2017 Investor Roundtable: TSLA Market Action

[bdy0627]

Hmmm, last ER I bought too many puts and this time not enough. You win some, you lose some. I didn't sell any of my calls though. The question remains when will this stock take off again. It will probably be both sooner and later than you think. I'm going to be focusing on June calls at $300-350 when we've bottomed and start coming back up again. I'll give up the first 5%-10% recovery from the bottom to avoid trying to catch the knife. I don't know why I keep trading like it is so important to catch that portion of the rise.

 

[3Victoria]

.... I actually know three people who have Model 3 reservations who will actually not buy them (one already has 3 Teslas R, S, X) another doesn't make much money and needs the $7500 credit or cannot purchase. The third has two Leafs and doesn't make much money and expects the Model 3 base unit to lease for $200/month. So, perhaps numerous more examples like this fill out the Model 3 reservation list and the real number is not enough to meet the factory "proposed throughput" and they settle on one line, thus 200,000-250,000 max per year. ...

For every person on the list bailing, there will be many more trying to get on it. Demand will not be a problem ... production will be an ongoing problem.

 

[Wenche]

I agree with you that this was a really interesting comment towards the end. I heard them say it was so customers would not face tariffs. Now, that isn't explicitly stating there will be no tariff for Chinese consumers, but, it's very encouraging that at least lower tariffs are part of the plan, and, yes, possibly no tariff at all.

I looked this up some months ago, at the official cite for the free trade zone, and my understanding was that; if 50% or more of the content of the product is made in China, you will not face tariffs. I'm not 100% sure, the terms was written in a way that I struggle to understand.

 

[techmaven]

The problem is the ramp for Model 3 is based on installation of a 2nd line which will only be ordered once the first "max throughput is reached" of 5000/week of Model 3 alone (separate from MS/MX). There is a chance that this actuality is not reached for quite some time. Just as various prior guidance "goals" were missed, who can trust that this new guidance will be met? And now, blaming suppliers is part of the picture. I suspect a good 1k-2k per week is possible going into Q1 but 5k per week is going to be tough.

So there is a problem with this thinking. At some point they do fix the issues. Just because they have issues, doesn't mean they have more issues. Their likelihood of hitting 5k/week in Q1 is probably slightly better than their original chance of hitting 5k/week in Q4, assuming this bottleneck did *not* occur.

 

[myusername]

I can not look at this ER and listen to the CC and come away with a positive feel for Tesla and TSLA in the short term. I am glad I reduced my TSLA exposure before the ER/CC.

I certainly may be reading this wrong and the stock price may rebound the next fews days but I put it better than 50:50 that we break down under $300 before we break above $320. This is NOT advice but how I personally feel after the ER/CC.

This is an old rant, but IMO, worth repeating. EM is brilliant and willing to take big risks but he is spread too thin and we need a COO to drive the daily train. If there was one they would put out and be responsible for accomplishing the 'realistic goals' of the company while EM championed the 'aspirational' ones to his team. The COO would be responsible to make sure the battery module production equipment had appropriate hardware and software so EM did not have to sleep on the factory floor or camp on the GF roof top. WTF.

how about in the long term?... you know my sentiment... but what most don't realize is I'm not a "to zero or bust" believer... Tesla has a place, in the auto industry... along with all the other manufacturers... I still don't know why that's not enough and people simply realize that this stock is not worth anywhere near the current value... which I believe is more respective of world domination.

 

[3Victoria]

I can not look at this ER and listen to the CC and come away with a positive feel for Tesla and TSLA in the short term. I am glad I reduced my TSLA exposure before the ER/CC.

I certainly may be reading this wrong and the stock price may rebound the next fews days but I put it better than 50:50 that we break down under $300 before we break above $320. This is NOT advice but how I personally feel after the ER/CC.

This is an old rant, but IMO, worth repeating. EM is brilliant and willing to take big risks but he is spread too thin and we need a COO to drive the daily train. If there was one they would put out and be responsible for accomplishing the 'realistic goals' of the company while EM championed the 'aspirational' ones to his team. The COO would be responsible to make sure the battery module production equipment had appropriate hardware and software so EM did not have to sleep on the factory floor or camp on the GF roof top. WTF.

You may well be right on your predictions, but the market has astounded us before, so "all bets are off".

I disagree with the COO. While a good one could help, JB, Jon and EM all fulfil that function. Where the glitches occur is not predictable, and a COO would not help. A COO might help with the general running of the business. The way I look at it, there is a set of jobs and how you assign them to the workers is flexible. EM likes to be hands on. He is an engineer and is useful in directing his engineering team.

 

[anticitizen13.7]

max pain?... that's all we've got at this point?

Not "max pain" in the theory sense, but in the psychological sense.

