Open letter to all S&P 500 benchmarked managers:

On Friday 12/18 at market close, $TSLA will enter the S&P 500 Index at an approximate 1.5% weight - the sixth largest weight in the S&P 500 index after $AAPL, $MSFT, $AMZN, $GOOGL, and $FB.

2/Goldman says 90% of you don’t own $TSLA, and you probably never had much interest in owning it, since it trades at 169x consensus 2021 EPS, and is +665% YTD. Surely you can ignore it for a little longer, and wait for it to come back down to Earth.

That would be a huge mistake.
3/ CNBC talking heads who know nothing about $TSLA have long proclaimed it to be overvalued. Celebrity shorts and sell side analysts who blindly compare it to other auto companies have been wrong about TSLA for years. Investors who I think are smart sound like empty suits...
4/ when they try to explain why $TSLA keeps going up.

I’ll tell you why $TSLA keeps going up, and why it could double again in 2021 (at 1.5% wt, a double will cost you 150 bp performance).

First, EVs will soon replace gas-powered cars, yet EVs today are just 3% of global SAAR.
5/ As with IPhone, once a customer goes EV, he/she never goes back. By 2025, EVs are likely to be 20% of global SAAR. Do the math: 20/3 = 6.7x = 46% CAGR.

Second, $TSLA is by far the global EV market leader, with 25% YTD global EV share. TSLA continues to grow its share...
6/ because $TSLA keeps increasing its TAM. The Y CUV almost tripled US TAM from 24% to 65%; in 2021, the Cybertruck iwill expand it to 86%. Like iPhone, ICE-brand EVs can’t compete with TSLA’s iconic brand, battery range, power, FSD/software, and cost. And ICE-brands are tainted.
7/ Valuation: This is where normally smart people get off track. With $TSLA vols and EPS growing by 50%+ per year, no portfolio mgr would put a auto mfr P/E of 8-10x on TSLA. If one looks at 2022/2023, my P/Es are 67x 2022 EPS and 43x 2023 EPS. That’s a 2022 PEG of 1.3x.
8/ There are no mega cap growth companies forecasted to grow by 50%+ per year trading at $TSLA ‘s 1.3X 2022 PEG. FB has the cheapest PEG at 1.1x; AMZN and GOOG are both at 1.3x, but all with lower growth. R1000G trades at 2x forward growth. S&P 500 trades at 3x forward growth.
9/ What is $TSLA worth? With an 2025 EV adoption rate of 20% and assuming TSLA holds its 25% EV share, with lower ASP, and no Reg Credits, I get 2025 EPS of $24. At a 50x P/E (2x PEG), that’s $1,200 by 2025. At a 9.5% disct rate, that’s $830. With a 100x P/E, both values double.
10/ Between now and Friday 12/18 at the close, the trade for S&P index funds will be: Buy $TSLA, sell everything else in the S&P 500 benchmark.

You might want to think about doing the same. Then you can sleep at night, knowing that holding TSLA at a 1.5% weight can’t hurt you.

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🌿𝑻𝒉𝒆 𝒔𝒕𝒐𝒓𝒚 𝒐𝒇 𝒂 𝑺𝒕𝒂𝒓 : 𝑫𝒉𝒓𝒖𝒗𝒂 & 𝑽𝒊𝒔𝒉𝒏𝒖

Once upon a time there was a Raja named Uttānapāda born of Svayambhuva Manu,1st man on earth.He had 2 beautiful wives - Suniti & Suruchi & two sons were born of them Dhruva & Uttama respectively.
#talesofkrishna https://t.co/E85MTPkF9W


Now Suniti was the daughter of a tribal chief while Suruchi was the daughter of a rich king. Hence Suruchi was always favored the most by Raja while Suniti was ignored. But while Suniti was gentle & kind hearted by nature Suruchi was venomous inside.
#KrishnaLeela


The story is of a time when ideally the eldest son of the king becomes the heir to the throne. Hence the sinhasan of the Raja belonged to Dhruva.This is why Suruchi who was the 2nd wife nourished poison in her heart for Dhruva as she knew her son will never get the throne.


One day when Dhruva was just 5 years old he went on to sit on his father's lap. Suruchi, the jealous queen, got enraged and shoved him away from Raja as she never wanted Raja to shower Dhruva with his fatherly affection.


Dhruva protested questioning his step mother "why can't i sit on my own father's lap?" A furious Suruchi berated him saying "only God can allow him that privilege. Go ask him"