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

[bkp_duke]

Profits are the reason corporations exist. Profits are what allow corporations to grow their business and pay employee. If profits drive them to make the transition to EV, that's good for everyone. If they don't succeed, a lot of jobs are going to be lost and a lot of government money is going to be wasted. Imagine Michigan without the auto industry.

I'd much rather they, along with Tesla, succeeded. The joined forces will speed up EV adoption and benefit everyone.

Yes . . . and no.

Current auto industry is so SHORT SIGHTED that they only care about the next quarter of profits.

IF these companies had made investments 5+ years ago like Tesla, they could have their cake and eat it too (profits with EVs). But they didn't want to make that investment (i.e. no lack of long-term vision). Therefore, they should just die.

 

[JRP3]

It's The Verge. A wise person does not refer to that site for unbiased coverage of Tesla or EM

You can find a similar article on other sites as well.

 

[bkp_duke]

You can find a similar article on other sites as well.

Anyone that's been on youtube for more than a short period of time has seen the Elon deepfakes. Some of them are obviously fakes, some of them have been good enough they have been linked in this very thread.

It's still a weak argument, I concur, but it's not a complete hail mary either.

 

[Hiline]

Yes . . . and no.

Current auto industry is so SHORT SIGHTED that they only care about the next quarter of profits.

IF these companies had made investments 5+ years ago like Tesla, they could have their cake and eat it too (profits with EVs). But they didn't want to make that investment (i.e. no lack of long-term vision). Therefore, they should just die.

Oh I agree that they made mistakes before. Doesn't mean they can't make better decisions now. The decision makers today may not be the same as those in charge 5-10 years ago. I'd rather not see an employment crisis in Michigan. Who would their failure benefit?

 

[bkp_duke]

Oh I agree that they made mistakes before. Doesn't mean they can't make better decisions now. The decision makers today may not be the same as those in charge 5-10 years ago. I'd rather not see an employment crisis in Michigan. Who would their failure benefit?

They are ONLY doing this because they are being dragged kicking and screaming to EVs. They push back against CAFE standards, they push back against any requirement for fleet changes, etc. This is multi-generational history for them, not a recent thing. No, they don't get a pass. It's time for traditional auto to die, all of them. What emerges from the ashes will be far more efficient, aligned with the desire of consumers, and profitable.

 

[Unpilot]

Thanks for that beaker of TSLA-related market news. Refreshing! For the rest this morning, I remind you:

Cheers to the Longs!

Or a cow?

 

[navguy12]

Bought my last 123 shares TSLA this morning to complete my block of 1000 shares TSLA in my non reg investment account, courtesy of a portion of my dad’s inheritance.

My total count is just over 1650.

 

[insaneoctane]

@Curt Renz or @Artful Dodger you guys have been pretty good at nailing Friday closes lately....care to predict today's close? I'm going with $160 on the nose...

 

[Artful Dodger]

@Curt Renz or @Artful Dodger you guys have been pretty good at nailing Friday closes lately....care to predict today's close? I'm going with $160 on the nose...

Lol, first you have to post a screen-shot of the TSLA Options Open Interest graph: (OI data is updated once per day at ~07:00 a.m. ET on Market Days)

TSLA Open Interest, Volume and Max Pain | maximum-pain.com​

Cheers!

 

[InTheMiddle]

Spoiler: A Personal Anecdote

One time my wife, a neighbor, and I were exploring jeep tracks in the Chihuahuan Desert and we came to a "T" in the road. I was turning left and my neighbor said we needed to go right. He was a smart fellow and we often argued over matters and he was usually right. We went back and forth over this for a couple of minutes and then he said, "I'll bet you a thousand dollars I'm right" and we shook on it.

I took the left turn and shortly it became obvious I was right. Before I could say anything, he had already written a check and handed it to me.

I held his check for about a month before giving it back to him. He framed it to remind himself not to make that sort of bet ever again.

Such a great memory to have and a story to tell, and sounds like you and your friend are both the best type of honorable friends to cherish through life! Side note: back in the mid-90s a friend wrote me a check which I had no intention of cashing, but being a *slightly* less good person myself, rather than return the check I have simply kept it, stored in a box somewhere all these decades...hopefully it doesn't make me too bad of a person to be thinking, "May her checkbook register always be out-of-balance..."

