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

[Right_Said_Fred]

The shorters at TESLAQ were having a field day. Still we can rejoice over the fact that most of them will not profit from their hate and sabotage. They are so convinced TSLA will go to 0 that they will forget to take profits. And when SP finds the way back up again they will double down. Many of them will only cover when they start losing too much money.

It wouldn’t surprise me if short interest kept rising over the last few days. In the past it rose when SP went up in exuberance, which makes sense, but since Q1 results they are smelling blood and becoming irrational.

 

[j6Lpi429@3j]

Tesla is currently making no profit and in the long run Tesla need to justify 37 Bn market cap with currently 4.6 Bn equity.
This is a lot discounted cash flow Tesla needs to generate in the future...

Ok.... lets talk about snapchat and uber's valuations shall we?

 

[Zextraterrestrial]

Including this, there are at least 4 posts on this page saying the share slide is due to "FUD" on some kind. It's so easy, and I am sure re-assuring to say that, but it's pure denial of some hard realities. The stock has been on the slide ALL YEAR, with a few caffeine breaks in between. T Rowe took a huge dump on the stock (after being bullish) - I suppose they are full of idiots falling for the "FUD" right? Maybe, but unlikely.

Then you have Elon on the earnings call casually downgrading the target Model 3 margins from 25% to 20% (they're actually closer to 15%), immediately wiping away $750m in revenue this year alone (around $2500 per car if current ASP's are correct). That's basically an admission that their best selling product won't meet profitability targets that were asserted last year, in 2019. Why? We have no idea.

I'm not crapping on the stock, but blaming the drop on conspiracy theories and shorts is nonsense. The reason is simple: hugely mismanaged expectations on an ongoing basis, over the last 4 years.

Personally I still think Tesla will pull a few things out of the bag, and could be a good bet, but I'm pretty sure we're not at the bottom and I'm also pretty sure we're only a few quarters away from a major global downturn. Tesla will have to survive a recession before it gets back to 2018's $374.

while this its probably true...
Just imagine how much the other car companies are going to hurt when they actually try to switch to EV's in any meaningful volume. What are they looking at in terms of margins on the Etron, Jag or Mercedes?

 

[dww12]

That's worse, a co-pilot takes over all duties if the pilot is incapacitated.


Harbor pilot is also bad , if you watch enough YouTube videos of ships crashing into things.

It’s “attentive student driver”.

 

[neroden]

That isn't accurate either. Taking into account the tax credit, my exact P3D is about 4k less now than when I ordered it in last June.

Emphasis mine. You bought a performance model. They did have substantial price cuts. Others didn't. That's what I said.

 

[neroden]

As someone who paid over $100K for my Tesla, I take exception to your silly comment.

You misunderstood me. I referred specifically to purchasers who paid a $10K+ premium for a "Performance" Tesla, above and beyond the cost of the otherwise-fully-loaded model. I don't understand paying $10K for a few tenths of a second faster acceleration. And apparently the number of buyers willing to pay through the nose for a few tenths of a second was, in fact, exhausted at the end of 2018. Performance models needed to have a smaller premium over otherwise-top-of-the-line models.

The Performance premium was pure profit margin, which is nice for the company, but it really couldn't last forever at that level.

 

[jerry33]

You misunderstood me. I referred specifically to purchasers who paid a $10K+ premium for a "Performance" Tesla, above and beyond the cost of the otherwise-fully-loaded model. I don't understand paying $10K for a few tenths of a second faster acceleration. And apparently the number of buyers willing to pay through the nose for a few tenths of a second was, in fact, exhausted at the end of 2018. Performance models needed to have a smaller premium over otherwise-top-of-the-line models.

I always thought that performance models of any premium car have about the same price bump (e.g. $10K-$15K). However, performance buyers tend to be picky, so I can see them waiting for the refreshed model.

 

[dqd88]

Actually, turns out that Reuters was right and I was also wrong to trust Electrek! CNBC has the full email and Musk references the recently-raised cash, not the end of Q1 amount.

I have no problem with the letter. Sounds reasonable to me.

 

[RobStark]

Talk about bans on vehicles that burn petroleum helps anti-green politicians. It helps them paint people who care about the environment as your enemy who is not offering just a choice but who will take away your right to buy the vehicle you want. Support for green initiatives doesn't have enough of a critical mass in the US for talk about bans to have a net positive effect. A subsequent post says she withdrew this comment, but that doesn't matter. Opponents can use this anyway: "This is what they're trying to do to you."

Read the article yourself.

