2017 Investor Roundtable: TSLA Market Action

[neroden]

I’ve heard timeframes posited for when EV’s will be cheaper than ICE but to me this is an oversimplification. If one assumes that a 100kWh battery pack and powerful inverters and motors cost 30k, EV’s have already overtaken cars that have ICE drivetrains that are more expensive (Ferrari, Bugatti...).

What will happen over time is that as EV drivetrains decrease in cost (and perhaps internal combustion engine drivetrains increase in cost because of emission control’s) EV’s will be cheaper than that subset of ICE’s which have a more expensive internal combustion engine drivetrain.

The very last holdouts will be the economy cars with the very cheapest engines and transmissions.

Yes. I believe there's going to be a political factor at that point.

Once cars bought by the richer 60% of the population are electric, I'm sorry to say, the political systems of the world will start implementing restrictions on gasoline cars. Because restrictions which only hurt a minority of poorer people are always easy to pass, politically speaking, whether here or in China. I may not like that, but I think that is what is going to happen. Once it is cheaper to buy EV than ICE in the "lower middle class" bracket, the politicians will ban gas cars and wipe out the ultra-low-end car bracket even before it becomes cheaper to buy EV than ICE in that bracket. The auto companies won't complain because they don't really make much money on those ultra-economy gas cars anyway.

 

[neroden]

Coco-cola is #4 behind #3 Apple in Berkshire Hathaways portfolio ranked by market value.

Yes, I know, he's had Coca-Cola for a long time. He avoided Apple until recently because he didn't understand it. This is easy enough to look up.

I have no real understanding of why anyone buys cheap soda (I'm told it's some sort of sugar addiction thing, perhaps?) so I stay away from Coca-Cola.

 

[Lump]

Yes, I know, he's had Coca-Cola for a long time. He avoided Apple until recently because he didn't understand it. This is easy enough to look up.

I have no real understanding of why anyone buys cheap soda (I'm told it's some sort of sugar addiction thing, perhaps?) so I stay away from Coca-Cola.

Buffet doesn't understand NY people either & thats why he stayed in Omaha.

 

[jhm]

Bloomberg offers a different view
Investors Are Betting on GM, Ford and Tesla. They Can't All Win.
"<
However, investors are divided at this moment, driving up the valuations of both legacy automakers and their rival Tesla. It's a zero-sum game, but investors are betting as though everyone can win.
>"

Not a zero sum game by virtue of the fact that not all ICE makers will survive into the EV age. Collectively, Tesla, GM and Ford could gain market share from traditional auto makers. For example, I doubt that Fiat-Chrysler will survive. Lots of small players may find it impossible to muster the capital to develop a compelling EV.

 

[jhm]

Just checked 5YJ3E1EA0HF001135 is not registered with NHTSA yet, where is this page getting the 1135 #?

Isn't that a sell signal?

 

[doctoxics]

I agree with your post that $1,000 by mid-18 depends primarily on Model 3, but you haven't quite argued why it won't be $1,000. Are you saying model 3 will not be enough?

By my estimate, if Tesla is on track for 500,000 cars in 2018 by mid-18, then $1,000 is "more likely than not" based on how I believe institutional investors value Tesla.

The two-to-three week delay in model 3 production is a major risk to my forecast, but I'm not including any semi or model y or exceptional Tesla energy growth etc. in my estimate.

Yes. I agree the stock price will hinge on the Model 3, but quality and value will be important variables in addition to number of cars. These qualities would be measured by additional reservations, media reports and direct comparisons with other cars, all driving sentiment that will boost the stock price. Not sure how to equate a very positive reception for the Model 3 to the stock price. Many times institutional investors "just don't get it" when the value is so obvious to those of us who study Tesla on a daily basis. Revenue will grow with increased production, but a profit for Tesla appears far in the future. Revenue increases will contribute to the increase in the stock price, but seems quality/value of the Model 3 will be decisive in quickly reaching multiples of the current stock price.

 

[TrendTrader007]

Thanks... If I may, in your past successes, were you always positioned in huge single stock bets?

