2017 Investor Roundtable:General Discussion

[ValueAnalyst]

For a number of years both before and after the iPhone launch, Gene Munster was one of the best Apple analysts, and one of the most bullish. During all those years I participated in a forum of Apple shareholders eerily similar to this one, and we were constantly dissing Gene for how conservative he was. Despite having price targets far higher than his colleagues, his projections were always frustratingly below most of our projections.

Of course Gene is in a different place than all of us. He needs to be conservative to protect his reputation and those who rely on his advice. He gets no extra points for saying that TSLA is a "screaming buy", when he can just say it's a "buy". He can take haircuts off of Tesla's manufacturing projections to justify his conservative targets. I wouldn't read too much into his projections, other than to understand whether he is a bull or bear. With Tesla, he is one of the biggest bull analysts we have.

Did he just keep adjusting his projections as Apple kept hitting them to stay at the top of the sell-side pack?

 

[ggr]

Maybe that is why the frunk seems so small. Only big enough for a back pack out standard carry on bag. There is not much difference between an electric motor and a generator. Probably use a generator for better efficiency because it's simpler and lighter but this would mean the duel more version probably won't be much more efficient.

The difference between a motor and a generator is, in Tesla's case, software.

 

[Sancho]

Did he just keep adjusting his projections as Apple kept hitting them to stay at the top of the sell-side pack?

He kept adjusting his projections to stay comfortably ahead of Apple's own conservative projections and stay at the top of the buy-side pack.

 

[Krugerrand]

Sorry, it's clear that everyone knows they need more gigafactories, but I think management underestimated demand for Model 3.

If they underestimated demand for Model 3, then that happened more than a year ago when the initial reservations came in. They haven't been sitting on their hands all this time.

Unless if the subsequent gigafactories start coming online in early 2019 with significant alien dreadnaught improvements, which is unlikely...

What's unlikely is you knowing where they are in their plans. What many of us learned several years ago was that Elon and Tesla have always been several steps ahead of everyone else. I'm confident they already know where the next 2-3 gigafactories are going to be and lots of negotiations and planning are going on behind the scenes.

 

[ValueAnalyst]

We can compare Tesla and Apple regarding the share counts:

1. Tesla guys know the stock is quite undervalued from long term view, they don't like dilution, and they are more likely to buy back as soon as they can. Apple's management have not been stock savvy, they started stock buyback way too late. Many years ago when Steve Jobs called Warren Buffett about Apple's cash, Warren said if you know your business is good, you can buy back your stock. But Apple didn't, they kept so much cash for so long.

2. Even though Apple started buy back too late, they still bought back around 25% of the stock, and still going.

3. In the future Tesla is likely to generate more cash than Apple did. They are likely to buy back aggressively at a good entry.

Based on the above, it's conceivable at some point Tesla can buy back 40% or more of it's float.

My wild estimate is, by 2030 Tesla will have 120 million total shares. Can the share count first go above 200 million in the next few years? It's possible, I think that's a low possibility event.

I'd be happy if Tesla just bought back the dilution tbh. Cash hoarding is the new trend these days, so not sure why Tesla would be any different...

 

[brian45011]

I was counting only the auto revenue from new deliveries. There was 126,375MM from services and others so I subtracted that number from 2,298MM.

Doesn't compute. If you decrease the denominator the % goes up.

 

[ValueAnalyst]

If they underestimated demand for Model 3, then that happened more than a year ago when the initial reservations came in. They haven't been sitting on their hands all this time.



What's unlikely is you knowing where they are in their plans. What many of us learned several years ago was that Elon and Tesla have always been several steps ahead of everyone else. I'm confident they already know where the next 2-3 gigafactories are going to be and lots of negotiations and planning are going on behind the scenes.

All I read was "I'm just gonna shut my eyes and ears and trust Elon."

Ok... now i understand what you're about. I'm glad you're "confident."

 

[Krugerrand]

Suppliers will not be able to keep up with Tesla's growth, so Tesla will have to bring in the entire supply chain in-house one by one.

I'm finding your posts exasperating now (and not in a good way). Suppliers that can't meet demand are simply replaced by suppliers who can. It's not even out of the realm of possibility to have two suppliers feeding Tesla with the same part. And yes, Tesla has brought certain parts in house in the past when a supplier has let them down, but the whole supply chain? Um...no.

 

[kenliles]

A smart man* said recently:

* Can yo guess, who was that ?

I think it was the person who shot the real thing up ULA's ass...
If I remember right...

Sorry for being off topic, I think increasing the diameter of Falcon 9 should be better than the current Falcon Heavy three core approach. Three core approach is much more complex and more things can go wrong, and after landing they have to move them together for next launch. Just curious why did they take this approach. I guess there must be a reason. It's amazing anyway.

Yeah on the surface a reasonable assumption, but without getting into detail, it makes reusability work (weight/ thrust/ return fuel ratio- Relates to the thrust necessary for payload delivery, hence staggered return).

 

[kbM3]

Sorry for being off topic, I think increasing the diameter of Falcon 9 should be better than the current Falcon Heavy three core approach. Three core approach is much more complex and more things can go wrong, and after landing they have to move them together for next launch. Just curious why did they take this approach. I guess there must be a reason. It's amazing anyway.

Given Elon's love of manufacturing efficiency, my guess is for reuse of falcon 9 cores.

