2017 Investor Roundtable: TSLA Market Action

[RABaby]

Oh, crap you beet me to it. Fine!! I’ll do it for $8,999. (This is a takeoff of Name That Tune)

as long as some are asking payment
like prostitutes and politicians
give me $500 and I'll stop the poems
since you think it affects your positions

 

[Krugerrand]

as long as some are asking payment
like prostitutes and politicians
give me $500 and I'll stop the poems
since you think it affects your positions

Hmm...I think I’m offended by the use of the word politician.

 

[vgrinshpun]

Here is additional information from the today's Oppenheimer note.

We hosted dinner with TSLA last Thursday with a group of debt and equity investors. Management said it was targeting a minimum deployable cash balance of $1.5B- $2.0B for the foreseeable future. The company indicated it would likely continue to access the capital markets opportunistically, given the unprecedented access to capital the platform has, provided that TSLA continues to see opportunities to invest the capital. TSLA pegged internal investment return hurdles at 30%-40% IRRs for each of its business lines. We continue to believe the shares will track progress of the Model 3 units and gross margin, recognizing long-focused investors largely expect further delays. We understand the delay in the truck launch has been due to production resources being redeployed to Model 3 de-bottlenecking.

 

[Reciprocity]

de-bottlenecking.

This is my new term. Last night, I was de-bottlenecking a few beers. And after today, I will be de-bottlenecking a few more.

 

[RABaby]

Hmm...I think I’m offended by the use of the word politician.

Of course you're correct
the politicians are obscene
imagine if the politicians
observed hookers hygiene

 

[AlMc]

Yes, it’s very frustrating. I’ve contacted Tesla IR several times in the past regarding this and asked for fair disclosure (ie, all meetings with Tesla management where material info is discussed should be recorded and posted, etc) but to no avail.

I just sent in another request (IR must just love me) about giving investors more color on all this leaked analyst's info.

 

[vgrinshpun]

The critical piece of info we need is WHEN the bottleneck(s) will clear.

I think that if 100% of the bottlenecks are related to the supplier problems (and as a disclaimer, based on information available for the Oppenheimer note, we *can't* say this conclusively) it will depend on what action is taken for the late supplier components.

If the supplier is late but took corrective action, the elimination of the corresponding bottleneck could be very swift. If, however, Tesla believes that they need to fire the supplier, replacing it, whether by ordering the component from another supplier, or in-sourcing, the "de-bottlenecking" will certainly take longer.

 

[geneclean55]

Lets hope it wasn't NVDA

 

[vgrinshpun]

This is my new term. Last night, I was de-bottlenecking a few beers. And after today, I will be de-bottlenecking a few more.

I prefer to maximize efficiency of de-bottlenecking by using beverages with higher alcohol density - currently my beverage of choice is scotch.

Not an advice.

 

[FredTMC]

Here is additional information from the today's Oppenheimer note.

Interesting.

Seems as if there IS a utilization of tesla talent that has been diverted from the Semi Project to the Model 3 program. Apparently in order to more quickly solve bottlenecks and build INTERNALLY whatever part(S) the fired supplier were making.

Wondering what the hell the part was that needs to now be built internally.
Can't be "simple" metal or plastic or else tesla would've built the part internally to begin with.... ummm "not good" IMO

This fits with my hypothesis that Elon wouldn't have tweeted about the bottlenecks if it was going to only be a two week delay. This seems like a 6-8 week delay.

We don't know the nature of the part and how many units of this part tesla already had in inventory and whether they would temporarily use the part and replace it later. zzzzzzz

 

[MitchJi]

Here is additional information from the today's Oppenheimer note.

What do you think we can read into this statement:
We understand the delay in the truck launch has been due to production resources being redeployed to M3 de-bottlenecking"?
Should we understand that as another clueless analyst or does anyone think it's possible that Tesla is planning to start semi deliveries in December?

 

[vgrinshpun]

What do you think we can read into this statement:
We understand the delay in the truck launch has been due to production resources being redeployed to M3 de-bottlenecking"?
Should we understand that as another clueless analyst or does anyone think it's possible that Tesla is planning to start semi deliveries in December?

I think that this is just sloppy writing - I assume the intent was to say "launch event" instead of "launch".

 

[FredTMC]

I prefer to maximize efficiency of de-bottlenecking by using beverages with higher alcohol density - currently my beverage of choice is scotch.

