2017 Investor Roundtable: TSLA Market Action

[AlMc]

thanks but i have survived terrible losses in past and come back like Jon Snow
i was down well over $3m over the last few weeks and did not lose a night's sleep
bTW Conference call now playing!!! YAY!!!!!!

Good thing you are cardiologist. My own heart would have stopped with the type of paper losses you were incurring.

Happy for you AND all of us.

 

[dmckinstry]

There is a special corner in Hell waiting for this dude. Of that I have no doubt.

Awful report. Yes! Awful for shorts. Awesome for the rest of us.

 

[Reciprocity]

One aspect that struck me was Elon bowing to the executive team on Model Y redirection. When you are as smart and correct as often as he is, it must be difficult to be able to really listen to their opinions and change his mind.

Elon is crazy not dumb. He learns from past hubris induced mistakes and can be convinced by those who make good arguments. He has more than once taken full credit for the initial model x issues. Im sure some of the same people whom he is listening to today told him the x was to ambitious in the form with which it was initially launched.

The fact is that the model 3 was financially something that could not be allowed to fail. Tesla was far too invested and over extended for anything other then what they have done so far. Every day we get closer to 5k/w is one day closer to fully de-risking Tesla. At least until they next major vehicle program, thought it seems the Y will also be conservative. I think what we are seeing with the Y is something similar to pulling production forward on gigafactory and model 3 to capitalize on the market. Instead of a completely new platform which could encounter delays, they want the Y production in volume sooner then later. Even if that means a higher cost/retail price then they could have attained with a completely new platform. I think it's a good thing as it shows discipline to aggressively attack the market while it's hot.

 

[myusername]

Is that even possible?!

is this a joke?... i'm not sure if i'm supposed to comment or mark funny... i guess i'll comment...

we've seen 15m traded in AH in the past on top of 10m during the day... during AH today the SP stayed flat for approx 13 minutes and then when the report was published it moved within one minute on 33k shares to $339 and stopped there for 4 minutes... guess where $339 is?... it's EXACTLY on the upper trendline I've been posting... then it bounced off $330 and then moved right back to $339 and again held right under it for 10 minutes... and then slowly climbed to $355 during the call.

3m shares in AH is LOW volume for an ER.

 

[viKtor slamet]

Wow..

Ok, doing another simple math, we're up +$30 in one trading day (incl After Hours) since yesterday. Extrapolating this rate of change, the stock price would almost double in the next 10 trading days..

Don't sell, don't sell.. just be patient for another 2 weeks

 

[Yuri_G]

Is there anywhere else I can find the ER recording? Cant find it on Tesla website yet.

Here's a Youtube link for the call.

 

[TrendTrader007]

It's back up and working now.

thx listening now

 

[Yuri_G]

is this a joke?... i'm not sure if i'm supposed to comment or mark funny... i guess i'll comment...

we've seen 15m traded in AH in the past on top of 10m during the day... during AH today the SP stayed flat for approx 13 minutes and then when the report was published it moved within one minute on 33k shares to $339 and stopped there for 4 minutes... guess where $339 is?... it's EXACTLY on the upper trendline I've been posting... then it bounced off $330 and then moved right back to $339 and again held right under it for 10 minutes... and then slowly climbed to $355 during the call.

3m shares in AH is LOW volume for an ER.

So when does it start going to $100 by December? Or better yet that magical $270? Better practice drawing some steeper slopes.

 

[elasalle]

One aspect that struck me was Elon bowing to the executive team on Model Y redirection. When you are as smart and correct as often as he is, it must be difficult to be able to really listen to their opinions and change his mind.

Yes. & hope the Model X FWD and fancy seats are excluded too.

 

[Krugerrand]

Would you say the same if you knew reading such comments could push him over the edge of committing suicide?

It takes only one small straw sometimes.

Admittedly, I can be ugly inside too. As a strong believer in Karma, I do my darnedest not to wish ill on others. And I'm not wishing ill on him. I don't have to, he's doing a fine job all on his own. I'm just saying he's made his bed and he's going to have lie in it, if he isn't already and I'm totally okay with that and whatever more there is to come. Reap what you sow, etc., etc., etc...

