dave1619

But overall, I suggest those who seriously want to know what kind of car the Model 3 is, is to test drive the car. And to ask Model 3 owners about the car. The vast, vast majority of Model 3 owners I've talked with tell me the car is truly amazing.

1. Traveling and living overseas for over half of my twenties. Gave me a world and multi-cultural perspective.

2. Getting emotional healing from an abusive childhood. Gave me confidence to pursue life from a place of healing and peace.

3. Getting married to my wife who I share everything with, including being work partners.

4. Having children which has opened up a whole new aspect of wonder, curiosity and adventure.

Corolla sales are above 1.2M per year.

The 900k number is Model 3 and Model Y.

2020 deliveries: 1M vehicles (according to company guidance) Average sale price per vehicle: 900k Model 3 and Model Y x ASP $42k = $37.8B. Plus 110k Model S/X x ASP $90k = $10B. Total revenue $47.8B

Gross margin = 25% (company guidance is 30%+ for Model S/X and "mid-20s" for Model 3/Y).

Gross profit = $12B

Operating expenses = $6B (note: It's difficult to predict operating expenses 3 years out, but Tesla will likely experience a lot of operating leverage as their sales will grow much faster than R&D and sales.)

EBITDA: $6B

P/E multiple: 30 (note: If targets are achieved in 2020, Tesla likely to be growing 50% year in revenue and would likely fetch a 30-40 P/E multiple.)

Market cap: $180B

# shares outstanding: 185M shares (currently 164M outstanding)

2020 stock price = $972

A few comments:

1. The above are my forecasts based on my beliefs that Tesla can reach their own forecasts of # vehicles delivered in 2020 and gross margins.

2. Each person has their own beliefs/ideas of Tesla. So, I'm not trying to convince anyone.

3. This model can be tweaked based on changes in # vehicles delivered, gross margin, or operating expenses... to name a few factors. So, it's not perfect but it gives the basics.

4. If you find someone bearish on TSLA and who thinks it's "overvalued", ask them to give you numbers like I have. Chances are they won't be able to.

5. The Model 3 will be the iPhone moment for autos. A sexy car that redefines transport and brings in high margins. This is why Tesla has potential to be the most valuable company in the world by 2025.

6. Tesla's moat grows as they execute faster than any other auto company. It's not appropriate to value TSLA based on other auto makers. It's like valuing AAPL in 2007 based off of Nokia and Blackberry.

Regarding Solarcity, yes I've seen reports saying they become subsidiary. But Elon has mentioned a few times that Tesla will assume all of Solarcity's debt.

Here's a quote from their Q3 shareholder letter: "Q3 GAAP Total automotive gross margin was 29.4%, while non-GAAP Automotive gross margin was 25.0% excluding SBC and $139 million of ZEV credit revenue."

source: http://files.shareholder.com/downloads/ABEA-4CW8X0/212351657...

(2) Current gross margin is 25%, but is trending up as they scale Model X. Model S/X gross margin is likely going to be 30% within a year. Tesla is targeting a gross margin of 25% on Model 3. This gross margin is excluding ZEV credits.

Tesla will soon use up the federal tax incentive ($7500 going to buyer) as they pass their 200,000th car sold in the U.S. But they still will have state and ZEV incentives that aren't depending on the federal government. There is risk with the new administration possibly delaying Tesla's autonomous driving plans.

(4) For cash flow analysis, look at Tesla's most recent Q3 financials. It was a breakthrough quarter, as they are selling 25k cars/quarter (100k cars/year run rate). Financials show that S/X gross profit now covers all operating expenses. And when you deduct depreciation expenses and stock-based compensation, Tesla is actually cash flow positive by a large amount (over $400M just last quarter). They used some of that cash for capex, but still have over $100M left over. Tesla's finances have turned a corner, and they look very positive. For Solarcity, they had good Q3 earnings as well. Looks like Solarcity will not impact cash flow for Tesla in Q4 as Solarcity look to be cash flow positive in Q4. Next year, Solarcity's cash flow is projected to be neutral.

I think one sign of mobile's maturation is that people now see mobile as part of a bigger integrated picture of distribution. For example, it's essential (more than ever) to have a strong strategy to be on mobile, on desktop, and in social channels. I think this makes it more challenging for small startups since they typically don't have the manpower to do everything well. So you've got to prioritize and go with what gives you the most bang for your buck. Sometimes it's mobile; sometimes it's desktop; sometimes it's social.

Seems like he regrets keeping Instapaper a paid app and not making it free to go after marketshare and take on Pocket. He seems to conclude he "lost" against Pocket, and now doesn't want to make the same mistake with Overcast.

I personally don't think the patronage model will go very far. I think he's doing more to make the full app free and gain marketshare, and any money made by "donations" is just bonus. If he can grow his marketshare and get a lot of users, then it looks like he's going to try to raise funds. So, this business model makes sense for now... at least until he's able to raise outside funds.

Overall, Marco seems to be insinuating that the podcast market is bigger than people think, and VC money is going to enter the space; thus, he wants to prepare for that and maximize the potential for his app and the possibility to raise funds and go really big.

It does seem that when VC funds enter a market it presents a challenge to existing indie developers who are making a living with a paid app. The VC-funded company will provide a great app (usually) for free, since they don't need a monetization stream right away. They usually are aiming to build a big audience and then monetize later.

Indie developers are then faced with a decision. How do they compete with VC funded companies? They likely are going to have to either make their app free and go head-to-head with these VC funded companies (and maybe raise money themselves to do so). Or they can narrow their scope and become more niche apps appealing to a more limited audience with high-end (hard-to-copy) features that might not appeal to the masses but to the minority who might pay.

But overall, Marco's blog post does bring up the challenges indie developers face when VC funded companies enter their space.

Would love to hear more thoughts on this.