TSLA Market Action: 2018 Investor Roundtable

[Lessmog]

How do you know "Some shorts appear to be covering"?

My guess: a good guess. ~80-100k bought at rising sp over the last hour going into a long weekend. Nobody can tell what news (or "news") might materialize while the exchange is closed, so some people may want to cut and hedge. Expect them back on Tuesday.

 

[Richard007]

I agree that the market expansion theory can work in some areas - Apple and smartphones being the obvious example. But I think market expansion is harder for high price goods like automobiles. It is easier to imagine a middle class family stretching their budget to buy a $700 smart phone than it is to imagine the same family stretching their budget from a $25,000 Camry to a $45,000 M3. It may happen it some cases, but I think that as a large scale phenomenon it is improbable.

On a 5 year loan that’s $333 a month which equals gas savings. Not to mention oil changes. Not to mention gas savings continue after 5 year loan is paid off. Not to mention hassle of getting gas every week (charging at home or work garage is easy). Not to mention gas/oil bad for planet. Not to mention hip factor. Not to mention going electric is a political statement.
It’s a generational change taking place.

 

[Lessmog]

Sorry guys, have to go. Many thanks, interesting as ever. Whatever you think of Tesla as an investment, it's certainly one of the most enjoyable stocks to analyze/debate.

Hint: It can be even more fun with knowledge of facts unknown to the general market. Granted, that takes time and some work. Nonetheless, much can be learned from these discussions here, for someone ready to absorb it.

In the end one still needs to be lucky, especially with timing, to make serious money trying to time the market.

I had the fortune to start building my investment in TSLA five years ago. It's been up and down ever since, but win or lose is a matter of when to buy or sell, and my horizon is not yet here.

In my humble opinion, this is still a fantastic buying opportunity for the long term and I would buy more if funds were available. But please note: NOT AN ADVICE as we are wont to say. Take individual responsibility. Seriosly.

Again, good luck to all.

 

[The Blue Owl]

I think we need to be polite and respectful, even if we disagree with bears. CuriousSunbird has always been (despite some goading I might add) and raises valid concerns at times that we should be happy to address without being insulting. We're only diminishing our argument when we do.

Oh, man... I have to agree. Dammit. It's just that certain themes have been beaten to death on this board and now I suffer from post traumatic tftf disorder. But I have to admit that our new avian bear (!) has been unflinchingly polite and so far hasn't resorted to trolling and empty sarcasm. So now I must respond in kind (can you feel my enthusiasm?)

If the M3 is not aimed at a broader slice of the market than premium sports sedans, then demand will clearly be insufficient for the target production levels. In any case Musk himself has often said he wants the M3 to be a mass-market offering and not just a premium offering.

As was mentioned many times before, after taking into account gas savings, the strong desirability of a high-performance electric sports sedan like the Model 3, and the unique appeal of the Tesla brand, the longs are betting that the global 'premium sports sedan market', as you call it, will greatly increase by pulling in buyers from both above and below what was traditionally been considered 'mass-market'.

For the foreseeable future, Tesla will simply not have a demand problem. Tesla has plenty of execution and capitalization risk, and too many significant missteps may kill them. We all know that. We are still long despite the high risks because we think that, under Musk, the company will rise to the challenge.

But lack of demand is such a weak argument, for which there is no shred of evidence other than tired conventional, analogy-based thinking, that is no wonder people (and other mammals such as myself) lose patience when it still comes up. We've just heard it too many times, usually as part of incessant trolling, of the sort that made an exasperated Musk go to YouTube.

I don't wanna go to YouTube. They're crazy over there.

 

[kbM3]

I am basically a finance guy (as you will have noticed from the previous comments).

I come here to see if I can find convincing arguments to rebut the bear case.

Unfortunately for Tesla, I don't think the car quality will be dispositive of their future.

Notice you haven’t acknowledged the difference between Ioniq and Model 3.

If you don’t respond I will begin to get the impression you’re hear to speak only and not listen.