 

[Ogre]

I see that chart as a reason NOT to use those search terms, seeing as Model Y has been outselling the model 3 in the US for a while now, but you wouldn’t know that by looking at those search terms.

Search terms don’t measure sales. It’s a vague non-metric which sort-of shows interest in a thing at the time.

Could be there are a lot of aspirational shoppers who are trying to figure out if they can get into the base Tesla but can’t qualify.

 

[CorneliusXX]

They've done it for tax credit qualification.
Elon has stated it has sometimes been because they've reduced costs
It's suggested they've done it (at least in part) to make them more accessible due to high interest rates

Do they manage demand to match production? No doubt. Is that the only reason for cuts? Only if you think Elon's lied.

None of those statements are appropriate for the current price cuts. The reduced costs and tax credit comments were a reasonable justification based on concurrent events but they are not the reason - the reason is because Tesla couldn't have sold all the vehicles at the higher price. You can see the truth to this when prices were rising - if Tesla cut prices because costs came down as a rule they wouldn't have increased the price when they did and would have just let the orderbook blow out. They used the orderbook backlog as a justification to increase prices, but the reason was because they could and because big margins are good for the company.

Those justifications are completely standard in business. Have you ever heard a CEO say we are putting prices up because we can get away with it, or we're putting prices down because we can't sell them at the current price - that's implied in every pricing decision by every company.

It's clear that Tesla is looking for a new clearing price for their vehicles due to increased production and a more difficult economic climate. It's also clear that COGS isn't coming down nearly as fast as vehicle prices (even with the IRA tailwind)

The reason this matters is because Tesla is valued at a high multiple which has a substantial amount of growth and profit embedded in it. The price cut discussion is important to try and determine just how low and for how long the stock price will be down so we can plan accordingly.

It also is starting to matter because free cashflow was only $0.4b in Q1 - that's only c.$1k/vehicle and we know that Tesla has dropped ASPs by more that $1k already over the last month. Some of this can be offset by higher sales volumes and reduced cogs but it's becoming likely that Tesla will need to start drawing cash from its balance sheet to fund its CapEx plans. And if prices continue to reduce they may need to issue debt or trim their CapEx plans.

 

[scaesare]

None of those statements are appropriate for the current price cuts.

<snip>

As you continue to address points I'm not making, I can only assume you simply want to talk. Go ahead.

 

[unk45]

Search terms don’t measure sales. It’s a vague non-metric which sort-of shows interest in a thing at the time.
...

Obviously they do not measure anything other than interest in the searched term. At worst it is a measure of awareness, at best it's an indication of willingness to buy if terms are agreeable. Most users of that term considerate as an awareness measure, but not much more.
On the other hand, historically search terms have higher correlation to actual sales than do most other metrics.

Because Tesla has access to far more direct metrics such as page views and dwell time on specific pages, they can have much more accurate implications that simple search.

This subject can go wildly off topic for this thread. We can usefully recognize that Tesla has copies data on specific intent and capacity of buyers to buy, and further have far more relevant understanding of elasticity of demand by price, availability, color and options for each model. Those, they have in each major market. FWIW, they have much of that by loan vs lease, and by lessor as well.

We, possessed of strong options on these subjects, are mostly clueless about the facts. We do not have the data, regardless of what we think we see.

 

[CorneliusXX]

The real world isn't as simple as economic models, but I am seeing a consistent misunderstanding here and on Tesla-Twitter about a shift in the demand curve, versus the equilibrium point moving along the existing demand curve. Tesla is increasing supply, so it's entirely possible that the demand curve is staying entirely static:

A shift in the supply curve from S1 to S2, leads to an equilibrium increase in quantity from Q1 to Q2, and a decrease in price from P1 to P2.

Compare that to holding the supply curve constant, and shifting the demand curve down and to the left:

I'm also seeing a lot of misunderstanding about demand elasticity. Elasticity refers to the marginal change along the curve (the slope of the line tangent to the curve at the equilibrium point), and because the demand curve is not linear as shown above, demand elasticity can change as the equilibrium point changes without the underlying demand curve changing at all.

