TSLA Market Action: 2018 Investor Roundtable

[MXWing]

Elon, his eyes open.

at Shanghai. When the shorts fell.

 

[wipster]

Ford, an Automaker at a Crossroads, Seeks Cuts and Partners

Ford dying.

Not a matter of IF but WHEN.

Ford should take whatever money they have left and invest in Tesla.

Marrying Tesla batteries and drivetrains to F150's may not be completely efficient and optimal at the start. However, it would be an amazing stop gap until they can jointly produce a truck built around EV technology.

I think it's time for Ford to exit this plane of existence, or at least be in a position to sell some manufacturing facilities on the cheap, both here in the states and in Europe. Tesla has a better idea for a pickup than converting F150's.

 

[generalenthu]

I am having fun with connecting the dots here for the weekend after a stressful week. This would explain why Elon insisted on being right for saying "Funding Secured" even after being forced to settle with the SEC because it is now secured. Let me know what you think of my crazy theory. Maybe there is light at the end of the tunnel, we will find out in less than 2 weeks!

The case: Tesla strikes a $10B deal with Saudi Arabia to build the first Gigafactory in the country. Details will be announced in less than 2 weeks.

1. Saudi wants and is investing in other energy to diversify from oil. This is a fact.
2. Saudi is executing a grand vision to build an industrial base in their country, reduce reliant on oil, and reduce unemployment rate from 13% to 7% in 12 years. they also want to build a futuristic city, Neom, a modern city with solar power and autonomous cars, among other advanced technology. This is according to MBS and people familiar with the Saudi.
3. Per Musk's blog post, they have been approaching Tesla offering them to go private for past 2 years. this fits perfectly into their plan #1 and #2
4. Musk announced funding secured on 8/13. The plan fell through because many investors cannot participate (Musk's announcement), and (possibly) Saudi wasn't ready yet with funding because it was not yet fully approved (article below) so they kept quiet.
5. (Possibly) After the failed take-private, Musk and the Saudi fund manager continued working quietly on a new feasible deal without involving going private. Instead, they have decided partner up. Saudi will provide funding and Tesla will provide technology, together they will build a brand new industry in Saudi Arabia, along with their futuristic city Neom.
6. (Possibly) On 10/18/18, 2 weeks from last Wed, funding has finally been secured, and the deal is announced. Construction will start early 2019 on GF4 (double the size of GF1, they have lots of lands and cash) which will complete in early 2021. Tesla will start building showrooms in 2019. At GF4, Tesla will be building Solar Roof, Solar Panel, Power Packs, and all 3 model S3X. Saudi will be able to sell extra solar power and tesla will sell cars to neighboring countries in the entire middle east.
7. (Possibly) More Gigafactories will be built until 2030 as needed.

Sources:



Bloomberg - Are you a robot?
Update on Taking Tesla Private
Saudi Arabia Weighs Larger Tesla Stake as Part of Plan to Make Electric Cars

Disagree because Saudi doesn't have a base or even work force for setting up a large industry. The footprint of these gigafactories will be so big that it's hard to get enough people into even the Reno area.

If Saudi wants to industrialize, start small.. like solar panel assembly, etc. Or something like a tilburg type facility.

 

[beachbum77]

You, like most Fudsters, aren't looking at the whole picture correctly. There are 95 million cars sold annually on earth. The % of EVs sold is growing yearly. Tesla is crushing it, #1 premium brand in US, #1 EV, #1 sedan. Now get out a spreadsheet and do some projections.

I have worked MY spreadsheets. My concern is some investors are looking at the Q3 ramp numbers and forgetting these were a result of
1) Hold overs from Q2 to prevent breaking 200K in the U.S. in June.
2) Largely people with reservations for over 2 years.

As far as the U.S. is concerned, Troy's spreadsheet is pretty ugly. Look at the number of new configurations starting in September. Even if this is just 2% of the actual numbers, the rapid decline is worrisome. I also truly expected to see more in-transit units at the end of Q3 then there were at the end of Q2. Instead, the number dropped by over 3,000 units.

