2017 Investor Roundtable:General Discussion

[jhm]

I don't like fake stuff. And I don't care about CAFE. But I KNOW, I will buy my next truck AMERICAN made. Not mexican made. I will NOT buy a replacement for my aging F150 until Ford gets those jobs back to AMERICA. Until then, they won't see a penny of my money. #MAGA

Nice. That works too.

Darn it, I forgot to use #MAGA in my fake. ALL CAPPS IS AWESOME.

 

[Vitold]

To be clear, my latest post was entirely fake.

2017 Investor Roundtable:General Discussion

I've been reading up on narrative economics and thought that I might experiment with crafting a disruptive narrative.

That fake quote was an attempt to suppress truck and SUV sales among a trumpian demographic. The idea that trucks and SUVs ought to be more affordable after CAFE standards are removed induces buyers to delay purchase. Whether or not prices actually come down is beside the point. Inducing worry and delay is the point. Delay gives time for EVs to catch up in this category and for fuel prices to increase. So if sales can be suppressed it would reduce emissions for the life of vehicles that would have otherwise been sold.

Could a false narrative like this go viral? Would it work? Is it ethical?

Your quote maybe fake but that is a real possibility. In my opinion you just offered 'alternative facts'.

 

[jhm]

jhm, as with just about everything that goes on, I don't think there's a better way than encouraging people's confidence in their ability to think for themselves (and the benefits that brings).

Such a libtard. Wants everyone to think for themselves. Hey, we can't all go to the Wharton School. That's why we got Trump for president. He always figures this stuff out.

 

[Matias]

I wish I could find it, but Mobileye had a video of this case being discussed: A snowy rural road where the only references were mailboxes, or power poles or something. The car could easily pick out the roadside references and infer where the roadbed was. They also said that existing tracks were used, and there was almost always existing tracks if you think about it.

22:34

 

[RobStark]

Yeah, agreed. I had my last one for 140k miles, and spent about $40 every 5k on oil changes ($1100) plus another $20 every 10k for tire rotations ($300). Add in two replacement sets of tires ($700) and one spark plug change at 120k ($100) and I'm at $2200 for 140k miles of service, all-in including consumables other than wiper blades. Brakes were nearly like new when I sold it at 140k miles.

Wow, you were paying top dollar for all your service. I used to pay $20 for oil changes at Jiffy Lube. Always on Tuesday when they have a Deal. That is in Los Angeles where the cost of doing business is not low.

Why are you paying for tire rotations?

Especially after a replacement set? Every tire dealer I have been to rotates my tires for free if I buy the tires through them. Many dealers also rotate your tires for free if you do the regular maintenance there too.

 

[RobStark]

Hey, we can't all go to the Wharton School. That's why we got Trump for president. He always figures this stuff out.

He learned a lot of big words there.

 

[MXWing]

Glad you asked. Reason was earnings. With the miss on deliveries last quarter, I would say the same conditions are very much in play. However, the potential reward that comes after that pullback is much too great for me to try to time each move hoping for an exact replica of the past. In other words, I would say chance of pullback on earnings is high, but depth of pullback is not great enough for me to try to time it, when I have to risk chasing it a lot higher in the small chance that there is no pullback this time.

The miss was relatively minor in my opinion? And only off by like 4000 cars for the entire year. And the miss I would chalk up to retooling assembly from AP1 to AP2 which would be made up in Q4 deliveries and Q1 2017? It's a supply side issue and not demand side issue?

I'm still trying to figure out

1 - The surge in price for no reason for other than Trump likes Elon Musk?
2 - What kind of pullback are we looking when next numbers are released?

 

[madodel]

He learned a lot of big words there.

The bigliest!

 

[SBenson]

Glad you asked. Reason was earnings. With the miss on deliveries last quarter, I would say the same conditions are very much in play. However, the potential reward that comes after that pullback is much too great for me to try to time each move hoping for an exact replica of the past. In other words, I would say chance of pullback on earnings is high, but depth of pullback is not great enough for me to try to time it, when I have to risk chasing it a lot higher in the small chance that there is no pullback this time.