I spend considerable time on Wallstreetbets - "It's like 4chan found a bloomberg terminal" • r/wallstreetbets.

People there make (or claim to make) high stakes gambles on speculative shares and/or short term options, and often get completely wasted on unexpected or seemingly illogical market moves. My observation is this: bulls (like TT07 here) who think that TSLA will leap to 400 or 500 overnight are surely irritated as frack that the stock sits at 305 AA last time I checked. Bears who hope for a quick crash to cover are likewise wringing their hands in frustration as to why the stock doesn't go down more. I've been in the markets for 20 years, and the only thing I see that is certain is that people on any side of the game get upset, sometimes simultaneously. The WallStreetBets people seem somewhat more immune to this, mostly because they are either sick bastards who enjoy pain, or psychos like me who can ride out crazy share price swings.

 

[The Blue Owl]

I still don't know why that's not enough

Just like I still don't know why you think one period at the end of a sentence is not enough. I can't bring myself to read your posts, especially now that November is here; they are way too melancholic for me.

 

[bonaire]

I don't understand the downer sentiments. EM honestly told us that predicting the course of the ramp is difficult (ie impossible) and that it would be a step-wise process. While one can all hope that there are no glitches, reality is that there will be glitches. If each process step has 1% chance of glitch-ing and there are thousands of steps, then it close to 100% that one of the steps will have a glitch. In the big picture, we are still on the lumpy bottom-end of the S-curve.
This is *not* unexpected.

If you review history, usually they would hype some insane number and raise funds - then fall off the guidance badly after that. This has happened numerous times. 2016- Musk said "between 100k and 200k Model 3 in H2 of 2017". Then recently "looks like we will certainly hit 5000k/wk by end of Q4". So, what kind of responsible CEO does this unless they are looking to float new stock or bonds on the market with extreme hype that has no possibility of being reached? This continues to be a credibility problem. Don't forget the $2.7Billion in oversubscribed convertible bonds of Feb 2014 were supposed to FULLY PAY for the GF1. And that was gone within 2 years.

 

[justin w]

In the Q and A section of Elon Musk's conference call, he answered most of the questions with vagueness.. And he shutters alot so obviously he has alot to hide or isnt tellig the full truth. I have to disagreed with Elon that Tesla's current autopilot hardware could achieve level 5 without replacing it with a more powerful one, like Nvidia's Pegasus. AP2 has so many problems on an epic scale, such as it cannot recognize traffic light and stop for you; it doesn't change lane for you unless you manual flick your turning signals; it doesn't recognize highway exits that your AP2 can do the exiting for you.etc.. Nvidia designs autonomous "brain" so they would understand more about autonomy than Elon does. I believed Elon failed to fully grasp how autonomy works.

In conclusion, it doesn't give me confidence about this company or the direction it is heading. another quarterly blowup like this, this company will fall flat like enron

 

[SteveG3]

So there is a problem with this thinking. At some point they do fix the issues. Just because they have issues, doesn't mean they have more issues. Their likelihood of hitting 5k/week in Q1 is probably slightly better than their original chance of hitting 5k/week in Q4, assuming this bottleneck did *not* occur.

Even more encouraging, 5K/week by the end of Q1 is probably quite a bit better chance than the original plan. Elon said his current expectation is some thousand per week by end of December, and he was very confident of that by a couple of weeks into January. That gives Tesla about 2-2.5 months to go from something like 1-2K per week to 5K per week. I don't have the numbers in front of me, but that sounds like quite a bit more cushion than there was in the steps in the ramp he'd laid out in a tweet a few months ago. What's more, during the next two months or as they wait for new machinery to be built and installed on bottleneck challenge #1, there will almost certainly be some other "bottlenecks in waiting" they will be able to catch, diagnose, and work on, reducing the remaining "debottlenecking" delays to the rest of the ramp.

 

[3Victoria]

If you review history, usually they would hype some insane number and raise funds - then fall off the guidance badly after that. This has happened numerous times. 2016- Musk said "between 100k and 200k Model 3 in H2 of 2017". Then recently "looks like we will certainly hit 5000k/wk by end of Q4". So, what kind of responsible CEO does this unless they are looking to float new stock or bonds on the market with extreme hype that has no possibility of being reached? This continues to be a credibility problem.

But it wasn't guidance, it was his best guess. Specifically in this latest call, they made an explicit comment that it was not guidance but a guess. Particularly during a ramp, no one can make an accurate prediction -- only a guess-timate.

