brainless, which is the same thing with the Tesla, right? That's what my wife loves about it is, you get in the car, the software is so good. If she gets in the car, if I'm driving, we're going somewhere together, and she gets in the car on the passenger side and I get in on the driver's side, and let's say she got in the car first. And so in most cases, the car sort of wakes up and it knows, okay, Tina is in the car now. The Tesla is smart enough to know that when I go around to the passenger side, that, Jason is actually going to be the one who's driving. And so it moves the seat, it puts on the radio station I was last listening to, et cetera. It knows where I am in the car. And I love all those features about the car. The build quality is...

Ed Ponsi (23:12.791)

Mm-hmm.

Jason Meshnick (23:21.29)

it's lacking a lot, right? So this is, have a five year old Tesla now and you know, I will say, is it the worst build quality I've ever had? No, but it's far from the best also. So there's so many good things with that, but one of the things I want to move to though is I want to talk about the analyst ratings, okay? And then, and then get into a few other things, some of the bear case. So I am going to share

Ed Ponsi (23:34.677)

Mm-hmm.

Jason Meshnick (23:50.889)

share the screen of, I've set this up, this is TipRanks. TipRanks is the parent company of the StreetPro. And one of the things that TipRanks does really, really well is aggregate a lot of data, but some of that data includes the analyst ratings and they come up with a consensus. So right now, today, Tesla's trading around $350. And we can see that there are 30 analysts who are rating Tesla stock.

There's a really big dispersion of the ratings, right? We have 13 analysts who have it on a buy, 10 who have it on a hold, and seven who have it on a sell. So I took a look at that and I think it's really interesting to see the consensus is that the stock has about a 15 % upside. That's not really earth shattering here. Analysts are always pretty optimistic. The most optimistic, which might be Dan Ives,

It has a 600 price target, but the most pessimistic thinks the stock is only worth $25. So I think that's a really interesting thing to note. The other thing that I wanted to share, and actually when I took a look at the sell, so not all of the bearish analysts are as bearish as $25, but they actually have a

The consensus of all the cell analysts is, and I wrote this down somewhere, I need to find this. The cells actually feel that the stock, so JP Morgan thinks the stock could fall by 60%, Wells Fargo thinks it could fall by 64%, but basically they are looking for, well, down 40%. You know what, I actually didn't write down what the consensus of all the cells are, but basically they're all pretty bearish to the tune of 20 to 40%.

plus this one person who thinks the stock is only worth $25. Some of the reasons why is they're looking for a revenue decline of 3 % in the next 12 months. That is a consensus across all analysts. And they're actually saying that their earnings per share could lose 47%. So those are some things that are pretty big negatives. One of the other things I wanna touch on, and I'm just going to flip over to sharing the stock chart.

Jason Meshnick (26:18.925)

And this is something that I think is really interesting about Tesla is that when we're talking about this company that everyone thinks that I was talking with actually my dad earlier today and he's a pretty sophisticated guy, but not just a regular investor. And I said, so, you know, in the last five years, how much is Tesla up? And he said, I don't know, but it's got to be a lot. And well, when you look at this chart, Tesla set an all time high back in 2021 of $400, right? And then it fell, right? It fell dramatically into 2023, bottomed out around $100. And then it was after the election last year, and as we know, Elon Musk was very involved in helping to get Donald Trump elected. And people said, well, know, Elon Musk is in the White House. This has to be a great thing for Tesla stock and shares ripped higher, $488.54. That was the new all-time high. And then right now, towards the end of last year, the stock hit 498.83, right? The thing is over the last five years, since that new high in 2021, the stock has been up as much as 20%, right? Now it's at 350, it's actually down from those highs, it's actually back to levels that it's been at for multiple years, but that it first hit back in 2021. So it's one of the reasons why I say that this stock, even though there's been so much speculation around it, it's really a great trading vehicle. As an investor, it's been dead money. So that's one of the things that I wanted to share. The interesting thing though is that the lows have increased from a hundred bucks in 2023, and then on up to the most recent, maybe this is an interim low. I don't know, maybe it has further to go, but the lows have gone up by 250 % or so, is great. So sort of your downside risk is improving.

Ed Ponsi (28:22.791)

Everything you said, don't disagree with any of it, but you can clearly see higher highs and higher lows on the chart. But of course, like you said, we can't say that this is the low, right? Because that's where we are in the present. We're on the hard right edge of the chart right now. So it obviously could go lower. But just from the way the chart looks right now, what I see is a volatile stock. goes, like you said, a great trading vehicle because it's very volatile.

But, know, but also look, look over a little farther to the left. You know, I can remember when TSLAQ was basically a meme on Twitter and on stock tweets, you know, people would, would tag instead of TSLA, they would tag TSLAQ. And for the folks out there who are not aware of it, a Q is an implication of declaration of bankruptcy.

that these people were declaring, you know, basically that Tesla would eventually be forced to declare bankruptcy. And I hope they, if they were short, I hope they covered because if they didn't, their trading careers ended that day. I mean, you look at the, if you look at it from the left to the middle of that chart to where it went to, that's a massive, massive gain. And yes, it's volatile.

