2017 Investor Roundtable: TSLA Market Action

[TheTalkingMule]

Up 20 buck at the open, not bad I guess.

 

[Starno]

Resistance under 350 ...

 

[JRP3]

You are a better person in some ways, but deriving happiness from someone else's misfortune isn't good. You can do better than that. I'm not a Christian, but think about Christ praying for forgiveness for the people nailing him to the cross and saying that "love and all things will be added to you"?

Yeah that didn't really work out too well for him. Not to drag this out too much, but consider this scenario:

Aliens come to earth and start pumping cyanide into the atmosphere because they breathe it. Would you want me to consider their feelings or attempt to take them out at any cost? Why is it different when our own kind are intent on making the planet uninhabitable for their own short term gains? No sympathy, no mercy.

 

[JRP3]

I'm interested in learning people's "I would definitely sell majority of my stake at this price." by year-end 2017 and year-end 2018.

Sell? And miss out on all those dividends?

 

[Bgarret]

So I take it he hasn't changed his (ridiculously pessimistic) vehicle production targets and is still valuing TE at 0?

..... While the Model 3 ramp represents an exciting opportunity for Tesla and its shareholders, we also believe the next 6 to 12 months will see a steady and intensifying flow of competitive efforts from very large and well capitalized firms that will be making increasingly conspicuous efforts to encroach into Tesla’s territory of highly safe/automated and electric transport."

Upcoming OEM competition in the next 6-12months??? Really Adam? Where is the stealth 35GW battery gigafactory to produce more than a trickle of compliance cars? Does OEM's "capitalization" allow them to defy the laws of physics?

Where did this capitalization come from....building electric cars and infrastructure? NO. InBev (Annheiser-Busch) has a 230 Billion$ market cap, doesn't mean I'm afraid of Bud Light replacing Tesla as the preeminent provider of sustainable transportation.

Jonas.....you are rapidly becoming a self-absorbed hack.

 

[MitchJi]

This one point made me really happy! Model Y on the 3 platform. No immediate need for a whole new line, no immediate definite looming equity raise after Model 3 profitability. While it may delay Alien Dreadnaught 1.0, IMHO this will let them practice some more until 1.0 is ready. At that point I would expect the new platform will become the new S and Xs.

What a relief! (also did anyone notice that Elon hedged on calling the Model Y, "The Model Y"--maybe a new name instead...)

The MS-MX are both built on the same platform and use different production lines. I believe that the chances of Tesla ever producing multiple cars again in the same lines is zero. Also if they build Gigafactories in China and Europe they will each get lines for both M3 and MY.

 

[ev-enthusiast]

I really like how some analysts keep on mentioning the intensifying competition from traditional car manufacturers with deep pockets. As if they all could just develop a great product in no time together with production line and supply chain and so on like a magician pulls out a white rabbit out of a hat. Over the years (almost decades) this story has gotten weaker and weaker and very old.
And once there is some news and Mercedes pulls the plug and stops production of both their Smart and B-Class EVs nobody wants to mention this?!
Honestly?
Might they not mention this information simply because this fact does not fit their tale?
I mean seriously?!

 

[ValueAnalyst]

..... While the Model 3 ramp represents an exciting opportunity for Tesla and its shareholders, we also believe the next 6 to 12 months will see a steady and intensifying flow of competitive efforts from very large and well capitalized firms that will be making increasingly conspicuous efforts to encroach into Tesla’s territory of highly safe/automated and electric transport."

Upcoming OEM competition in the next 6-12months??? Really Adam? Where is the stealth 35GW battery gigafactory to produce more than a trickle of compliance cars? Does OEM's "capitalization" allow them to defy the laws of physics?

Where did this capitalization come from....building electric cars and infrastructure? NO. InBev (Annheiser-Busch) has a 230 Billion$ market cap, doesn't mean I'm afraid of Bud Light replacing Tesla as the preeminent provider of sustainable transportation.

Jonas.....you are rapidly becoming a self-absorbed hack.