 

[myusername]

So there is a problem with this thinking. At some point they do fix the issues. Just because they have issues, doesn't mean they have more issues. Their likelihood of hitting 5k/week in Q1 is probably slightly better than their original chance of hitting 5k/week in Q4, assuming this bottleneck did *not* occur.

so they're scaling back MS/MX and have delayed M3 guidance which is still optimistic... so what's the 2018 delivery projections now?... certainly not 500k... 300k?... how about 200k?... along with massive Q1 losses and cash burn... btw... they have $3.5b right now... if they didn't raise $1.8b 3 months ago they'd be sitting on about 120 days worth of cash... there will be another raise within the next 180 days... better be crossing fingers that macros don't tank.

 

[myusername]

But it wasn't guidance, it was his best guess. Specifically in this latest call, they made an explicit comment that it was not guidance but a guess. Particularly during a ramp, no one can make an accurate prediction -- only a guess-timate.

at what point does never providing guidance and only providing completely over hyped estimates to raise cash cross the line?

 

[anticitizen13.7]

You may well be right on your predictions, but the market has astounded us before, so "all bets are off".

I disagree with the COO. While a good one could help, JB, Jon and EM all fulfil that function. Where the glitches occur is not predictable, and a COO would not help. A COO might help with the general running of the business. The way I look at it, there is a set of jobs and how you assign them to the workers is flexible. EM likes to be hands on. He is an engineer and is useful in directing his engineering team.

Product engineering is a bit different than manufacturing and supply chain management though.

Based on what I've seen with the evolution of Tesla product from the Roadster, to Model S, Model X, and then Model 3, engineering and design is the least of Tesla's problems. By Model 3, it's obvious that Tesla has got the product hardware almost 100%. Trouble building numerous copies of the hardware is the issue here.

 

[anticitizen13.7]

In the Q and A section of Elon Musk's conference call, he answered most of the questions with vagueness.. And he shutters alot so obviously he has alot to hide or isnt tellig the full truth. I have to disagreed with Elon that Tesla's current autopilot hardware could achieve level 5 without replacing it with a more powerful one, like Nvidia's Pegasus. AP2 has so many problems on an epic scale, such as it cannot recognize traffic light and stop for you; it doesn't change lane for you unless you manual flick your turning signals; it doesn't recognize highway exits that your AP2 can do the exiting for you.etc.. Nvidia designs autonomous "brain" so they would understand more about autonomy than Elon does. I believed Elon failed to fully grasp how autonomy works.

In conclusion, it doesn't give me confidence about this company or the direction it is heading. another quarterly blowup like this, this company will fall flat like enron

Stuttering is actually a poor predictor of whether someone is telling the truth or not. If I'm interrogating someone who is handcuffed to a chair in the dim back room of a police station, and they've already been roughed up a bit by the patrol officer, they're going to stutter, whether innocent or guilty.

 

[pGo]

This conference Call has been a downer. I don’t remember anything like this in the past few calls. Elon definitely needs help with project planning. Or needs a dedicated guy who can run operations so he can free himself up for technical challenges.

Tesla Semi event will be good but most won’t trust his timelines. I think we will see 280s before we see 340s.

 

[pGo]

But it wasn't guidance, it was his best guess. Specifically in this latest call, they made an explicit comment that it was not guidance but a guess. Particularly during a ramp, no one can make an accurate prediction -- only a guess-timate.

5000k/week was a guidance. It was very clear and often repeated in the last CC.

 

[Thumper]

Where does the semi fit into this earnings call? Where will it be built? What battery pack does it use? Is this delayed also, since JB has said the semi uses a lot of M3 drive components? How is the semi line to be financed?

 

[AlMc]

how about in the long term?... you know my sentiment... but what most don't realize is I'm not a "to zero or bust" believer... Tesla has a place, in the auto industry... along with all the other manufacturers... I still don't know why that's not enough and people simply realize that this stock is not worth anywhere near the current value... which I believe is more respective of world domination.

I don't believe Tesla with have world domination nor does it need to from my investment perspective. I don't like where Tesla (and therefor TSLA) is right now (let's say $300).

It is a 'momo' stock so it is next to impossible to put a valuation on it using any fundamental analysis. This is why your thoughts on tremendous overvaluation and TT and VAs tremendous undervaluation become the ' ying and yang' of this thread.

I was fortunate to get in early so a drop in the SP, while painful as any drop if you are holding stock or calls in any company can be, are more easily tolerated. So my frame of reference is different than others in that if I lose money by reinvesting some I am still ahead aside from the opportunity costs of investing elsewhere.

So much for the caveats: I have been impatiently waiting for J20 LEAPS and feel that DITM ones will give me several profit possibilities in the next two years. PTS: I see us at $280 sometime this quarter; but $350 be end of Q2 and 400 by Dec 31 2018. Possibility of $500 by end of 2019. I will probably exit the J20s in early 2019 and replace with J21s.

And as with your investing, I will be prepared to change my plan quickly if the situation arises.