Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Fact Checking]

^This 100%. And in my opinion (which I know is unpopular here) a lot of the drama we are seeing recently is all related to Tesla, err Musk's decision that he wants Tesla to be self funding from here on out vs raising additional capital.

Sorry, but this is false.

Tesla had two recent rounds of investment where they successfully raised cash:

• The first one was called 'the third quarter of Q3', and Tesla raised $831m of cash, and managed to do it without diluting existing shareholders. This was one of their largest cash raising rounds!
• Then the second one was called 'the fourth quarter of 2018', during which Tesla raised $880m of cash, a new record!
• The next scheduled cash raising round will end in two weeks, it's called "the first quarter of 2019". Expected cash results will be around $500m-$700m, but with a lot of cash-equivalent cars in transit to customers.
• There will be four more rounds of Tesla cash raising rounds in 2019 alone!
• In 2020 Tesla expects another four rounds of cash raising events.
• Stay tuned!
  

Also, note how low the fees and other perks to Wall Street investment banks were during these cash raising rounds - they were very close to zero. Tesla didn't have to prepare and issue investment round prospectuses either, nor did they distract Tesla executives from building the company.

So the fact is, Tesla is raising additional capital just fine, and each of the recent rounds was non-dilutive!

 

[farzyness]

The reaction to the Model Y is nuts.

It looks totally great and from an investor point of view, exactly what I wanted:
A compact SUV built on M3 design that they stamp out like candies.

They now have 4 cars hitting multiple price points built on the pretty much the same tech, motor, battery platform.

And a huge network of superchargers to charge them, locking people into the Tesla ecosystem.

And it's happening now, while the other car guys fiddle about with concepts, like deer in headlights.

It is amazing how people who have never even driven one of these cars are commenting. They have no idea what's going on.

Also Elon was not subdued, he was relaxed, confident and joking with audience. He was a guy who knows they made it and future is very bright indeed.

Most people just don't get what's happening.

It's so obvious Tesla is right on track, ahead of all others, with lots of room to grow huge.

So, so obvious...

This x 100.

This was my immediate feeling right after the event. Elon seemed well rested, relaxed, and in a great mood. All the while, Tesla rolled out 3 cars currently in production, 1 soon to be in the Y, and two that will be in production shortly after in the semi and the Roadster. That's not even mentioning the pick up.

The iPhone moment is here. Now we get to sit back, relax, and enjoy the show.

 

[Causalien]

Even this Model Y announcement felt rushed and feels to me like a wasted opportunity. I watched it live and let's be honest, it was underwhelming. Invites were sent at the last minute and the setting kind of small and cramped and had poor lighting. At the event Musk barely showed or even talked about the Y. The live stream cut out almost immediately afterwards and before Musk mentioned any details about preordering the car. It would have been better to have more time spent on the Y (Like a comparison with other CUVs in the segment) and less on all the achievements Tesla has made. Yes I know Musk had originally given a date of 3/15/19, but this event did not have the proper preparation, there's no other reason I can think of as to why it was such a weak presentation.

So the question begs. Why is Elon intentionally underselling the Y?
From previous events, we understands that they know how to jazz it up. If it is toned down, there is probably a reason for it.

 

[Nathan]

The reaction to the Model Y is nuts.

It looks totally great and from an investor point of view, exactly what I wanted:
A compact SUV built on M3 design that they stamp out like candies.

They now have 4 cars hitting multiple price points built on the pretty much the same tech, motor, battery platform.

And a huge network of superchargers to charge them, locking people into the Tesla ecosystem.

And it's happening now, while the other car guys fiddle about with concepts, like deer in headlights.

It is amazing how people who have never even driven one of these cars are commenting. They have no idea what's going on.

Also Elon was not subdued, he was relaxed, confident and joking with audience. He was a guy who knows they made it and future is very bright indeed.

Most people just don't get what's happening.

It's so obvious Tesla is right on track, ahead of all others, with lots of room to grow huge.

So, so obvious...

I agree, and I will keep reminding people that there were negative reactions about the Model 3. I believe people overwhelmingly agree now that the 3 is a huge success and quite stunning visually. Maybe it's a function of absurdly high expectations, and on top of that, a culture of social media snap negativism that doesn't allow for reflection?

 

[jhm]

Majority of the US right: Electric cars are evil. Solar is evil.
Majority of the US left: Billionaires are evil. Cars are evil.