Opening up Europe will release the pent-up second wave of reservations. But those deliveries will take much longer to hit revenues. Once those orders are filled in about 6 months what will be left for Model 3? SR deliveries at lower margins? Even if Q3 and Q4 prove profitable I do not see the profits being as high as the last quarterly profit in 3Q16. China will be a huge drag on revenues until GF3 is online or the tariffs are reduced.

 

[Artful Dodger]

Buying batteries from Tesla is still a possibility though.

Currently, Tesla buys battery cells from Samsung (S.Korea) for it's storage products, ie: the Australian 'Big Battery' project near Adelade.

I think it makes sense to build powerwalls and powerpacks locally in KSA along side solar PV since solar doesn't provide a complete solution without storage. And it saves a great deal in shipping/time costs shipping direct S.Korea => KSA instead of S.Korea => GF1/Sparks, NV => KSA

Cheers!

 

[MXWing]

I think it's time for Ford to exit this plane of existence, or at least be in a position to sell some manufacturing facilities on the cheap, both here in the states and in Europe. Tesla has a better idea for a pickup than converting F150's.

As far as I know, nothing wrong with the RAV4 EV and Mercedes B-Class Electric drive which was powered by Tesla internals.

A transplant as a stop-gap is quicker than designing an entire vehicle life cycle.

 

[KarenRei]

I have worked MY spreadsheets. My concern is some investors are looking at the Q3 ramp numbers and forgetting these were a result of
1) Hold overs from Q2 to prevent breaking 200K in the U.S. in June.
2) Largely people with reservations for over 2 years.

As far as the U.S. is concerned, Troy's spreadsheet is pretty ugly. Look at the number of new configurations starting in September. Even if this is just 2% of the actual numbers, the rapid decline is worrisome. I also truly expected to see more in-transit units at the end of Q3 then there were at the end of Q2. Instead, the number dropped by over 3,000 units.

Opening up Europe will release the pent-up second wave of reservations. But those deliveries will take much longer to hit revenues. Once those orders are filled in about 6 months what will be left for Model 3? SR deliveries at lower margins? Even if Q3 and Q4 prove profitable I do not see the profits being as high as the last quarterly profit in 3Q16. China will be a huge drag on revenues until GF3 is online or the tariffs are reduced.

Q2 was artificially boosted by the need to avoid tolling the 200k limit for the tax credit.

Demand - as with all of Tesla's other models in the past - self-inflates with time as word-of-mouth spreads (positive reactions and experiences from friends replacing FUD). Doesn't just happen with Teslas, it happens with all new vehicle tech (remember the same thing happening with the Prius?). Eventually Tesla will need to pull some demand levers, such as leases. But so far, it's the same rollout pattern as the S and X.

 

[wipster]

As far as I know, nothing wrong with the RAV4 EV and Mercedes B-Class Electric drive which was powered by Tesla internals.

A transplant as a stop-gap is quicker than designing an entire vehicle life cycle.

Possibly, but starting a transplant in the next 6 months at the earliest vs. completing the design of a pickup designed from the ground up to be an electrically powered vehicle sounds like a far superior solution to me.

I dunno though, maybe if they threw in a twin I beam front suspension? /s

 

[defc0n]

Oh *sugar*.. just found out a friend of a friend is Anton Wahlman, my favorite Tesla short. When I mean favorite, I'm a big fan of clowns.

I need a advice on how to proceed STAT.

Seriously.

Step one is getting my friend to buy a Tesla. Urgency level has gone up on that referral.

Deliver a personal “**** you” from me to Anton if you ever get the chance. Will reimburse you for your troubles.

 

[mongo]

Musk and Straubel really in Dubai?

If so, great news.

Tweet

“Excited to bring the largest sustainable energy project in history to Dubai”.

Versus

“Hope shortville puts on some long pants. Boss battle is over for the shorts and their SEC overlords”.

Oh, I didn't mean to imply any actual news, just the fun of trying to discern meaning.

Ford, an Automaker at a Crossroads, Seeks Cuts and Partners

Ford dying.

Not a matter of IF but WHEN.

Ford should take whatever money they have left and invest in Tesla.

Marrying Tesla batteries and drivetrains to F150's may not be completely efficient and optimal at the start. However, it would be an amazing stop gap until they can jointly produce a truck built around EV technology.

