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MartinAustin
Active Member
Yeah. This is worth dwelling on actually. Elon thinks the Model 3 will be just as profitable per-car as the Model S+X by the end of the year. That is obviously quite an achievement. And it's obvious the first cars aren't profitable at all - if you take the cost of building the Gigafactory into account! New robots on the assembly line, etc.. There are all sorts of ways to make the car look profitable, or unprofitable.
It's looking like $258-ish is the low point beyond which investors are saying "this is crazy, I've gotta buy some of this."
Also worth noting that TSLA is now at a 2-week low!!! That's right. It reached the $260 area around February 8th.
Participants in the referral program are being rewarded with tickets to a Model 3 delivery event. Why wouldn't the delivery event in question involve deliveries to employees? On the Model S and Model X delivery events, the customers were insiders.
racer26
Active Member
I wasn't suggesting that would be all the employee deliveries, just that the first bunch of cars getting delivered to the first few employees happens at the 'delivery event', much like the first few X's were delivered at an event.
This is just people selling the news. Tesla had a great run over 3 months off of no major news. It was such a great run that it was tough for longs to pass up $280. No worries though, TSLA will settle around $240. We're approaching Model 3 territory so we may see quite a bit of volatility soon.
DurandalAI
Member
Jim, like everybody else, is out there to make money. But I think that full autonomy will be a sleeper profit center for the M3. They could offer a purchase price for autonomy, or they could offer a subscription model... Purchase autonomy for $6-8k (Whatever they pick) or subscribe for $75/mo. Pre-pay, turn it on/off as you like, first month's free. Just like those coke dealers that visit the stock analysts, Tesla knows that once they try it, they'll be hooked.
I have nothing to back up the idea they're going to do that, but just a good idea.
Mike Smith
Active Member
I pointed this out in the other thread but I think it's worth mentioning here as well - Musk didn't say there wouldn't be a M3 reveal part 3 around late March as previously indicated, just that the final car wouldn't be revealed until near production. This could still be a big catalyst coming up.
Runarbt
Active Member
It was solidly neutral. Almost everything lined up with my expectations with one exception. SG&A is much higher than predicted, which is a complete mixed bag and depends on what's driving the costs there. I should dig into that further.
I think you can't tell the difference between gross and net margins in capital-intensive businesses. This seems to be a really common problem and it actually causes consistent mispricing of railroad stocks. As most of us know, Tesla is raking in profits on Model S and Model X.
Capital-intensive businesses require large scale to function. There is no such thing as a successful small carmaker or successful small railroad. This is the core issue which Tesla is grappling with: getting large enough to cover the fixed costs. This is the same reason why railroads went merger-crazy in the 19th century. If you haven't figured this out, you shouldn't be anywhere near the stock.
I can absolutely disagree with your nonsense.
They didn't need to issue stock; they might do so for risk reduction if the price was right; the price WAS right, so they did.
I'm not going to make a strong claim regarding *at what price* Musk currently considers it suitable to issue stock. Personally I'd guess he'd go for it at anything over $250.
As I said before, if the stock price drops back down to $200 or something, I bet he doesn't.
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I actually discussed this issue in my one abortive foray into venture capital. There's a big difference between being *forced* to raise more capital, potentially on disadvantageous terms, and *choosing* to raise more capital -- being able to say no if the price sucks.
I was looking at a capital-intensive business which needed a certain minimum amount of capital to get to a self-sustaining position. If they couldn't get that, they'd be over a barrel and the next investor could demand whatever they wanted, meaning that earlier investors would be screwed big-time. But after they hit that amount of capital... they would be making a very tiny amount of money, but enough that they *could turn down vulture offers*. At that point they probably would issue lots more capital, but *they didn't have to* and that meant that they could get much better terms when they did.
I told them they had to line up that minimum amount in pledges before I would put my money in. They didn't line it up. Hence, abortive foray.
However, if they had lined it up and gotten to the self-sustaining point, I could have honestly said "We don't need to raise any more capital." We would then have raised several dozen times as much capital. Probably. But we wouldn't have *needed* to, and that's important.
Musk made this exact point in the ER. He said that Tesla could be cash-flow positive right now if they just stopped expanding. But of course nobody wants them to do that.
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Was only too conservative in my prediction is all...The above from like 10 hours ago... It's rare when I'm right so have to take advantage when it comes around...
