2017 Investor Roundtable: TSLA Market Action

[TrendTrader007]

Buying more at open

 

[ValueAnalyst]

My assumption has been that they will wait until Model 3 production is ramping nicely before giving specifics on GF 3, 4, 5 etc although that could turn out to be wrong. We could hear something about GF3 during the Semi event but I am not expecting much.

I agree with this, except for the last six words, because I expect Model 3 production to be "ramping up nicely" by then, and I expect Project TIM to be announced at the Semi Event.

 

[notsosure]

The focus on normal course employee reviews/matters, in my view, shows the desperation of those who want to see this stock go down. Very large companies do annual reviews, and the good ones always let people go (usually the bottom five to ten percent). This is not news, but rather normal course action that is actually quite prudent and very healthy for an organization.

 

[Reciprocity]

Please allow some adjustment on this:

Elon is not setting unobtainable goals. He is stating what needs to be done for success.

From a time perspective he may be forgiving, as long as you are not twice as slow as he would be. [If you are that slow, he will just do it himself and fire you].

Here is a list of examples of requirements that are not reasonable, but must be met for success:
1) No "valves everywhere" at Space X in the fuel lines. [too expensive, too many failure points, too many control points].
2) Must reuse the rockets. [Costs will never work if you don't do that].
3) Must land on a boat. [Payload fraction for return is too high if you don't do that for many missions with today's rocket volumes].
4) Must use 18650 NCA [Nothing else is available with the density to deliver range. Yeah, it is 7,104 cells for 85kW. I know that. We have no real other choice.]
5) Must not catch on fire easier than gasoline [Safety reference standard].
6) Must be safest cars on the road. [People, that we want t o sell our cars to, will have seen lithium fires in school. We need independent test lab verification of safety].
7) Must be sexiest car on the road. Yes, 0-60 in less than 3 seconds. [Not your ordinary EV in bold.]
8) Must be sexiest car at price point. [Hire a person that was able to deliver a sexy car at GM - Delorean was the last guy with the Firebird... That is more than just design skills.
9) Must not be gender specific [Hire the person who understands the new Beetle].
10) Must meet $35K price point to be relevant [2170 battery with affordable chemistry.]


None of these are stretch/aspirational goals. These are realistic goals that must be met for success to happen. They are not negotiable.

The only thing that approaches aspirational is time. But he is serious about that. If you don't take it seriously as a supplier, or employee, you are done.

The goals are valid, real and mission critical.

A very simple rule of thumb for me at least... I dont care what Elon says. I only care what Elon and Tesla deliver. I automatically assume that not everything will be delivered but the critical items will be and they will probably be late, or if you really think about it.. 10 years early. EVs and solar roofs with battery packs would have eventually happened, but no where near the timeline Elon has set. Elon and Tesla saw that you MUST push the limits in every way to accelerate the demand and adoption. The S/X are not all the way there, though they are compelling vehicles in segments where only few hundred thousand are sold per year. But the S/X were just enough to build a very high brand recognition and generally very positive consumer perception for all the reasons noted in the above post. Your car picking you up at the door is not mission critical, though I have heard people who dont own Tesla's and never even ridden in one say that its awesome that they can pickup you up at your front door. Certainly we all know it doesnt and I dont see what is so cool about it, its really not that useful.

When you look back, Tesla has already done the impossible several times and should not be here at all. But since they are, we all assume they can do the impossible again. I think a successful Model 3 ramp (5k/w then 10k/w at 20%+ GM) is that point at which Tesla pivots from things being impossible to things be a given. Once you can build and sell 500,000+ fairly reasonably priced cars, at a profit (GM of 20%+), the rest is just expansion and incremental improvements. No more crazy moonshot like goals that no one expects anyone to achieve, they just need to build a dozen copies of what they have already accomplished with incremental improvements in each copy. That is not to say that there wont be other moonshots, but they are not required to achieve a 100% success rate for the survival of the business and the mission. I think we are 12 months or so from knowing whether or not Tesla an make that pivot with out one last opportunity for bankruptcy, though I think that is even a joke at this point as Tesla has so much support from long term and institutional investors that Elon could go to just his buddies with hat in hand and raise enough to get past any issues.

12 months, the clock is ticking on shorts and bears. I also think there is almost zero change for a recession in the next 12 months, though my outlook beyond that is far less than positive. At some point there MUST be a correction and potentially (likely) a recession. It just a matter of time as there is no such thing as a recession proof economy and the business cycle will eventually require a contraction. My hope is for a decent sized correction so that it buys us more time Tesla to maintain its current momentum and expansion before markets become very tight for the kinds of expansion Tesla needs to make a dozen or so copies. I am actually glad to see inflation ticking up because its a sign that we will not be in a situation of stagflation and we will actually have some decent growth before giving it back in a recession. There is nothing worse then deflation and slow growth over decades like they saw in Japan.

 

[austinEV]

Ugh, below support levels. the 10, 20, and 50 are all converged at 353-355.

