2017 Investor Roundtable: TSLA Market Action

[CyberDutchie]

Here's more from Adam Jonas' note this morning:

Is Tesla a must-own strategic asset? Does a large tech firm with adjacency in shared autonomous transport look at Tesla as important to control before somebody else controls it? As both traditional auto and non-traditional tech firms make further headway into the world of miles and data, we believe the discussion around the value, the opportunity and the risks of an investment in Tesla will evolve, if not accelerate. A fundamental question for the Board of Tesla and for all Tesla stakeholders is whether the company is better off disrupting transport on a stand-alone basis or whether it could extract even greater value (while mitigating risk) as part of a larger entity or consortium. This conundrum is as old as capital markets. In our opinion, predicting specific strategic activity/M&A is not the point – it’s the question itself that is important to the investment debate and long-term value creation.

We recently downgraded Tesla shares to EW with a $305 price target. Please see our May 15th report: The Price of Ambition: Downgrade to EW. The most important catalyst for our downgrade is our view that we expect much larger and more well-capitalized competitors to soon unveil strategies that directly address sustainable transport and mobility. There have been numerous developments that suggest to us the continued preparation of an assault by large tech firms on the market for shared, autonomous, electric mobility. While the forthcoming developments we expect may prove as some validation for the core mission of Tesla (accelerating sustainable transport), we believe there may be a new host of competitive risks to consider. Along the way, the market may simultaneously price in the value of Tesla as a strategic/trophy asset, particularly as it continues to build out its extensive infrastructure of vehicle and battery manufacturing assets, charging and service infrastructure and unveils forthcoming milestones in business model (Tesla Mobility or Tesla ‘Network’ as they call it) and automated/autonomous achievements. While the gap to our $511 bull case may be large in percentage terms, it can be achieved with rather modest (yes, subjective) changes in the assumed market share of global miles traveled by 2030 or 2040.

 

[Waiting4M3]

While the gap to our $511 bull case may be large in percentage terms, it can be achieved with rather modest (yes, subjective) changes in the assumed market share of global miles traveled by 2030 or 2040.

So if the M3 is ahead of his schedule and Tesla puts 1M of M3 with AP2 HW on the road, I wonder how quickly Jonas will factor that into his market share of global miles traveled.

 

[Tslynk67]

Meanwhile, elsewhere... EU and China commit to deeper climate cooperation as US turns away

 

[Drax7]

Here's more from Adam Jonas' note this morning:

Pure mumbo jumbo

 

[cziegler]

Quick little data point:

Yesterday, a crew of 3 from Solar City, DBA Tesla Energy, installed an A/C Powerwall II (PWII) at our home. The install was smooth and the team was very professional. The post installation grid failure/PWII take-over test was perfect. The remaining deliverable, off-peak electricity purchasing and peak shaving/pricing arbitrage functionality, is expected to be rolled-out in a month or so. As an unintended benefit of the PWII installation, they freed-up several circuit breakers in my garage's sub-panel (by moving the circuits to a newly installed PWII backed-up subpanel) so now I can install even more EV charging outlets.

I was told by the Tesla scheduler a week ago, we were the first 100 in the area (Southern California/Greater Los Angeles area) and the installation crew mentioned they are solely PWII installers and they are busy! Ladies and gents, I think it's safe to say TE is ramping and the GF1 is beginning to yield fruit.

 

[Curt Renz]

Jonas on Bloomberg:

Morgan Stanley Takes a Pause on Tesla With Downgrade

We appear to have had bestowed upon us a long-term buying opportunity back in November when a short-selling mini-hedge fund manager addressed a conference. His concern was the potential for competition among electric car manufacturers, when of course the real need and effort are to make internal combustion engines obsolete to the benefit of all dedicated EV makers.

Then this month another opportunity arose after Morgan Stanley cooled off its opinion of TSLA. Their analyst expressed a concern about competition somewhat related to that of the aforementioned mini-hedge fund manager. But reading between the lines, this analyst actually seems to want Elon to declare that the big deal is ride sharing and that Tesla will be aggressively involved.

Perhaps someone will ask Elon about ride sharing at the June 6 stockholders meeting. If he responds enthusiastically enough, that may inspire Morgan Stanley to upgrade TSLA back to an overweight and raise the price target.

 

[TradingInvest]

We appear to have had bestowed upon us a long-term buying opportunity back in November when a short-selling mini-hedge fund manager addressed a conference. His concern was the potential for competition among electric car manufacturers, when of course the real need and effort are to make internal combustion engines obsolete to the benefit of all dedicated EV makers.

Then this month another opportunity arose after Morgan Stanley cooled off its opinion of TSLA. Their analyst expressed a concern about competition somewhat related to that of the aforementioned mini-hedge fund manager. But reading between the lines, this analyst actually seems to want Elon to declare that the big deal is ride sharing and that Tesla will be aggressively involved.

Perhaps someone will ask Elon about ride sharing at the June 6 stockholders meeting. If he responds enthusiastically enough, that may inspire Morgan Stanley to upgrade TSLA back to an overweight and raise the price target.

I give zero weight to what Morgan Stanley thinks or asks. They play the stock game like GS. Many people on this board (including Curt Renz) know better than them and are more trustworthy. Nobody can value a company like Tesla to the precision of $50, let alone $5. When they insist $305 is the true value, $340 is overvalued, either they don't know what they are doing, or they are playing the stock game with Calls and Puts.

 

[MartinAustin]

So Elon's going to leave the presidential councils if Trump leaves the Paris agreement.

If Trump decides to stay... this could make Elon look pretty clouty.

