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

[Joe F]

That’s a cop out and should be put to the mat. I should do something bad/dishonest/deceitful/questionable/et al because it puts food on my table. Bite me and every other person working hard to make an honest living. Under scumbag we find his picture.

See, sad cat already transitioning.

So you're suggesting there should be no media at all?

As pertains to advertising, that's the main supporting reason media exists. Your and my paying for cable, or whatever money anyone of us shell out for access to news and entertainment, is nowhere enough to support MSM.

Now, if you're speaking to the BS shorts that bash Tesla, I agree with your sentiment. Otherwise, I don't agree at all, at least not WRT to the individual I mentioned.

 

[Artful Dodger]

Here comes the top of the hour Tesla bashing from CNBC. Marching out the bears - Dan Niles, who just admitted his fund is short Tesla, is this hour's bear.

Dan Niles explains why he shorted Tesla despite loving EV space

 

[Hock1]

Right! Like it’s such a shock that tesla sold record credits with record deliveries. There is no reason that they should be viewed as a bad thing. The credits are doing exactly what they were designed to do, accelerate the transition to electric vehicles.

Please, someone correct me if I’m wrong, but the EU pooling credits to Tesla should scale with higher volumes delivered. I. E., to date Tesla’s pooling credits have been capped by the amount of Tesla deliveries in EU. No?

 

[jhm]

I bought 100 shares today.

Tesla is poised to grab 0.6% market share from ICE makers this year, while people chatter about reg credits and bitcoin. Serious distraction from the game. Excellent time to score some shares.

Not investment advice. Just me doing me.

 

[Rb48888]

Well... it doesn't seem that great at the moment, but since yesterday's close, I was able to pick up what I needed at an average price of $714.03.

It took me about 5 hours and 18 orders, and hurts my pride that I could have done better in a single click right now, but I think I'll be quite happy with these prices in a couple of week's time.

IMHO every earnings report that comes and goes without a large unexpected downside surprise, leaving the same tired clowns with the same tired arguments, is a step closer to the inevitable.

Cheers to the longs!

 

[dgodfrey]

If there was a company that just sold regulatory credits, even for a few years and made a profit from it, then that company, such as "Regulatory Credits R Us", would be a viable entity. IF they sold these regulatory credits as a byproduct of their regular product, then even better. The goal is to maximize profit and for Tesla the mission is to facilitate the transition to clean energy vehicles. So i don't know why there is so negativity with sale of regulatory credits.

Also, tesla has invested heavily in capital expenditure to make their product, while other auto manufacturers refuse to do so. So if there is a way get an earlier return on investment, why not maximize that return. I would ask tesla, why are you selling so few regulatory credits, why not sell more, aka regulatory credits as a service.

Finally, no matter which side you are on, the air we breathe is for everyone, so everyone benefits from cleaner energy. If you drive a tesla, sometime for fun and go to a gas station, even with a mask, and take a sniff...

I've sparred with many anti-Tesla foes these last 7 years trying in vain to explain the whole, "rate of growth" being proportional to regulatory credits and it falls on deaf ears. Regulatory credits dry up, expansion, acquisitions, investments, slow down. It's just a balancing act that maintains solvency.
Is there some data bank that would show graphically a percentage of revenue that is spent on non-production expenses compared to Tesla's peers. It might be interesting to see how much does GM spend on their future relative to their revenue. Just saying Tesla is a young company in an explosive growth phase isn't resonating although they most likely ignore listening to reason or they wouldn't take the position they do.

 

[Thumper]

Just because IDRA is part of a larger company, does not mean it couldn't be sold off. Companies spin off or sell off divisions all the time.

 

[Artful Dodger]

Please, someone correct me if I’m wrong, but the EU pooling credits to Tesla should scale with higher volumes delivered. I. E., to date Tesla’s pooling credits have been capped by the amount of Tesla deliveries in EU. No?

Paging @Prunesquallor for all EU carbon credits related questions.

 

[jerry33]

Just because IDRA is part of a larger company, does not mean it couldn't be sold off. Companies spin off or sell off divisions all the time.

True, but generally only if the spin-off company is losing money or the acquisition price is as high or higher than future potential income. Alternatively there could be some regulatory reason (e.g. They want to purchase X company but they can't without getting rid of Y company.) I don't believe any of these apply to IDRA.

 

[Drezil]

Please, someone correct me if I’m wrong, but the EU pooling credits to Tesla should scale with higher volumes delivered. I. E., to date Tesla’s pooling credits have been capped by the amount of Tesla deliveries in EU. No?

