2017 Investor Roundtable:General Discussion

[RobStark]

Analysis: What will Macron and France do on climate change?

French election 2017: Emmanuel Macron policies – what is his manifesto?

http://www.sciencemag.org/news/2017...p-please-come-france-says-presidental-hopeful

Macron mocks Trump in video

World blasts US President Donald Trump for pulling out of climate change deal


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It's already foretold, and behind schedule--
Tesla is built on this foretell and missioned to accelerating it.

Where was Macron at the beginning of the Election cycle?

Most were predicting whoever won the Republican nomination would unite the center right and win the elections. Macron was an independent, a man without a party.

No one takes Manifestos seriously, least of all the French auto industry.

Lest they would already have Gigafactories being built in France.

It is easy to prognosticate after the fact.

 

[Ameliorate]

+1

Elon in answer to the Kentucky governor’s question, “I’ve gone on record several times saying that the stock price is higher than we have any right to deserve. That’s for sure true based on where we are today and where we have been in the past. The stock price obviously reflects a lot of optimism about where Tesla will be in the future.” Short sellers have jumped on only the first sentence of the statement every time Elon has said it. The resulting FUD from short sellers has become stale and ineffective.

Elon has essentially said this same thing many times before. The Kentucky governor seemed fishing to help him ascertain Elon’s degree of credibility. The straightforward answer should have provided reassurance to all the governors.

At this conference Elon would have been seeking the assistance of the governors to achieve his goals for Tesla, SpaceX and humanity. He needed to appear completely on the level, which he did. The governors may soon be falling over one another to provide incentives to get Tesla factories built in their states. Perhaps some of those blocking Tesla’s direct sales model were sufficiently humbled.

I hope you're correct, I still would have preferred along the lines of: shareholders seem very optimistic about our future, at times it's overly demanding trying to uphold their sometimes unrealistic standards. Overall i'm hopeful for Tesla's future and look forward to the creation of thousands of more jobs.

 

[FredTMC]

Again! (even while we're trying to get this latest bear attack behind us!). Any wild guesses at bear headlines for Monday??

I agree with Curt. This has less and less impact each time he talks SP

 

[22522]

Elon needs to give horses a little more credit.

Care of the Newborn Foal - eXtension

 

[MXWing]

At least Elon didn't say "yeah aspirationally, Goldman and Sach price target sounds about right.".

I'm running for the exits and buying puts with every dollar of margin I have.

Seriously speaking, market shrugged it off over intraweek if I recall. Please don't do this Elon on Friday over lunch time.

 

[AlMc]

I agree with Curt. This has less and less impact each time he talks SP

I agree it has less impact each time but it is a question that he should be able to answer better. Not his first or even second bite at that apple.

I thought overall it was a great Q and A session

 

[DragonWatch]

This

The Model 3's Success Depends Upon Tesla Building Far More Than a Decent Car

Belongs here more for impact on investor audience than on new information it provides for this audience.

Points being:

1. Service cost structure is way different
2. Service inconvenience is way different
3. Tesla is building infrastructure based on reservation density

Awareness of these facts should set a bias to purchase Tesla stock even in the sober minded.

1. Service cost structure is way different. Yes, I have an option to pay three years in advance betting on inflation With ICE maintenance is every 5K miles or 6 months depending on your flavor of car.
2. Service inconvenience is way different. Yes, I had to drive to Seattle from Olympia for warranty issue where I was given an MX 100D that had seven seats compared to our five, and autopilot functioned better than mine until the updat a week or two afterwards. The intermittent problem could not be duplicated by service and not me since ~ which is great as far as I am concerned ~ but we are on the record. Unlike my 2001 VW Beatle; dealership was a mile or two away and every time I drove by the warning light went on and in the end it cost me over $5,000 of being wee'd off before the dealership and the motherland (Germany) finally found the problem and fixed it just before I sold it off and will never buy another VW ~ period.
3. Tesla is building infrastructure based on reservation density. Yes and NO; first the yes is obvious based on the unprecedented exceedingly large number of reservations; the NO is the less obvious high sales/demand for the MS and MX.

 

[MXWing]

Again! (even while we're trying to get this latest bear attack behind us!). Any wild guesses at bear headlines for Monday??

I wish I was a loaded celebrity would have tweeted something along the lines of "show you how little you know" and buy a bigger position just to head off any bear attacks at the pass.