I was surprised that TSLA appears to be unmoved by these tweets.

 

[Starno]

I give zero weight what Morgan Stanley thinks or asks. They play the stock game like GS. Many people on this board (including Curt Renz) know better than them and are more trustworthy. Nobody can value a company like Tesla to the precision of $50, let alone $5. When they insist $305 is the true value, $340 is overvalued, either they don't know what they are doing, or they are playing the stock game with Calls and Puts.

They're definitely playing the stock game.

I'd also suspect they're trying to hold the stock down a bit so they can get " friends " to jump on board before it takes off.

 

[Tslynk67]

So Elon's going to leave the presidential councils if Trump leaves the Paris agreement.

If Trump decides to stay... this could make Elon look pretty clouty.

I was surprised that TSLA appears to be unmoved by these tweets.

Here's the tweets...

 

[racer26]

So Elon's going to leave the presidential councils if Trump leaves the Paris agreement.

If Trump decides to stay... this could make Elon look pretty clouty.

I was surprised that TSLA appears to be unmoved by these tweets.

Agreed, particularly with the way the media has portrayed Trump's intentions.

Paris is an accord with little in the way of ramifications for non-compliance. The appropriate chess move here is to stay, look progressive, and then fail to meet the requirements of Paris.

 

[Curt Renz]

So Elon's going to leave the presidential councils if Trump leaves the Paris agreement.

If Trump decides to stay... this could make Elon look pretty clouty.

I was surprised that TSLA appears to be unmoved by these tweets.

Indeed, a huge amount of clout. However, Elon might also have considered that the ramifications of having to resign from the councils may be minimized, if Trump remains on a hot seat or possibly leaves office early. It also could make Tesla appear particularly good to car buyers in other countries, not to mention a great many Americans.

As an aside, when I was young this use of the word clout was only heard in Chicago.

 

[Tslynk67]

Now this: Exxon Shareholders Approve Climate Resolution: 62% Call for Disclosure in Landmark Vote

Exxon Shareholders Approve Climate Resolution: 62% Vote for Disclosure
The landmark investor vote defied Exxon's management. It requires the oil giant to begin reporting climate-related risks to its business.

 

[SteveG3]

So Elon's going to leave the presidential councils if Trump leaves the Paris agreement.

If Trump decides to stay... this could make Elon look pretty clouty.

I was surprised that TSLA appears to be unmoved by these tweets.

The traders don't know whether to trade off this tweet until they can see whether the propagandists in the media can spin this negatively in a manner that at least has the appearance of credible coverage. It will take WSJ, Forbes, Business Insider, et al, as much as a few hours to figure out how to try to sell this as a crisis for Tesla and/or "another" amateur unprofessional error by Musk. Partially joking.

 

[ValueAnalyst]

So Elon's going to leave the presidential councils if Trump leaves the Paris agreement.

If Trump decides to stay... this could make Elon look pretty clouty.

I was surprised that TSLA appears to be unmoved by these tweets.

Why do you think this should affect the value of the business?

It seems to me that investors have already discounted Trump administration pulling from the Paris agreement, and its implications for Tesla are unclear, if any.

 

[MitchJi]

Jonas on Bloomberg:

Morgan Stanley Takes a Pause on Tesla With Downgrade

Bloomberg's title doesn't match the thrust of their own interview. Jonas responds to the perennial "why TSLA bigger than F and GM, har-har" with a patient and cogent explanation that Tesla is skating to where the puck is going to be, while traditional automakers are still playing water polo. He actually defends the valuation and the core reasons behind it.

Agreed, but he only talked about AI, and autonomy. Almost nothing on EV's, and absolutely nothing about alien dreadnaught production technology, TE or solar. So he has good points about aI and full autonomy and networked cars (although I think that effects he is expecting are exaggerated), but he's completely missing most of the biggest catalysts!

 

[Waiting4M3]

Agreed, but he only talked about AI, and autonomy. Almost nothing on EV's, and absolutely nothing about alien dreadnaught production technology, TE or solar. So he has good points about aI and full autonomy and networked cars (although I think that effects he is expecting are exaggerated), but he's completely missing most of the biggest catalysts!

I just noticed Jonas' title is Auto Researcher, so maybe TE, solar, manufacturing are all out of his league, and he doesn't know how to evaluate the, poor Jonas.

 

[The Blue Owl]

Agreed, but he only talked about AI, and autonomy. Almost nothing on EV's, and absolutely nothing about alien dreadnaught production technology, TE or solar. So he has good points about aI and full autonomy and networked cars (although I think that effects he is expecting are exaggerated), but he's completely missing most of the biggest catalysts!

Well, he did he explicitly mention energy when he said that Tesla was much bigger than cars. I think he didn't want to harp on the electric stuff because he felt it was more than his skeptical interviewers could comprehend. Any thinking person realizes that in the autonomous shared-mobility future he (Jonas) believes in, ICE powertrains don't make any economic sense.

 

[SW2Fiddler]

Secondarily, any requirements set by the board for whether or not conversations are allowed should be set by the moderators within the administrative panel, even if it requires custom code changes.

You are under the impression that mods are admins? They clearly are not the same thing.

 

[PaulusdB]

So Elon's going to leave the presidential councils if Trump leaves the Paris agreement.

If Trump decides to stay... this could make Elon look pretty clouty.

I was surprised that TSLA appears to be unmoved by these tweets.

DT was explained in Taormina (Italy) that the US's withdrawal cannot be filed before November-2019, so he has a free pass at making bold statements about leaving for two and a half years.