This is the kind of fracturing that propagandist set out to do. They promote any wedge issue that will separate potential supporters from their target. So no matter what your issues are, the propagandist will try to find a couple of them to get you to hate or mistrust the target (Elon Musk or Tesla). They will use also sorts of proxies to give credible sounding voice to the wedge issue. So one gets the impression that you are well informed by someone who shares your values and are thus inclined to believe. The target is attacked by very different influencers on the left than from the influencers on the right, or along any other social divide. Tesla is attacked from every angle. This is no accident. This is by strategic design.

 

[Fobble]

TSLA appears to have good strength around 276. There are chances that today's close is >280

 

[Causalien]

This x 100.

This was my immediate feeling right after the event. Elon seemed well rested, relaxed, and in a great mood. All the while, Tesla rolled out 3 cars currently in production, 1 soon to be in the Y, and two that will be in production shortly after in the semi and the Roadster. That's not even mentioning the pick up.

The iPhone moment is here. Now we get to sit back, relax, and enjoy the show.

A lot of new eyes on this event. Lots of comments about how awkward it is on the web. However those of us who followed over the years can probably notice that Elon is giddy. Compared to the Elon on model 3 unveil.

Either things are going well, or he got another hollywood girlriend.

 

[PhaseWhite]

Sorry, but this is false.

Tesla had two recent rounds of successfully raising cash:

• The first one was called 'the third quarter of Q3', and Tesla raised $831m of cash, and managed to do it without diluting existing shareholders. This was one of their largest cash raising rounds!
• Then the second one was called 'the fourth quarter of 2018', during which Tesla raised $880m of cash, a new record!
• The next scheduled cash raising round will end in two weeks, it's called "the first quarter of 2019". Expected cash results will be around $500m-$700m, but with a lot of cash-equivalent cars in transit to customers.
• There will be four more rounds of Tesla cash raising rounds in 2019 alone!
• In 2020 Tesla expects another four rounds of cash raising events.

The fact is, Tesla is raising additional capital just fine, and each of the recent rounds was non-dilutive!

I am not disputing Tesla had 2 great quarters of positive cash flow, only that I am seeing a lot of circumstantial evidence that Tesla is making choices recently that appear to be driven by a desire to raise short term cash but don't look to be good long term moves. So the cash they earned earlier may not be enough for all the things they need to fund right now in order to continue their growth trajectory. We also don't know what cashflow looks like right now with the slower US sales in Q1.

You've shared the argument before that raising equity is a bad tradeoff because of the compounding dilutive effects, but the alternative I fear is a much lower growth trajectory without raising cash.

 

[mickificki]

A lot of new eyes on this event. Lots of comments about how awkward it is on the web. However those of us who followed over the years can probably notice that Elon is giddy. Compared to the Elon on model 3 unveil.

Either things are going well, or he got another hollywood girlriend.

i noticed too that he was super upbeat and playful. at least he's not that stressed out.

 

[Do It]

Stock is testing $275. I think it's going to break through. If so, next stopping point would be ~$260.

Are we running a bus here? Can I see the schedule?

 

[Fact Checking]

We also don't know what cashflow looks like right now with the slower US sales in Q1.

Several robust sources of data are suggesting that Q1 cash flow will be just fine, we'll be able to estimate Q1 cash flow figures in about 2 weeks, when the April 1-2 delivery report is out.

The European 'end of quarter push' is looking good so far, but let's not count our chickens before they are hatched, the Chinese Model 3 customs hick-up has shown that unexpected events can happen too.

 

[jerry33]

So the question begs. Why is Elon intentionally underselling the Y?

It's pretty simple (in my opinion). If he pushes it, it will trigger people's buying emotions, but with no cars to sell (assumes they want a Y type car) there's a good chance they will buy some competitor's car and not be in the market for the Y when it's ready to be delivered.

 

[ZachF]

You are looking at a single quarter that was not totally terrible for Tesla. Let's compare again for Q1 2019 and see how things look.

I don't have a dog in this fight, other than owning and being slightly disappointed in Tesla products and owning and being generally satisfied with BMW products.

It is in my financial best interest for Tesla to succeed, since I have a decent chunk of change tied up in one of their rapidly depreciating assets.

BMW has flat and/or declining revenue and operating cashflow, negative free cash flow of ~17 billion euro the last 5 years, and debt has increased from 55 billion euros to 78 billion euros 2013 to 2018.