I think one of the biggest risks bulls face is selling way too early into the upcoming rally. The stock has been in or near the $200-$300 range for four years, and I think some bulls are tired of waiting. This is why basing investment decisions on fundamentals (vs. price action) is so important, because (and I agree with Elon on this) fundamentals of the business have never been better, and they are improving at a rate faster than the stock price is increasing.

 

[Mkorpal]

I really like how some analysts keep on mentioning the intensifying competition from traditional car manufacturers with deep pockets. As if they all could just develop a great product in no time together with production line and supply chain and so on like a magician pulls out a white rabbit out of a hat. Over the years (almost decades) this story has gotten weaker and weaker and very old.
And once there is some news and Mercedes pulls the plug and stops production of both their Smart and B-Class EVs nobody wants to mention this?!
Honestly?
Might they not mention this information simply because this fact does not fit their tale?
I mean seriously?!

Moreover, how it's supposed to be the death of Tesla. Seriously, competition would actually be healthy. The biggest risk, in my opinion, to Tesla, is BEVs remaining a niche market.

 

[mmd]

Unbelievable, that Adam Jonas is using the Model 3 order rate right after the delivery event to project another 150k reservations over a quarter! This rate is highly unlikely to be sustained over a long period.

BTW, a question on the Kauai project. Tesla sold the batteries for Kauai project to Solarcity many quarters ago. How does it show up again in Q2 report?

Also, it seems Elon and Straubel bought solar roofs (likely just prototypes) to goose up the solar roof revenue and make nice headlines. Anyone knows how many total solar roofs were installed in total? Isn't this what's known as "self dealing"?

 

[jeewee3000]

Moreover, how it's supposed to be the death of Tesla. Seriously, competition would actually be healthy. The biggest risk, in my opinion, to Tesla, is BEVs remaining a niche market.

BEVs remaining a niche market used to be a big risk, not anymore. For the first time, we know Tesla can actually deliver on their promise of bringing to market an affordable BEV with decent range.

Some competition would be healthy, but as an investor I don't mind the slow pace of the big auto companies. The later they realise they have to switch over to BEV production (i.e. Volvo recently had a change of heart), the further Tesla can increase their lead on battery technology and so on. Also, Tesla will have grown a lot meaning more market share for them -> higher SP.

 

[GoTslaGo]

The MS-MX are both built on the same platform and use different production lines. I believe that the chances of Tesla ever producing multiple cars again in the same lines is zero. Also if they build Gigafactories in China and Europe they will each get lines for both M3 and MY.

Thanks for pointing that out! I was thinking a whole new factory (dreadnaught 1.0) not line... mis-wrote my thoughts.

 

[MitchJi]

Good morning everyone. Did y'all sleep like a baby?

I'm interested in learning people's "I would definitely sell majority of my stake at this price." by year-end 2017 and year-end 2018.

If you'd like to share, please also provide your math/reasoning behind your price targets.

Four hundred dollars or end of August, which ever comes first. That would be a ten bagger and a four bagger for us, and our crystal ball thinks that the market is going to crash in September. Right or wrong we plan to load up on June 2018's in October, and probably January 2020's in November.

 

[GoTslaGo]

I think one of the biggest risks bulls face is selling way too early into the upcoming rally. The stock has been in or near the $200-$300 range for four years, and I think some bulls are tired of waiting. This is why basing investment decisions on fundamentals (vs. price action) is so important, because (and I agree with Elon on this) fundamentals of the business has never been better, and they are improving at a rate faster than the stock price is increasing.

Yep. I am invested in Tesla. I trade other stocks. Big difference.

 

[jeewee3000]

...our crystal ball thinks that the market is going to crash in September.

If that were true, TSLA might do well in september. Bad macro + positive Tesla semi announcement = happy SP

Not an advice, obviously.

 

[JRP3]

Also, it seems Elon and Straubel bought solar roofs to goose up the solar roof revenue and make nice headlines. Anyone knows how many total solar roofs were installed in total? Isn't this what's known as "self dealing"?

