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

[sparcs]

Every day more Tesla cars are flooding the markets. And sales cause sales (we all know this) - so all the FUD in the media is getting less and less effective if a) your neighbour tells you the car is awesome and b) the company shows pretty decent financials.

FUD isn't going anywhere until Tesla is producing quarter after quarter of results meeting their guidance. We should still be assuming volatility in the share price until then (at least i am). One good quarter is not enough.

 

[Krugerrand]

I am wondering where is Adam Jonas. And what’s he up to with regards to the rating and price target for TSLA now...

I used to get his notes and posted them here, but they removed me from the mailing list.

You’d expect at some point he has to wake up to reality and update his models and must come out with a much higher price target.

In the past, his notes and price target changes moved the stock significantly.

I don’t care about him or his notes, but what you did to get dumped from their mailing list greatly intrigues me.

 

[dww12]

Has anyone ordered the solar roof yet? I know it’s only been out a day but the pricing on it looks really good. How is it that Sunpower/Trina/GAFF/Corning/Dow have absolutely nothing like this? We just replaced our roof on our “historic” house and could not get solar because the sunny side faces the street and the historic district rejected placing solar panels on it. I think we could do this without the permitting problems... just have to tear off a new roof.

Is is just me or does TSLA look like even better buy today (after a 30% run up) than it did last week at 250? If Tesla can do install as fast as comp. for the same price as comp + solar it’s going to dwarf auto very quickly.

 

[Curt Renz]

Benzinga - 7 minutes ago: Whitney Tilson Loses Tesla Bet With Andrew Left, Will Donate $15K To Charities

Markets Insider - 2019 MAR 04: Tesla is 'out of bullets' and will plunge below $100 this year, former hedge-fund manager Whitney Tilson says (TSLA) | Markets Insider

Markets Insider - 2019 MAR 08: Tesla won't 'ever report another profitable quarter,' former hedge-fund manager Whitney Tilson says (TSLA) | Markets Insider

Apparently Markets Insider is waiting until the year ends before following up on this.

 

[Singuy]

A short-covering rally is the definition of a short squeeze. And this is one. Our last big one was after Q3 '18.

They'll be back, of course - at least those who have the money to come back. Some at $350, some at $380, some at $400.... they only peel off for good when they get burned badly enough, and repeatedly enough, that they give up. Usually with some remark along the lines of, "I was right and it's still a zero, but the market can remain delusional longer than a short can remain solvent."

My guess is they will come back in masses for Q1 2019 since Elon said it's going to be "tough". We think he means QoQ Model 3 unit growth will be tough for Q1 but I guess people can take it to mean anything.

Right now it's terrible time to short unless you are just a swing trader playing the wave. Q4 will be 100% GAAP+ with a possible good guide for 2020 now that solar roof and Y are going to scale.

I do feel like this is one of those moments that we will be out of the typical trading cycle. This was long overdue after a year of FUD from Fudsters and Elon himself(cough, tesla bankruptcy in 10 months, closing model S production lines, need to save money however possible or else bankruptcy).

Happened with AMD precisely after they found that Intel *sugar* themselves with the 10nm node. We were trading between 10-15 and then bam, 20-30.

 

[KarenRei]

Is is just me or does TSLA look like even better buy today (after a 30% run up) than it did last week at 250? If Tesla can do install as fast as comp. for the same price as comp + solar it’s going to dwarf auto very quickly.

Well, it should add something like ~$50M net income to Q1 '20, and by Q4 '20 / Q1 '21 be adding half a billion dollars or so per quarter, depending on timing and price / margin evolution.

 

[Dynastar]

Has anyone ordered the solar roof yet? I know it’s only been out a day but the pricing on it looks really good..

I did. After a big hail storm this summer we need a new roof. Looked into metal roofs for extra hail protection but they seem no better then normal shingles- even if the metal is structurally sound after hail it can look terrible and insurance won't cover that. With an insurance check and bids in hand the solar roof really is the same price as shingles+solar. Just hope Tesla really will be ready to install next year.

