2017 Investor Roundtable: TSLA Market Action

[TrendTrader007]

If this is all shorts can do then I fully expect tomorrow to be an up day and a furious rally with gap up on Thursday

 

[Starno]

There's going to be an interesting end of the week, that'll set the tone for the next 2-3 months until M3 production launch, assuming macro stays on its path.

 

[EinSV]

Considering the massive and well financed misinformation campaign against Tesla, anyone willing to actually follow what Tesla says they will do has an information edge over the rest of the market. Either the market is pricing on this disinformation or there is no value in spending millions on this disinformation.

+1000. This is a point that does not get made often enough.

Given the rampant misinformation and irrational negativity that is spread about all things Tesla, making a dispassionate and rational attempt to predict outcomes creates a significant investment edge IMO.

 

[Drax7]

I expect both GM and F to go bankrupt in the next three years as they fail to electrify their fleet in time.

Neither of these companies have even started building their first battery factory, whereas Tesla is planning to have five online by 2020/21.

Tesla will introduce additional models that will eat further into these companies' margins.

Their balance sheets are levered with leased car debt which is backed by used car values, which are declining quickly.

I expect Berkshire Hathaway to exit its $1B investment in GM sooner rather than later.

Electrification plus the next recession could very well put them out of commission.
The double whammy of EVs plus recession will shrink their demand noticeably.

 

[Drax7]

Furthermore, GMs trailing 12 months free cash flow is Negative 12 billion dollars.
They are also the biggest consumers of viagra, that puts pfizer in a bind.

 

[neroden]

In fact both of these companies have been issuing debt to sustain buybacks/dividends, which is financial mismanagement, instead of investing this cash to building Gigafactories.

Oh, GM and Ford are doing this too? I noted previously that Exxon and Chevron were doing this. (I should check again on Shell and BP, which hadn't quite fallen to those depths of mismanagment yet, last I checked.)

 

[Skryll]

FWIW, in the auto industry I am certain that FCA will be a spectacular short in another couple of quarters. I'll also expect some great opportunities with several industry suppliers, too many to name. All of those will have some serious volatility as the transition to more sustainable transport accelerates.

And that FCA short evaluation is taking into consideration the following key advantages in the legacy industry?
- they have the only plugin hybrid minivan, beating honda, toyota and others to market with an 8 seater that can go 30 miles before the gas engine even kicks in, Chrysler Pacifica 2017. Think GM Volt as a soccermom minivan.
- they have been partering with google now alphabet+waymo on a fully autonomous driving version using said minivan with lidar etc in an ongoing effort for years now
- waymo added 500 of these minivans to a self driving fleet

I don't know enough about the other FCA fundamentals in terms of legacy gas car inventory, but I do see the potential on the plugin hybrid minivan with an edge in autonomous driving and as a platform for an autonomous ride share service with ample seat and luggage space.

I am super long tesla but intent to also be long FCA and Alphabet for that reason after learning more about the fundamentals of the legacy business FCA carries.

Chrysler Pacifica plug-in hybrid is finally being delivered, free charger is offered for delays
Waymo deploys 500 self-driving Pacifica hybrid minivans in Phoenix for rides open to public

The only disadvantages I know about for the Pacifica are that steering is not great, that $40k is the higher end of minivan pricing, and that it does not have an all wheel drive option like Honda Odyssey Touring does.

The fact that they throw in an electric home charger now to make up for the delay to market for the general public (had to satisfy the 500 waymo vehicles production first I guess) is also telling about a leadership that gets it.

 

[ValueAnalyst]

Oh, GM and Ford are doing this too? I noted previously that Exxon and Chevron were doing this. (I should check again on Shell and BP, which hadn't quite fallen to those depths of mismanagment yet, last I checked.)

Oh yea! Check out the 5-year trend in their Debt-to-Asset ratio.

And that's BEFORE Tesla started nibbling at their lunch, and BEFORE Tesla will start eating their lunch with the Model 3 and the Model Y.

 

[neroden]

The other issue is that even if we lower our reliance on fossil fuels the cost will actually start to go up because of the failure by the companies that find the oil and the companies that refine the oil into gas and its other parts. Prices might go down in the short term, but eventually it become less and less efficient to get at due to the reverse of economies of scale.

Oh yeah. This is going to be interesting.

What I've said before is that we'll get to a point where crude oil prices are permanently low (because demand is dropping and existing cheap-to-operate wells can oversupply demand), but *gasoline* prices are still high (because the costs of the supply chain keep rising as the economies of scale disappear).


(1) When all but one gas station in town closes, the last one charges monopoly prices.
(2) When gas demand drops low enough, the number of gasoline *distributors* drops to one, and that one charges monopoly prices. This is apparently already happening in some areas.
(3) When gas demand drops low enough, refineries are oversized. Refiner margins ("crack spread") get squeezed. First, the least efficient shut down, which tends to improve the average efficiency. But this increases the distance by which the gasoline needs to be transported, giving more power to the (shrinking number of) distributors.
(4) Upstream, the oilfield services companies have already slashed their profits. When exploration drops, they'll initially have excess assets, but after a while they'll start declaring bankruptcy and the remaining ones will raise prices as they will have cartel/monopoly power.