 

[ValueAnalyst]

I'm finding your posts exasperating now (and not in a good way). Suppliers that can't meet demand are simply replaced by suppliers who can. It's not even out of the realm of possibility to have two suppliers feeding Tesla with the same part. And yes, Tesla has brought certain parts in house in the past when a supplier has let them down, but the whole supply chain? Um...no.

Good luck to you.

 

[22522]

Given Elon's love of manufacturing efficiency, my guess is for reuse of falcon 9 cores.

Somewhere it said these work on the same production line.

 

[myusername]

"THE M3, TE and solar roof are all right at the beginning of their exponential ramp"

TE?... so who's sifted through the 10-Q and sees evidence of the exponential TE ramp? wasn't that supposed to start in Q1?... we see this in the letter:

"Last month, Tesla was selected from among 90 initial bidders to provide a 100 MW/129 MWh Powerpack system in South Australia"

so, that's a big time project right?... big enough for headlines and being singled out in the letter?... and would bring in what... about $40 million?... this doesn't seem very exponential to me... unless the S-curve for this one is 20m this year... 40m next year... 80m the year following... 160m in 2022?... it's true... that is exponential.

so what's up with TE?

well... this guy went ahead and worked this out for us:

https://grouvytoday.com/tesla-energy-bleeding-heavily-tesla-motors-nasdaqtsla/

"SolarCity had $174 million of costs during Q2 out of the segment’s total of $203.76 million. That leaves approximately $29.76 million for the energy side of the business. Putting the numbers together, this means that the business lost more than $14.08 million, a negative gross margin of 89.81%. Remember, this is just the cost of the product, and doesn’t include any operating expenses involved like R&D, sales and marketing, general and administrative costs, etc. That means that in Q2, the energy storage business likely had a negative operating margin of more than 100%."

so on to Solar Roofs and Tesla Truck... any other businesses that might help justify a $450 SP?

 

[Krugerrand]

All I read was "I'm just gonna shut my eyes and ears and trust Elon."

Ok... now i understand what you're about. I'm glad you're "confident."

I (and many others here) have been around here and following Tesla a lot longer than you. We have more experience and knowledge on the topic, we bet on it when it wasn't fashionable, and I assure you we're all still paying very close attention to what comes out of Elon and Tesla. Yes, I trust Elon and Team Tesla have got this. In time you might come around to grasping why that is.

 

[Krugerrand]

Good luck to you.

 

[scaesare]

The delivery event disappointment was due to a change in plans. They initially were planning to announce lower options prices for the M3, and because they were nervous about canabalizing the MS-MX they were probably planning to reduce MS-MX prices simultaneously. They decided that they could maintain their MS-MX prices and also make more money on the M3 by charging more for the M3 options. An excellent strategy that they implemented brilliantly.

The semi production line is probably going to be much simpler to design, build and ramp than the M3 line or the MY line. That's probably part of the reason that they are revealing it before the MY.

THE M3, TE and solar roof are all right at the beginning of their exponential ramp (2013 MS x 3!). It's a great time to be long TSLA.

Any sources for this categorical assertion?

 

[Fallenone]

Doesn't compute. If you decrease the denominator the % goes up.

Yeh I know it's not that accurate. But I'm only interested in new car deliveries. Since they don't break out SGAA for auto/energy/services, I made the assumption that the SGAA for storage and services are minor. I also like being a bit conservative.

 

[DragonWatch]

do you not understand that price is a factor of demand?... the demand up to this point has been based on hardly any knowledge of the data that goes into the decision to buy a car... it was not an accurate account of future conversions to sales... that's why these numbers are so misleading...

you have no idea what's going to happen to demand... but considering the price is somewhat higher than expected for features that were advertised... then it's a pretty safe bet that the current demand will reduce... the question is, by how much.

While I understand your thinking, I disagree with your stand. I have been a critic as a consumer over some forty years. I am disregarding my first twenty as clueless Early on I could buy with strong confidence that the higher priced item was better built for longevity and quality. However, that became noticeably a foul the older I got. Manufacturers focused on bling instead of longevity and quality. So, then I had to turn my focus on trying to read between the lines Today, it is an almost certainty that manufacturers have achieved their goal of finding the bottom ~ so when I buy a new computer today I am ecstatic if it lasts more than two years. The same with hand tools, and cars. When I am asked to buy an extended warranty I assume they are saying the product will not make it past the one year warranty. That fact came to pass on an hp printer. Do not ask me about my current contractor.

Now, we have been introduced to Tesla/Elon. Elon while aiming for the planets is trying to drag us along for the ride. His products are designed with the highest quality and standards in mind which I have the highest regard for as a consumer. While not every consumer thinks like me, most are captivated by the vision and the qualit craftsmanship (or robot). Another pent up part of the demand is simply something positive to believe in

 

[JRP3]

This is supposed to be a shot of the front suspension on the Model 3. No axle shaft going to the wheel, so no generator/motor unless they are wheel motors, which is extremely unlikely.

 

[Sparky]

... My son is going to Stanford this Fall. When he asked my suggestions, I told him consider learning something useful so he can support Tesla or SpaceX in the future.

Congrats to your son for his hard work to get into a great school.
I have three kids with strong opinions and they carry some worry about the future. One is doing another education iteration, entering Harvard this Fall. I tend to offer more general guidance; to learn the advantages of skepticism over cynicism, optimism over naivete; and I paraphrased Elon Musk by suggesting they think about a future that makes them less sad and work towards that. They're not all SpaceX or Tesla material but can still do much in other spheres.