She did not withdraw the comment.

She put it out there as a trial balloon to get the conversation started.

Didn't say it was imminent.Said fiery language should not be used. But something required for people to get safe air quality if Feds allow increases in pollution from ICEv.

 

[X Fan]

Tesla is currently making no profit and in the long run Tesla need to justify 37 Bn market cap with currently 4.6 Bn equity.
This is a lot discounted cash flow Tesla needs to generate in the future...

Ah, the troll is back....

 

[Duffer]

@Zaxxon That is a great info-graphic. It really shows the disruption that, if successful, Elon and his companies will cause globally.

Reality for those businesses is that unless they destroy Elon soon, the tipping point will be reached and it will be too late. The FUD, lawsuits, "investigations", and other dirty tricks will be at an all time high, IMHO, through Q4 earnings at least.

Next we will have a complaint to the SEC about Elon making materially significant statements to employees and a case.
ie how can a CEO manage a company under the stupidity of leaks from employees - maybe director of communications sees the catch 22 and got out.

Good luck to ‘em. Gonna have to prove simple arithmetic on known and publicly stated past numbers is “material”. In front of a judge who appears to be done with their *sugar*

When you have the head of the SEC whining about the recent settlement will there be more lawsuits? To quote one of the tag lines from the 70's comedy show Laugh In "You can bet your sweet bippy".

I agree that the judge that recently heard the case won't put up with any SEC *sugar* However, that's the beauty of the Federal Court system. The SEC can just claim that the latest Musk/Tesla "victim" is in another judicial district.** Shockingly, which just happens to have a judge that is more inclined to see the SEC's version of events.

** Unless there is something that ties all of the Musk SEC lawsuits to one judicial district.

 

[anthonyj]

Ah, the troll is back....

I mean, he has a point

 

[RobStark]

https://www.washingtonpost.com/busi...90de4259661_story.html?utm_term=.d5068ce6a28c

U.S. reaches deal with Canada, Mexico to lift steel, aluminum tariffs, clearing key obstacle to passage of Trump’s new trade deal

 

[dqd88]

While I will buy an EV and most likely a Tesla, some of us have to rely on fossil fuels.
Even if I did drive an EV right now it would be powered by coal.

Get a hybrid if you can't afford an EV. Hybrid is better for planet than pure ICE.

 

[dqd88]

I bought the stock @ $293 last year. My financial advisor advised against it. Said he liked the product but did not like the stock. I did not get it. If the product good and desirable thenhey would the stock not follow?

I still don't get it. The product is amazing. When I drive around, people still point fingers at the car stating: "Look, a Tesla" even when there are already driving quite a few around.
Whenever I see a Tesla store there are alway at leas five people in there, no matter what time of day. So what is it with the stock? Why the discrepancy?

Many people/organizations/etc want Tesla to fail. Oil co's, auto co's, car dealerships, gas stations, advertising co's, etc. They are working hard to push FUD and push the SP down.

 

[ReflexFunds]

From Elon's full email it is very clear his message was just: We have raised a lot of new money but this doesn't mean we can relax, we still have a lot of work to do and sorry but cost discipline has to remain extreme.

His choice to exaggerate and dramatise the challenge with misleading comparisons between the new $2.4bn raised and the $0.7bn Q1 net loss was just entirely unnecessary though and was 100% guaranteed to get twisted out of context in the media.

Elon can't help that his communications skills are one of his main weaknesses (together with his ego) - nobody is good at everything, but it is most disappointing nobody else at Tesla told him how utterly stupid his choice of wording was before he sent the email. I'm sure as soon as staff got that email 95%+ of people would have thought immediately: - oh no not again, this is going to get twisted in the media and stock will be down 5-10% tomorrow. That's not how to motivate your staff effectively.

 

[Remus]

Just wanted to point out how clear it's become over the past 2 quarters now about how much the US Tax credit system F'd over Tesla's organic growth and especially us investors. I can't really be that mad at Elon for the logistics woe's over the past 2 quarters because he and Tesla tried to the right thing by getting as many Model 3's to US customers as they could before the US tax credit got cut in half.

The issue is that it has completely screwed any chance at doing the Model 3 ramp organically and more importantly......correctly. They essentially completely focused on US logistics during Q3 and Q4 and actually overdid logistics for US. They spent and wasted money that should have been spent getting logistics ready for 2k/ week in Euro and in China. Here's how the process went:

Q3 - Only focused on US variants, enough demand for only high end US variants for that quarter. Didn't give ANY focus to getting production or logistics ready for overseas. Posted big profit because logistics is much more simple but also wasted money on things like overtime for delivery employees, re-touch up of cars, etc...