There are a lot of other little effects like that.

I dont have a good idea of when that will happen, but would guess it wouldn't take much to start to cause those companies to start having problems. There were a lot of companies to go belly up in the shale business when prices dropped, but they have all but come back stronger, probably in part due to consolidation and in part due getting real lean after the down turn. Problem is that you can only consolidate and get so lean before there is nothing you can cut.

 

[Turing]

+1000. This is a point that does not get made often enough.

Given the rampant misinformation and irrational negativity that is spread about all things Tesla, making a dispassionate and rational attempt to predict outcomes creates a significant investment edge IMO.

When i made my big bet in Tesla last december. Part of my confidence was that i went on reddit/r/investing and even reddit/r/teslamotors And both were overwhelmingly bearish, r/investing was 99.9% super bearish on tesla in late 2016 with Tesla under $200 - it was basically just a repeat everything Chanos says on cnbc circlejerk, even the fan subreddit was buying into Tesla overvalued under $200 right before the gigafactory was to launch. I thought to myself, so this is suppose to be a cult stock? Even the fanboys are buying into misinformation.

 

[D-egg-O]

When i made my big bet in Tesla last december. Part of my confidence was that i went on reddit/r/investing and even reddit/r/teslamotors And both were overwhelmingly bearish, r/investing was 99.9% super bearish on tesla in late 2016 with Tesla under $200 - it was basically just a repeat everything Chanos says on cnbc circlejerk, even the fan subreddit was buying into Tesla overvalued under $200 right before the gigafactory was to launch. I thought to myself, so this is suppose to be a cult stock? Even the fanboys are buying into misinformation.

r/investing might as well just be r/indexETFpurchasing. The r/teslamotors sub is, mostly, filled with financially inexperienced young Tesla fans. It's difficult to start a serious discussion about invsting in TSLA. It's the main reason I started coming to this forum. I had difficulties adjusting to the TMC forum structure, but I understand it now. Love the discussions in here.

 

[Mike Smith]

Tesla (TSLA) closes equity sale of 38,000 residential solar installations from SolarCity

240 million in the bank. This should move TSLA higher as the market finds out.

 

[erha]

Unqualified guess: I think we will see people who's been hoping for a large drop all day start covering in the final two hours.

 

[Irishjugg]

I expect both GM and F to go bankrupt in the next three years as they fail to electrify their fleet in time.

Neither of these companies have even started building their first battery factory, whereas Tesla is planning to have five online by 2020/21.

Tesla will introduce additional models that will eat further into these companies' margins.

Their balance sheets are levered with leased car debt which is backed by used car values, which are declining quickly.

I expect Berkshire Hathaway to exit its $1B investment in GM sooner rather than later.

I hadn't thought about the lease car debt leverage before, interesting point. Perhaps I will have to undo my disagree reading based on that.

In general, I think Fiat Chrysler and all the Japanese companies focusing on fuel cells will bankrupt. I think GM actually has a good shot at survival, and I think Ford has an advice average one, but less than GM. Compliance car or not, the Bolt helps GM ramp and change to electric massively.

 

[ValueAnalyst]

I hadn't thought about the lease car debt leverage before, interesting point. Perhaps I will have to undo my disagree reading based on that.

My guess is that not many investors in GM/F have.

 

[Richgoogol]

bought more @ 319.59

 

[D-egg-O]

Tesla (TSLA) closes equity sale of 38,000 residential solar installations from SolarCity

240 million in the bank. This should move TSLA higher as the market finds out.

"PGGM, The Netherlands’ second biggest pension fund, announced the cash-equity transaction today."

So they own the systems now. Who would now service and maintain the systems? Maybe Tesla struck a deal to also maintain mobile app support as well as service and maintenance repair for the systems.

 

[LeonHe]

Oh, GM and Ford are doing this too? I noted previously that Exxon and Chevron were doing this. (I should check again on Shell and BP, which hadn't quite fallen to those depths of mismanagment yet, last I checked.)

This is more than mismanagement. It is a Ponzi scheme.

 

[ValueAnalyst]

I expect Tesla to produce more than 100,000 Model 3's in 2017.

Combined with Model S and Model X, I expect Tesla to produce more than 200,000 cars in 2017.

Combined with Tesla Energy, I expect Tesla to achieve total revenue of more than $15 billion in 2017.

This compares favorably to the current 2017 consensus estimate of $11 billion.

Looking out to the next fiscal year, I expect Tesla to achieve total revenue of more than $35 billion in 2018.

This is nearly 2x of the current FY2018 consensus estimate of $19 billion.

I don't know from which body part some Wall Street analysts are pulling their estimates...

 

[Irishjugg]

My guess is that not many investors in GM/F have.

It's funny, I've been planning out my future autonomous fleet for a while and had decided it makes the most sense to lease so I'm not such with the depreciating assets (and I am never behind advancements too long). It's such a small leap from there to sitting that it will accelerate the legacy automakers issues, I don't know how I missed it.

Thanks for the strong analysis on this.