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

[Silent Ludicrosy]

I did not even think about investing in Tesla till I got my car.
BANG to the head....THIS is a sea change...THIS is the best car ever. Other cars are just sh@t to me now.
Never could I go back....then I started buying the stock.....and now you all make me spend WAY too much time here.

Same here. Sometimes I wish I would have waited on the Model S and dumped all my money in $TSLA. But then I remember it is the car that convinced me to invest. And hold.

 

[willow_hiller]

Same here. Sometimes I wish I would have waited on the Model S and dumped all my money in $TSLA. But then I remember it is the car that convinced me to invest. And hold.

Owning is believing. Once we had a Tesla in our carport, it became very clear that the negative press was unwarranted. And if all of that negative press was depressing the stock price, purchasing a few shares became a no-brainer.

 

[Webeevdrivers]

I have a hunch that we're about to see guidance of 115,000-125,000 production and 105,000-115,000 deliveries for Q3.

I think we may see an increase in guidance but not to those numbers. I don’t think Panasonic can provide the batteries yet...unless something has changed at giga. I’ll throw my hat in the ring at 105,000 production based on the usual pull a number out of my ass number...which has actually been fairly accurate. .

 

[Mokuzai]

It’s Time to Wait for Lower Prices on Tesla Stock
"With comparable vehicles from Ford, General Motors and Nio (NYSE:NIO), Motor Trend is behaving as if Tesla were still the only leading-edge electric vehicle manufacturer around, which is absolutely not the case in 2019."

Final Update: Monthly Plug-In EV Sales Scorecard: June 2019
June US EV Sales Estimates:
Tesla (3+S+X): 25,700
GM (Volt+Bolt+CT6): 1994
Ford (Energi): 675
NIO: 0

These leading edge manufacturers in 2019...lets see how they stack up. This is US Battery Electric sales from the InsideEVs scorecard. Took out the hybrids for this graph since they say "electric" and not "electrified".

 

[tinm]

Lora's really starting to struggle with her Tesla hit pieces. This is a whole article about how some fired ex-employees were not doing their job properly. She is also trying to write about how terrible it is to work in the tent assembly line but all her sources told her "These people said that while work in GA4 is physically demanding, many people like working there because the atmosphere is good and camaraderie is strong."

Lora's article reeks of UAW PR involvement.

 

[Artful Dodger]

Now sure that follows from SMP. Successive models meant Roadster->S->3->Y* (*higher volume, maybe not lower price). It is not directly addressing price cuts within a single model.

Ahaha, I figured you'd chime in on that. Left it in anyway.

It DOES apply within Tesla's Models. Look at the pricing history of within each generation. More for less continuously.

The best comparison is to Windows PC pricing during the 1990s: more performance, more value with each product. But you didn't have to wait for a new Intel chip generation to see performance increases: The 80486DX went from 25mhz to 33 to 50. Then came the Pentium at 66, 90, 100 etc...

Each Intel generation was faster but cheaper than the previous one. Hard discs followed a similar curve. Guess how the clone-makers drove sales? The result was that in a single decade we went from ~10% of homes having PCs to ~90%.

Tesla is doing the same, except almost nobody has a 10-yr-old PC, and nearly every 10-yr-old Tesla will still be on the road.

Cheers!

 

[tinm]

It’s Time to Wait for Lower Prices on Tesla Stock
"With comparable vehicles from Ford, General Motors and Nio (NYSE:NIO), Motor Trend is behaving as if Tesla were still the only leading-edge electric vehicle manufacturer around, which is absolutely not the case in 2019."

The author of that article, David Moadel, ladies and gentlemen:

 

[Todd Burch]

Share price doing well considering how it historically has interpreted price drops.

This one feels different. NOT a demand problem.

 

[EinSV]

GF4 will be built off the back of GF3's success.

GF4 will be built off a generous donation from FCA honoring Tesla's large production of clean vehicles.

