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

[Curt Renz]

Probably, but it's essentially meaningless. I'd expect Nikola to lose the patent suit regarding similarities in the designs of semi cabs. The judge is already upset with the way Nikola has been proceeding.

Nikola was probably hoping for a settlement for allowing Tesla to proceed with its design, but Tesla says take it to court. Nikola may not want to absorb the legal expenses of a lost lawsuit. It may not even be worth it for a winning suit.

In the unlikely event that Nikola wins, it would not be difficult for Tesla to slightly alter the design of a vehicle that is still far from entering regular production.

 

[Tslynk67]

Totally fake SP action today, methinks. Aided somewhat by ugly moves with the other EV stocks and a bit of classic FUD

 

[larmor]

The Gigapress is quite big for very big parts. They could certainly use a smaller die casting machine for wheels, but right now there are reliable and affordable sources for wheels.

Seems like it makes most sense for them to focus the specialized equipment on building parts which aren’t widely available elsewhere.

Or they could make paperclips.

 

[Krugerrand]

View attachment 723286
Watching the share price today is like watching paint dry; however, you're in luck . . I have something much more exciting for you: Accounting.
(trying to solicit a response from the grouchy cat . . .you know who you are).

There were some discussions about Free Cash Flow (FCF) a few posts back.
FCF is Cash generated from business operations less spending on Capital Expenditures.
Here is Tesla's FCF for the last 4 quarters and my estimate for Q3 2021:

View attachment 723287

With Free Cash Flow, Tesla is then:
- free to pay down debt
- free to buyback shares
- free to pay dividends
- free to purchase another company
- free to buy Bitcoin
- or free to add to their cash account

Here is how Tesla has used their FCF in the past and what I expect in Q3:
View attachment 723288
As you can see, Tesla has used much of it's FCF to pay down debt and buy Bitcoin.
They raised cash from Equity raises in Q3 & Q4 2020.

My annual projections for FCF are:
$ 4b - 2021
$ 9b - 2022
$15b - 2023
$24b - 2024

There is only so much debt to be paid down; Tesla will be sitting on a pile of cash.

Next time just start with the 2021-24 b prediction chart so I can skip everything else. Robin of the Hood and his Merry Men, Lex Luther, Scrooge McDuck, Bruce Wayne, nobody cares how they get the money.

 

[Words of HABIT]

SP has been green for 6 days, wondering what's the maximum # of green day TSLA had in history?

I won't be happy until TSLA beats The Athletic A's 2002 winning streak of 20 games.

 

[hacer]

Correct. These are trading with no time value left, e.g. at 668 when the stock is at 868. And I knew I wanted the shares and had the cash to exercise, so no time like the present.

I'm in the same boat and have been thinking for a while now of early exercise just to start the long-term-gains clock sooner but I'm still waiting a bit because I'm using my cash to cover sold puts at the moment and I'm hoping soon I can sell just 2 of the calls and cover the exercise costs of the other 8, but it's not quite there yet. Then next year(or maybe 2023 depending on if it takes until Jan or is about to expire) I use my cash for the taxes on the ones I sold. A nano version of Elon's option dilemma I guess.

 

[Rarity]

Good question. I can't wrap my head around these Treasury Operations . . . when to take on debt and when not to.
For example, I thought I just read that Tesla was getting a favorable loan from a German locality.
I guess if the interest rate terms are low enough, it does not hurt so much to take on debt even with a stack of cash on hand.

As I understand, some companies use debt (or have used debt in the past) to shift where they show profits from intellectual property.

I also vaguely understand that the corporate tax cuts in 2017 made such shifts less worthwhile, or at least made any such shifts away from the US less worthwhile.

Suffice it to say that debt can sometimes be taken on for unintuitive reasons.

 

[The Accountant]

Considering the tsunami of FCF headed our way, do you understand Elon's statement at the shareholder meeting that they don't expect to pay dividends any time soon?

This seems to contradict:
1) He's repeatedly said that the limiting growth factors are talent and supply chain and that if Tesla could find more ways to spend money reasonably they would
2) Tesla's CapEx efficiency has been improving at a stupendous rate. E.g. Giga Shanghai's up front investment costs paid for themselves in less than a year. So if anything, with rising ROIC we'd expect it to be even harder to reinvest all FCF into growth (a good problem to have).