 

[Off Shore]

In recent times not at all but in the early days I found some of the somewhat more rational contrarian views prodded me to dig deeper and do more research to backup my position. Everything I found supported my/Tesla's premise and made me more confident.

FWIW In view of the tepid response(s) to @Krugerrand's important question I'm maintaining my 3-digit ignore list.

Edit: Whose question?

 

[EVCollies]

Business/Markets Insider - 2019 MAR 04: Tesla is 'out of bullets' and will plunge below $100 this year, former hedge-fund manager Whitney Tilson says (TSLA) | Markets Insider

Business/Markets Insider - 2019 MAR 08: Tesla won't 'ever report another profitable quarter,' former hedge-fund manager Whitney Tilson says (TSLA) | Markets Insider

Apparently Business Insider is waiting until the year ends before following up on this.

Whitney doesn't have the best record:

 

[wipster]

I did. After a big hail storm this summer we need a new roof. Looked into metal roofs for extra hail protection but they seem no better then normal shingles- even if the metal is structurally sound after hail it can look terrible and insurance won't cover that. With an insurance check and bids in hand the solar roof really is the same price as shingles+solar. Just hope Tesla really will be ready to install next year.

Please keep us posted. I have some friends that may be interested... we're in a great location for solar here and I think the solar roof would be a much better solution for them than panels.

 

[Green Pete]

I’ve long believed as I believe many here have that Tesla can choose to be profitable and not grow as fast as they can anytime they want. And they haven’t done so because they want to grow at breakneck speeds. This has provided a lot of fuel for FUD.

It’s also clear that Tesla will want to do another capital raise at some point in the future so they can fund the manufacturing of Tesla owned fleet for the Tesla rideshare service. But to do so at anything below 1000 per share seems like a poor choice to me. I get the sense/hope that since musk feels like autopilot is basically done and will be technically capable of taxi service by the end of 2020 the focus until then will be increasing the stock price in preparation for this capital raise. This seems like a completely legitimate approach to the next year of Tesla’s planning to me. Does anyone see a flaw in that logic? Grow slower so each quarter is profitable, so the stock prices goes up, so they can raise capital to build a bunch of Tesla owned taxis in 2021, so they can grow at an insane speed in 2022. (A Tesla owned model 3 taxi making 30k a year is basically a 80% gross margin product, as Tasha keeps saying, those are software like margins)

 

[electracity]

My guess is they will come back in masses for Q1 2019 since Elon said it's going to be "tough". We think he means QoQ Model 3 unit growth will be tough for Q1 but I guess people can take it to mean anything.

Right now it's terrible time to short unless you are just a swing trader playing the wave. Q4 will be 100% GAAP+ with a possible good guide for 2020 now that solar roof and Y are going to scale.

I do feel like this is one of those moments that we will be out of the typical trading cycle. This was long overdue after a year of FUD from Fudsters and Elon himself(cough, tesla bankruptcy in 10 months nonsense).

Happened with AMD precisely after they found that Intel *sugar* themselves with the 10nm node. We were trading between 10-15 and then bam, 20-30.

The Q1 plan obviously seems to be have China cover any flatness in Fremont sales. But Tesla is probably really going after Q4 sales in the U.S., so Europe may be somewhat starved from product for the rest of the year. That would leave some pent up demand for a Q1 next year.

But tesla may be flat or down a bit in Q1. It doesn't matter.

Tesla has a lot to do in Fremont getting ready for the model Y. Some slowness in Fremont Q1 isn't necessarily a bad thing.

 

[ReflexFunds]

Elon also said that Model Y will enter Volume Production of 1,000 units per week by Summer of 2020. That's well inside the limitations of GF1 battery pack production, even with 7-8K Models 3 per week. When they need more batteries, it'll be done in the most capital efficient way possible. That means new proceses, not new/expanded building.

Again, and this is not in dispute, GF4/EU is Tesla's priority for capital spending in 2020. I expect FCA/Eurozone C02 credits to cover that capital expense. Once that facility is building product and paying its way, Tesla will turn to building their next highest priority, which may by Cybertruck/Pickup with a new US Factory and Bty workshop.

