TSLA Market Action: 2018 Investor Roundtable

[brian45011]

I will lay bets very few of the convertible holders actually read this.

You may be underestimating the skills of analysts and Investment Committees at the large bond funds that hold most of these types of instruments. The 2018 convert holders did very well--both TSLA and the hedge writers did not, in hindsight.

 

[neroden]

You may be underestimating the skills of analysts and Investment Committees at the large bond funds that hold most of these types of instruments. The 2018 convert holders did very well--both TSLA and the hedge writers did not, in hindsight.

I may be. *Shrug* The wild trading prices for the convertibles indicate that at least some of the convertible holders didn't understand Tesla's finances, though the current price on the 2019s might indicate that some of them do think it's going to convert at a higher ratio.

Honestly I would have looked into them further if I had actually had a convenient way to buy them, which I did not. Phoning up San Francisco to try to see if my broker can get hold of any and get a quote, and then waiting for a callback, is not particularly convenient. I've had a lot going on; time and tolerance for aggravation turn out to be limiting factors on investments. I can list a lot of investments I should have made if I'd been willing and able to do the tedious scutwork at the time.

 

[Krugerrand]

I still think they may miss this goal. Getting close to break even will still ensure survival, but missing the mark a little bit will create another buying opportunity. This is just my blind application of elon time.

No way do they miss it. Elon is as super determined as I’ve ever seen him.

Note I'm simply trying to guess what the market consensus is made of, personally I'm just holding a leveraged long position and I am not so confident at the moment it'll work out well.

As to buying now vs then: no, this isn't a clear choice. Back then Tesla didn't discredit itself as much by missing its own guidance, folks were actually hopeful they learned from Model X disaster. Turned out, they didn't quite do that. They overspent on automation (wasted money and effort, some auto production expert commented that $2B spend on production line is unheard of), they had to stretch their finances and they are in a less advantageous position now vs. what was anticipated a year ago. Sure, the uncertainty of when M3 ramp happens is resolved, but for valuation to go up on that we would have to assume that valuation was based on an even more grim forecast (say, 5K/month 3 month from now) than what reality delivered.

Hold up. They DID learn from Model X. The mistakes made on the 3 ramp were *different* ones from the X ramp. Let’s be clear and accurate about that, k?

 

[Ocelot]

What a confusing week.
I used up, all available cash to buy some short term calls after the Elon tweet, expiring this week, and next 3 weeks. Oops. People talk about "elon" time, however most of his projections are long range, and hence have more variability/standard time deviation than a short range prediction of a few weeks. Now with the tweet this morning of him agreeing it will go down before up, reinforces and twists the oops to a oomph. No one to blame but myself though. Over the last five years I have lost way more on short term options, than I have gained, and hopefully have learned.


"Who knew a day would turn into a week
But I learned my lesson
And I can still remember the last one
But this time will be different
Until I do it again"
kill devil falls, phish

 

[AZRI11]

The EU is reportedly considering international talks to cut car tariffs

Let’s hope the world is able to hash things out.

Idk, why did Elon thought it would provoke a " short burn of the century " then ?

Either something is missing that will come out in the next few days or he just f*** up his promise once again.

Something will be announced before the end of the week. Elon might already be in china.

 

[ValueAnalyst]

ValueAnalyst on Twitter

In just three months, @Tesla Model 3 will become the top selling sedan in the United States, ahead of @Toyota Camry:

Current Market Cap:
$TSLA: $53B
Toyota: $200B

Current Enterprise Value:
$TSLA: $60B
Toyota: $325B

Investing is not that difficult.

#NotSellingAShareBefore1000

 

[UnknownSoldier]

You have posted that chart of Toyota Camry sales a few times and I've stared at it and I don't see at all evidence for your prediction in the numbers there. Please explain.

 

[bdy0627]

Krugerrand, 46 minutes ago
I still think they may miss this goal. Getting close to break even will still ensure survival, but missing the mark a little bit will create another buying opportunity. This is just my blind application of elon time.
No way do they miss it. Elon is as super determined as I’ve ever seen him.

I 100% agree. I would absolutely positively NOT bet against Elon on this.

 

[neroden]

After looking at luvb2b's model over in the "q2/q3/q4 projections" thread, I don't see how they can fail to show profit and positive cash flow for Q3 and Q4 barring some weird disaster. luvb2b's model is actually quite conservative in several ways. They might show worse profits than luvb2b is estimating, and they might have to dip into their undrawn line of credit to show positive cash flow in Q3, but it seems certain.