Good catch, those two installations make all the difference in the world! Better call SEC, FTC, and the FDA for good measure.

 

[DurandalAI]

I recall Elon commenting somewhere a while ago, maybe twitter, that yes it would be possible. But if not, I'd just reserve Y on day 1 and cancel this one, but I think the'll allow that if/when Y is announced... There's still possibility that i'll get 3 for a relative, but not likely right now...

At this point, I plan on reserving whatever Tesla will be putting up, be it the Y, the Z, the Truck, etc... Why? Even if I don't want it, I bet I can find someone who will want it.

 

[jeewee3000]

At this point, I plan on reserving whatever Tesla will be putting up, be it the Y, the Z, the Truck, etc... Why? Even if I don't want it, I bet I can find someone who will want it.

enjoy your Semi

 

[ValueAnalyst]

Nope. Still same target of $305. Here are his notes:

Auto gross margin (ex ZEVs) was 120bps higher than our estimate and cash burn (while $1.2bn) was more moderate. Early Model 3 launch milestones look strong, but the $2bn of 2H capex will make your eyes water. Time will tell if they are tears of joy.

Key thoughts following Tesla’s 2Q result:

Auto gross margin, excluding the $100mm of ZEV credits, was 24.6% vs. MS at 23.4%. ZEV credit revenue was triple our forecast.

Tesla consumed nearly $1.2bn of cash in the quarter – much better than our $1.7bn forecast. The difference was higher profit (helped by ZEVs and Tesla Energy), slightly lower than expected capex, better than expected working capital movement, and other factors.

Tesla ended 2Q with over $3bn of gross cash, significantly ahead of our $2.3bn estimate.

Guidance for 2H Model S and X volume higher than first half is more positive than our forecast of a modest sequential decline. We have anticipated cannibalization from Model 3, particularly vs. the ageing Model S. Tesla says reservations for both S and X are improving.

Guidance for 3Q auto gross margin to dip below 20% is very much in line with our forecast of a 19.9% gross margin (18.6% ex ZEVs).

2H guidance for Model 3 volume is above our expectation and the company reports it is collecting 1,800 reservations every day. While still early days, over the next quarter this could add 150k to 200k more reservations for this model. At this pace, incremental Model 3 volume for just the next quarter could as much as 10x the full year’s volume of the Chevy Bolt.

2H capex guide of $2bn is really big. 2x our forecast. On an annualized basis, this level of spending is approaching the neighborhood of established auto giants like Honda and Nissan as much as 1⁄2 or more of the spending levels of GM or Ford. Bears may seize on this guidance to focus
on the increased risk of equity dilution.

Reiterating our investment thesis. Tesla is a rather expensive call option on disrupting transport and energy but should attract serious competition over time – the stock is trading just over our assessment of fair value. In our opinion, the direction of Tesla's share price will be dominated by (a) its pace of cash consumption, (b) the excellence and excitement of its products and (c) the openness of capital markets to fund the company's plan. While the Model 3 ramp represents an exciting opportunity for Tesla and its shareholders, we also believe the next 6 to 12 months will see a steady and intensifying flow of competitive efforts from very large and well capitalized firms that will be making increasingly conspicuous efforts to encroach into Tesla’s territory of highly safe/automated and electric transport.

His commentary around competition is really dumb. Maybe he's talking about some announcements from Apple?

In any case, if Tesla reports another Q of lower than expected capex while staying on track for Model 3 ramp, he'll have to raise his PT.

It seems he's overly concerned about another equity raise, which management has already ruled out and which wouldn't be the end of the world even if it happened. Dumb.

 

[donauker]

The MS-MX are both built on the same platform and use different production lines. I believe that the chances of Tesla ever producing multiple cars again in the same lines is zero. Also if they build Gigafactories in China and Europe they will each get lines for both M3 and MY.

Not sure what your definition of different production lines is, but I am sure that the line I saw less than 2 weeks ago had an X between each S.