2017 Investor Roundtable: TSLA Market Action

[30seconds]

there are plenty who believe that Elon is exploiting your sentiment... promoting a story over reality to keep propagating something that should have failed long ago as a business... and only increasing risk to retail shareholders. what do you say to this?... that they are 100% wrong?... Elon's notorious for blasting out completely impossible projections to the point where you guys actually have found ways of describing this in a positive way... just the other day someone posted how great it was for Elon to have got the stock raised up by making what in retrospect were completely false and inaccurate statements about 2017 possibilities with the M3... how then they were able to get funding... this in the real world is considered fraud... and in this world is equal to "a company that is trying to do fundamental good for society and mankind"...

there's a common saying here... "elon shoots for the stars and hits the moon"... well, that's great, unless the stock is priced for the stars... and the CEO keeps you thinking the stars are the target... and the stock retraces to the moon. yep... that last part hasn't happened yet... but if/when it does... will you still think so highly of this company?

Yes, they are 100% wrong. They misuse the financial statements to say clearly incorrect things like "Tesla loses money on every car they sell" or "Telsa is dependent on government subsidiaries" or "Its clear the Chevy Bolt will destroy Tesla" or "Tesla should be valued at the same multiple as GM" and so on.

Tesla is a high growth company that is in the middle of disrupting multiple industries. If you think it should be valued like a no-growth, non-disruption business that is your fault, not the CEOs.

 

[Todd Burch]

there are plenty who believe that Elon is exploiting your sentiment... promoting a story over reality to keep propagating something that should have failed long ago as a business... and only increasing risk to retail shareholders. what do you say to this?... that they are 100% wrong?... Elon's notorious for blasting out completely impossible projections to the point where you guys actually have found ways of describing this in a positive way... just the other day someone posted how great it was for Elon to have got the stock raised up by making what in retrospect were completely false and inaccurate statements about 2017 possibilities with the M3... how then they were able to get funding... this in the real world is considered fraud... and in this world is equal to "a company that is trying to do fundamental good for society and mankind"...

there's a common saying here... "elon shoots for the stars and hits the moon"... well, that's great, unless the stock is priced for the stars... and the CEO keeps you thinking the stars are the target... and the stock retraces to the moon. yep... that last part hasn't happened yet... but if/when it does... will you still think so highly of this company?

I'm sure there are plenty that believe that.

But as an engineer with an advanced scientific degree, I can see the technical side and validate it. I also experience it daily by driving a Tesla. Most of the people you speak of (that believe Elon is exploiting that sentiment) either have no clue about science, or have never driven an electric car, or have no ability to see a world outside of their own blinders.

I do not deny that Elon is optimistic. In fact, a year ago I argued on this forum that true production-ready level 5 was still 5 years away and got blasted for it. But I also admire his optimism because he aims high and guns for it. That doesn't make him a con-artist. It makes him someone that ultimately achieves things that others spend their lives complaining is impossible.

I still remember before the Model S came out, some Ford engineers made fun of Tesla being a new car company and building the body out of aluminum. "They'll never be able to do it", they said. They were wrong.

You say Elon's Model 3 goals were "false and inaccurate statements". They were aspirational. Have you ever listened to any of the disclaimers at the beginning of the quarterly conference call? Remember the one where the say "this call may include forward looking statements that depend on a myriad of factors, etc?" That's for people like you who don't understand that his comments are not promises, but aspirations.

 

[Intl Professor]

OT: Everybody knows

Loved the guy's work but missed this. Reminds me of what I used to tell students, "these are the good old days."

 

[Reciprocity]

I'm sure there are plenty that believe that.

But as an engineer with an advanced scientific degree, I can see the technical side and validate it. I also experience it daily by driving a Tesla. Most of the people you speak of (that believe Elon is exploiting that sentiment) either have no clue about science, or have never driven an electric car, or have no ability to see a world outside of their own blinders.

I do not deny that Elon is optimistic. In fact, a year ago I argued on this forum that true production-ready level 5 was still 5 years away and got blasted for it. But I also admire his optimism because he aims high and guns for it. That doesn't make him a con-artist. It makes him someone that ultimately achieves things that others spend their lives complaining is impossible.

I still remember before the Model S came out, some Ford engineers made fun of Tesla being a new car company and building the body out of aluminum. "They'll never be able to do it", they said. They were wrong.

You say Elon's Model 3 goals were "false and inaccurate statements". They were aspirational. Have you ever listened to any of the disclaimers at the beginning of the quarterly conference call? Remember the one where the say "this call may include forward looking statements that depend on a myriad of factors, etc?" That's for people like you who don't understand that his comments are not promises, but aspirations.