 

[Lump]

Elon made similar comments in Sept 2014 when TSLA was trading around $290, over the course of the next 6 months TSLA traded down to $155 & its only recently crossed back over $290, TMC advice back then was to ignore him too .
Tesla sinks after Musk's 'kind of high' comment

 

[MitchJi]

+1

Elon in answer to the Kentucky governor’s question, “I’ve gone on record several times saying that the stock price is higher than we have any right to deserve. That’s for sure true based on where we are today and where we have been in the past. The stock price obviously reflects a lot of optimism about where Tesla will be in the future.” Short sellers have jumped on only the first sentence of the statement every time Elon has said it. The resulting FUD from short sellers has become stale and ineffective.
O
Elon has essentially said this same thing many times before. The Kentucky governor seemed fishing to help him ascertain Elon’s degree of credibility. The straightforward answer should have provided reassurance to all the governors.

At this conference Elon would have been seeking the assistance of the governors to achieve his goals for Tesla, SpaceX and humanity. He needed to appear completely on the level, which he did.

I disagree with that assessment. I'm not displeased or unhappy about what he said, but IMO he could have done much better.

For example he could have said something like;

"I haven't sold any of my personal shares, because while the stock might be currently overvalued using traditional methods of valuation, I strongly believe that as we continue to facilitate the inevitable transition to sustainable energy our growth will be exponential, and I believe that in the medium term an even higher price will be supported using traditional methods of valuation.

I'm also happy because I believe that many of our shareholders are partially motivated by their desire for support the acceleration to sustainable energy."

He actually did say a lot of that, but in addition to adding the few missing pieces it's important to tie it all together, since a big percentage of potential population is clearly unable to do, that by themselves.

Edit Addition:
I believe that even though he could have clearly IMO done a much better job responding than to that question, that most of the reason he didn't is that SP isn't nearly as important to him as Tesla's mission. I'm happy that at least he has his priorities straight.

 

[EinSV]

Yep:
The two cults of Tesla: do you bet on Elon Musk, or against him?

The other "cult" would do well to consider that they are down 2000% and the "Teslarians" who are the target of their scorn and ridicule are up 2000% since June 2010.

But this time it's different, they may say, and they may be right (although there is a reason those are the "four most expensive words in the English language" ).

In considering how likely it is that this time will be different they may want to consider Whitney Tilsion's words of wisdom from earlier this year as he reflected on the painful lesson he learned shorting Tesla in 2013 from $35 all the way up to $205:

In summary, today reminds me of early 2013, when the stock was at $35: the company was/is burning a ton of cash, has missed all sorts of deadlines, and there was/is much skepticism about a major new product launch (then: Model S; now: Model 3). Back then, I figured Musk/Tesla would have to pull an inside straight to beat me – but they did. In hindsight, I don’t think it was luck. They were much better engineers than I thought and built a brilliant, innovative car. Tesla is chock full today of even more, better engineers, led by the same two guys, so why would I bet against them now? Fool me once, shame on you. Fool me twice, shame on me…​

Tesla - Tilson Compares To Amazon And Netflix But Won't Buy Or Short

 

[MitchJi]

I must say the governors asked better questions than shareholders at the annual shareholders meeting. What does that say about us?

What do you mean by "we" kemo sabe?

 

[Starno]

I revise my thesis as Elon and OPEC revise theirs.

No one could foretell the Chinese government bringing down the hammer on legacy automakers in 2018.

Or the Libertarian Macron winning in France then threatening to bringing down the hammer on French ICEv market.

Going forward I will forecast more governments doing such. As will Elon and OPEC I think.

Macron isn't Libertarian. He's at most a centrist. (between socialist, and right wing party).

And, knowing very well the french, I don't expect Macron to do much about what he said.

Even the taxes cut he promised won't happen before 2020, and they're much lower than what he initially planed ....

 

[MitchJi]

Is Tesla Model 3 The Next Toyota Camry?

And don’t forget the viral nature of Tesla ownership: “As more Teslas find their way onto the road, the general public will become increasingly aware of the benefits of Tesla ownership and likely view the 13% total cost of ownership difference as insignificant. We expect this ‘see it and want it’ phenomenon to cause an acceleration in Model 3 demand.” This, in turn, could open up the coveted Tesla brand to the masses. Munster predicts, “the Model 3’s value, in combination with its technology, has the potential to change the world and accelerate the adoption of electric and autonomous vehicles.”