 

[UncaNed]

The author of that article, David Moadel, ladies and gentlemen:
View attachment 430237

This is odd! Am I the only one who recently got a Q-insights Survey email about my Tesla from an Oliver Moadel?

 

[Unpilot]

The author of that article, David Moadel, ladies and gentlemen:
View attachment 430237

Wow their web site is a freaking mess! I got a headache after 10 seconds there.

 

[Fact Checking]

Lora's article reeks of UAW PR involvement.

And in a completely unrelated development, UAW's 5 year contracts with Detroit are up for re-negotiation this year and they are going to start negotiations next Monday:

Here's Why Thousands Of Autoworkers Could End Up On Strike Soon | HuffPost

"The United Auto Workers union is set to start bargaining new contracts covering 150,000 workers at Detroit’s Big Three on Monday in what could be the most contentious negotiations the auto industry has seen in years."​

In the coming weeks/months I'd expect UAW and their co-conspirators to flex their muscle in every which way they can to demonstrate their ... power even in non-union car factories.

 

[Pezpunk]

People should be clear what they mean when they say "loss" - GAAP or non-GAAP?

I'm inclined to put the odds of there being a small nominal non-GAAP profit at ~70%. But I'd put the odds of a GAAP profit at ~20%.

i think if there was a non-zero chance of either GAAP or non-GAAP profit, Elon would have mentioned that possibility in recent guidance or leaked emails. to my knowledge he did not.

 

[pdq]

For preservation of capital you diversify, to get rich you have to concentrate your investments

And to lose everything, you bet 100% of every penny you have on a single stock as Frenchboy has done, when it moves against you.

There's a difference between investing and gambling. Similar to taking your life's savings to the roulette wheel at a casino and putting it all on red. Hero or zero.

 

[elasalle]

Share price doing well considering how it historically has interpreted price drops.

This one feels different. NOT a demand problem.

Looks like Shorts didn't pile on to the -ve (perceived) news ...

 

[Creekstalker]

Share price doing well considering how it historically has interpreted price drops.

This one feels different. NOT a demand problem.

Yes, announced price cuts are normally not received kindly by the market in the short term. Today's price action is incredibly strong thus far and has to be dispiriting to Kolodny and the shorts.

 

[powertoold]

i think if there was a non-zero chance of either GAAP or non-GAAP profit being above zero, Elon would have mentioned that possibility in recent guidance or leaked emails. to my knowledge he did not.

He did mention during the shareholders meeting that Q2 was looking to be a record on all levels.

 

[Yonki]

If you are increasing production without increasing labor costs. If one person could produce 10 cars in 10 days and now can produce 11 cars in 10 days that is a 10% savings on labor. Thus margin's increase. This also applies to the production of the parts. Every improvement in production efficiency reduces that labor cost. So yes Tesla can lower the price and still make the same or more money on the same amount of units or more if the units sold increase.

I totally get that, it's just IMHO they would be able to achieve the Master Plan most quickly if they were able to profit more from the decreased cost without damaging demand and/or their reputation as a supplier of the best EVs at a reasonable cost. As a shareholder I'd like them to maximize profit (within reason). As a car owner, I'd like them to maximize profit so they can spend more (or spend the same without hampering growth) on service, Superchargers, etc.

You're gonna be fine, just relax and let it happen.

Ultimately I believe Tesla knows what they're doing - I just wish I understood the reasoning better (as do we all). G̶o̶d̶ Tesla works in mysterious ways...

 

[Pezpunk]

He did mention during the shareholders meeting that Q2 was looking to be a record on all levels.

he was talking about production/delivery, not profits and cashflow. i think it's insane to expect record profits.

