2017 Investor Roundtable: TSLA Market Action

[ItsNotAboutTheMoney]

Actually, this is something Tesla has been working on for at least four years now, it has always been part of Tesla's plan, and I expect it to be rolled out in 2018 given the increasing chatter along with the Model 3 ramp-up. The following article was published in July 2013:

Tesla Aims to Charge Electric Vehicles in Just Five Minutes, as Fast as a Fill-Up

Yes, they're working on it. So are other companies. The chatter is a result of a vague, acerbic Elon Musk tweet that was a response to a question that was a response to a competitor's deliberately misleading announcement. That vague tweet can simply be taken as comparing Tesla's _current_ charging with the announced site.

Note that I presented the value of FSD, not the price, which will be set by Tesla, likely below $10,000.

Further, note that the regulatory approval roll-out for FSD will likely be state-by-state, and California will likely be the first state. If California approves FSD in early-2018, and assuming Tesla can achieve the coast-to-coast demonstration by the end of 2017 as Elon has repeatedly predicted, this would give Tesla more potential customers than it can supply before competition can catch up by 2020/21.

An economic value of $350k isn't that important if the price is $10k.

Tesla's current hardware doesn't seem to have the redundancy necessary for full autonomy. Without full autonomy, the value's insurance+physical relaxation. Demonstrable success would certainly help sales of AP2-enabled vehicles, but it won't enable Tesla Network sharing that could help add buyers from the mainstream segment.

Proving the system to take the next step will take a lot of miles and statistics, plus addition of redundant hardware, plus more miles, plus legislative approval. The first fully autonomous system will find the legislative approval will slow them down by a couple of years. Governments are reactive. (They don't even have the obvious replacement for fuel tax set up yet despite lots of hand-wringing over the past 15 years). After that it'll be much easier. Given that a good fully autonomous system will be able to attract a lot of investment, and therefore accumulate test miles very rapidly, and given that government works in 2 year cycles, I don't see 2 years lead (even if there were any evidence that supports it, which there isn't) as having any significant value.

 

[neroden]

Also worth considering where market valuations were at in 1973 vs. now (chart uses Professor Robert Shiller's PE Ratio)
My point isn't necessarily about unease this week, but rather that we are at historically high valuations, and at any time a significant selloff could happen.

I absolutely agree. I'm only holding stocks which I'm comfortable holding if market P/Es revert to 10. (Admittedly, I'm not in great shape if they revert to 5 as they did during the WWI bear market and after the1929 crash, but I'd still be OK.)

 

[AudubonB]

MOD:

Discussing politics qua politics is what is not permitted here.

Discussing political events in the context of the investment markets in general and Tesla in specific is absolutely appropriate and is to be fostered.

 

[neroden]

and ubiquitous awareness that the stock market long-term has considerably outperformed bonds.

I should point out that the best-conducted very-long-run studies show this is not actually true over the very, very, very long term; stocks only outperform bonds on average in the 20th century and later. The trouble is that you have to go back into the centuries of bad data and analyze it really well to notice this.

The periods when bonds outperformed stocks (several have been identified in the 19th, 18th, etc century) are specifically periods with high company bankruptcy rates. Many studies screw up the analysis by omitting the bankruptcies from their analysis. So that was the advantage of bonds: better on the downside risk.

In the US today, bankruptcy law is so messed up that bonds really don't have true priority in Chapter 11 bankruptcy any more, so that's vastly devalued corporate bonds as an investment; they still have an advantage in high-bankruptcy periods in *other* countries with stricter bankruptcy laws.

Corporate investments (stocks or bonds) have on average been better than the alternatives since the industrial revolution, which makes sense because they're investments in businesses which create value, as opposed to just collecting rent. Before that, rent was the best investment for centuries.

Are we going into a high-bankruptcy period? Probably not. I still see this as a sector-selection market.

 

[neroden]

As much as I hate seeing politics discussed in this thread, this situation worries me in regard to the market. We've managed to blow through all the other insane stupid things he has done, but this is heading toward crisis. People do stupid things in crises even when it doesn't affect the underlying fundamentals.

So be ready to ride out the crazy. The NYSE was actually *closed* for months during WWI. Is everyone ready for a period when Tesla isn't readily tradable for nine months? I am...

 

[ValueAnalyst]

OK, I've researched that period a lot more than you have. It's quite important economically and rather relevant to Tesla's mission.

1972 featured the Soviet Crop Failure, which had world-spanning economic consequences (as well as major geopolitical consequences). This started to cause price inflation in consumer staples worldwide (as the USSR imported grain from around the world).

1973 was the First Oil Shock, with the OPEC embargo. Combined with a misguided Federal Reserve policy which treated this the way it would treat a money-shortage recession (but it wasn't a money shortage recession), this caused stagflation. (The Fed still hasn't figured this out and would be just as dumb if it happened again.)

(For explanation, in a standard money-shortage recession, you can add money and it means more people get hired. However, the economy in 1973 was limited by the oil supply. They couldn't hire more people unless they had more oil for those people to work with. Which they didn't beause of the embargo. So any money from the Fed just drove up the price of oil, and the oil was used for everything, so it drove up the price of everything, causing inflation. But not hiring anyone. And there weren't quick substitutes for oil at the time.)