Things are this way in europe:
You got target CO2-Numbers for the Fleet of vehicles you sold. 90g CO2/km last year iirc. These are calculated with complicated formulas (heavy cars may emit more, small cars less etc.).
For every gram you land above that you have to pay a fine PER VEHICLE SOLD.

2020 the calculation was as follows: you can leave out the dirtiest 5% of your vehicles. For the rest: take the NEDC-Emissions (NOT WLTP!), plug it into the formulas and get an average.
Example calculations for e.g. a VW Family-Van go up to ~10.000€ of potetial fines PER VEHICLE (in 2020 those were the ones most likely to be excluded in the 5%). Small city-cars may land below the 90g so this can also offset these fines.

Now the extra-regulations for EVs: For the Phase-in every EV counts as 2(!) Vehicles with 0g Emissions. This should roughly be ~12k for every Tesla sold in credit-value.

This year things get harder: EVs only count as 1.66 Vehicles - so the potential credits of each vehicle for pooling on teslas side go down to around 9.6k. With enough vehicles sold this effect can be offset (and Tesla will offset it easily).

On the other hand: Do the other producers NEED those credits? Probably yes. I'm not sure on the timeline, but either this or next year the value you plug into the formula is the WLTP-number and not the NEDC. On that cycle ICE cars usually emit ~20% more CO2 per km.
And also the 5% dirtiest vehicles will be included soon and not left out anymore - upping the stakes again.

After 2022 they will shrink down the allowed CO2 gradually (90->80->70 or so over some years) keeping the pressure up.

Also 2021 every EV counts as 1.66 cars, but in 2022 EVs only count as 1.33 cars & 2023 onwards EVs just count as 1 car - so even with equal production ratio of ICE/EV as a manufacturer you pay more and more fines.

--
As always in europe: It is a bit complicated. But in the end they made a mighty hammer for decades. So hard that some manufacturers complained that they will never get their diesel clean enough & stopped research in it to transition to something else.

 

[BornToFly]

FYI, Max pain for Friday is 732 right now according to maximum-pain.com

 

[aubreymcfato]

You have to laugh at the schrodingers analysis that people do on tesla.

Tesla is doomed because competition is coming from the big players
Tesla is doomed because its reliant on emissions credits from the big players

Surely if the big players were even close to producing volume EVs, tesla wouldn't be able to sell energy credits? Even their own arguments contradict each other. lolz HOLD and enjoy.

that's a perfect tweet right there, use it.

 

[GOVA]

True, but generally only if the spin-off company is losing money or the acquisition price is as high or higher than future potential income. Alternatively there could be some regulatory reason (e.g. They want to purchase X company but they can't without getting rid of Y company.) I don't believe any of these apply to IDRA.

In addition, this is the segment which can be quickly saturated. How may casting machines are needed in the foreseeable future? 20?, 50?

This are not batteries that will be produced in billions of units. I don't think that IDRA = Grohmann situation.

 

[Curt Renz]

Jim Cramer & TheStreet - 2 hours ago:

 

[Drezil]

regarding EV-Credits in Europe: Nextmove has some calculation-examples for 2020 in an old video:

it is german, but many prices/specs are displayed as text in the video.

For every car they have the "Ist-Wert" (the NEDC-Cycle-Value), "Flotten-Soll" (the 95g per km fleet-wide) and "Soll-Wert" (the g CO2 every vehicle needs to hit to be at "Flotten-Soll" when also factoring in things like weight etc. using the mentioned complicated formulas).
And they also calculate how many ID.3 VW would have to sell to offset 1(!) sale of the example vehicle.

Really eye-opening. Especiall if you factor in that in 2020 this was "only" NEDC, that EVs contribute with factor 2 & that you can strike the worst 5% offender. Those things will be way harder 2021 for the same cars!

 

[Curt Renz]

https://twitter.com/x/status/1387010971072438272

 

[joh01652]

I am vexed, irked and disappointed. The most important of those is the last; I’ll get over the first two as soon as the thieves and bandits get run over.

I realized yesterday after the call that we are indeed royally ******. Not that I need to care about any of you or even myself for that matter - we won’t be *here*, but I’d always held onto a teeny piece of hope. That hope just got significantly downsized yesterday. It’s microscopic now.

Tesla is moving so fast, but it’s not fast enough. In and of themselves the delays are meaningless, as a whole and in context they are crushing.

I had thought the stream on conscience would shift quicker. After all there’s gobs of money to be made with the transition and nothing motivates man’s greed more than riches. It appears, though, that hanging onto what they have is a greater motivator than what they could have even if the could have is bigger and better.

Sad cat today. No worries because invariably that’s followed by burn in purgatory cat.