Glad to see you back and optimistic.

What I'm failing to see is what will drive the stock price further up. Except for increased "confidence" or "faith" or "trust" (pick your poison) in either autonomous driving or model 3, I don't see any thing strongly catalytic at this point.

On a related note, have you seen the latest MS note? If Jonas predictions were to come true, this year would be quite very sucky in terms of financials. No growth in S/X, TE irrelevantly small esp in operating margin perspective, no meaningful model 3 (2K units is irrelevant), not much of progress in tesla network.... So I kind of have a hard time seeing anything tangible propelling the stock.

 

[dmckinstry]

The bigliest!

By the way, I've heard that Trump was trying to say Big League, not Bigly. Thus he may not be that dumb, just mush mouthed.

 

[austinEV]

Glad to see you back and optimistic.

What I'm failing to see is what will drive the stock price further up. Except for increased "confidence" or "faith" or "trust" (pick your poison) in either autonomous driving or model 3, I don't see any thing strongly catalytic at this point.

On a related note, have you seen the latest MS note? If Jonas predictions were to come true, this year would be quite very sucky in terms of financials. No growth in S/X, TE irrelevantly small esp in operating margin perspective, no meaningful model 3 (2K units is irrelevant), not much of progress in tesla network.... So I kind of have a hard time seeing anything tangible propelling the stock.

I look at it this way. The fence-sitters were vindicated the last 2 years. The shorts felt brilliant at times too. But they have a deadline. By the end of 2017 we will see real volume in M3, TE, and progress on solar products. At that point the "multiple companies in one" narrative will be running and the valuation will simply have to be higher. When does the market adjust up to that point? I actually think it will be later in the year, but who knows? Maybe it really is now. The market should move ahead of the reality, so maybe this is the big move now.

Chart:

 

[austinEV]

By the way, I've heard that Trump was trying to say Big League, not Bigly. Thus he may not be that dumb, just mush mouthed.

Yeah but using "Big league" the way he does is almost as stupid as Bigly.

 

[MitchJi]

Tesla Energy is unknown, maybe a slight positive surprise.

Tesla quietly brings online its massive – biggest in the world – 80 MWh Powerpack station with Southern California Edison
Since launching ‘Tesla Energy’ in 2015, the company reportedly delivered 300 MWh of battery packs, both Powerpacks and Powerwalls, meaning that Mira Loma’s 80 MWh alone is likely to make the latest quarter’s Tesla’s best for energy storage product.

The project was actually launched after SCE started looking into storage solutions following the shutting down of the Aliso Canyon natural gas reservoir, which was the source for the power plants in the region, after the catastrophic rupture in 2015 that led California Governor Jerry Brown to issue a state of emergency.

If it proves successful, the project could serve as an example to decommission more peaker plants and replace them with battery-powered energy storage installations.

A company executive recently said that Tesla was in talks for ‘a number of new large’ utility-scale energy storage projects.

They also signed for 34 MWh of battery capacity projects for water treatment facilities in California and for several more smaller projects, like a 2.3MWh system at a substation in Glen Innes, New Zealand, or the 3 MWh Powerpack system for an off-grid solar and energy storage installation at Singita, a luxury safari lodge in the Kruger National Park in South Africa.

 

[jesselivenomore]

The miss was relatively minor in my opinion? And only off by like 4000 cars for the entire year. And the miss I would chalk up to retooling assembly from AP1 to AP2 which would be made up in Q4 deliveries and Q1 2017? It's a supply side issue and not demand side issue?

I'm still trying to figure out

1 - The surge in price for no reason for other than Trump likes Elon Musk?
2 - What kind of pullback are we looking when next numbers are released?

The surge in price is because buyers are buying just as the decline before was sellers selling. Bigger picture as long as the company is progressing the market will find whatever reasons it wants to drive SP higher, and vice versa.