None of this had anything much to do with Watergate. It could all happen again -- global warming could cause serious crop failures. Or OPEC could finally get their act together and really cut production, but we aren't nearly as dependent on oil now (we can switch to electric cars....)

My point is that it wasn't really about the domestic politics. The market reaction of that time period was tied to things which are actually related in a very deep way to Tesla (crop failures, oil dependence), not to domestic politics.

I agree.

 

[Lhan]

Does the Goldman team look at anything beyond the next six months when they value companies? Have they run out of excel columns?

I ran out of columns in Excel 2003, because of the 5 if statement limit at the time, and had to upgrade my laptop, recalculating took about 5 seconds,

Yes, they're working on it. So are other companies. The chatter is a result of a vague, acerbic Elon Musk tweet that was a response to a question that was a response to a competitor's deliberately misleading announcement. That vague tweet can simply be taken as comparing Tesla's _current_ charging with the announced site.



An economic value of $350k isn't that important if the price is $10k.

Tesla's current hardware doesn't seem to have the redundancy necessary for full autonomy. Without full autonomy, the value's insurance+physical relaxation. Demonstrable success would certainly help sales of AP2-enabled vehicles, but it won't enable Tesla Network sharing that could help add buyers from the mainstream segment.

Proving the system to take the next step will take a lot of miles and statistics, plus addition of redundant hardware, plus more miles, plus legislative approval. The first fully autonomous system will find the legislative approval will slow them down by a couple of years. Governments are reactive. (They don't even have the obvious replacement for fuel tax set up yet despite lots of hand-wringing over the past 15 years). After that it'll be much easier. Given that a good fully autonomous system will be able to attract a lot of investment, and therefore accumulate test miles very rapidly, and given that government works in 2 year cycles, I don't see 2 years lead (even if there were any evidence that supports it, which there isn't) as having any significant value.

I don't think you need redundancy, the AP replaces a human, so you only need a fail safe mode, that kicks in when conditions demand it.

 

[DurandalAI]

So be ready to ride out the crazy. The NYSE was actually *closed* for months during WWI. Is everyone ready for a period when Tesla isn't readily tradable for nine months? I am...

I certainly don't want to see that. While not being able to touch my TSLA stock for 9 months wouldn't cripple me, if at the end of that 9 months my stock was worth $0, then yes, it would be quite the gut punch.

 

[winfield100]

Hit articles that the Tesla blog was likely referencing this weekend. How convenient they be posted today, as TSLA attempts to recover this morning. Also note the volume spike at 10:26am - 107k volume, an attempted sell off just as SPY was breaking higher.

Tesla: Founder Elon Musk says it doesn't 'deserve' market value

Tesla factory workers reveal pain, injury and stress: 'Everything feels like the future but us'

http://www.bizjournals.com/sanjose/...-tsla-fremont-factory-working-conditions.html



Those apparent quotes seem rather out of character, given all other recent statements regarding valuation, market cap, etc.

and another hit piece on SleezeKing Alfalfa
Elon Musk talks up safety, talks down market cap - Tesla Motors (NASDAQ:TSLA) | Seeking Alpha

 

[winfield100]

MOD:

Discussing politics qua politics is what is not permitted here.

Discussing political events in the context of the investment markets in general and Tesla in specific is absolutely appropriate and is to be fostered.

apologies

 

[TrendTrader007]

There are two guys it never pays to bet against
Elon Musk and Papafox

 

[TrendTrader007]

If the stock goes upto $1000 then I'll add another name to the list
ValueAnalyst

 

[TrendTrader007]

Drinks on me

Anne Boleyn would be happy

 

[geneclean55]

Fingers crossed that this ascending triangle pops during power hour

 

[zdriver]

Strong bids dried up about 40 minutes ago, just as it touched $313, based on HFTAlert's accumulators. Basically correlated directly to the macro break upwards just before then. As popafox would say, "not too hot, not too cold" - macros heated up, and TSLA became far less interesting when an imminent "perfect trade" was setting up elsewhere. (I rode SPY for about a dollar, probably one of the easiest SPY trades I've ever done)

Wouldn't be surprised if we close below 312 now, save for any EOD rally.

 

[CaliBear1]

Noooo! Not Cornell! So bummed. What an amazing voice and lyricist. Hope he finds Kurt, Scott, and Layne and they have a few laughs together.

Heaven's Super Grunge band.

 

[zdriver]

Strong bids dried up about 40 minutes ago, just as it touched $313, based on HFTAlert's accumulators.

Curling up now... a nice strong EOD FOMO rally might be enough to break the $313 support-turned-resistance.

 

[geneclean55]

Fingers crossed that this ascending triangle pops during power hour

Finally!

 

[Richgoogol]

My gut feeling is telling me that index will close slightly up for the day and TSLA will close up modestly today, maybe half a percent. I hope I am right.

Looks like I'm off by a huge margin but I'm very thrilled that I was wrong

 

[zdriver]

a nice strong EOD FOMO rally

Follow through -

Looks like the strong bids anticipating a break upwards jumped back onboard pretty quickly once $313 was breached. On the buy/sell side (not shown), algos lost interest after 2pm, but jumped back in within a minute or two of $313 being broke, and were largely responsible for the volume spike at 3:49pm.