So with your projection of $48 billion in FCF for 2022-24, what can they do?
- pay down debt

• Tesla's total debt is only around $10 billion last time I looked

- buy back shares

• This is effectively a dividend with different tax implications, so I think we can rule this out

- pay dividends

• Elon just said this isn't coming any time soon

- purchase another company

• Maybe, but large-scale mergers and acquisitions are slow, difficult and prone to failure, so it'd be hard to spend all the FCF

- buy Bitcoin

• Meh, still too much FCF for this. They have quite enough BTC in my opinion and I wish they owned zero. Seems unlikely that they'd pile all their excess profits into BTC before paying a dividend.

- add to their cash account

• They already seem to have enough cash at $24 billion last quarter IIRC, and at a certain point they have more than enough dry powder to weather out any conceivable headwinds

All I can think of is that Elon is intimating that a massive, monumental increase in CapEx is coming soon, beyond that which we already know about that fed into your $48 B estimate. I can only think of one way to profitably spend that much in '22-'24 and beyond: Directing most automotive production away from consumer sales & leasing in favor of building the Tesla Network robotaxi fleet. At a unit production cost of let's say $24,000 each, that would fund production of about 2 million robotaxis while keeping cash and debt roughly constant.

Thoughts?

I don't know why some corporations hold on to so much cash. Perhaps the cash is stuck in a foreign tax jurisdictions . . .not sure. Or maybe it just corporate hubris for bragging rights. Once Capex and R&D are safely funded, I would use some excess cash to buy-back stock at opportune times.
As of 2020, these are the Top 10 US holders of Cash & S-T Investments:

I think we will see Tesla break into the Top 10 by the end of 2023.

 

[Drezil]

I don't know why some corporations hold on to so much cash. Perhaps the cash is stuck in a foreign tax jurisdictions . . .not sure. Or maybe it just corporate hubris for bragging rights. Once Capex and R&D are safely funded, I would use some excess cash to buy-back stock at opportune times.
As of 2020, these are the Top 10 US holders of Cash & S-T Investments:
View attachment 723359

I think we will see Tesla break into the Top 10 by the end of 2023.

For the case of Apple PolyMatter made a video:

 

[dhanson865]

Tesla ready to "move" Like a Teracap?

 

[ZachF]

I don't know why some corporations hold on to so much cash. Perhaps the cash is stuck in a foreign tax jurisdictions . . .not sure. Or maybe it just corporate hubris for bragging rights. Once Capex and R&D are safely funded, I would use some excess cash to buy-back stock at opportune times.
As of 2020, these are the Top 10 US holders of Cash & S-T Investments:
View attachment 723359

I think we will see Tesla break into the Top 10 by the end of 2023.

Tesla #1 in revenue, profit, market cap, and cash by 2030.

 

[TheTalkingMule]

Tesla ready to "move" Like a Teracap?

Market cap 973M?

 

[traxila]

I don't know why some corporations hold on to so much cash. Perhaps the cash is stuck in a foreign tax jurisdictions . . .not sure. Or maybe it just corporate hubris for bragging rights. Once Capex and R&D are safely funded, I would use some excess cash to buy-back stock at opportune times.
As of 2020, these are the Top 10 US holders of Cash & S-T Investments:
View attachment 723359

I think we will see Tesla break into the Top 10 by the end of 2023.

Silicon Valley traditionally hated to pay dividends. It was seen as an admission that the companies were no longer innovators and could not find productive uses for the money. That has changed as the cash piles grew gargantuan and the ability to get risk free returns also shrank.

Apple set the example when their cash pile accumulated from the 80s (minuscule compared to today - remember it as a couple of billion) was the only thing that saved them from bankruptcy in the 90s as essentially the entire business world was set to kick dirt on their grave.

"When Steve Jobs returned to Apple in 1997, Michael Dell famously trashed the company with a killer quote.
When asked what he'd do with Apple if he were in Jobs' shoes, Dell said:

"What would I do? I'd shut it down and give the money back to the shareholders." "

Dell referred to the last of the cash hoard that Apple had left. If not for their cash pile, Apple would have failed. The PTSD from their near death experience led to Apple stockpiling over 100 billion before deciding to spread it around a bit.