If you take the motor, transmission, transfer case, cluster, HVAC, ABS module, master cylinder and center stack off a 150, you're left with a shell that needs the sheet metal redone. Then change the frame to hold the pack, shorten the front, and add new load points. Tesla gains nothing over a custom frame.

 

[CorneliusXX]

Show me the math supporting it as normal....even back of the envelope is OK since it's Saturday.

Once you provide your workings, since you made the original assertion that it is not normal.

 

[generalenthu]

Here in Ithaca, we do see Bolts flying off the lot, actually; our Chevy Bolt dealer says they're gone within a day of arrival and he has a waiting list.

But our Chevy Bolt dealership can't get GM to assign him any more Bolts. So he's been buying Bolts off of dealers all over the rest of the country -- dealers who were trying not to sell the car and didn't bother to learn anything about it. At least two of the dealers he bought them from didn't bother to charge the car before trying to drive it over to him, and he had to tow them back to his dealership when them ran out of charge halfway through the trip.

This goes to show two things: (1) that the dealership model is seriously harming all other EV brands, and (2) also that GM corporate is not serious about mass-selling the Bolt (if they were, the Ithaca dealership would be getting a lot more Bolts).

The year-long waiting list for Bolts in Canada is another data point; apparently now GM is redirecting Bolts to Canada -- but now dealers can't get them in the US. GM's plan for increasing production can only be called embarassingly modest -- from 20,000/year to 30,000/year, still way less than Model *S* which sells for three times as much.

And it's actually this that forms my core investment thesis on Tesla. As long as the would-be competitors are going out of their way to avoid selling their electric cars in volume, Tesla can get away with astounding amounts of bullshit (the tales in the Model 3 Delivery forum are hair-raising), and people will deal with it because, unlike GM, Tesla is actually trying to deliver cars to everyone. I wish Tesla wasn't providing a crappy delivery experience. I wish Musk would not post on Twitter without review. I wish Tesla would actually improve things in software updates rather than routinely breaking things. I wish Tesla had something approximating internal communications.

But the bottom line is, nobody else is mass-producing EVs, they're not *willing* to even when the demand is evident, and customers want EVs. In August, Tesla delivered *15%* of the plug-in cars in the *world*, and Model 3 production was 2.4 times as high as Leaf production, and 3.8 times as high as the next most popular model (the Geely Emgrand). That's August.

Tesla's still increasing production faster than Geely or BYD (who are also trying to ramp up).

EV Sales: World

If you accept the basic thesis that EVs are better and will take over, then it's clear that Tesla is seizing the largest share of the market. This is particularly true outside China, since Geely and BYD don't do much in the way of export business.

I don't know about Ithaca, but autoline says there's excess inventory stateside

 

[beachbum77]

Options are time bound, therefore a time limited position impacted by short term volatility. Elon is willing to sacrifice the short term for the long term. He has warned people that do not like volatility to not buy TSLA.

This "not weak" long has regrets about not selling at any of the $380 peaks. Long term, I believe holding will work out, but short term it's annoying.

Mongo, most smart investors do not follow a "buy and hold forever" mentality and survive. Just like institutional investors they constantly revisit their investments to see if they still meet the criteria that caused them to be bought in the first place. Unforeseen and changing events can alter any investment's popularity.

Since the Q1 CC when Musk scoffed at questions and turned to You-Tube, Musk has been increasingly irrational, emotional, and at times downright stupid and the volatility in the share price has increased dramatically. Whether caused by physical issues or mental stress is unclear. But something has seriously been altered in this man. While there is no doubt he is a visionary and long-term strategist for mankind's survival, whether he is fit to continue as CEO and a BoD member is becoming a real question.

I keep asking myself if he is trying to get the BoD to fire him so that he does not have to resign. If so, what is up his sleeve? I equate trying to follow this man to playing chess with a Grandmaster. How many moves ahead is Musk right now? Is this some elaborate exit strategy? Time will tell. But in the meantime, I would limit how many TSLA eggs you put in your investment basket.

 

[MXWing]

Oh, I didn't mean to imply any actual news, just the fun of trying to discern meaning.