It has very clearly been explained why the comparison is specious, and you’ve not acknowledged that fact.

 

[sundaymorning]

Surprise surprise

Emails show cooperation among EPA, climate-change deniers

This is shameful, the EPA should get rid of it’s chief now, or change its name to the EPPA, the Environmental Profit Protection Agency.

 

[kbM3]

I think the M3 is aimed at a broader slice of the market than that. That is certainly what is indicated by the $36,000 to the $78,000+ price range. Due to the production delays, the M3 will now suffer from some peel off of demand at both the top (iPace, etc.) and the bottom (Ioniq, etc.), although not so much (as far as I can see) in the middle. I am wondering whether it is possible to estimate the effect of that in dollar terms.

The $36k-$90k is exactly the premium sports sedan market. Which is very large.

If you’re arguing Model 3 is going to capture more than the premium sports sedan market, that is a bull argument.

Maybe you are coming around?

Many thanks. One of the most important aspects of being an investor is to avoid confirmation bias. The best way to do that, in my opinion, is to challenge people on the other side of the debate to explain and justify their opinions.

And listen.....

 

[The Blue Owl]

Notice you haven’t acknowledged the difference between Ioniq and Model 3.

If you don’t respond I will begin to get the impression you’re hear to speak only and not listen.

It has very clearly been explained why the comparison is specious, and you’ve not acknowledged that fact.

Yeah, that's why I can't help but be somewhat mistrustful of the intent behind those posts. They're articulate and impeccably modulated, but at the same time never really acknowledge the good points the other side is making. I get that it's hard to be a bear in a bull-infested arena, but clear evidence of intellectual honesty goes a long way on this board. We are actually thirsty for thoughtful bear arguments, but a certain level of trust must be there, and trust is easily lost.

 

[Lessmog]

Yeah, that's why I can't help but be somewhat mistrustful of the intent behind those posts. They're articulate and impeccably modulated, but at the same time never really acknowledge the good points the other side is making. I get that it's hard to be a bear in a bull-infested arena, but clear evidence of intellectual honesty goes a long way on this board. We are actually thirsty for thoughtful bear arguments, but a certain level of trust must be there, and trust is easily lost.

Agreed. I think we have seen similar things in the past. Polished politeness only goes on the shiny surface. It can still be misleading to the unwary.

 

[wipster]

Notice you haven’t acknowledged the difference between Ioniq and Model 3.

If you don’t respond I will begin to get the impression you’re hear to speak only and not listen.

It has very clearly been explained why the comparison is specious, and you’ve not acknowledged that fact.

The CuriousSunbird has signed off (for now as least) per his/her recent post, so I wouldn't take a lack of response as speaking only and not listening...

Just sayin'...

 

[Dennisj00]

The absurdity of comparing the Ioniq (or Leaf or bolt ) to the M3 shows he has done very limited research-if any. It’s very easy to pick 5 random you tube results for either and draw a better conclusion!

 

[madodel]

Agreed. I think we have seen similar things in the past. Polished politeness only goes on the shiny surface. It can still be misleading to the unwary.

Perhaps the fossil fuel industry has upped its hiring standards? Some are polite, but if they were truly polite they would respond to actual facts and not incessantly spout outright propaganda.

 

[Remus]

Not impossible, but it still seems to me improbable.

For now I guess we all hope Tesla gets to 5,000 per week quickly so we can start to see some hard evidence on either side.

Ok, you meant it is improbable that Tesla can be profitable when $35,000 model 3 consists of majority of the mix.

I am really surprised that your answer was not "absolutely impossible". But anyway... It's like if SpaceX were public, and you were shorting the stock because you thought landing orbital booster is absolutely impossible and Elon is full of it. Most respectable experts actually agreed with you. Don't you think the exit for the bears would be really crowded when you hear the voice from web cast "the Falcon has landed"?

Even with that question aside, did you considered the long term impact of the Model 3 on the used car market? I argue even a $40,000 EV would still beat $25,000 Camry or Accord, in cost consideration alone.