"CUPERTINO, California (Reuters) - Steve Jobs defended Apple Inc’s decision to maintain a $40 billion cash pile and said it was better to save the money for bold risks, like acquisitions, than to spend it on stock buybacks or cash dividends."

That was over ten years ago. My feeling is Tesla should do the same. Cash piles do allow for bold risks and self insurance.

I know we are all crowing now and see nothing but clear skies ahead, but circumstances can change so quickly. Tesla needs to be able to say it is 100% self reliant. It simply has too many enemies. Maybe everyone here does not agree, but IMO, 100 billion should be a starting point before we should talk about dividends and other ways of distributing the cash. But who cares what I think?

Elon's thoughts, OTOH, are very much cared about and I believe he is on the same page here. He does not see the argument for distributing cash that may suddenly be sorely missed and jeopardize the mission. This is very low his list of priorities. And it is not like Tesla did not have a couple of near death experiences as well...

 

[LST]

Hmm, say hello to the bears? Every firm has a stooge they trot out from time to time.

Another analyst just put out a shocking bear case for Tesla: Citi says stock could drop to $36

Morgan Stanley caused a stir with its "bear case" scenario of $10. Now, Citi is getting in on the act.

www.cnbc.com

 

[Opus BC fan]

Tesla #1 in revenue, profit, market cap, and cash by 2030.

How about this?

 

[MikeC]

Silicon Valley traditionally hated to pay dividends. It was seen as an admission that the companies were no longer innovators and could not find productive uses for the money. That has changed as the cash piles grew gargantuan and the ability to get risk free returns also shrank.

Apple set the example when their cash pile accumulated from the 80s (minuscule compared to today - remember it as a couple of billion) was the only thing that saved them from bankruptcy in the 90s as essentially the entire business world was set to kick dirt on their grave.

"When Steve Jobs returned to Apple in 1997, Michael Dell famously trashed the company with a killer quote.
When asked what he'd do with Apple if he were in Jobs' shoes, Dell said:

"What would I do? I'd shut it down and give the money back to the shareholders." "

Dell referred to the last of the cash hoard that Apple had left. If not for their cash pile, Apple would have failed. The PTSD from their near death experience led to Apple stockpiling over 100 billion before deciding to spread it around a bit.

"CUPERTINO, California (Reuters) - Steve Jobs defended Apple Inc’s decision to maintain a $40 billion cash pile and said it was better to save the money for bold risks, like acquisitions, than to spend it on stock buybacks or cash dividends."

That was over ten years ago. My feeling is Tesla should do the same. Cash piles do allow for bold risks and self insurance.

I know we are all crowing now and see nothing but clear skies ahead, but circumstances can change so quickly. Tesla needs to be able to say it is 100% self reliant. It simply has too many enemies. Maybe everyone here does not agree, but IMO, 100 billion should be a starting point before we should talk about dividends and other ways of distributing the cash. But who cares what I think?

Elon's thoughts, OTOH, are very much cared about and I believe he is on the same page here. He does not see the argument for distributing cash that may suddenly be sorely missed and jeopardize the mission. This is very low his list of priorities. And it is not like Tesla did not have a couple of near death experiences as well...

Maybe Tesla needs to stockpile cash in order to have the capital to be an insurance underwriter?

 

[EVDRVN]

Maybe Tesla needs to stockpile cash in order to have the capital to be an insurance underwriter?

Because insurance companies are so solvent.

 

[Skryll]

Maybe Tesla needs to stockpile cash in order to have the capital to be an insurance underwriter?

How do you insure that against inflation tho

 

[JustMe]

I won't be happy until TSLA beats The Athletic A's 2002 winning streak of 20 games.

So… what you’re saying is… Tesla should hire Brad Pitt as CEO?

 

[Cherry Wine]

Another red flag, and supportive of the idea that NHTSA could soon turn hostile:

Biden to tap No. 2 official to head U.S. auto safety agency

President Joe Biden plans to nominate the No. 2 auto safety official to head the National Highway Traffic Safety Administration (NHTSA), the White House confirmed on Tuesday.

www.reuters.com

An official separately told Reuters that Duke University engineering and computer science professor Missy Cummings is being named a new senior adviser for safety at NHTSA.

She posted this on Twitter on Sunday:

https://twitter.com/x/status/1449788572106625039