Q2 will be a dog's breakfast financially, of course; they've frontloaded the expenses which will turn to revenue in Q3. Q2 will probably have worse cash flow and worse P/L than Q1. If it's anything else I'd be surprised.

 

[ValueAnalyst]

You have posted that chart of Toyota Camry sales a few times and I've stared at it and I don't see at all evidence for your prediction in the numbers there. Please explain.

Even before Model 3 ramped to a sustainable weekly rate of 2,500, Toyota Camry sales have started to decline at a rapid rate. This is in-part due to ever-expanding interest in electric vehicles combined with higher gas prices, which increase demand for Model 3, while reducing demand for gasoline cars. Oil prices are expected to continue to increase throughout the summer, in line with my expectation, and an increasing number of higher and higher quality Model 3's are hitting the roads in droves generating buzz. FSD features are also about to be released creating even more buzz around Tesla. As Model 3 production reaches 6,000 weekly rate by August, and beyond by September and October, I expect Model 3 monthly sales rate to exceed that of Camry. This fundamental trend is in stark contrast to the 4x to 5x differential in the two companies' valuations.

 

[bdy0627]

What a confusing week.
I used up, all available cash to buy some short term calls after the Elon tweet, expiring this week, and next 3 weeks. Oops. People talk about "elon" time, however most of his projections are long range, and hence have more variability/standard time deviation than a short range prediction of a few weeks. Now with the tweet this morning of him agreeing it will go down before up, reinforces and twists the oops to a oomph. No one to blame but myself though. Over the last five years I have lost way more on short term options, than I have gained, and hopefully have learned.

That's a tough spot, but one to learn from. I believe those tweets were from May. I haven't come across any such tweets from Elon today. Safest approach is not to bet short term on Elon. However, many of us still do. When you do make such a bet, you have to protect yourself with time. Go out at least a month or two on the calls, or better yet, just go with LEAPs. Those darn weeklies just get killed and there isn't an option for plan B. If you go out a ways, yes you make less money, but you have the option of increasing the leverage if the stock crashes by going shorter term or with a higher strike price. I end up doing that sometimes with some of my tranches when I add at the wrong time on a dip. I always try to go with calls that allow me to adjust my strategy if the stock goes down when I thought it was going up. I want to have the opportunity to have more leverage when the stock starts to climb than during the dip.

 

[brian45011]

Phoning up San Francisco to try to see if my broker can get hold of any and get a quote, and then waiting for a callback, is not particularly convenient.

You said you now have a Fidelity account--just put trade in using the CUSIP--recent pricing:

Bond Trade Activity Search Results

 

[schonelucht]

What time frame do you think we *are* hoping for? I'm currently expecting Model 3 at 8K/week by end of year.

Musk said 10K, so I apply the usual 20% Musk Optimism Discount Factor(TM). Normally I would also apply a time discount, but duplicating all the lines which need to be duplicated in 6 months just doesn't seem like a stretch.

We'll see 10k when the Model Y starts production in my opinion. Or a Chinese factory is up and running. Whichever is first. End 2019?

 

[UnknownSoldier]

Even before Model 3 ramped to a sustainable weekly rate of 2,500, Toyota Camry sales have started to decline at a rapid rate. This is in-part due to ever-expanding interest in electric vehicles combined with higher gas prices, which increase demand for Model 3, while reducing demand for gasoline cars. Oil prices are expected to continue to increase throughout the summer, in line with my expectation, and an increasing number of higher and higher quality Model 3's are hitting the roads in droves generating buzz. FSD features are also about to be released creating even more buzz around Tesla. As Model 3 production reaches 6,000 weekly rate by August, and beyond by September and October, I expect Model 3 monthly sales rate to exceed that of Camry. This fundamental trend is in stark contrast to the 4x to 5x differential in the two companies' valuations.

All you have to do in order to disprove this theory about declining Camry sales is simply look at YoY sales in a month, say April/May from 2014 to 2018 and see that there has been a steady decline in Camry sales during that period YoY probably associated with the overall decline in sedan sales in the US the past few years, which is also why Ford is planning on stopping selling almost all sedans in the US. I mean I'm all for being bullish but let's not post things which are blatantly disprovable as it only hurts our credibility and our cause.

 

[bdy0627]

We'll see 10k when the Model Y starts production in my opinion. Or a Chinese factory is up and running. Whichever is first. End 2019?

