Right! This is useful info. Now, I have *absolutely no idea* what this will do to P&L, but it'll be great for *cashflow* in Q1 (replaces "cash later" with "cash now")
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good for you... unfortunately though, this time around Tesla will not be able to rely on sales of their vehicles from profits made by retail investors on their stock... $3b in revenue a few years back... retail investors have consistently held about 10% to 15% of available shares (correct?) since then... market cap goes from $5b to $40b during that time... retail investors either on paper or took gains of the equivalent of Tesla's annual revenue...I am just $2,000 short of a free base model 3.
how many of you guys bought or justified a Tesla car based on your TSLA stock gains like this guy is considering?
Pyramid scheme - Wikipedia
what is simply being overlooked by the euphoria around this stock is... Tesla at 50k to 100k cars/year being sold to a wealthy customer base is a COMPLETELY different company than 500k to 1m cars/year being sold to the general consumer.
3000 cars... if they're numbers this quarter were 3000 cars different, would this stock have run?... 3000 cars is waste at 1m cars per year...
28% margins right?... you guys keep touting that... so ASP has moved down to $90k... that makes cost at 64k... that's only $192m... people exclaiming about the 25k beat by Tesla... the stock runs up $5 BILLION in market cap...
so... you take $200m... have tesla put 3000k cars on a boat and sink the boat into the ocean... then watch your stock move up by billions...
i'm not suggesting that's what happened... but this is an example of how stupidly small this company is compared to its valuation... along with the fact that the profits made on the stock were enough to fund large portions of Tesla's revenues over the last few years...
this setup is madness.
jhm
Well-Known Member
Market cap is a perfectly respectable measure of value. So is enterprise value. But if Tesla were as highly leveraged as Ford and GM, you know all the sensational headlines would be about how deep in debt Tesla is.
I like that Tesla is not so highly levered. It is positioned for growth, while GM and Ford are positioned for debt repayment.
I just did a quick tally and there are over 200,000 open J18 put contracts at all strike prices (according to nasdaq.com), which represent over 20 million shares. I am too lazy to add up all of the others but seems like enough open contracts that some big shorts could be leveraged enough with options that it might be tempting to take what otherwise would be dumb risks on shorting shares to try to knock down share prices or prevent the SP from running up to protect their option position.
Again, this is totally speculative and could easily be wrong, but seems to fit with the evidence of the post-open and lunchtime short selling beatdowns we see sometimes.
if you had $52 billion... would you buy Tesla with all of your money or would you buy Ford and have $6b left over?... then when would you expect to get gains on your investment?... with Ford at $6b/year of profits... you'd get that back in ~6 years... and start making profit from that point on at a rate of $6b or more each year....
when will Tesla ever pay you back your $52 billion?... when?
this market cap has nothing to do with value.
I don't think it is easy to achieve, but with computer chips constantly improving, and Tesla leading the way (creating a working model for others to copy/reverse engineer), I think that it will become as common as adaptive cruise control is today. So why not sell it and make a lot of money off of it while they still can? Autopilot is only a minor reason why Tesla cars are so much better than everything else. Tesla is going to need lots of cash to keep expanding. I would rather they sell Autopilot to someone than dilute my shares.
Well, it could be, but trying to batter the price down now to rescue a J18 $100-strike put is complete lunacy; there's no chance. This sort of manipulation only works with relatively near-term options and relatively near-the-money strike prices.
There are still quite a lot of options outstanding in that category, so maybe there's some of this going on. I don't think it accounts for anywhere near the full 31 milllion shares shorted though!
Reciprocity
Active Member
this one's for yesterday... oh look... right on the line... the same line... the random meaningless line that magically occurs naturally.
Well, in the first case, in ten years I'd have (conservatively) $52 billion of TSLA; and in the second case I'd have $6 billion in cash and some worthless Ford stock. If I had certificates issued I could use it for wallpaper, I guess, but it seems like expensive wallpaper.
Ask yourself this: would you have invested in Johns Mansville in 1970? High profits -- even growing profits! By 1982 the company was dead.
Investing is about the future, not about the present.
A large portion of the reason "Tesla has larger market cap than Ford!!!" is about how awful a company *Ford* is, not about how good a company Tesla is.
Even if I had $100B, I'd gladly spend it all on having Elon working part time for me.
anticitizen13.7
Not posting at TMC after 9/17/2018
That is an absurd question.
(1) If I had $52B, I would not invest it in just one company.
(2) Just because Ford made $x B in profits in the past does not mean they will continue to do so in the future.