 

[humbaba]

The big picture here is that Tesla, due to having increased volumes and accumulated experience making BEVs, are now able to sell BEVs cheaper. The competitors that are supposed to enter the market will initially have lower volumes and less experience and will likely not be able to sell cars at matching prices. This will be very hard to overcome without taking huge losses. Tesla was almost not able to ramp up to this point even while having almost zero competition and very loss friendly share holders. Competitors will have a much harder time ramping up sales with lower priced competition from Tesla. Conclusion is that it will be very hard for competitors to enter the market profitable, while Tesla can scale demand and thus production by lowering prices as their costs fall with volume and experience.

This will look negative short term to wall street “experts” but look like Elon playing 3D-chess to long term shareholders.

I don't disagree with your post, but I do think it is simpler than 3D-chess, its just the mission of accelerating adoption.

Lowering prices may not be good for the stock because of the bear fud about demand, but it does great things for sales volume. If the dinosaurs can't be bothered to sell EVs that isn't good, but Tesla will just keep on doing -- which is selling as many EVs as they can as fast as they can.

Sure, there's a side effect that the tar pit the dinosaurs are in keeps getting bigger and bigger and many will likely never make out. But I don't think Elon worries that much about the success or failure of his "competitors". In fact, I'm not all that certain that he really sees them as being competitors. Just my opinion, but I think Musk sees them as potential contributors to the mission. At the same time, his caring budget is fully spent on the world so he wastes no time on trying to bail them out.

Same net effect, but in terms of predicting Elon I'll go for the simple before the complex.

Farther along in the thread there are some points made about cutting prices when you are supply constrained not making sense. The points by @Fact Checking about not knowing what the supply constraint is are valid, but ultimately make no difference to the underlying point. If they are supply constrained (and I have no doubt that they are, demand is at least an order of magnitude greater than production) then I am sure that they could sell 100% of their (increasing) supply at a higher price point.

[edit, if I'd seen his last prior post, this part would have been @Yonki]
Why would Tesla sell them for less than that? I could argue (I think quite reasonably) that doing that price discovery takes too long and that the parameters would all change before they could determine what that price was. But as above, I don't think that is what is going on. Again, I believe it comes down to this: making an affordable EV. As long as Tesla believes it can continue to meet their margin goals I believe they will continue to lower pricing.

As a car purchaser I made the "mistake"* of not understanding this. I bought in late 2018 without the tax burden to be advantaged by the timing. While I certainly knew that it was possible that Tesla would cut prices with the reduction to tax break I thought they would keep prices largely where they were because doing so would still result in 100% consumption of the supply and at increased margin hence more profit which would fund the growth which would further the goal of making more EVs. Assuming my basic thesis is correct (that sales would've continued to eat all supply) it makes no financial sense to do what Tesla did. And yet they did it.

Which leaves two options:

1. Tesla really is demand constrained -- that's the bear argument and I don't believe it.

2. Tesla really wants to sell an affordable EV -- this is my belief. It not only explains the price reductions in the face of under supply, it also aligns with Elon's tone in the February call where he got emotional about people not being able to afford a Tesla.

If you go on Twitter you will find a constant stream of replies to his posts about "please give me a Tesla". While Musk obviously cannot do that, he actually is doing everything he can to allow everyone to buy a Tesla. And this is costing Tesla in terms of unrealized profit. I'm okay with that.

Will this hurt the stock price? Undoubtedly. But, aside from the value of the stock as a benefit to employees, I don't think Elon Musk cares that much what the stock price is. To the extent that he does, I agree with the notion that the timing of a price drop before the EC limits the downside potential. With that belief, the timing may have been done with that in mind. Its possible. But I'd bet the timing is simply from the point where they knew the costs and what price adjustments could then be made.

* I put that in quotes because the price differential (and since I don't have a tax burden to realize the $7500 tax break I daresay few have "lost" as much as I have from the price reductions) is not the only factor. Most significantly there is the opportunity cost of waiting for a lower price. And while it is hard to put a dollar value on how driving a Tesla has improved my life there would definitely have been a cost in waiting for that benefit.