Edit: I'll start dipping my toe in for additional purchases tomorrow. Still hold core shares as always. I don't trade them.
I just looked over my TSLA portfolio transactions. I have bought on bad news almost always, emphasis on almost. I have yet to sell a TSLA share. With some fairly bearish populist-style critics and a handful of auto industry analysts who are unable to see the difference between GM and TSLA there certainly is some cynicism moving the sentiment of unanalytic people down. I thus see the bearish events today.
The positive side is Model 3 prospective profits at Model S & X levels by year end. If that happens we'll all be ecstatic! Or, the longs among us will be.
The real oddity for me is the near-total lack of curiosity about the former Solar City business. There are some formidable competitors in that business but tesla has some big advantages in speedy, uncomplicated installations, and utilities around the world are trying to manage peak power and peak production much better. So, tesla has doubled installation from tiny base with an island in Hawaii, another in American Samoa and a couple small park power utility deals in California. Not much, But, this is shaping up to be giant global business and countries from Argentina to Zambia are busy examining the prospects. Here in Brazil the major renewable educators are using the name Tesla as a generic term for non-lead-acid batteries. The points if that sometime within the next few months all that will begin to register with the analysts. When it does we'll see another nonautomotive impetus for growth in revenues and profits. In the short run solar tiles and residential power will distract from the big story, for which Tesla will suddenly need a new gigafactory or two to meet demand. I skip any attempt at all to quantify this because the stationary storage market is limited by capacity to deliver and price, nothing else. Tesla has licked the price problem by all appearances.
There is something on the order of 1300 TWH in speakers alone. The DOE numbers for natural gas were my metric since most of that is used for speakers, although some speakers are oil too:
Energy Economy | Department of Energy
Just imagine the scale of the opportunity, just replacing peakers and nothing else. With energy demands becoming less even, as they are, new speakers must be built. new battery storage invariably is cheaper and faster than building new speakers, and can be distributed to be nearest the peak loads, thus reducing transmission losses too. The Tesla Energy story hs been being told, mostly by JB, for years. Now it is real. It just might be bigger than cars. Most competitors are trying to make huger deals, but tesla ha set uno to provide near-turnkey simple integrated solutions. Hospitals, islands, urban peakers, retailers, factories..this list goes on and on.
I think this will begin to be visible right around Model 3 reveal, so the price should rise quite quickly then. Imagine the share price if a handful of utility analysts figure this out.
Doesn't matter that much honestly. Obviously this is better in a non taxable account, but 75% or a massive gain is still a massive gain. Not making a deeply profitable trade because taxes will decrease the profit is being pennywise and pound foolish.
In my case I'm lucky enough to be profit taking with really old converted SCTY shares around 40/share, so I'll actually show paper losses FIFO on my ~80% gains. Even when taxed a 60% 6 month gain is something I will take every single day.
If I'm majorly wrong in my above reply, please correct me. Learning is the most useful thing.
racer26
Active Member
Swapped one of my LEAPS (the oldest one, J18 @ 130, bought around SP=200) for some June 2017 @ 265's. There is no logic to dropping $15 on this news. Once again, Tesla performs well, and is rewarded with punishment. All signs from management are pointing to an on-time to arguably early Model 3 launch, with an easily 4 and probably 5 or 6 digit number of them delivered in 2017. The market has been acting like it expects Model 3 to be late, or only deliver a token amount in 2017 since last March.
Ridiculous.
Ridiculous.
You're wrong about this unless the drop is really substantial. (Or you're in a low tax bracket.)
So, consider my shares which have a basis of $180 and a long-term holding period. If I sold them at $280 and bought back at $260, I gain $20/share and I pay taxes on $100/share -- taxes at a combined state & federal rate of greater than 20%, so more than $20/share. In short, it's not a profitable thing to do.
It's even worse for my shares with a basis of $100 or $32. And it's also even worse for the $180 basis shares with a short-term holding period, where the combined tax rate could exceed 40%.
I guess I'm saying this isn't deeply profitable enough to be worth it. If you expected the shares to drop by 50% before you bought them again, obviously it's worth it.
Oh, well in THAT case when you're sitting on a realizable tax loss -- or if your taxes on the gains are going to be erased by deductions which you otherwise can't claim -- yeah, you totally should. I've done stuff like that.
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