Not an advice.

I think I'm going to have some "The Maccallan" 12 Scotch tonight
I'm feeling poor.

If Tesla news was better, I'd get into some 18 or 30 year old.

 

[Cobos]

I really hope this is not true. If they make a deal with Magna to build cars in Europe, that smells to me like a clear indication that "the machine, that builds the machine," and the "Factory as a product" are not working out the way they hoped they would, and are definitely no where near being ready to be duplicated for European or Asian markets.

I'm not saying this is true, but can't this be related to timing? They have too much demand in Europe. Building a factory there takes several years especially since they haven't perfected the ones they've got in the US as the molds for their copies in Europe. So ask Magna to build the high value M3s with supplied batteries and stuff from factory in Freemont. Gets a bigger supplies of M3s ready within a year or 6 months with a slight hit to margin. Cancel the arrangement when the real factory is ready in Europe in 2021 or some such.

Cobos

 

[Snapdragon III]

Interesting.

Seems as if there IS a utilization of tesla talent that has been diverted from the Semi Project to the Model 3 program. Apparently in order to more quickly solve bottlenecks and build INTERNALLY whatever part(S) the fired supplier were making.

Wondering what the hell the part was that needs to now be built internally.
Can't be "simple" metal or plastic or else tesla would've built the part internally to begin with.... ummm "not good" IMO

This fits with my hypothesis that Elon wouldn't have tweeted about the bottlenecks if it was going to only be a two week delay. This seems like a 6-8 week delay.

We don't know the nature of the part and how many units of this part tesla already had in inventory and whether they would temporarily use the part and replace it later. zzzzzzz

Based on the web comment someone dug up the other day about problems with Panasonic at the gigafactory, I wonder if the supplier problem might be Panasonic. If there was a grain of truth to that comment, and a large portion of the problem was that the staff Panasonic had hired was not up to the job, it is conceivable that Tesla has made an agreement to send some of it's own staff to get things up and running. I could imagine the decision being made for the semi team to drop everything, and head to Nevada for a month for an all hands on deck, lets get this line running push. In terms of large numbers of Tesla staff helping suppliers, that seems the most plausible to me since they already have a close relationship, and are in the same building. This would also help to explain the seemingly very slow rollout of power wall, and power packs.

 

[MitchJi]

Yes, it’s very frustrating. I’ve contacted Tesla IR several times in the past regarding this and asked for fair disclosure (ie, all meetings with Tesla management where material info is discussed should be recorded and posted, etc) but to no avail.

Standard industry practice. I believe that Tesla is better than mouse companies on that.

I was going to try to get around that by finding an inside source of information. I was going to ask a friend how to contact a friend of his who works as a,problem line engineer at Fremont but I decided that I couldn't do that in good conscience. I would not violate an NDA so how could I ask someone else that do that?

I think we should probably try to find a bartender in Fremont though.

 

[vgrinshpun]

Nomura lays out China track for Tesla (via Seeking Alpha Market News):

• Nomura/Instinet backs its Buy rating on Tesla (TSLA-1.6%) and sticks with a high-flying price target of $500.
• After talking with Chinese automobile industry insiders, the firm sets out a positive scenario in which Tesla partners with a local tech company (say Tencent (OTCPK:TCEHY, OTCPK:TCTZF)) on manufacturing in a free-trade zone and lands reduced import tariffs on batteries and other components needed for final assembly.
• If Tesla sticks the China landing, Nomura says the long-term numbers will justify the $500 PT.

 

[AlMc]

Speculation: Jerome G. was called upon to 'fix service' when the S started into production, took a leave, came back to spearhead the 'semi'. I hope he is spearheading all or part of 'fixing the bottlenecks'. Probably will need another 'leave' after this

 

[TrendTrader007]

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.

You, Sir, are 100% correct
I totally agree
I could not have put it any better
investing is a game of probabilities and those who play the probabilities correctly do much better over time
BTW, I listened to your hour long podcast couple weeks ago and totally loved it
you are a voice of reason and caution that we definitely need on this forum

 

[MitchJi]

I think that this is just sloppy writing - I assume the intent was to say "launch event" instead of "launch".

I think that is probably correct. Wishful (probably delusional) thinking on my part.

Some people have been(unrealistically IMO) expecting an SP bump from the semi reveal. However if Tesla announced at the reveal, that they were starting production in December that would do it in my opinion.