Right I made $1 twice with single position in FB
Lost $0.6 in a single day back in 2008 January trading VMW on the wrong side (back then I thought that was a lot of money to lose in a single day) After I got a second mortgage on my house and put all the money in VMW common at $55 IPO back in August 2007 and SP went to $120 by November 2007
My $12K call options went to $60 K then back down to $8K
Played numerous single stock trades in EMLX 1999
NSOL 1999
CMG in March 2006 I bought at $32 and kept on buying like crazy for a whole year then sold at $135
Stock eventually went to $800+
Without me
Bought Googl on a whim in February 2005 when I put $100k at $215 only to see it trade down to $185 by March 2005 so I kept on buying the sucker for next 2 years and sold it at $650 or so with cost basis in $300s
They tell me it trades higher now (with a few splits)
Traded single stock positions in SOHU AMD FNM FRM C LNKD TWTR BABA and too many to remember
The worst mistake I ever made was to sell BIDU at $200 in October 08 and took a $0.5 loss when I was super confident that the Stock will bottom at $100
And that is exactly what happened
BIDU touched $100 in November 08 or so and never looked back
Went up 26 fold over next 5 to 6 years
I had 55 shares at $300 back then
I probably left a potential profit of $12 to $13 on the table
Never lost a night's sleep over it
Easy come easy go
It's all a game
Numbers don't matter
TSLA I got a feeling is the big one
This one will make BIDU look like a loser

 

[TrendTrader007]

I agree with the general sentiment of your reply, but I'm trying to understand where he's coming from... how he reached his targets. Makes no sense to me.

I think he's just using 1m cars in 2020, no output from additional gigafactories, no semi, and nothing from Tesla energy...

Beats me
I'm not a numbers guy
You're right of course since you are the top analyst on seeking alpha and this board and You can figure all this stuff out
I'll just surf the waves of stock market sentiment and hope for the best

 

[ValueAnalyst]

Yes. I agree the stock price will hinge on the Model 3, but quality and value will be important variables in addition to number of cars. These qualities would be measured by additional reservations, media reports and direct comparisons with other cars, all driving sentiment that will boost the stock price. Not sure how to equate a very positive reception for the Model 3 to the stock price. Many times institutional investors "just don't get it" when the value is so obvious to those of us who study Tesla on a daily basis. Revenue will grow with increased production, but a profit for Tesla appears far in the future. Revenue increases will contribute to the increase in the stock price, but seems quality/value of the Model 3 will be decisive in quickly reaching multiples of the current stock price.

Thank you.

I agree that institutional investors are more cautious at jumping in on Tesla even though the value is obvious to us. I've been surprised at how reluctant they have been, but I think it has something to do with the near-sightedness of market participants. This actually makes the game easier for retail investors imho.

I agree that model 3 quality has to hold up for 2-3x return in 2018. This is key. I note, however, that we already have some indications (motor trend etc) that quality seems to be good thus far.

Yet... the stock is at $355. So what gives?

Ron has been at the game longer than me, manages a lot more money than I do, and knows Tesla better than me, but I still fail to see how one can conclude $1,000 by 2020 given what we know today. I wish he had elaborated further in the interview.

Maybe he's being conservative in public record. This seems to be the only logical explanation, but there's a possibility I'm missing something. If I'm wrong at any point in my analysis, it's likely the estimated profit margin at 2020. Time will tell.

 

[ValueAnalyst]

To counteract that:

Console me over the fact that I will probably never be able to buy another share at $310.

You will, after a split.

 

[TrendTrader007]

Your thoughts are noble and, of course, you have lots of cred or compassion from most of us here. I love this outburst, much like Dostoyevski, Nietsche, or other heroes I have.

But then that must have also been in the "tortured skull" of the guy in Las Vegas, or Trump as he thinks of himself. It is useless looking for their motives in the mental space you so elegantly describe. In Trump's case he's really not a winner because he seeks so much self-validation. I don't think this thinking is rooted in Nietzsche's concept of the overman which his sister so viciously distorted at the Bayreuth circle. Replies should be in the General arena.

Trump is a not a financial winner but not when it comes to realizing his ambitions
Both Bill Gates and Trump had $1B back in 1982 I read somewhere
So now Bill Gates is worth $72 or whatever
And Trump $4 or 8 or something like that
So he multiplied his net worth approximately 8 times over 35 years which is annualized rate of 6 or 7 % or so
Which you could do a lot better by simply indexing your money
But then he came back from near bankruptcy in 1990 or so
Trump did however one up all the billionaires on Forbes 400 by becoming the US President
Basically accomplished all he wanted
I don't care one way or the other about Trump
Personally I think Elon Musk is far more successful than Trump or anyone else I know of
In any case this discussion will end in nothing but trouble
for me
So with great regards to you Professor
I rest my case

 

[jhm]

Does anyone agree with his SP projections?

I estimate $1,000 is more than likely, defined as more than 50% chance, by mid-18.

Looking for devil's advocates.

I'll run it up against BFPT tomorrow. Yep, Blind Faith as Devil's Advocate.

 

[larmor]

Isn't that a sell signal?

