When I ask an investor what their upside/downside on a stock they own is, and the downside is multiples above the current stock price, I know the investor is not serious. An upside/downside ratio can be probability-weighted, but can’t just have upside scenarios. That’s unrealistic.

For $TSLA my 6-12 month upside case is $551, assuming TSLA earns $3.80 in FY’25 (WS is at $3.28) and investors accord the same recent high P/E of 145x as in Nov 2021 to account for the future growth potential of robotaxi and Optimus. I don’t go back to $TSLA’s Jan 2020 high P/E of 183x, because that assumed TSLA volume growth of 50% CAGR guided by TSLA management - until it wasn’t anymore.

My $TSLA downside case is $352, assuming 1/ the U.S. EV credit of $7,500 is eliminated; and 2/ we are wrong that the $25K-$30K TSLA EV due out in 1H is a new form factor that extends TSLA TAM into the compact category, and instead is just a price cut funded by cost cuts, which does nothing for FY’25 volume or earnings growth. In that case I would reduce my FY’2025 EPS to $3.20, and apply a forward P/E of 110x, which is still well above TSLA’s avg P/E of 75x over the past five years, and which equates to $352. At Friday’s close of $432, that produces a TSLA upside/downside of +27.5%/-18.5%= 1.5x, which we use to determine TSLA’s relative position size vs our other portfolio names.