You are talking to a brick wall. He does not care about reality, only how he can deceive those who have no clue. I heard Elon say about 14 times that orders of parts where to hit goals that where unattainable. I heard Elon say production hell about 12 times since then. I dont know what people think that means. Suppliers had to be held to a standard that was impossible to meet a goal that was possible. Do people forget that volume production for Model 3 and GF1 where pulled forward 18 months. Thats not really possible. Elon has never once deceived anyone on the challenges they faced. Certainly you could cherry pick a quote here or there, but if you take everything said and are smarter then a rock, then you can figure out Tesla is doing everything humanly possible to hit goals that are unattainable and if they do strive to hit those goals, they might just be able to pull mass production forward 12 months vs the aspiration goal of 18. Either way, its years ahead of anyone else and its forcing serious investment (Cash Burn) by "Competitors".

 

[D-egg-O]

there are plenty who believe that Elon is exploiting your sentiment... promoting a story over reality to keep propagating something that should have failed long ago as a business... and only increasing risk to retail shareholders. what do you say to this?... that they are 100% wrong?... Elon's notorious for blasting out completely impossible projections to the point where you guys actually have found ways of describing this in a positive way... just the other day someone posted how great it was for Elon to have got the stock raised up by making what in retrospect were completely false and inaccurate statements about 2017 possibilities with the M3... how then they were able to get funding... this in the real world is considered fraud... and in this world is equal to "a company that is trying to do fundamental good for society and mankind"...

there's a common saying here... "elon shoots for the stars and hits the moon"... well, that's great, unless the stock is priced for the stars... and the CEO keeps you thinking the stars are the target... and the stock retraces to the moon. yep... that last part hasn't happened yet... but if/when it does... will you still think so highly of this company?

 

[Skryll]

I'm sure there are plenty that believe that.

But as an engineer with an advanced scientific degree, I can see the technical side and validate it. I also experience it daily by driving a Tesla. Most of the people you speak of (that believe Elon is exploiting that sentiment) either have no clue about science, or have never driven an electric car, or have no ability to see a world outside of their own blinders.

And this is exactly what I think it boils down to.

The ones that are driving a tesla for years now they know. The ones that don't have a hard time grasping why this is going to work and whats so disruptive about it. They just see 'charges slower than I fill in gas' but miss the big picture.

I would strongly recommend for any short to live with a tesla model S or X for a few months and giving it a full immersion attempt to feel what they are up against. If they then still think its going to fail, they sure should go ahead and short the hell out of it.

We have had a VW eGolf since 2015 and a Tesla Model X since 2016. Stories like Woz saying that autopiiot is a gimmik means he does not understand it despite having owned one, or is trying to mislead people for whatever reason. I can attest that that we would have never put on 32k miles on our Model X since mid-2016 if it wasnt for teslas autopilot and I will never buy a car again without it. As an informed short you should have experienced it to be able to see statemens like Woz's and most of the stuff on seeking alpha as what it is, bunk.

 

[RobStark]

I pass new car lots literally packed with unsold inventory of every type, entry level to luxury vehicles, 10's and 10's of thousands of unsold vehicles. in a recession that will be worse.

It is called stock.

Automakers want to keep 60 days worth of sales in inventory.

 

[Tslynk67]

I've recently traded a pre-AP P85 for an AP2 MX. I always viewed AP as a bit of gimmick, "not for me, I like to drive". Well guess what, it's great! Sure it doesn't take-over completely (yet), but it take the edge off driving, especially in the dark or poor weather conditions. And it will only improve from here.

 

[Zhelko Dimic]

I'm 120% in TSLA now. It just felt like risk/reward was tilted on the long side.
Huge majority of my options are DITM Jan 2019

Dropped down to 115% after Jesse's post. Still leveraged, just a touch less so...

 

[Starno]

there are plenty who believe that Elon is exploiting your sentiment... promoting a story over reality to keep propagating something that should have failed long ago as a business... and only increasing risk to retail shareholders. what do you say to this?... that they are 100% wrong?... Elon's notorious for blasting out completely impossible projections to the point where you guys actually have found ways of describing this in a positive way... just the other day someone posted how great it was for Elon to have got the stock raised up by making what in retrospect were completely false and inaccurate statements about 2017 possibilities with the M3... how then they were able to get funding... this in the real world is considered fraud... and in this world is equal to "a company that is trying to do fundamental good for society and mankind"...

there's a common saying here... "elon shoots for the stars and hits the moon"... well, that's great, unless the stock is priced for the stars... and the CEO keeps you thinking the stars are the target... and the stock retraces to the moon. yep... that last part hasn't happened yet... but if/when it does... will you still think so highly of this company?

No I won't.

And what about you, if you're wrong and Tesla actually reaches the starts, will you still think so lowly of this company ?