Our family of 4 used to live on less than $3000 per month. Finding a cheap and reliable used car was very important. Each time car breaks down, it was disaster for us. We are very familiar with oil change, transmission fluid flush, coolant leak, water pump replacement, alternator trouble, serpent belt crack. Money is one thing, more importantly when your car in the shop, you can not get to work, shop for food or pick up kids.

Tesla has shown their car batteries really last. With much fewer moving part, longevity and reliability in old age is superb. We can already see on twitter many people brag about their Model S past 150k mile. For an ICE at around 150k miles, it is about $1000 per year in maintenance and repair, if it is still running. with fuel savings, we are talking about nearly $3000 per year difference ICE car vs EV, without considering the time loss.

EVs in general would lasts longer than ICE cars. The expected total cost of ownership over the lifetime of a $40k ev will be lower than a $25k Accord. The lifetime of an EV is too long, nobody thinks that long. But the higher reliability during old age would mean EVs can command higher resale values. That would significantly change the new car buyers attitude.

So I think it is very likely Tesla can make money building $35k model 3s., and even if they don't, we just need a little bit more time for used car market to realize their value.

 

[JRP3]

It's just that certain themes have been beaten to death on this board and now I suffer from post traumatic tftf disorder.

Tell me about it. Same arguments for the last 10+ years, only slight difference is now instead of "no one wants EV's" we see more of the "look out for the competition". If a bear ever comes up with an original argument I'll be shocked.

 

[Todd Burch]

My real point is that I don't feel this kind of talk belongs in this forum, and there are two sides to everything

Facts by definition only have one side.

 

[Reciprocity]

I agree that the market expansion theory can work in some areas - Apple and smartphones being the obvious example. But I think market expansion is harder for high price goods like automobiles. It is easier to imagine a middle class family stretching their budget to buy a $700 smart phone than it is to imagine the same family stretching their budget from a $25,000 Camry to a $45,000 M3. It may happen it some cases, but I think that as a large scale phenomenon it is improbable.

The base model 3 is very comparable in terms of chat to the Camry if you factor residual value, fuel and maintenance.

That being said, your argument is meaningless because model 3 competes against and entirely different class of vehicles and is already dominating.

 

[sundaymorning]

Tell me about it. Same arguments for the last 10+ years, only slight difference is now instead of "no one wants EV's" we see more of the "look out for the competition". If a bear ever comes up with an original argument I'll be shocked.

There’s no convincing bears or bulls. Right now you are either on one side or the other, pending Tesla’s 5k then 10k rate. If history has any indication of where things are headed, shorts will learn a very hard lesson. Every business in every industry will face competition, there isn’t a lone wolf business out there enjoying the playing field on their own. As good as Apple product is, there will be a Samsung, HSI, etc. My bet is that Tesla will own a large part of the EV pie when it’s all said and done.

 

[Reciprocity]

On a 5 year loan that’s $333 a month which equals gas savings. Not to mention oil changes. Not to mention gas savings continue after 5 year loan is paid off. Not to mention hassle of getting gas every week (charging at home or work garage is easy). Not to mention gas/oil bad for planet. Not to mention hip factor. Not to mention going electric is a political statement.
It’s a generational change taking place.

Not to mention if you add solar which cuts fuel cost in half for EVs.

Model 3 isn't targeting the Camry, it's targeting the Audi A4/5, BMW 3,4,5,M3,M4, MB C and E class as well as AMG and whatever Lexus, Jag and Porsche in the same class.

 

[JRP3]

Model 3 isn't targeting the Camry, it's targeting the Audi A4/5, BMW 3,4,5,M3,M4, MB C and E class as well as AMG and whatever Lexus, Jag and Porsche in the same class.

True but as we've seen with the S Camry buyers and others will move up market for a compelling EV. A good number of Prius owners moved to an S, you can expect far greater numbers of them to move to the 3.

 

[30seconds]

Thought exercise -

What year will it be before Tesla isn’t the top seller of EVs in the US?

How many cars WW will Tesla be selling by then?