Looking for a pullback on earnings is more because SP is overextended on the short term and may find an excuse to consolidate. But I am not trying to time it that micro. If we pullback I will definitely add, in fact we may pullback to 250 from 270 by the time earnings come. What I am trying to figure out is how to add if there is no pullback ala 2013(I don't think this is likely as we are not at that part of the breakout yet, but can't rule it out completely)

 

[jesselivenomore]

Glad to see you back and optimistic.

What I'm failing to see is what will drive the stock price further up. Except for increased "confidence" or "faith" or "trust" (pick your poison) in either autonomous driving or model 3, I don't see any thing strongly catalytic at this point.

On a related note, have you seen the latest MS note? If Jonas predictions were to come true, this year would be quite very sucky in terms of financials. No growth in S/X, TE irrelevantly small esp in operating margin perspective, no meaningful model 3 (2K units is irrelevant), not much of progress in tesla network.... So I kind of have a hard time seeing anything tangible propelling the stock.

Yes I have seen Adam Jonas's projections, and his price target of 305 even so. If we really end up with 2k Model 3s in 2017, then obviously I have a hard time seeing share price rally. Perhaps make a short lived momentum/short covering all time high, then back to low 200s in that scenario. However if we come closer to Tesla's timeline(even if falling a little short), then doesn't that give Adam the excuse to raise his target again since it would smash his lowball estimates?

I posted the catalysts I see in the other thread:

So this analog spans 13 months to set up, I can't remember seeing one with this long of a duration ever. What that tells us is it took a lot of underlying capital, a lot of tussle from bulls and bears to set up. What lit the rally in 2013 was that positive earnings report along with Model S smash success. The analog does not tell the future, but does tell us that if we get similar catalysts, share price may play out similarly. We are set up to rally, just need to light the match.

Model 3 nearing launch is the obvious catalyst. In 2013 share price only reacted months after Model S started delivering. For Model 3 I do not believe that will be the case. The market had no history to base the Model S launch on, so had to wait to see how it goes. With the Model 3 I think the market will anticipate months in advance as long as it is on time(give or take a couple of months is okay). Much like AAPL rallying a ton already going into Iphone 1 launch.

TE ramping is another catalyst. If Musk believes TE will one day rival its automotive revenue, signs of this S curve would light the stock. We do not need TE revenues to equal cars in 2017, but going from 1% to 10% or 20% would be significant. I don't think it is a coincidence that this latest leg of the rally over the 200 SMA was set off by the Gigafactory going online - start of mass production of TE 2.0. Given that TE 1.0 was uneconomical in many cases, especially for the powerwall, the start of TE 2.0 in essence signals the beginning of TE period.

If one of these catalysts pan out I believe SP will be over ATH. If both then over 450. If none(delayed) then back to low 200s.

BTW I don't believe TE needs operating margin yet to be relevant, just revenue for now. Share price will discount the operating margin in the future at scale as long as they prove there is an (exponentially growing) market for it. (just like it did for the automotive side)

 

[Intl Professor]

To me though, this is all stuff that will somehow and someway be overcome over many years. It only matters that Tesla remains the leader.

This is the only time I disagree with Neroden. I'm in the camp of expecting AI to eventually become equal to and probably much better than human drivers. (I'm not sure he's denying this in any case.)

However, Neroden mentioned one corner case that can't be solved by Tesla alone. There's always been a situation when two cars or more arrive simultaneously at a four way stop. There are rules of the road which might guide traditional programming when there is a time difference or "yield to the right" but that's when human error and behavior can still be a problem and I constantly encounter such a situation when indicating a left turn at stop. In my dotage I'm constantly barked at by my normally soft-voiced bride because I often play chicken with cars in such situations, or at least creep forward a bit, and then stop, sometimes, while the other guy may do the same. Very risky behavior even though the intent is to signal the next move!

The solution requires all automobiles to communicate with each other and, of course, that will invite hackers, and so human intervention at end use may still be needed.

Edit: Panic button activated by imminent death scream?

 

[MXWing]

How large of a factor is capital gains taxation when it comes to peoples decision to hold?

