TSLA Market Action: 2018 Investor Roundtable

[RobStark]

(Aside from this, I noted a lot of jealous/nasty comments from legacy car makers it's not just the Ford tweet, it is a lot of comments in German media from guys that work in the German car industry).

Regarding Ford, Musk drew first blood by calling Ford a Morgue.

Because of their refusal to get into EVs wholeheartedly with both feet and spending billions on hydrogen fuel cells Elon has repeatedly called automotive industry executives as a group idiots.

So when you dish it out you need to be able to take it.

 

[Starno]

Ok, here is my 2cts - could you check my logic?

I base this on the most excellent posts of @jesselivenomore here: Elon Musk vs. Short sellers

If this theory about shorts is correct, we will see a slow winding down of the attacks once Tesla is cash flow positive / has a (smallish) GAAP profit. In my simple mind this should start now, as we reach 5k/Model 3 a week. Of course this is my perspective. From a short perspective, however things are not clear at all. I do think we are in an interesting twilight moment, when some shorts start to realise the risk/danger they are in and some keep believing that it is all smoke and mirrors and that Tesla is going to need much much more external funding over the coming months.

So here are my questions: if the above is correct - what will it take to convince the shorts? Will that realisation be "at once" or slowly seep in?

(Aside from this, I noted a lot of jealous/nasty comments from legacy car makers it's not just the Ford tweet, it is a lot of comments in German media from guys that work in the German car industry).

IMO, the realization that they're doomed will come from 2 things :


- Net profits, and huge margins
- No signs of slowing down, while competition lagging years behind (shown by no alternatives to buying a Tesla if you want a good quality "affordable" EV).

 

[SebastianR]

IMO, the realization that they're doomed will come from 2 things :


- Net profits, and huge margins
- No signs of slowing down, while competition lagging years behind (shown by no alternatives to buying a Tesla if you want a good quality "affordable" EV).

Thanks!

So what you say is that we should have patience for 3 months maybe 6 months... I save the rest: at least 9 months, right? Profits will come earliest in Q3, no signs of slowing down will be Q1 2019...?

 

[rameshbende]

Incrementally there will be positive news going forward in next couple of months. First, remember there are 12K model 3s produced but not delivered.So in July we should see at least 15K model 3 delivered. And if number is between 18-20K that is more than all deliveries of Q2 in single month.Tesla will put out this number in their quarterly release and will be huge news bringing Tesla into top 10 cars sold in US.

I believe production is rate sustainable rate and it may drop little bit may be few hundreds but I believe Tesla will produce more than 4.5K cars per week. With close to 20K cars produced in July. This number will also be put out in their quarterly release. I do not expect Tesla to have any Factory shut down in July. I expect them to do that in August to increase production to 6K and I expect it to be short period shut down not lasting more than 3 days.

China GF will be announced sometime in July/August.

FSD update in august. I thnik this will be bigger news of all.

 

[WarpedOne]

When will people finally see most of the shorting TSLA is not to make money?
The shorting is with full intention to loose the money by harming tesla' financial condition and thus slowing them down, possibly killing them.
Shorting will thus not stop, there will be no short capitulation.
The funds to cover margins are practically unlimited.
The real squeeze may happen when Elon decides to buy back, and "longs" take the profit.

I do not despise shorts - they are fighting for their own survival.
I despise "longs" who lend their shares - they enable harming the company they say they support.

 

[SebastianR]

When will people finally see most of the shorting TSLA is not to make money?
The shorting is with full intention to loose the money by harming tesla' financial condition and thus slowing them down, possibly killing them.
Shorting will thus not stop, there will be no short capitulation.

But isn't this exactly the point? They will stop once that proves to be futile, right? I mean when Tesla is profitable and won't "need" capital markets any longer because it can start to fund growth out of a well working and strong delivery pipeline (i.e. get cash from customers, pay suppliers 90 days after) this whole thing will go away. Tesla is signaling "we don't need capital markets going forward", the shorts essentially say "yea you still do, because we don't believe you - so hold my beer and watch me cut your access to capital markets off".

I think of it this way: if you spend millions of USD to kill a company you need to create the "crisis of confidence". That's the current short-play with the capital market. Now if the company won't need access to money, you better spend the money to create a consumer crisis of confidence: deliberately crash autopilot cars, make sure they go up in flames, engineer quality or service disasters etc. Because that's the only thing left: make people stop buying Tesla cars. And I'm wondering when this shift will happen (i.e. when the shorts realize that access to capital markets is no longer needed).

 

[Causalien]

If any of you have dry powder left. The best play right now is to sell put spreads in order to harvest that volatility while being protected on the downside.