Growth, Profitability, and Financial Ratios for Bayerische Motoren Werke AG (BMW) from Morningstar.com
Balance Sheet for Bayerische Motoren Werke AG (BMW) from Morningstar.com

 

[MarcusMaximus]

I am not disputing Tesla had 2 great quarters of positive cash flow, only that I am seeing a lot of circumstantial evidence that Tesla is making choices recently that appear to be driven by a desire to raise short term cash but don't look to be good long term moves. So the cash they earned earlier may not be enough for all the things they need to fund right now in order to continue their growth trajectory. We also don't know what cashflow looks like right now with the slower US sales in Q1.

You've shared the argument before that raising equity is a bad tradeoff because of the compounding dilutive effects, but the alternative I fear is a much lower growth trajectory without raising cash.

I’ll just note that one of the things you cited as “circumstantial evidence” is the Model Y reveal happening.... one day earlier than when Elon said it would ~6 months ago. Exactly on that day for everywhere outside the America’s. That suggests that you expected they would significantly delay the already-announced date if they weren’t doing poorly? Seems like an odd stance.

 

[jhm]

3. Back to last night, a question: during the reveal, Mr Musk referred to this GF as equal (??) to the Fremont and Sparks factories combined. Did anyone understand that that means -

• in terms of function: i.e., producing voumes both of vehicles and batteries
• in terms of size: i.e., as large as two of the world's current 3 or 4 largest buildings
• in terms of something else?

The impression this language gives me is that the productive output would be comparable. So maybe it would have the annual capacity of about 500k to100M vehicles and 50 to 150 GWh of packs.

 

[davecolene0606]

I am not disputing Tesla had 2 great quarters of positive cash flow, only that I am seeing a lot of circumstantial evidence that Tesla is making choices recently that appear to be driven by a desire to raise short term cash but don't look to be good long term moves. So the cash they earned earlier may not be enough for all the things they need to fund right now in order to continue their growth trajectory. We also don't know what cashflow looks like right now with the slower US sales in Q1.

You've shared the argument before that raising equity is a bad tradeoff because of the compounding dilutive effects, but the alternative I fear is a much lower growth trajectory without raising cash.

So ur sayin there's a demand issue?

Fire Away?

 

[AudubonB]

I believe there were Shanghai Government planned documents mentioned here a couple of week ago, with a GF3 full production capacity of 30,000 Model 3's per week equivalent ...

So it's clearly larger than all existing Tesla factories combined - in every metric.

30K/w * 52 = 1.5mm per year. That's a lot of steering wheels!

It's also equivalent to the world's current #1 - Hyundai's Ulsan 5-building plant. Source: the internet...and as below, extracted:

At 1,225 acres, it's the largest automobile production site in the world.

Comprised of five independent plants that produce 5,600 cars a day, 1.53 million cars per year, the Ulsan plant employs more than 34,000 people – 800 of whom are women. So large is the site, it functions almost like a small city, operating its own hospital, a network of roads, fire and emergency services and a port that can accommodate three 75,000-ton ships at a time. In a nod towards environmental responsibility, the site boasts its own sewage and waste water treatment plants, and is host to more than 500,000 trees.
Read more at The biggest car plant in the world | Car News | Auto123

 

[TNEVol]

If Q1 shows that demand for the 3 is still decent, what do you think the new FUD story will be? I assume it will shift back to the flood of Tesla killers? "flood" and "tesla killers"

Those words do not go together.

I do wonder about that. Either demand is a bit squishy or he just doesn't care about SP right now. ​

Another possibility is it was a scripted event where EM was controlled and preapproved to not guess or express optimistic opinions. Think SEC. Then again this was not a car where he or Franz could express themselves. Pickups will be different.

 

[davecolene0606]

The impression this language gives me is that the productive output would be comparable. So maybe it would have the annual capacity of about 500k to100M vehicles and 50 to 150 GWh of packs.

I kinda took as functionally rather than matching numbers or building volume etc.

Fire Away!

 

[gene]

In my area of California the status car for young families is a Subaru wagon but it absolutely, positively, has to have a pod on its roof. I have commented to people I know that they should take the pod off when they are not using it. But no, the reaction is always "it looks cool" (meaning it is their identity). In my past experience such a pod or roof rack can waste 20% mpg. At Trader Joe's parking lot this morning which a few years ago was full of Prius', there was a serious number of these Subarus complete with roof rack and pods. I am confident the Model Y will take over this market of Subarus, especially as these young parents wise up to climate crisis there kids will inherit. But my point here is, Tesla, please be sure to allow for a roof rack, these folks need to hold onto their outdoorsy identity, seems like a small thing but here, no pod, no status.

About the stock. My memory of 6 years of TSLA is that if a Friday ends in the red, thanks to people pondering the stock price over the weekend, almost always rises on Monday.

Just picked up 200 more shares.