Q4 - Not enough organic demand for only high end variants, so they introduce Mid-Range, probably earlier than they would have wanted to. Only focused on US production to maximize how much customers get cars before tax credit gets cut in half. Again, no focus on overseas production variants or overseas logistics preparation. Again, wasting money on the end of quarter rush. No inventory to act as buffer financially to start overseas production and shipping. Posted profit, but smaller because of wasted logistics money and sales to try and get as many cars into customers hands.

Q1 - US demand is still not organic yet because of how much production they gave US in Q3 and Q4. Tesla had really high goals of being able to start overseas production and get overseas logistics figured out...….all in in quarter. No inventory buildup at all for overseas and limited inventory for Model 3. Cell production still constrained so can't make up the difference in volume. Add on that they decided to the Raven update for S/X which further eliminates any financial buffer.

Q2 - Still dealing with the ramifications

Now here's how it should have gone down...….organically:

Q3 - Model 3 High end variants only....with 60-70% for US markets. The rest for overseas. Allows them to get their logistics figured out without wasting money. No 300+ million profit....more like break even because they have to fill inventory for overseas.

Q4 - Model 3 high end variants only, 50/50 split between US and overseas. Logistics increases as ramp increase for both US and overseas. Prob a profit of about 50-100 million or so

Q1 - Introduce Mid-Range across all territories, increase production as Mid-Range uses less cells. Prob profit of 50-100 million

Q2 - Introduce SR, increase production as SR uses less cells. Logistics increases organically as production volume increase. Profit stays stable at 50-100 million.

Q3 2020 - Profits start to grow organically much quicker as production ramp continues.

This is how it should have gone. If you're mad at Elon right now, you're mad at him for doing the right thing for customers. That has obviously blown up in Elon and Tesla's face. If I have any blame for someone, it's actually probably Deepak. Like come on man, you should have been able to forecast how the non-organic approach was going to be an issue.

Absolutely! I also think to allow as many people as possible to get the car before cut off, they started priming the European delivery system too late. The high stress on the production line last December also contributed to the delay of project Raven.

 

[Sean Wagner]

If FSD really starts driving people cross country in December 2019 (31st, midnight, Elon time), Q2 and Q3 execute, Model Y development and deployment remain on track, Shanghai starts spitting out automobiles, Semi shows some life, and cash on hand stabilizes or improves I think there’s a huge potential upside.

Of course. Don't need the Semi nor FSD in the near future for that either.

The market is blind without guidance and will just assume the worst

Great point. "The market" cannot quite grasp the nature of Tesla and its CEO either.

So what is it with the stock? Why the discrepancy?

First principles! The objects of contention are not the same. In an earlier investing life, I swallowed losses that almost knocked me out. A car will not have that effect. Purely personal observation with no present implications but to elucidate my point.

@neroden All the best for your harrowing week ahead.

 

[JohnDinger]

I bought the stock @ $293 last year. My financial advisor advised against it. Said he liked the product but did not like the stock. I did not get it. If the product good and desirable thenhey would the stock not follow?

I still don't get it. The product is amazing. When I drive around, people still point fingers at the car stating: "Look, a Tesla" even when there are already driving quite a few around.
Whenever I see a Tesla store there are alway at leas five people in there, no matter what time of day. So what is it with the stock? Why the discrepancy?

How did the company sell 110% more cars compared to Q1 2018, and yet still lose 700M?

Why is the company forecasting a loss in Q2 despite record quarterly deliveries?

4 months ago, Tesla was going to be "profitable and cash flow positive for all quarters going forward" - so why is Elon insisting on such dramatic cost cutting?

These questions are killing the stock.

 

[StarFoxisDown!]

Absolutely! I also think to allow as many people as possible to get the car before cut off, they started priming the European delivery system too late. The high stress on the production line last December also contributed to the delay of project Raven.

The extent of the damage the US tax credit system did to Tesla's production was definitely underestimated by myself.

The very unfortunate thing about it is enabled Tesla to do bad practices instead of nipping things in the butt.....like the "Wave". I like to compare it to a tsunami...…….the longer it keeps going and higher production gets while the wave exists, the more damage it will cause when it eventually ends....and it had to end. No way was Tesla going to be making S, X, 3, Y, Pickup, Semi with the wave still going. Looks the damage is Q1 and Q2......hopefully we start to rebuild in Q3