 

[kbM3]

I think we're missing one key thing here, and that is leading by example. You don't motivate employees by simple demanding unrealistic goals if you don't show employees you go above and beyond with you're own work. Case in point, sleeping on the production floor while resolving Model X production issues.

There is also another factor. Elon is one of the few who can tell his employees, with a straight face, that they are rushing to save the planet.

 

[Runarbt]

Ugh, below support levels. the 10, 20, and 50 are all converged at 353-355.

Wait until after amateur hour before panic please;-)

 

[ZsoZso]

I knew all that poetry yesterday will not end well...

our only hope is now in the magic of xx6, so that 346 will hold

 

[EarlyAdopter]

I knew all that poetry yesterday will not end well...

Yeah, seriously. Is this lesson that needs to be relearned every year?

 

[MitchJi]

What are your guys thoughts on Tesla hiring a COO?

If it's not broken, and it's not then why try to fix it

Elon and the Tesla team are doing an outstanding job. Why would you even consider messing with that? That's like suggesting that Cleveland replace or demote Le Bron James.

 

[AlMc]

If it's not broken, and it's not then why try to fix it

Elon and the Tesla team are doing an outstanding job. Why would you even consider messing with that? That's like suggesting that Cleveland replace or demote Le Bron James.

No, it is more like hiring someone to manage 'All things LeBron/The LeBron brand' while he concentrates on what he does best: playing basketball.

No reason someone like Wheeler could not have been COO and let EM 'play his game' while making sure that Tesla ran on time. Heck, SpaceX has a COO.

I admit the point is mute as it will not happen for a long time, if ever.

 

[DaveT]

My bet :
End of 2017 : about 350-400
End of 2018 :about 500-600
End of 2019 : about 700-800
End of 2020 :" " 1000
End of 2021 : " " 1300
End of 2022 : " " 1690
End of 2023 : " " 2200
End of 2024 : 2856
End of 2025 : 3700
End of 2026 : 4800
End of 2027 : 6200.

Basically 30-35% growth for 10 years.

@Starno No way I would bet against that. I'm actually expecting TSLA to be higher than your estimates through 2020. For example, I'm expecting TSLA at 600-800 during 2nd half of 2018 when M3 is in full production and I think they turn a profit (although might be pushed out to early 2019 if M3 delays are very significant).

Also, just FYI, 6200 in 2027 isn't going to be 1T market cap because there will be dilution over time even if Tesla does no more cap raises (due to stock composition of employees).

 

[DaveT]

No. I never bet for money, except for my investments.

Also, I just noticed that I made a spelling mistake in my reply to your offer. I meant that at least onE of the three scenarios will play out. I think it's the $1,000 in 2018 one, primarily due to a reason that hasn't been discussed in this thread.

Just wanted to clarify that I do not necessarily expect $500 with high confidence by year-end, although it is possible if Model 3 production ramps up soon.

Actually I understood it as just one of the three scenarios playing out. So you never bet money.... hmmm. Then, let's do it for charity. Loser pays $10k to the homeless charity of winner's choice. All that is needed for you to win is one of the three scenarios to play out.

 

[DaveT]

Please allow some adjustment on this:

Elon is not setting unobtainable goals. He is stating what needs to be done for success.

From a time perspective he may be forgiving, as long as you are not twice as slow as he would be. [If you are that slow, he will just do it himself and fire you].

Here is a list of examples of requirements that are not reasonable, but must be met for success:
1) No "valves everywhere" at Space X in the fuel lines. [too expensive, too many failure points, too many control points].
2) Must reuse the rockets. [Costs will never work if you don't do that].
3) Must land on a boat. [Payload fraction for return is too high if you don't do that for many missions with today's rocket volumes].
4) Must use 18650 NCA [Nothing else is available with the density to deliver range. Yeah, it is 7,104 cells for 85kW. I know that. We have no real other choice.]
5) Must not catch on fire easier than gasoline [Safety reference standard].
6) Must be safest cars on the road. [People, that we want t o sell our cars to, will have seen lithium fires in school. We need independent test lab verification of safety].
7) Must be sexiest car on the road. Yes, 0-60 in less than 3 seconds. [Not your ordinary EV in bold.]
8) Must be sexiest car at price point. [Hire a person that was able to deliver a sexy car at GM - Delorean was the last guy with the Firebird... That is more than just design skills.
9) Must not be gender specific [Hire the person who understands the new Beetle].
10) Must meet $35K price point to be relevant [2170 battery with affordable chemistry.]


None of these are stretch/aspirational goals. These are realistic goals that must be met for success to happen. They are not negotiable.

The only thing that approaches aspirational is time. But he is serious about that. If you don't take it seriously as a supplier, or employee, you are done.

The goals are valid, real and mission critical.

Yeah, I'm not talking about his long-term goals. I'm talking about how Elon manages teams toward specific timeline goals. His timeline goals are almost always excessively aggressive and unrealistic, but that serves his interest to motivate his teams to work hard... and yes, he works hard too.

 

[DaveT]

Adam Jonas raised price target helped matters. The SP was beginning to look vulnerable just before his note came out.
Aslo, where are the new Gigafactory announcements?? The year is coming to a close.