I got in when SP was around 200 with the biggest salvo I could. It wouldn't be a bad move to set a sell limit to 250. But I'm not wanting to do that because of the higher taxation rates for stocks held less than one year.

Is the best move to just get out at the first sign of a dip, watch to rebuy or just hold for a year and make decisions at that point?

 

[esk8mw]

Glad to see you back and optimistic.

What I'm failing to see is what will drive the stock price further up. Except for increased "confidence" or "faith" or "trust" (pick your poison) in either autonomous driving or model 3, I don't see any thing strongly catalytic at this point.

On a related note, have you seen the latest MS note? If Jonas predictions were to come true, this year would be quite very sucky in terms of financials. No growth in S/X, TE irrelevantly small esp in operating margin perspective, no meaningful model 3 (2K units is irrelevant), not much of progress in tesla network.... So I kind of have a hard time seeing anything tangible propelling the stock.

I think many of us are getting hung up on TE margins to date, as I've heard these low margins repeated quite a bit.

I'm not sure it makes sense to suggest that TE will be a low contributor based on margins to date. Margins to date reflect low volume production, one-off projects and 2170s specially sourced from Panasonic outside the GGF. Low margins are not surprising to me.

Looking ahead, the GGF is now producing cells. Packs are being assembled with a high degree of automation. All 2017 TE products will be GGF-sourced and benefit from all these factors and economies of scale. Even if margins are 5% now, there's nothing stopping Tesla from releasing 2017 guidance re: TE margins "approaching 25% by Q3" or something. They've certainly done that with cars and there's definitely precedent for Tesla starting very slow and low to negative margin and then ramping up to profitability quick. See the X - it probably had negative to 5% margins all the way through 16Q2 and suddenly are probably at 20%-25% (per guidance).

Tesla knows how to make margins once the kinks are worked out and I expect nothing less from TE, especially since the GGF and all processes were developed from the ground up by Tesla. They aren't re-working a factory (Fremont) or building a car without ease of manufacturing in mind (S and X). I think TE and the Model 3 together will represent a new era in manufacturing efficiency for Tesla once it's all ramped up.

 

[MXWing]

This is the only time I disagree with Neroden. I'm in the camp of expecting AI to eventually become equal to and probably much better than human drivers. (I'm not sure he's denying this in any case.)

However, Neroden mentioned one corner case that can't be solved by Tesla alone. There's always been a situation when two cars or more arrive simultaneously at a four way stop. There are rules of the road which might guide traditional programming when there is a time difference or "yield to the right" but that's when human error and behavior can still be a problem and I constantly encounter such a situation when indicating a left turn at stop. In my dotage I'm constantly barked at by my normally soft-voiced bride because I often play chicken with cars in such situations, or at least creep forward a bit, and then stop, sometimes, while the other guy may do the same. Very risky behavior even though the intent is to signal the next move!

The solution requires all automobiles to communicate with each other and, of course, that will invite hackers, and so human intervention at end use may still be needed.

Edit: Panic button activated by imminent death scream?

4 autonomous cars arrive simultaneously at a stop.
All 4 cars activate a randomized timer between 5-20 seconds (or any interval that makes sense) on when it decides to make a move.
Once a car moves, the others wait.

Or have an agreement with manufacturers on who has "right of way" for this one very specific scenario.

 

[jesselivenomore]

I look at it this way. The fence-sitters were vindicated the last 2 years. The shorts felt brilliant at times too. But they have a deadline. By the end of 2017 we will see real volume in M3, TE, and progress on solar products. At that point the "multiple companies in one" narrative will be running and the valuation will simply have to be higher. When does the market adjust up to that point? I actually think it will be later in the year, but who knows? Maybe it really is now. The market should move ahead of the reality, so maybe this is the big move now.

Chart:
View attachment 211908

Yes, to be clear I am not saying we are at March or April 2013, more like Nov or Dec 2012, awaiting the big breakout. I believe the market will anticipate 4-5 month ahead of Model 3 mass production. So if that means end of Q3, then share price should start breaking out around April-May.