 

[2virgule5]

there are plenty who believe that Elon is exploiting your sentiment... promoting a story over reality to keep propagating something that should have failed long ago as a business... and only increasing risk to retail shareholders. what do you say to this?... that they are 100% wrong?... Elon's notorious for blasting out completely impossible projections to the point where you guys actually have found ways of describing this in a positive way... just the other day someone posted how great it was for Elon to have got the stock raised up by making what in retrospect were completely false and inaccurate statements about 2017 possibilities with the M3... how then they were able to get funding... this in the real world is considered fraud... and in this world is equal to "a company that is trying to do fundamental good for society and mankind"...

there's a common saying here... "elon shoots for the stars and hits the moon"... well, that's great, unless the stock is priced for the stars... and the CEO keeps you thinking the stars are the target... and the stock retraces to the moon. yep... that last part hasn't happened yet... but if/when it does... will you still think so highly of this company?

Yep. May or may not happen but not afraid

 

[dmvevguy]

lol I feel as if we are empowering the myusername posts way too much. The guy is able to land a rocket autonomously when everyone said he couldn't. Nuff said.

My southern accent is about to come out...we ain't got no time for this drama!! Can't wait for some good ole' positive earnings call tonight!

 

[myusername]

Yes, they are 100% wrong. They misuse the financial statements to say clearly incorrect things like "Tesla loses money on every car they sell" or "Telsa is dependent on government subsidiaries" or "Its clear the Chevy Bolt will destroy Tesla" or "Tesla should be valued at the same multiple as GM" and so on.

Tesla is a high growth company that is in the middle of disrupting multiple industries. If you think it should be valued like a no-growth, non-disruption business that is your fault, not the CEOs.

it's not in the middle... it's in the beginning. all the big risks still lie ahead... and the SP is not reflective of this.

 

[GoTslaGo]

I still remember before the Model S came out, some Ford engineers made fun of Tesla being a new car company and building the body out of aluminum. "They'll never be able to do it", they said. They were wrong.

Hey! Isn’t that what they’re doing now with the F150? What’s that saying about imitation...

 

[EinSV]

View attachment 257550
This is a chart showing the expected range of TSLA moving forward, based on assumptions:
- Steady 50% annual revenue growth rate through 2025
- Gross profit margin of 22.5%
- Annual share dilution of 5%
- Steady risk-free rate of return
- Also using Q3 earnings estimates from @luvb2b et al

The current price level appears to be an exceptional buying opportunity if these assumptions hold true or don't vary significantly enough to materially affect the stock price. TSLA has closed only ~10% of trading days below these current multiples, so the risk here is relatively low - especially compared to October 2014, when I first started accumulating

I like your chart.

Can you explain what assumptions/metrics are used to convert gross profit to the range of SPs in the chart (e.g., OpEx assumptions and P/E or other valuation metric). Thanks!

 

[SteveG3]

fwiw, at 4pm, I'm going to place some trading share orders for the after hours session about $5 and $10 below the closing price as there might be a head-fake attempt by shorts to try to create the perception of disappointing news released. I've seen a few times over the years where right around the time earnings are released the stock is sent down ~$10, only to be up later in the same after hours session. I think there's quite a good chance this is related to some shorts realizing that it takes time to actually read and digest the shareholder letter, and that people are influenced by what they perceive to be other people's interpretations. it's a bit of a microcosm of the flood of "news" hit pieces, and short selloff activity in Tesla, like what we've seen the past couple of weeks, just swapping creating the perception of "news" out in place of "news" hit pieces.

caveat, I wouldn't do this if it meant my being fully out of dry powder.

 

[MartinAustin]

The ones that are driving a tesla for years now they know. The ones that don't have a hard time grasping why this is going to work and whats so disruptive about it. They just see 'charges slower than I fill in gas' but miss the big picture.

This. My S is 4yrs old now, and has 125,000 miles. Car is still amazing and a lot of people think it is new. I am now able to see the battery degradation and servicing that has to be done over this period of time and it is a helluvalot less than any uninformed people would guess.

Every day that goes by sees more and more "older" Tesla cars driving around, and more and more people realise that they have hardly any running costs. Gonna be an avalanche once it hits the tipping point. (this is ignoring the autonomy discussion, which is another layer on top of it all)

Back to TSLA... I believe today is going to be that kind of "parabolic dish" pattern that ends up more-or-less unchanged at the end of the day, as optimists and gamblers buy in before the close.

 

[RobStark]

Hey! Isn’t that what they’re doing now with the F150? What’s that saying about imitation...

Audi had been building all aluminum A8s for about a decade before the first Model S came off the production line. Ditto Jaguar XJ.

I think the insult was meant directly at Tesla's manufacturing skills. That Tesla couldn't do it.Not that it couldn't be done. Welding aluminum without creating rust or other issues over time is a challenge.

 

[Cobbler]

Is there a Q&A after the release?

 

[Intl Professor]

Is there a Q&A after the release?

Yes. I think at 2:30, PDT.