Yeah on the GF front, I predicted Tesla would only announce 1 or 2 GF locations this year... and at the time, all the ultra-bulls were shouting foul at me, saying but Elon said "3". No, he didn't say "3", he said up to 3. And it was an unrealistic aspirational timeline goal that was predictably not going to be met... but ensures his teams work as hard as they can toward it.

 

[geneclean55]

I assume this could be as much to do with high level negotiations between Elon and various governments/organizations. Not sure how much subordinates could influence that timeline.

 

[ValueAnalyst]

Actually I understood it as just one of the three scenarios playing out. So you never bet money.... hmmm. Then, let's do it for charity. Loser pays $10k to the homeless charity of winner's choice. All that is needed for you to win is one of the three scenarios to play out.

Dave,

This is my last post on this topic.

Your offer to bet me for money, and when I say I don't bet for money, your offer to do it for the winner's choice of charity is exactly, to the t, what MontanaSkeptic offered me last year. What does that tell you?

Your continued personal attacks, despite the patience I've shown over the weekend and the last several weeks, is exactly what dozens of FUDsters do on a daily basis. What does that tell you?

As I have repeatedly said before, I very highly appreciate what you have done for Tesla, its investors, the TMC community, and for me. Your Google Hangouts were eye opening for me to subjects, in which I had no experience, but that are critical to Tesla investors.

For this, I am thankful beyond imagination.

Having said that, however, I don't think it's in the best interest of the TMC community for me to respond to your posts any longer. I hope that one day we can get over this hump, and maybe even grab a drink or two next time I visit San Diego, but I understand that it will take some time for us to get to that point, if at all possible.

Sincerely,
ValueAnalyst

 

[DaveT]

Never say never
No one can accurately predict the SP over any given time frame
It's merely an exercise in abstraction and probability
Personally it matters little to me whether the SP is $400 or $2000 over the next several months
I'll make money as long as SP is anywhere over $275
I've been wrong TMTC
However I've usually always made money despite being wrong because I bet on the improbable and the few times those improbables come true I make a killing more than enough to compensate for all the times I'm wrong
I suspect my batting average is 70 to 80% directionally
In other words I'm right 7 to 8 times out of 10 in the direction of SP movements but not necessarily on the magnitude of the move
what you and some other realistic bulls are discounting is the irrationality of the markets
You have the luxury of being more sure of your predictions than I can be of mine because most of the times the markets behave rationally and 8 to 9 times out of 10 those who predict that SP will be relatively well behaved will be proven right. After all how many times a year do you get major tropical storms hitting Houston ? But when they do the results can be much more impressive than expected by most "rational" observers
1 to 2 times out of 10 SP of any given stock will defy all rational expectations and seems to me that this may be one of those times
the reason I would not make a bet on the magnitude of the SP movement is because I don't need to
As long as I get the direction right I'm golden
The way to make money in the markets is not to worry about being right or wrong
It is to Simply bet on the direction of the move
That itself is really hard for most investors to accomplish
The reason why I'm making so seemingly outrageous SP predictions is because we are breaking out of a multi year trading range and seems to me that we are in a similar situation as in 2013 except even stronger technically
So it's wrong for "realistic" bulls like you to pick on ultra bullish investors like Value Analyst because even though the odds are long, at the end of the day, when and not if the SP starts ramping up seriously then all your "realistic" assumptions will be discarded by the bull market to wayside

So, I have no problem with mental thought exercises and thinking about the possibility of TSLA shooting to the moon at any moment. But I think as an investor it's an important discipline to keep those "to the moon" thinking at clear and realistic probabilities.

For example, when you're predicting $2000 in 18 months... to be clear, the possibility of that is quite slim, and I think you'd probably agree with that. I place the probability at under 1%... maybe you might place the probability at 5-10%. But if somebody places the probability at 70%, then I think their thinking is reckless and ridiculous. But the great thing about investing is over time, over multiple investments, it will all work out to humble and teach the investors who are reckless. At least usually. In your case, you've learned lessons over the years, and when you say TSLA is going to $2000 in 18 months... I know how to take it because I've talked with you and understand your cautious side as well. I know that you're excited about that possibility of TSLA going to $2000, but wouldn't put your entire position in Jan19 TSLA 2000 calls (if they had them) because you understand it's a possibility but not a likely scenario (ie., over 50% chance). But surprisingly, a lot of people will put a ridiculous amount on money on ridiculous risky things because they haven't learned your cautious side that you've learned over the years.

When VA says there's a 80% chance TSLA will be over 420 by end of year and claims to have a model to back it... that to me is reckless... or ridiculous... or inexperienced... or all three. Again, I'm not saying it's not possible TSLA is over 420 by year end... but it's not 80% likely.

 

[elasalle]

is Earning date out?
http://www.nasdaq.com/earnings/report/tsla says tentative Oct 25th?

 

[MitchJi]

Why don't you guys bet against some shorts for a change

You mean why don't you guys take some candy from some babies?