Notice how the first marginal change in price from $6 to $5 yields a 10 unit change in equilibrium quantity. That's highly inelastic. Later down the curve, a $1 change in price yields a 100 unit change in quantity. Demand becomes more and more elastic as the slope of this curve changes.

I think the conversation has been surprisingly cognizant of the above. But Tesla has dropped ASP by >10% and sales have only increased 5% QoQ. If the demand curve hasn't shifted then demand is quite inelastic. The demand curve should have moved as the economy worsens, it's natural.

As a high operating leverage business we are very sensitive to these movements as we are seeing play out in the financials.

 

[Cosmacelf]

Such a great memory to have and a story to tell, and sounds like you and your friend are both the best type of honorable friends to cherish through life! Side note: back in the mid-90s a friend wrote me a check which I had no intention of cashing, but being a *slightly* less good person myself, rather than return the check I have simply kept it, stored in a box somewhere all these decades...hopefully it doesn't make me too bad of a person to be thinking, "May her checkbook register always be out-of-balance..."

Just don't do that to a business, unless you want to make a donation to your state's treasury. If a business writes a check for a valid invoice or reimbursement and it doesn't get cashed after repeated attempts to give the money back, then the money must be returned to the state's treasury. Fun fun.

 

[CorneliusXX]

<snip>

As you continue to address points I'm not making, I can only assume you simply want to talk. Go ahead.

Ok. Hi, how's life treating you?

 

[SOULPEDL]

I'd rather not see an employment crisis in Michigan. Who would their failure benefit?

No mercy here, but also no disrespect for the honest worker caught up in this foolery - who needed to be planning their next move, but haven't started yet under false hopes. I encourage the cost side analysis as well, but suspect it's all about jobs, and that's it.

Who benefits from ICE closure? Here's just a few...

1. The planet - less waste, whole cycle.
2. Less FUD sponsored by their own Media dollars.
3. Less placating to people hoping for a quality EV from their brand which delays purchase of an EV further (always coming soon).
4. Car Salesmen and women who will continue to misinform the public with bait and switch tactics etc...
5. Fewer inefficient vehicles when we do catch up with demand. Less wind pushing.
6. Exxon gets a loss not a record quarter.
7. My stock portfolio along with all the others who invest in the future.
8. Eliminate bad players, give some market space for new ones.
9. Fewer BEV customers that get frustrated by slow charging and were never told (salesman/women again).
10. Less damage to BEV reputation (F-150 Lightening as a tow vehicle, charging, fires).
11. Fewer Hybrids.
12. Delaying the re-education effort needed to place unemployed.
13. More dangerous vehicles, namely the F-150 crushed cab secret when rolled.
14. Less BS lobbying against climate change actions, trying to downplay it all.

 

[Hiline]

No mercy here, but also no disrespect for the honest worker caught up in this foolery - who needed to be planning their next move, but haven't started yet under false hopes. I encourage the cost side analysis as well, but suspect it's all about jobs, and that's it.

Who benefits from ICE closure? Here's just a few...

1. The planet - less waste, whole cycle.
2. Less FUD sponsored by their own Media dollars.
3. Less placating to people hoping for a quality EV from their brand which delays purchase of an EV further (always coming soon).
4. Car Salesmen and women who will continue to misinform the public with bait and switch tactics etc...
5. Fewer inefficient vehicles when we do catch up with demand. Less wind pushing.
6. Exxon gets a loss not a record quarter.
7. My stock portfolio along with all the others who invest in the future.
8. Eliminate bad players, give some market space for new ones.
9. Fewer BEV customers that get frustrated by slow charging and were never told (salesman/women again).
10. Less damage to BEV reputation (F-150 Lightening as a tow vehicle, charging, fires).
11. Fewer Hybrids.
12. Delaying the re-education effort needed to place unemployed.
13. More dangerous vehicles, namely the F-150 crushed cab secret when rolled.
14. Less BS lobbying against climate change actions, trying to downplay it all.

Eh the other poster was wishing for the failure of their EV business, not of their ICE business.

 

[EVNow]

My point that seems to be being missed is that price reduction is not always evidence of a demand issue. We've seen them cut prices for other reasons. Hence "correlation is not causation" applies here.

Just because they might cut price for some other reason doesn't mean the several price cuts in the last few months are not to increase demand.