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

[Artful Dodger]

NASDAQ-100 NDX 8,974.94 −166.53 (1.82%)
NASDAQ: TSLA 547.49 USD −17.33 (3.07%)

TSLA was running about -2.3x below NDX thoughout most of the Pre-market trading. Now it's closer to -1.7x so PROGRESS wot?

Whoops! somebody's buying. up over $551 again now at 09:52

Cheers!

 

[gerebgraus]

Tesla hasn't said that have they?

No. They have not. But it is obvious. That is the tech., that reduces costs radically. No paint shop, minimal body shop with no car specific tooling.

 

[StealthP3D]

Yes, but its not real impact to TSLA. How does this affect long term growth - isn't that what the stock represents?
Two outcomes, will be swift... 1) can't fight the virus so it runs its course and we are left with a stronger DNA pool or 2), it gets contained. Either way, stocks return. Viruses are normal, we are the anomaly.
No change here, still long, this han no effect on longs.

I wouldn't go that far! We still don't know exactly how this will play out but the most likely scenario is that it will be similar to other virus scares that have come to the forefront. TSLA is growing so fast that a one week impact does have a lasting effect. It's just one negative in a sea of positives. Knowing how Elon thinks, he will figure out a way to take advantage of it (as much as possible).

 

[Unpilot]

I know it's early but this has been a better start to the day than I expected.

 

[StealthP3D]

I know it's early but this has been a better start to the day than I expected.

Later Monday to Tuesday might be worse...Just thinking out loud.

 

[JustMe]

No. They have not. But it is obvious. That is the tech., that reduces costs radically. No paint shop, minimal body shop with no car specific tooling.

Let’s not get ahead of ourselves. That’s not the only way to reduce manufacturing cost. There’s plenty of potential cost savings to be had through advances in battery production and increased automation. And we know that Tesla is pushing hard on both fronts. EV cost parity with ICE at $25k is expected in the next couple of years.

 

[Derek Vinyard]

Hi everyone! hope you and your dearest are doing well - primarily in terms of health and wellbeing!
I am glad to see most of you are still active here and contributing to this forum. I have been off for a while due to business reasons. Now I am back again following the incredible pace of Tesla and its entire team around Elon.

in terms of the upcoming ER, guess this is a valuable statement by Colin Rusch/Oppenheimer.


Investors to focus on Tesla's 2020 delivery guidance, says Oppenheimer

Ahead of Tesla quarterly results, Oppenheimer analyst Colin Rusch expects investors to focus on 2020 delivery guidance, gross margin performance, and free cash flow metrics. The analyst also anticipates incremental information on Tesla's insurance offering take rate amid speculation among investors that the company could begin underwriting select leases. Given Tesla's "increasingly robust" data on usage and maintenance patterns, Rusch would not be surprised by increased activity on either front as it looks to leverage data-driven insights on its vehicles. He has an Outperform rating and $612 price target on the shares.

Breaking News: TSLA latest news. - The Fly

 

[lklundin]

Planning to up leverage today as well. I've been slowly accumulating a (minor) lotto ticket position before the ER ($750-800 21 Feb spreads), and they should be on quite the sale today

I generally try to do trades slowly because you never know when a day like today will come along. If I'd just bought all last week, I would have missed this. On the other hand, if I'd waited for this week, and then the stock had shot up, I'd have missed out. Best to average things over a period of time IMHO.

Thanks for sharing.

With your chosen Feb. 21 expiration you pay more for time value than with e.g. Feb 7 (or even Jan. 31), even though the significant and potentially catalytic event is the ER, which is prior to Jan. 30.

Why February 21st expiry as opposed to sooner?

 

[jbcarioca]

No, this is wrong. Vehicles go into inventory on the balance sheet when produced, which btw affects FCF, but not on the P&L Statement. When the vehicle is sold, then that asset is moved from the Balance sheet to P&L, with COGS (less labor which is a fixed expense) go to Expense and the sales becoming Revenue.

Given that Tesla made 21.8% gross margin on vehicles with an ASP around $53k, that's about $11.5 gross profit for every extra vehicle sold, regardless of when it was produced. Then given that Tesla sold 6,100 more vehicles than it produced in Q4, that's an est'd $70M in ADDITIONAL gross profit for 2019Q4 vs just selling the same no. of cars as they produced.