 

[WarpedOne]

They will stop once that proves to be futile, right?

Don't assume rationality at the point of death.

 

[Tslynk67]

Don't assume rationality at the point of death.

Indeed - even when the financial side is lost I expect them to keep up the FUD with the hope to disenchant the public with Tesla.

Tesla's only real counter to this is to keep going and get more products in the hands of customers.

 

[Boomer19]

I just asked the same question on another thread. Now I’m thinking that maybe he was simply referring to revenues. He likely knows the shorts can’t do simple arithmetic and they will be shocked at the number of commas in the quarterly results.

he meant the short numbers...
when he said next level he meant that short interest % was biggest it’s ever been on tsla

 

[neroden]

Morgan Stanley note keeps price target the same; while waiting for Q3 for evidence of sustained 5K/week production rates. Accoridng to Adam Jonas: $5K/week offers temporary relieve but long term risks remain.

“Making 5k Model 3 vehicles in a week should not come as a complete shock to investors given the extraordinary short- term efforts of the firm (the tent). However, sustaining 5k or 7k/week could significantly improve Tesla cash flow and the character of a potential capital raise.

Our model does not assume 5k Model 3 deliveries per week before 1Q19. Ostensibly, at least, the latest Model 3 production news suggests a faster ramp than we have allowed for in our model. If not a complete 1-off achievement, then our 2H forecasts for Model 3 deliveries look too low. We may need to see some evidence of the true telemetry of 3Q production and deliveries before we can make a material change to our unit estimates.”

Someone at Morgan Stanley wants Adam Jonas to be pessimistic about Tesla, because this is just silly; he's refusing to update his model based on information which he concedes requires an update to his model.

Watch the institutional purchase records and don't be surprised if MS is buying lots of TSLA stock.

 

[neroden]

Ok, here is my 2cts - could you check my logic?

I base this on the most excellent posts of @jesselivenomore here: Elon Musk vs. Short sellers

If this theory about shorts is correct, we will see a slow winding down of the attacks once Tesla is cash flow positive / has a (smallish) GAAP profit. In my simple mind this should start now, as we reach 5k/Model 3 a week. Of course this is my perspective. From a short perspective, however things are not clear at all. I do think we are in an interesting twilight moment, when some shorts start to realise the risk/danger they are in and some keep believing that it is all smoke and mirrors and that Tesla is going to need much much more external funding over the coming months.

So here are my questions: if the above is correct - what will it take to convince the shorts? Will that realisation be "at once" or slowly seep in?

Jesse's theory is that the shorts are trying to starve Tesla of capital. At this point, they will be latching onto the following means to do this:
(1) Attempting to drive down demand. Thus the FUD, disinformation, and lies of the "fires" and "panel gaps" variety. This is hopeless and won't work, but should be fought anyway.
(2) Driving the stock price down to prevent issuance of stock. This is pretty effective. But Tesla doesn't plan to issue more stock.
(3) Spreading FUD in the bond market to prevent issuance of bonds. This may be effective since bond buyers can be very conservative and avoid doing research. But Tesla doesn't plan to issue more bonds.

And finally:
(4) Driving the stock price down below $360 so that the March convertibles have to be paid off, a $920 million cash requirement. This will fail because Tesla will actually have the $920 million to pay it off, but the short-sellers don't think that Tesla will, and it is a close enough thing that the short-sellers' belief here is plausible (though wrong).

So they will throw all their efforts at this. When Tesla pays it off in cash and still has a billion in cash and undrawn lines of credit, that's when they'll give up.

 

[Buddyroe]

Geees. what consequence does the 5k production in one week bring? I know I'd hate to be someone receiving one of those cars. And secondly, as an investor, I'm going to hate seeing/hearing about all the issues with these cars. Like the X when it was rushed into production, this batch of M3s will cost the company every penny of profit in warranty repairs (and probably more). Not to mention the hit on its quality reputation (even further).

How could Musk have been SO wrong about building 5k cars? What was the date he said they'd be at 10k per week? If they have to jump through so many hoops to hit 5k, how in the world will 10k ever be a reality?

Finally, didn't Ford make about 600,000 Mustangs in '65 or '66 (over 11k per week)? How is it that 50 years later, a supposed technology company can't even make 5k a week?

The last 2.5 to 3 years has been a struggle for Tesla. The days of beating delivery estimates, surprise profits, exciting product reveals, etc are OVER. As I predicted at the time, the MX would turn out to be a terrible mistake in the life of Tesla. I really thought it may even destroy Tesla completely (as it still is). 2 years of delays and billions of dollars spent on an SUV that can't outsell it's sister sedan in an age when EVERYBODY wants an SUV. And now the effects of that mistake are showing up in the M3. Because the MX was SO late and so many resources were dedicated to it, Tesla had to rush the M3 through R&D, rush it into production, and now rush to even be able to build the dang car. I had hoped that the production lessons on the X would make the 3 much easier to build, but obviously not.