(3) I don't care exactly "when" Tesla pays me back. TSLA is only a % of my overall portfolio and constitutes exactly 0% of my retirement funds. TSLA is purely a bet.
The problem with people trying to conduct all kinds of mathematics analysis is that it is simply impossible to predict what will happen with the company and how the market will react. Anyone who wants certainty should not be invested (either long or short) in TSLA. U.S. Treasuries are a more appropriate investment for investors who want certainty.
davecolene0606
Member
Or Buy Ericsson/Motorola or Apple or Amazon or Walmart or Blockbuster or Netflix.
I'll get my 52 back (and all my chips are not on black) off profits from the innovation being deployed right now that IS changing the paradigm of transportation and energy. That is the arbitrage here and apparently your satisfied with tried and true kinda like ULA using russian hardware and continuing to throw away their vehicles on each launch.
You either can wrap your head around the earthquake that is happening now or remain as you are.
People who are long TSLA can see that, risk? Yup, but the choice between stagnate or progression is the same as 3.5% return or 10%+ cause if one does what everyone else is doing one is doomed to the mediocrity of conservative investing solutions that only enrich the investment houses.
Fire Away
Ford is not going to be making $6b profit a year for the next 6 years. Auto sales are trending down now, read the news. One more repeat of 08 and GM and F are done. No more bailouts, lessons learned.
RT
jhm
Well-Known Member
If I had $52B, my share of Tesla would be reported to the Sec.
Ford or GM may be fine as value invests. But where's the growth? They need huge leverage to turn a 1.5% growth rate into something like 7% growth on equity. Really their equity is not much more exciting than their debt. But if you're a value investor, go for it.
Careful there. Repeat of 08 could yield more carcasses than we are comfortable with.
My family is lined up with 17% in cash, and 20% in ultra-conservative insurance-company-guaranteed-return stuff (backed by real estate) -- enough to live on if there is some sort of terrible 1929 market crash. We're also completely debt-free. As you can tell, I'm much, *much* more conservative than 007!
So we *have* some certainty. Once you have a base of certainty, then you can be more speculative with the rest of your money.
This makes me very comfortable having 20% invested for growth for the future in TSLA.
To be clear about where I'm coming from with TSLA, my average purchase price is below $160, thanks to SCTY stock being available at an absolute steal of a discount prior to the SolarCity merger. I do not know whether the stock is overvalued or not right now, since it's now within my valuation range; but I also don't care. There is a chance of huge future growth and a chance of the price sitting still for four years. Either case is far better than paying the capital gains taxes today! There is no real chance of it dropping back below $160, barring an asteroid hitting the Gigafactory or Musk dying in a launch pad explosion or something. With a lot of supposedly "safe" stocks, there is a very real chance that they will drop a lot.
jhm
Well-Known Member
That day may come. But strong cash flow may minimize the need for so much debt. And strong continued growth rates mean that leverage is not needed to achieve a compelling return on equity. So debt is used either to facilitate growth faster that cash flow can support or to amplify ROE when growth is slow. I hope neither applies to Tesla in ten years.
You may be misunderstanding/misinterpreting the terminology. It's clear SCTY distinguishes between securitization and tax equity transaction: " At the end of 2016, we had over 54 financing funds with 22 different investors, comprised mostly of large financial institutions and large blue chip corporations, and had engaged in a number of long-term strategic transactions, including securitization and cash equity transactions."
The Sammons (SRE) is discussed here: ($170 million plus $70.9 million equals the $241 million provided in post #10426.
"On December 16, 2016, the Company pooled and transferred its interests in certain financing funds into a SPE and issued $170.0 million in aggregate principal of debt of the SPE (see Note 12) to a syndicate of banks and also issued $70.9 million of equity interests in the SPE to an investor. Of the net proceeds from this transaction, $131.0 million was used to partially prepay the revolving aggregation credit facility due in December 2018 and the remaining amount was retained by the Company to fund its operations...
Cash Equity Debt III
In connection with the cash equity financing on December 16, 2016 discussed in Note 11, the Company issued $170.0 million in aggregate principal of debt that bears interest at a fixed rate of 5.81% per annum. This debt is secured by, among other things, the Company’s interests in certain financing funds and is non-recourse to the Company’s other assets."
The excerpt from the CC likely refers to:
"24. Subsequent Events
New Debt Facility
On January 27, 2017, a subsidiary of the Company issued $145.0 million in aggregate principal of solar loan-backed notes with a final maturity date of September 2049. The solar loan-backed notes are secured by certain customer loans under the MyPower program."
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