I'm sorry you're feeling down today. Maybe this morning's news posts from my Schwab account will cheer you up:

Goldman Sachs Adjusts Tesla's Price Target to $860 From $835, Maintains Buy Rating​

Canaccord Genuity Adjusts Tesla's Price Target to $974 From $1,071, Maintains Buy Rating​

Tesla Should Exceed 2021 Delivery Growth Target, Wedbush Says​

Oppenheimer Adjusts Tesla PT to $1,080 From $1,036, Maintains Outperform Rating​

Tesla is clearly on it's way to a $1T market cap within the next few short months. Keep accumulating TSLA shares and you will be rewarded.

 

[Chunky Jr.]

upcoming bear argument : "If you exclude all the revenue from sales of Model Y and Model 3, Tesla is losing money"

 

[jhm]

Maybe Tesla should just have a quarterly public auction for reg credits, bids to be paid in BTC. Let environmentalists and speculators try to outbid OEMs. Let the OEMs show publicly just how much they need cheap credits from Tesla. Let auto analysts bloviate about what they think a credit is worth and how many will be needed next quarter.

 

[henchman24]

Love how you leave out the additional Elon pay package that was triggered that no one was expecting . That easily covers/negates the boost in credits from Q4 to Q1 and the 100 million in gains on the bitcoin sales........So yes, the earnings report was pretty amazing.

I never said the 200 million S/X hit in Q1 was only a one time thing. Probably half of that is paying the line workers and the other half is all of the test cars they made/scrap/etc.. Not sure why you're pointing out that this is the "2nd quarter in a row with a disclaimer about extra costs" when we can all see with our eyes they're not in volume production and not selling any S/X, so of course there's going to be extra costs until they do so. Doesn't change the math that when they get the S/X up to only say 15k-20k a quarter, that 200 million hit will go to a positive 200-300 in profits from selling the cars, so a 400-500 million swing. Which again, makes the fact that they beat Non GAAP that much more impressive.

Also we can't forget that the Plaid S/X will likely be sold first. 4k of Plaid S is about 7k of the old S because of the dramatically higher selling price. The margins on the Plaid S (and X) are going to be pretty nuts. Combine that with Q2 starting off great in terms of 3/Y Fremont/China production (already 2 more ships this quarter than Q1 ) and Q2 is going to be above 220k P/D.

Having said all that......I think if you're someone that has a lot of Q2 Calls, probably even July/Aug Calls, you're hosed at this point. Tesla needed to give that 1 million guidance to really force Wall St is cover and let this thing ride

We are only in tranche 8(?) of Elon's pay. If that isn't triggered now, it is triggered later impacting later quarters at a higher rate. That will be a continuous pressure on GAAP income, especially as the market cap and fundamentals of the company improve. Along with that, I would say it is pretty unlikely that Elon won't get a subsequent package after this one is fully achieved. His compensation and the structure of it will have this impact continually. Disregarding it for this quarter to just have it impact Q2 is robbing Peter to pay Paul. It happens regardless.

Kirkhorn has mentioned the impact on gross margin twice due to this refresh and they are 'one time' sorts of items. We will hear it again for Q2 when they are still ramping up. Tesla just having less of a product line than other manufacturers means there is a higher impact when these delays and costs happen to the company. We are going on 5 months of these impacts on something that was supposed to be a 2 month item, and they didn't ease the concern much. That is material. Also just assuming half is payroll and half is scrap is coming from thin air. We don't know based on the earnings. I do agree that once they get ramped it will add to their bottom line quite a bit. The timing there is important as that impacts near term valuations. I do think the earnings cleary show Tesla has an excellent base, because if they execute well from here forward on S/X... they will have a solid addition to revenue and income. It still takes execution.

The margins will be high on S/X when the get going. The question of when it ramps and how quickly it ramps will have a lot to do with valuation of the company over the rest of 2021. If they don't hit volume production until Q4, there will be downward pressure on the stock simply due to that. Now the upward pressure of FSD, continual improvements to China production, Berlin/Austin completion, etc will probably still elevate more than the downward pressure of the new version of production hell. This will also think this will cause questions on how quick the ramp in Berlin/Austin happen. Elon has been pretty vocal in how large that technology change overs are there, and he didn't state much on S/X. Which reasoning stands that 4680, Y, and Cybertruck won't go as smoothly as S/X refresh. I do think that when volume production happens with the S/X, it will swap to being a large upward pressure on the stock. Berlin/Austin will be a lot more. Those are key catalysts over the next 18 months.

I don't think these were bad earnings at all, but they just weren't blowout earnings. They show Tesla has a really strong base to self fund and capitalize on their growth ambitions. If they can execute, the earnings will follow and push the stock a lot higher.