As Tesla’s Autopilot is perfected, Big Auto will be left behind: “Detroit, Japan, and German car manufacturer feature shortfalls will compound around the end of 2020 when Tesla adds autonomy to approximately 2 million Teslas on the road virtually overnight… Note that every Tesla sold today has the hardware for full autonomy. When Tesla turns on full autonomy, we believe the market will tip away from traditional autos to Tesla.” A trip down memory lane might be in order — perhaps Apple vs. Nokia could soon resemble Tesla vs. Toyota.
I agree with that assessment, except that he is missing the fact that Tesla will be able to drive down their prices faster than the competition and since their goal,is to accelerate the transition to sustainable energy that they will reduce their prices accordingly. In other words at some point in the not too distant future Tesla's cars will cost less than the conventional ice cars upfront.

 

[Navin]

Looking at the iPhone stock app - under Tesla's daily news feed - there are 6 articles published today from the Street all on tesla. What's so disgusting is that not one actually says anything meaningful. I'll challenge anyone to extract one real piece of news or insight from the articles. It's just straight up noise.

 

[22522]

If Tesla can ramp Model 3 production up to 5,000 per week by December, along with a more clear timeline to 10,000 per week ("some time in 3Q18" for example) and 20-25% gross margin, I would expect the stock to move above $1,000 per share by end 2Q18.

I wonder self selection based on risk is in these price expectations.

For example, the recall risk with cars is very high compared to other tech items.
Justified FUD because they have never seen the sun come up in the morning will keep money on the sidelines. They are just not sure.

So the value math works, but the risk math reduces demand by people selecting out.

Do you have a way to include that in the valuation timeline?

 

[22522]

For what it is worth, Elon said he left his money on the table and has only sold stock to pay taxes.

I don't remember seeing a lot of sympathy press for how much money he lost a few weeks ago.

There is some empathy here. From a money perspective, I likely lost proportionally more. From an emotional investment perspective I lost 4 orders of magnitude less.

The statement meant something.

 

[Reciprocity]

Is Tesla Model 3 The Next Toyota Camry?

And don’t forget the viral nature of Tesla ownership: “As more Teslas find their way onto the road, the general public will become increasingly aware of the benefits of Tesla ownership and likely view the 13% total cost of ownership difference as insignificant. We expect this ‘see it and want it’ phenomenon to cause an acceleration in Model 3 demand.” This, in turn, could open up the coveted Tesla brand to the masses. Munster predicts, “the Model 3’s value, in combination with its technology, has the potential to change the world and accelerate the adoption of electric and autonomous vehicles.”

As Tesla’s Autopilot is perfected, Big Auto will be left behind: “Detroit, Japan, and German car manufacturer feature shortfalls will compound around the end of 2020 when Tesla adds autonomy to approximately 2 million Teslas on the road virtually overnight… Note that every Tesla sold today has the hardware for full autonomy. When Tesla turns on full autonomy, we believe the market will tip away from traditional autos to Tesla.” A trip down memory lane might be in order — perhaps Apple vs. Nokia could soon resemble Tesla vs. Toyota.
I agree with that assessment, except that he is missing the fact that Tesla will be able to drive down their prices faster than the competition and since their goal,is to accelerate the transition to sustainable energy that they will reduce their prices accordingly. In other words at some point in the not too distant future Tesla's cars will cost less than the conventional ice cars upfront.

I love the TCO analysis because I came to a similar conclusion. One thing I would add is the residual value, which matters more for a lease, but the residual value of a more expensive car will be higher then that of a cheaper car as long as both cars are high quality cars. Higher residual value means a lower lease payment, which would put the model 3 much closer to the Camry. No matter how you purchase the car the higher residual value will wipe out the 13% difference noted in the article.

 

[ValueAnalyst]

I wonder self selection based on risk is in these price expectations.

For example, the recall risk with cars is very high compared to other tech items.
Justified FUD because they have never seen the sun come up in the morning will keep money on the sidelines. They are just not sure.

So the value math works, but the risk math reduces demand by people selecting out.

Do you have a way to include that in the valuation timeline?

Thank you. I agree that there is risk in estimating the future. I use an appropriate discount rate for similar size companies with similar balance sheet characteristics.

I recently built a financial model that estimates future path of enterprise value by quarter. I created it from scratch. It seems to do okay when backtestig, but of course there are absolutely no guarantees that it will work as well in the future. The $1,000+ level I indicated is for 2Q18.

 

[erthquake]

Looking at the iPhone stock app - under Tesla's daily news feed - there are 6 articles published today from the Street all on tesla. What's so disgusting is that not one actually says anything meaningful. I'll challenge anyone to extract one real piece of news or insight from the articles. It's just straight up noise.

I've learned to skip anything and everything by TheStreet. It's worthless.