And since we know 2019Q3 was profitable while selling 15,000 fewer vehicles, we have a strong indication that MOST of that extra gross margin in Q4 will flow straight through to bottom line profits. I estimate the effect on profits to be +$172.5m from this alone.

Paging @The Accountant "Is this Accounting 101, or Accounting 301?"

Cheers!

Obviously I am not The Accountant. Still, it is very useful to distinguish TSLA vs nearly all auto manufacturers regarding income recognition.
An example: General Motors: " Revenue for new vehicle sales is recognized at the time of delivery when customers obtain control of the vehicles or when the vehicles are transferred to the dealers which generally occurs when the vehicles are released to the carrier responsible for transporting to the dealers. The recognized revenue excludes any sales incentives paid to customers and dealers."

TSLA, by contrast, recognizes a sale only when the vehicle is transferred to the ultimate purchaser.

The income recognition prior to shipment or even title allows considerable room for manipulation. TSLA income recognition is absolute and definitive. That is the major reason for EOQ and EOY rush at TSLA while nobody else bothers. The others just decide that vehicles are designated for a given importer/distributor/dealer and recognize income before the vehicle has even actually been shipped.

Almost no analyst ever even mentions that distinction. Of course that is the natural consequence of distribution through only TSLA. Supercharger and service consequences are quite material too. The next gigantic category is incentives paid to and discounts given to those same distributors/importers/dealers. Then there is the time delay in come recognition cased by shipping and delivery processes, which have the consequence of seeing TSLA inventoies larger than they would be for any other manufacturer.

 

[Artful Dodger]

The China Designed world car is supposed to be built with the cybertruck tech. That means substantially less capital cost and manufacturing space. so the issue is with the battery, which will be built using the Maxwell tech. i.e. less cost and space. So ultimately the limiting factor is metals like lithium that require a substantial increase in production as their use in batteries is very high compared to other uses.

Is it? I know some bloggers have released 'Cyberhatch' sketchups, but I've never heard anything from Tesla about the build tech...

You may be right of course, but I also think 'cybertruck tech' is an intermediate step for Tesla's manufacturing tech, not the destination. I do like the SS hull design, but it's limited in form and aesthetics, which is exactly contrary to what Elon says that "Designed in China" brings to the table: some of the World's best art. Can you 'square' that with 'cyber'?

No. They have not. But it is obvious. That is the tech., that reduces costs radically. No paint shop, minimal body shop with no car specific tooling.

Instead, I'm hopeful Tesla will invent the required tech to produce stainless steel metal foam carbodies using the exoskeleton principle but not compromising on curved design or flowing, Artful shapes. Bonus: metal foam is ~1/3 the weight of cold rolled SS for the same strength panel, and has superior crush performance for safety features. Keeps the low costs of not needing separate stamping, body, and painting lines. All three are replaced by one (automated) step, with superior properties in all aspects of weight, performance, strength, durability, and cost.

Lotta work ahead to get all this done for 2024. Might well need some more intermediate steps, wot?

Cheers!

 

[TheTalkingMule]

Mark Reuss on Bloomberg today teasing EV trucks from GM. President of GM and Doug Pederson's twin brother.

These two geniuses....

 

[gerebgraus]

Is it? I know some bloggers have released 'Cyberhatch' sketchups, but I've never heard anything from Tesla about the build tech...

You may be right of course, but I also think 'cybertruck tech' is an intermediate step for Tesla's manufacturing tech, not the destination. I do like the SS hull design, but it's limited in form and aestics, which is exactly contrary to what Elon says that "Designed in China" brings to the table: some of the World's best art. Can you 'square' that with 'cyber'?

Instead, I'm hopeful Tesla will invent the required tech to produce stainless steel metal foam carbodies using the exoskeleton principle but not compromising on curved design or flowing, Artful shapes. Bonus: metal foam is ~1/3 the weight of cold rolled SS for the same strength panel, and has superior crush performance for safety features.

Lotta work ahead to get all this done for 2024. Might well need some more intermediate steps, wot?