Jason Meshnick (29:37.566)

Yeah.

Ed Ponsi (29:53.359)

Yes, there are highs and lows. And like I said, think a lot of the people that are putting sell ratings and maybe low target prices on this stock, really think they're viewing it like an auto company. I think in the short term, it's an EV company, but in the long run, it's a lot of other things. And I think autos just becomes a small part of what Tesla is in the future.

That's really the way I look at it.

Jason Meshnick (30:22.888)

Do you remember?

Ed Ponsi (30:26.503)

Go ahead, I'm sorry.

Jason Meshnick (30:26.994)

Do you remember at that time during the Tesla Q period, I remember following the stock pretty closely back then. And one of the things that was driving the stock higher was, do you remember this? was options. It was actually a lot of the Tesla bulls, a lot of the retail bulls were trading options in Tesla. And it was forcing the options market makers to take the other side of those trades. And it meant that they had to

they're doing, I believe it's Delta hedging in order to lay off a lot of that risk. So the options market makers were being forced to buy Tesla shares. And that was one of the things that drove the stock so much higher in this period. And I wanted to ask you, I am far from an options expert in this way. This was just something I was reading back in the day. Is that something that is happening very much today? Do you know?

Ed Ponsi (31:24.185)

You know, I think a lot of that is kind of hidden. But there's so much noise in the market. I think it's difficult to say if that's what's happening. You know, if you're referring to the general bullish nature of the market.

I think it's liquidity driven. And this is something that I think we've touched on in the past is that, you know, recently M2 hit an all time, the money supply hit an all time high. Hey, remember quantitative tightening? Well, you're trying to clean up the ocean with a Q-tip. It's not working. And in fact, it's, it's, they threw the Q-tip away, right? So I think a lot of this is liquidity driven and I think you have to own assets.

You that being said, just the fact that SpaceX is coming public later this year could push a lot of large cap stocks down, including Tesla, simply because you're going to have to create, you know, you, you need money to buy to buy SpaceX. It's going to have to come from somewhere. So I wouldn't be surprised if we, could put a little bit of pressure on, on Tesla and some of the other big names, the mag seven stocks, but

Who knows where they'll be trading when that pressure occurs. So I don't want to say lower from here. There is some support around 343 and we got a little bounce off of that level recently. This is on the daily chart, but you know, it's not, it doesn't look great. I'm the first to tell you it doesn't look great. The chart earnings on the shorter term earnings are coming next Wednesday. Right. And, so

I'm looking forward to getting updates on a lot of different things, including, of course, that I'm very big on Optimus, but also 14.3 is rolling out and the low-cost version of Tesla, which we all thought was dead, might not be dead according to recent reports. The CyberCab, I want updates on all of this.

Ed Ponsi (33:37.051)

But yeah, obviously this stock could fall further. But I think liquidity is helping the market in general. But I wouldn't be surprised if the SpaceX IPO sucked some liquidity out of some of these big names. I think it's inevitable, actually.

Jason Meshnick (33:56.243)

Yeah, I think that SpaceX, yeah, I think that IPO and the liquidity argument is a really good one. You know, if you're an Elon Musk fan and you already have your full Musk allocation invested in Tesla, you'll probably consider, especially now that you may have some losses, right, or break even, this might be a good time for some of those people, or they might be considering diversifying away from Tesla and into SpaceX.

Ed Ponsi (34:03.483)

Mm-hmm.

Jason Meshnick (34:24.712)

But I wanted to ask you to, okay, so I wanted to, or yeah, did you have something you wanted to say on that? Okay, great. So there are a couple other things I want to say and I'm going to, well, yeah, I'm going to remove the chart here and I'm just going to say a couple of other things around Tesla. So when we talk about valuation, right, the stock, as you mentioned, has a $1.1 trillion market cap. I took a look.

Ed Ponsi (34:29.816)

No, no, no, go ahead, go ahead, that's fine.

Jason Meshnick (34:54.472)

at the other, so the 20 largest companies out there. And Tesla was the only one that had a PE over 100, right? So the stock is hugely more than fairly valued. But if we think about from a price to sales perspective, the company is trading at 15 times trailing granted revenues. so the stock is definitely not trading on trailing revenues. But I always go back to that quote from Scott McNeely.

Ed Ponsi (35:07.441)

Okay.

Jason Meshnick (35:24.2)

after the dot com bust. So Scott McNeely was the CEO of Sun Microsystems. And I don't remember all the details, but he has this famous quote where he's talking to professional investors. And the professional investors basically said, hey, you should have warned us that your stock wasn't as strong as we thought it was. And he says, and I'm completely paraphrasing here, but he says, hey, the stock was trading at 10 times earnings. Shame on you for buying it.