If you take the motor, transmission, transfer case, cluster, HVAC, ABS module, master cylinder and center stack off a 150, you're left with a shell that needs the sheet metal redone. Then change the frame to hold the pack, shorten the front, and add new load points. Tesla gains nothing over a custom frame.

Informative, I know nothing about EV retrofits so thank you.

There’s other ways to make this go.

Nothing stopping Ford from selling Model E’s that’s 90 percent Tesla with full federal tax credit.

 

[Fact Checking]

What's not normal is for $1.8B 8yr corp bonds issued barely 14 months ago to be trading at 84 and change.

I don't see anything out of the ordinary:

• 7-year Treasury yields have risen a lot recently, to 3.28%, which is about 1.2% higher than 14 months ago. This means the value of corporate bonds priced 14 months ago would be about 8.7% lower - i.e. 91.3 instead of 100.
• Even non-convertible corporate bonds (of any company, not just Tesla) depend on the equity value and their price thus tracks the stock price. When the bonds were priced the TSLA stock was well above $300 ($350?), and if you check the price graph, a ~$100 drop corresponds to about 1% yield rise, which for 7 years is about 7.2% cumulative.
• So 7.8%+7.2% = 15%, fair price for the 7-year bonds would be $85, if there were $100 14 months ago. That's pretty close to the $84 price.

Treasury yields have risen a lot this year:

7-Year Treasury Constant Maturity Rate​

If you check that graph it was near a minimum about 14 months ago. Tesla picked a pretty good time to raise money!

The rise in Treasury yields coincided with the drop in the Tesla stock price, so the two effects (lower corporate value and higher Treasury yields) added up and a price of $84 looks fairly normal to me.

 

[RobStark]

The Roadster was fake, Model S was fake, Model X was fake, Model 3 was fake, Semi is fake, Roadster is fake again...

You forgot that the Gigafactory is a potemkin village.

 

[CuriousSunbird]

View attachment 341497
View attachment 341498

Here is the source of today’s manufactured rumor. Straight from the crime playbook. This is the “reporter” from the fox video everyone with Apple stock app has seen today.

If it isn’t clear the objective is a hostile take over, it should be very clear now.

Sunlight is the best disinfectant.

Doesn't seem to make sense - only way to make this work would be to walk away from the Solar City obligations.

 

[AZRI11]

Alright, here’s part 2 in my blog post series. After all parts are done I’m hoping to put it altogether in one post. Please PM me if you have any ideas on how we can get Elon to read the final compilation.

DaveT on Chatstarter: "Part 2: The Turning Tide - Why Elon vs SEC might have a very bad ending"

Also, I'm looking for quality feedback. Just @ me in the thread so I can see it.

There will be a settlement. Elon brings guns to a knife fight. Government needs SpaceX badly, will play that card even if it's not necessary.

 

[Esme Es Mejor]

Show me the math supporting it as normal....even back of the envelope is OK since it's Saturday.

Those are Amazon bonds. Obviously, Tesla bonds have slid more because they have a substantially lower rating and weaker balance sheet than Amazon, but the trajectory is the same. You can see the big drops when rate rises were announced.

 

[CorneliusXX]

I don't see anything out of the ordinary:

• 7-year Treasury yields have risen a lot recently, to 3.28%, which is about 1.2% higher than 14 months ago. This means the value of corporate bonds priced about a year ago would by about 8.7% lower - i.e. 91.3 instead of 100.
• Even non-convertible corporate bonds (of any company, not just Tesla) depend on the equity value and their price thus tracks the stock price. When the bonds were priced the TSLA stock was well above $300 ($350?), and if you check the price graph, a ~$100 drop corresponds to about 1% yield rise, which for 7 years is about 7.2% cumulative.
• So 7.8%+7.2% = 15%, fair price for the 7-year bonds would be $85, if there were $100 14 months ago. That's pretty close to the $84 price.

Treasury yields have risen a lot this year:

7-Year Treasury Constant Maturity Rate​

If you check that graph it was near a minimum about 14 months ago.

The rise in Treasury yields coincided with the drop in the Tesla stock price, so the two effects (lower corporate value and higher Treasury yields) added up and a price of $84 looks fairly normal to me.

@NikeWings Does this count as my working?