And now we hang our hate on a pitiful success like building 5k cars in a vacuum - stealing workers from the MS/MX line, Musk sleeping in the factory, workers being paid tons of OT. When will Musk STOP worrying about the media, stop worrying about the shorts, stop worrying about the haters, and just get back to work concentrating on the simple master plan he laid out in '06? He needs to STOP with the BS timelines and projections. Yes, his words lifted the SP in the past, but not any more. People are past that and want to see results. Stop posting on twitter about burning the shorts - and just burn them. Just execute the plan, deliver, and no words or tweets will be needed.

 

[Unpilot]

Jesse's theory is that the shorts are trying to starve Tesla of capital. At this point, they will be latching onto the following means to do this:
(1) Attempting to drive down demand. Thus the FUD, disinformation, and lies of the "fires" and "panel gaps" variety. This is hopeless and won't work, but should be fought anyway.
(2) Driving the stock price down to prevent issuance of stock. This is pretty effective. But Tesla doesn't plan to issue more stock.
(3) Spreading FUD in the bond market to prevent issuance of bonds. This may be effective since bond buyers can be very conservative and avoid doing research. But Tesla doesn't plan to issue more bonds.

And finally:
(4) Driving the stock price down below $360 so that the March convertibles have to be paid off, a $920 million cash requirement. This will fail because Tesla will actually have the $920 million to pay it off, but the short-sellers don't think that Tesla will, and it is a close enough thing that the short-sellers' belief here is plausible (though wrong).

So they will throw all their efforts at this. When Tesla pays it off in cash and still has a billion in cash and undrawn lines of credit, that's when they'll give up.

So even though I am a long I have to wait till march to celebrate on the graves of the shorts?

 

[mongo]

The last 2.5 to 3 years has been a struggle for Tesla. The days of beating delivery estimates, surprise profits, exciting product reveals, etc are OVER. As I predicted at the time, the MX would turn out to be a terrible mistake in the life of Tesla. I really thought it may even destroy Tesla completely (as it still is). 2 years of delays and billions of dollars spent on an SUV that can't outsell it's sister sedan in an age when EVERYBODY wants an SUV.

X outsold S last quarter.
Per the Q2 numbers:

Q2 deliveries totaled 40,740 vehicles, of which 18,440 were Model 3, 10,930 were Model S, and 11,370 were Model X.

 

[hacer]

So, you believe Tesla IS being intentionally deceptive, and the in-transit backlog is due to a different reason from the reason they publicly disclosed.

That's ok, I agree with you!

Their stated reason is completely correct. It takes a long time to ship cars to Canada because most Canadians orders are on the East coast. Most of the cars were produced in last few weeks and there wasn't enough time to get them delivered to customers in Canada.

Tesla likely could have delivered most of these cars in the United States before the end of quarter but chose not to because it would have triggered the tax credit phase-out at the end, rather than beginning of a quarter.

There is no deception in this at all.

 

[Dan Detweiler]

This entire conversation sickens me. How can political and institutional greed have so much sway on the success and failure of a company trying so hard to do the right things and create positive change. Whether it's Tesla or any other company. Watching all this play out makes me understand why people have little to no interest in Wall Street, the media, analysts, all this crap. Blatant manipulation through false reporting and manipulation of facts. Slanted bias arguments meant only to mitigate what should be hailed as a triumph...and the majority of people are to stupid or lazy to question it. I understand that the powers that be want to keep it that way and why. Capitalism at its finest, right? Absolutely disgusting.

Dan

 

[jelloslug]

This entire conversation sickens me. How can political and institutional greed have so much sway on the success and failure of a company trying so hard to do the right things and create positive change. Whether it's Tesla or any other company. Watching all this play out makes me understand why people have little to no interest in Wall Street, the media, analysts, all this crap. Blatant manipulation through false reporting and manipulation of facts. Slanted bias arguments meant only to mitigate what should be hailed as a triumph...and the majority of people are to stupid or lazy to question it. I understand that the powers that be want to keep it that way and why. Capitalism at its finest, right? Absolutely disgusting.

Dan

It has been that way since the first days of publicly traded companies.

 

[Unpilot]

OK since yesterday premarket was up almost $20 and then we ended in the red. Today we start in the red so theretofore we must end in the green.

 

[Dan Detweiler]

It has been that way since the first days of publicly traded companies.

So has murder and rape. Doesn't make it right.

Dan