I really don't think Tesla has to have priorities for capital spending anymore. Why should they delay any project at all any longer than necessary when they have $7bn+ liquidity and towards $1bn quarterly free cash flow (before growth capex)?

Spreading capex over a longer time period isn't more capital efficient. They can spend the cash as soon as they need to as long as they spend it wisely.

The main constraint on growth is likely to be local infrastructure, staffing and management bandwidth rather than capital. But investing in multiple locations at once doesn't come up against these barriers.

In summary, I really really hope to see Tesla beginning construction of new factory space for more batteries, Semi and Pickup as soon as possible.

Possibly Tesla can increase cell production within GF1's current footprint, but that would first require buying Panasonic's GF1 business. But cells are never going to go to waste so the more cell manufacturing space they have the better. Redesigning the current GF1 cell lines would also cause significant temporary supply disruption which will reduce vehicle production. On the whole I think it best for Tesla to just keep building new cell lines rather than upgrading old ones every time they iterate the technology (or at least build the new lines before upgrading the old ones). Current cell production is completely insignificant relative to the future 2TWh capacity in any case.

 

[mongo]

Tesla is doing very well right now.

I am wondering, if the cash flow in the coming 12 months can support the expansion going on:

1. Model Y production equipment

2. Roadster production line

3. GF4 project (land, buildings, equipment)

4. Scaling of the roof in the coming months will cost for production equipment and to finance the time it takes from making the roof to collecting the money for the installed roof

5. production capacity for the semi

6. production capacity expansion for batteries and probably cells

7. repayment of debts that are due in these 12 months

I guess some of these items can be covered by the $5MM cash on hand, some more by loans.

As so often in the past, I believe Tesla and Elon keep finding many interesting (and profitable) ways to spend money. Way faster than the cash comes in. That is a good thing because it accelerates the mission.


But do we rule out a cap-raise in the next 12 months?

No need for cap raise. Stagger the projects and growth so the current sales fund the next level of capEx. Get loans if needed.
Even without complete FSD, Autosteer is a reason for people to order the FSD package which gives Tesla $6k in cash (soon to be $7k) per vehicle to fund expansion (deferred revenue but present capital).
360k vehicles * 70% *6k = $1.5 Billion a year (made up take rate and some is not deferred, autosteer, smart summon).

Vehicle deposits (semi, roadster) help fund the plant development.

 

[dww12]

I’ve long believed as I believe many here have that Tesla can choose to be profitable and not grow as fast as they can anytime they want. And they haven’t done so because they want to grow at breakneck speeds. This has provided a lot of fuel for FUD.

It’s also clear that Tesla will want to do another capital raise at some point in the future so they can fund the manufacturing of Tesla owned fleet for the Tesla rideshare service. But to do so at anything below 1000 per share seems like a poor choice to me. I get the sense/hope that since musk feels like autopilot is basically done and will be technically capable of taxi service by the end of 2020 the focus until then will be increasing the stock price in preparation for this capital raise. This seems like a completely legitimate approach to the next year of Tesla’s planning to me. Does anyone see a flaw in that logic? Grow slower so each quarter is profitable, so the stock prices goes up, so they can raise capital to build a bunch of Tesla owned taxis in 2021, so they can grow at an insane speed in 2022. (A Tesla owned model 3 taxi making 30k a year is basically a 80% gross margin product, as Tasha keeps saying, those are software like margins)

I hope Tesla leaves the RT fleets to individual proprietors. Does Tesla need to employ thousands of car washers and vacuum attendants? Just do an “Uber” app and get “Jeff’s City Taxi Model X-2 - 5*” and take 15%.

 

[MP3Mike]

Are there any FCA plants in EU they can take over ? Spend an extra month to dismantle the plant and build new - but cut down a year or more in permits.

Cut down a year in permits?

Tesla is going to release the location in the next 2 months, and they are planning on having production in 2021. We know at China speed they need ~1 year to complete construction, but they are only saying production sometime in 2021. So they are giving themselves ~2 years to get it up and running.