Yes Tesla will be selling that car to an owner very soon.

 

[Snapdragon III]

I agree with the general sentiment of your reply, but I'm trying to understand where he's coming from... how he reached his targets. Makes no sense to me.

I think he's just using 1m cars in 2020, no output from additional gigafactories, no semi, and nothing from Tesla energy...

First I do not think 1,000,000 cars in 2020 sounds that conservative. These things seem to take a long time to get going. I don't think they will have additional factories up and running at volume in 2020, but hopefully they will come on line soon after. Just look at the Giga factory, from all the fly over pictures I have seen, they have not even started digging the foundations for the next sections that are to be built to get it up to its full size. If they were really going all out, and thought they would need that battery capacity for semi, power packs, model Y etc, in 2019, you can bet they would be digging holes yesterday.

What does Ron Barron possibly have to gain by saying the stock price will be anything higher than $1000? If he says it will go to $2000, and it only gets to $1,200, he will look like an idiot. On the other hand, if he say's $1000, and it goes to $2000, he will look like the smartest guy in the room.

On the other hand, I totally agree with TT007 that there is a decent chance that we could see $2000+ in a relatively short time frame. Tesla is such a great story, and has so much potential, in such a huge market, that you could come up with a model to justify any value you wanted. My hope is that the Model 3 work through it's manufacturing problems, and be the huge success that we all think it is destined to be, and hopefully we will get some meaningful progress on self driving, and the Narrative on the stock will change dramatically. All of a sudden as the price starts going up, and the products are taking off, the media will switch gears, and start pretending that they knew it all along, and Tesla will become the new must own stock. Imagine what the stock price could be if 75% of investors all of a sudden agreed with TMC members, and wall street became a huge Bullish echo chamber? Who knows how high it could go? I am not saying this is guaranteed to happen by any means, but I would guess there might be a 15-25% chance of it, and the reward would be so huge, that it is worth taking the risk. Also, I think there is a much larger percentage chance that Tesla soundly beats the S&P, and is a great investment, but is not the epic story I am hoping for.

 

[vgrinshpun]

My hope is that the Model 3 work through it's manufacturing problems

I think it might take some time, unless there is a divine intervention...

 

[D-egg-O]

To counteract that:

Console me over the fact that I will probably never be able to buy another share at $310.

$410 will be the new $310.

 

[vgrinshpun]

Yes Tesla will be selling that car to an owner very soon.

BTW, no changes to the NHTSA registered VINs today: spreadsheet

 

[D-egg-O]

Right I made $1 twice with single position in FB
Lost $0.6 in a single day back in 2008 January trading VMW on the wrong side (back then I thought that was a lot of money to lose in a single day) After I got a second mortgage on my house and put all the money in VMW common at $55 IPO back in August 2007 and SP went to $120 by November 2007
My $12K call options went to $60 K then back down to $8K
Played numerous single stock trades in EMLX 1999
NSOL 1999
CMG in March 2006 I bought at $32 and kept on buying like crazy for a whole year then sold at $135
Stock eventually went to $800+
Without me
Bought Googl on a whim in February 2005 when I put $100k at $215 only to see it trade down to $185 by March 2005 so I kept on buying the sucker for next 2 years and sold it at $650 or so with cost basis in $300s
They tell me it trades higher now (with a few splits)
Traded single stock positions in SOHU AMD FNM FRM C LNKD TWTR BABA and too many to remember
The worst mistake I ever made was to sell BIDU at $200 in October 08 and took a $0.5 loss when I was super confident that the Stock will bottom at $100
And that is exactly what happened
BIDU touched $100 in November 08 or so and never looked back
Went up 26 fold over next 5 to 6 years
I had 55 shares at $300 back then
I probably left a potential profit of $12 to $13 on the table
Never lost a night's sleep over it
Easy come easy go
It's all a game
Numbers don't matter
TSLA I got a feeling is the big one
This one will make BIDU look like a loser

Beats me
I'm not a numbers guy
You're right of course since you are the top analyst on seeking alpha and this board and You can figure all this stuff out
I'll just surf the waves of stock market sentiment and hope for the best

I think I found your avatar.

 

[Snapdragon III]

I think it might take some time, unless there is a divine intervention...

View attachment 251902

Check out the "Bear crosses street" video Referenced in the info for that video! A coded message from Elon????

 

[Krugerrand]

$410 will be the new $310.

Well let’s just hope $410 doesn’t happen too soon because that will just throw @vgrinshpun for a serious loop. His ability to adapt from the 2s to the 3s has been painful to watch. We throw in some 4s and I see bloodshed.