Right now, I don't think there is any clear guidance from Elon/Tesla on the timeline to 10,000/week. I'm personally hoping to see the 6,000/week by the beginning of September. Clearly, Elon's pattern has been to guide for a max weekly rate rather than a sustained rate. Perhaps this time will be different, but I tend to doubt it. I'm optimistic that a sustained rate of 6,000/week is achieved by November, and perhaps 7,000 by the end of the year. I really really wish Elon had changed to guiding for quarterly production this time, rather than the max weekly rate. That would take the pressure off focusing with everything they've got for the highest rate possible in the last week of the quarter.

 

[UnknownSoldier]

What a confusing week.
I used up, all available cash to buy some short term calls after the Elon tweet, expiring this week, and next 3 weeks. Oops. People talk about "elon" time, however most of his projections are long range, and hence have more variability/standard time deviation than a short range prediction of a few weeks. Now with the tweet this morning of him agreeing it will go down before up, reinforces and twists the oops to a oomph. No one to blame but myself though. Over the last five years I have lost way more on short term options, than I have gained, and hopefully have learned.


"Who knew a day would turn into a week
But I learned my lesson
And I can still remember the last one
But this time will be different
Until I do it again"
kill devil falls, phish

There's a reason why r/wallstreetbets refers to weeklies as FD's, and if you don't know about WSB or what FD stands for it's a very offensive phrase so don't bother finding out if you are easily offended. I dipped my toes into a few calls last week and I have no idea what I'm doing but they are January 2019, sure they are more expensive but I have the luxury of time to wait out dips that you don't get with weeklies and other short term expiration calls.

 

[RobStark]

This is in-part due to ever-expanding interest in electric vehicles combined with higher gas prices, which increase demand for Model 3, while reducing demand for gasoline cars.

The overall US auto market, including Toyota, has been relatively flat the last 4 years at near record highs.

Sale of sedans and minivans have fallen while crossovers and trucks have increased.

For Toyota, the sale of hybrids and specifically the Prius have fallen. You can probably point the finger at early adopting Prius owners switching to BEVs in general and Tesla in particular.

Toyota literally can not build enough Highlanders,RAV4, and Tacomas.

 

[Unpilot]

All you have to do in order to disprove this theory about declining Camry sales is simply look at YoY sales in a month, say April/May from 2014 to 2018 and see that there has been a steady decline in Camry sales during that period YoY probably associated with the overall decline in sedan sales in the US the past few years, which is also why Ford is planning on stopping selling almost all sedans in the US. I mean I'm all for being bullish but let's not post things which are blatantly disprovable as it only hurts our credibility and our cause.

I think the main message is M3 WILL be the best selling sedan unseating the previous leader.

 

[ValueAnalyst]

I think the main message is M3 WILL be the best selling sedan unseating the previous leader.

Exactly.

All you have to do in order to disprove this theory about declining Camry sales is simply look at YoY sales in a month, say April/May from 2014 to 2018 and see that there has been a steady decline in Camry sales during that period YoY probably associated with the overall decline in sedan sales in the US the past few years, which is also why Ford is planning on stopping selling almost all sedans in the US. I mean I'm all for being bullish but let's not post things which are blatantly disprovable as it only hurts our credibility and our cause.

That does not disprove my theory. In fact, if there is a YoY decline in previous years, it usually means a reversal in the following year for a particular month. This is true across brands and models. Camry will likely sell less than 30,000 units in either September or October, and Model 3 will likely have ramped to 7,000 or more weekly rate by then. The cross over will happen by October.

Every cycle, consumer demand shifts from cars to SUV/Trucks when and shortly after oil prices plunge, which is what happened in 2014/15, and this trend continued in 2016 and 2017. This was normal and as expected.

What is not normal, however, is that when oil prices surge back up, this time demand is shifting to electric vehicles, and not to ICE cars. This is why Ford decided to stop selling cars, not because consumers permanently decided to never buy cars again.

The overall US auto market, including Toyota, has been relatively flat the last 4 years at near record highs.

Sale of sedans and minivans have fallen while crossovers and trucks have increased.

For Toyota, the sale of hybrids and specifically the Prius have fallen. You can probably point the finger at early adopting Prius owners switching to BEVs in general and Tesla in particular.

Toyota literally can not build enough Highlanders,RAV4, and Tacomas.

See my note above on industry cyclicality based on oil prices.

 

[mongo]

Now with the tweet this morning of him agreeing it will go down before up, reinforces and twists the oops to a oomph.

I believe those tweets were from May.

Yes, that was an old (May) tweet exchange, I apologize for causing confusion by not calling that out.