I have to assume that fast-tracked permits are part of whatever location deal they are working on.

 

[jerry33]

How was it fixed?

They removed the message about live chat, and if you press one, you always get to a person who will redirect you.

 

[MP3Mike]

It’s also clear that Tesla will want to do another capital raise at some point in the future so they can fund the manufacturing of Tesla owned fleet for the Tesla rideshare service. But to do so at anything below 1000 per share seems like a poor choice to me. I get the sense/hope that since musk feels like autopilot is basically done and will be technically capable of taxi service by the end of 2020 the focus until then will be increasing the stock price in preparation for this capital raise. This seems like a completely legitimate approach to the next year of Tesla’s planning to me. Does anyone see a flaw in that logic?

Sure do.

1. They are already printing money with every car/solar/energy sale. They have stated that they are now self-sustaining, no need for capital raises.
2. While it may be capable of RoboTaxi service by the end of 2020, they know it will take at least a year to get wide-spread approval to do so.
   
3. They have already announced how they are going to build their RoboTaxi fleet, and it is already in progress.

Remember all of those Model 3 leases that they said are dragging down the financials? What else do you remember about them? That's right you can't buy the car at the end of the lease. It belongs to Tesla and becomes part of the RoboTaxi fleet. So Tesla will have Model 3s coming off lease starting in 2022. Which should line up well with when RoboTaxi services could get wide-spread regulatory approval.

 

[Dan Detweiler]

Has anyone ordered the solar roof yet? I know it’s only been out a day but the pricing on it looks really good. How is it that Sunpower/Trina/GAFF/Corning/Dow have absolutely nothing like this? We just replaced our roof on our “historic” house and could not get solar because the sunny side faces the street and the historic district rejected placing solar panels on it. I think we could do this without the permitting problems... just have to tear off a new roof.

Is is just me or does TSLA look like even better buy today (after a 30% run up) than it did last week at 250? If Tesla can do install as fast as comp. for the same price as comp + solar it’s going to dwarf auto very quickly.

Not available in my state yet. We will most likely be moving in the next 3-5 years and it will almost certainly be new construction. Planning on putting a Solar Glass Roof on it with a couple of Power Walls.

Dan

 

[Remus]

What do you think: Are we turning a page with regards to TSLA here? If we go back to the old thread: Elon Musk vs. Short sellers

The key point behind the relentless attacks on Tesla was to induce a crisis of confidence that will prevent people from buying the actual Tesla products and thus drive them out of business (also ref. the Fairfax example).

Can you help me pierce my bubble? If Tesla even on a "decline" in turnover manages to squeeze out a profit, if their expansion right now is clearly not soaking up all the cash available to Tesla - is this attack vector on TSLA futile? And will we see a significant portion of the short position go away now?

Every day more Tesla cars are flooding the markets. And sales cause sales (we all know this) - so all the FUD in the media is getting less and less effective if a) your neighbour tells you the car is awesome and b) the company shows pretty decent financials.

Now if the shorts were to fold: could we expect a short covering rally? (Not a squeeze, I don't believe in that). What's your take?

I am convinced the shorts attacks do have negative effect on Tesla's sales. I am super convinced that the GAAP losses last two quarters largely due to theses attacks.

Shorts saying this is the same with last Q3, and it won't last.

So I am super excited to see the FCF getting stronger and orders picking up nicely. I am not sure Tesla can be GAAP profitable going forward, but as long as they continue to sell cars, the cars will do the job. I have observed more than once that I can not persuade certainly people Tesla is a great choice as a car. But I observed that three Tesla owners around the same person, just by driving their cars daily, can convert a pretty strong Tesla skeptics.


I think we are not completely out of the woods yet. There are too many places Tesla cars are very sparse. Increased delivery will fix this problem gradually, strengthened financial will remove people's worry about bankruptcy. All these take time.

I think if Tesla show a good Q1, a success roll out of model Y combined with nice margin, then I will say we are completely out of of the woods.