Right? For the stock to be worth it at 10 times revenues, that means that for the next 10 years, I would have to be selling the same amount of product that I am right now, but not paying my employees, which is a crime, not paying taxes, which is a crime, potentially, not paying my suppliers, which they wouldn't put up with, et cetera, et cetera, et cetera. Right? And that's purely to give you, you know, to pay the shareholders back and give you

Ed Ponsi (36:01.044)

Okay.

Jason Meshnick (36:20.591)

give you the money that you're paying for right now. So Tesla is trading at 15 times revenues, which means that for, if we were to have a 15 year payback on those shares, that means that Tesla basically has to either grow significantly from where it is today, or they have to stop paying their bills and paying their employees, which at a time when currently the stock is the revenue.

Ed Ponsi (36:39.717)

Mm-hmm.

Jason Meshnick (36:48.699)

growths is negative. Now they do have $44 billion in cash that they can use to create this robotic future and combine with all the others. But I wanted to ask you, have you bought any other stocks trading at 400 times earnings or were the price to sales of 15, specifically a company that was a little bit more mature like Tesla is? And if you did, how'd that work out?

Ed Ponsi (37:13.863)

Well, I tend to be more long term oriented. I would think, listen, it's not that I would necessarily think of it that in that way. But just remember, when we're looking at things like trailing earnings and revenues and price to revenues, we are looking at Tesla as an auto company. We're looking at

rearview mirror stuff and you know and yeah I think if you if you assume that great things are not going to happen in the future then then the stock should probably trade a lot lower but the only reason that valuation is there is because they're trying to they're trying to figure out a way to price in a part of the company that probably becomes the dominant part of the company that doesn't even sell any products right now and doesn't really basically barely exists at this point. Right. So, you know, I'm very interested to see the updates next week when earnings come out, but I don't think it's going to happen tomorrow. And I think you could go through a rough period, but I would I would really think of it. You know, I was thinking about the JP Morgan.

Prediction that I think it's going to 150 or 160 or something something like that. And I would just think wow, that would just be a massive opportunity. If that stock were cut in half, it would have a market cap. Of a half a trillion and. Even if. Musk doesn't hit his 10 trillion market cap. Target maybe he only makes it halfway. To a $5 trillion market cap target now that's a 10 bagger.

If it becomes a half trillion company, it's a 10 bagger. it's from half a trillion to five trillion, from half a trillion to 10 trillion, it's a 20 bagger, but it's gonna take time, right? It's gonna take a lot of time. maybe I watch too much Star Trek, I don't know, but I think it's doable. I think it can happen. just know it's not going to happen overnight. And I know there's gonna be a lot of gnashing of teeth over how many.

Jason Meshnick (39:12.07)

Yeah.

Ed Ponsi (39:24.928)

vehicles they sell and how many get delivered and and Basically to me that's all rearview stuff. I'm looking down the road so to speak Yeah, I think you could create some excitement with Roadster I think you could create some excitement with cyber cab and and you know, maybe that's enough just to keep going Until you get to the point, but I thought it was very interesting I thought it was very interesting that the S and the X were discontinued

And that, you know, that suddenly and suddenly production space is becoming available, you know, potentially for optimists, you know, and that's something that I think, you know, again, I'm really looking forward. I don't really want to pass any judgment until next Wednesday. I'm dying to see how this comes out and what information is given out. And it's going to be after the close on next week on Wednesday because I do think it's a bright.

Jason Meshnick (39:55.91)

Right. next Wednesday.

Ed Ponsi (40:22.274)

I think it's a bright future, but I don't know if it's a bright near future, but I think it's very bright future.

Jason Meshnick (40:29.671)

I think that all makes sense. I'll throw out there one other item on the bullish case that I haven't heard from anyone. And I think it's sort of an obvious one too, is that Tesla is part of the S &P 500. We all own shares in Tesla, right? In our 401Ks or whatever it happens to be, if you own an index fund, you have a position in Tesla. So from my perspective as an investor, I feel like, well, I don't really need to own more Tesla because I already own it there. But

Ed Ponsi (40:45.774)

Mm-hmm.

Yeah. Yeah.

Jason Meshnick (41:00.363)

If Tesla does nothing but stay part of the S &P 500 and the S &P 500 doubles over the next five years, makes, if the S &P 500 doubles five, 10 years, whatever it happens to be, that's already a tailwind pushing Tesla stock price higher. So I think there are some great things from that perspective. But Ed, this has been incredibly informative.

And I think you're right. think so much of the reason why Tesla is up isn't because of its current business. It's because of the potential that it could be. I think the argument all comes down to whether you believe the current valuation supports, or at least whether the current valuation supports having given you an opportunity to make money in the future, or if you think the stock needs to fall a little bit more before Elon Musk's vision comes to fruition.

I think we should leave it there. And I really appreciate your time today. So I just want to say thank you again.

Ed Ponsi (42:04.717)

Jason, thanks for having me on and may we all enjoy a brighter future. Thanks, Jason. I appreciate your time.

Jason Meshnick (42:14.277)

Alright.

Yeah, thanks, Ed.