Cheers!

I assume you are right that they will not stop at cybertruck tech. and they advance it further. It definitely will not be the traditional paint and body shop like all current cars. Obviously my only information is Tesla's presentation and Munro's explanation. I have no inside info or expertize.

 

[SOULPEDL]

Knowing how Elon thinks, he will figure out a way to take advantage of it (as much as possible).

Completely agree; I bet Elon eats opportunities like this for breakfast.
So now I changed my view. The virus is potentially a plus for TSLA when compared to all other companies

 

[Aeon]

I'm about to watch this:

Join me in looking forward to embarrassing details.

 

[Ameliorate]

Thanks for sharing.

With your chosen Feb. 21 expiration you pay more for time value than with e.g. Feb 7 (or even Jan. 31), even though the significant and potentially catalytic event is the ER, which is prior to Jan. 30.

Why February 21st expiry as opposed to sooner?

I can't speak for Karen but the monthly options have much higher volumes and liquidity (I suspect this is the main reason) . I have Jan 31's and Feb 21's nothing between as my short term calls.
More time value adds some safety
If you paid a premium for those extra two weeks (you would) that time value is still there unless you ride it out the entire 2 weeks. It's not all lost after the ER.

(PS those 02/21/2020 800C's are a hot ticket, at one point today they were down less than my LEAPS. over 9000 traded today! )

 

[jbcarioca]

FWIW it is instructive that GM is more deeply dependent on China than Tesla will be even after GF-3 has matured a while:
GM
General Motors - vehicle sales by country 2018 | Statista

 

[ProfTournesol]

Tata steel import fees of laminated steel have been removed for US import. Especially interesting for Tesla and Tata Steel in the Netherlands. Tesla uses this steel at GF1 for battery cell production.

 

[FreqFlyer]

Since there seems to be a fascination with the Taycan's range here.

Porsche Taycan Turbo Crushes EPA Range Rating On Our 436-Mile Drive

Had we been driving in 70-degree temperatures and no rain the range would have been even better. Even with the cold weather and rain, we averaged 2.96 miles per kWh over the 436-mile trip. If you multiply that consumption rate by the 83.7 usable capacity the Taycan Turbo has, you come up with 248-miles of range per charge. That's not bad, and much better than the EPA range rating of 201 miles per charge. The car's remaining range estimator was a little more conservative and if you add the miles driven with the estimated remaining range you get a trip average of 235 miles per charge, still way better than EPA.

So why the huge discrepancy? I honestly don't know. I've driven pretty much all of the EVs available today, and I usually agree with the EPA range rating. EV range is a moving target; there are a lot of factors that influence how far any EV can go. We already talked about battery temperature and weather conditions like rain we experienced above. Topography is another. We did lose 1,000 ft of elevation from Atlanta to Daytona Beach so that was helpful, but not really enough to make that much of a difference over a 436-mile drive.

Also notable is the fact that the EPA provided the range figures themselves, and that's not how it usually happens. Many people don't realize that the manufacturer does the range testing and provides the EPA with the range rating and the data to back it up. The EPA has the choice to accept that data and publish it, or to then do their own internal testing. In the case of the Taycan, the EPA decided to do their own range certification, and those numbers came out much lower than what Porsche expected.

The EPA only does their own testing for about 10% - 15% of the EVs on the market today, the range figures for the remaining 85% - 90% were provided by the manufacturer. The EPA just doesn't have the resources to test every car, so they randomly pick some to test internally and the Taycan was chosen.

 

[lascavarian]

Just adding a comment that Tesla is progressing toward the ability to provide autonomous resupply to medical facilities in regions or cities that are quarantined. I am seeing comments that a lesson to be learned is that breaking quarantine for the movement of medical supplies as regional hospitals have consumed their standing supplies, is a problem that should be solved.

Seems to me the Cyber Truck would be ideal to deliver resupplies of drugs like antivirals as quarantined areas run out of supplies.

Shades of Balto!

The True Story of Balto, the Dog that Became a Hero

 

[Tslynk67]

Looks to me that shorty and/or MM's are taking the opportunity to walk it down a bit more than the macros when the dips are presented.