 

[techmaven]

Getting started with the Google Hangout... please PM me if you want to join with your Google Hangout ID.

 

[winfield100]

I encourage all bulls to not gloat..... it's time to invite bears to our side.
]

OT rant on
VA, I have been telling them for months to cover, and all I get are curses and vile imprecations. You post on Seeking Alpha.
You know what they are there.
You would be wise to realize they are sociopaths, with no morals, who could care less if you live or die. They are poisonous snakes, scorpions and spiders, it's their nature, what they are, not their fault. I would suggest perhaps "demons clothed in human flesh, masquerading" as a working defense. They would show you not mercy. Turn the other cheek if you will, but to use an Ian M. Banks allusion, keep a "lazy gun" in one hand, just in case.
"The world is a cold and cruel place, it cares not if you live or perish."
OT rant off

 

[neroden]

Tesla has been increasing S & X deliveries, in part, by expanding into geographically more remote and thinner markets such as Mexico, South Korea, UAE, Ireland, Portugal, Jordan, etc., all of which require build-out and operation of new sales/service centers and supercharger locations, many of which involve shorter-term operating leases until the market is validated.

Except Tesla is not actually doing those service center expansions. Arguably they should be. But they are in actual fact not.

Other, more established markets such as Denmark, Hong Kong, and the UK where the EV subsidies are contracting still have operating expenses for the embedded infrastructure that do not decline anywhere near as sharply as new sales apparently have.

I'm going to ignore this silliness, because this doesn't change SG&A, it leaves it constant.

Then, there is the promised tripling of Supercharger pedestals before year end 2018. "There are currently 6,124 Superchargers around the world. By the end of 2018 there should be over 18,000 worldwide. Eventually you’ll be able to go anywhere on Earth using the Superchargers," Elon said on Friday night. To the extent site leasehold improvements for expansion are on shorter-term operating lease locations, those costs will also be expensed rather than capitalized. Tesla allocates SC operating costs between COGS and SG&A. The more that is allocated to SG&A, the higher the reported GM%, but it all washes out at the Net Income (Loss) level.

Superchargers don't amount to a hill of beans financially, though. It just doesn't add up to much. Even the capital costs are small, but the operational costs approximate 0. So I'm going to ignore this too.

So far you haven't given a reason to expect SG&A to increase.

The greatest driver of SG&A will obviously be the growth in total deliveries (and servicing)--say from ~76,000 in 2016 to ~350,000 +/- during 2018. It's not just the increase in volume but also the amount of "hand-holding" of new, down-market customers that will be required.

Except that Tesla isn't going to actually do this in 2018. If anything, they've been decreasing the amount of hand-holding. For all of 2018, Tesla will be delivering to early reservation holders -- early adopters. Certainly there will be some administrative overhead involved in handling the customers, but they sure aren't going to do hand-holding. It'll be drop ship and deal; they've made it pretty clear.

Through 6/30/17, Tesla had delivered ~230,000 Ss & Xs world-wide. I'd guesstimate that about 80% were to multiple car households and about 20% were to customers who had previously owned Teslas. Most of the customers in that demographic could readily write a check for their purchase and/or the difference between the Tesla they were returning and their new one. A far greater percentage of M3 customers will be single vehicle households, have un-paid loans/leases on non-Tesla vehicles, and are not nearly as financially astute nor well off as S and X purchasers. IMO, Tesla will have to expend a lot of SG&A to accommodate the new customer demographic to avoid complaints from disgruntled ones who are always more vocal than the more tolerant types.

Tesla is not going to do this in 2018.

Maybe they WILL get a bunch of complaints from disgruntled customers. That's a very real possibility, and one worth worrying about. But they've made their decision very clear. They aren't even listening to the existing disgruntled customers (cough cough, USB bugs). There's no way they're going to spend more SG&A on dealing with this sort of thing in 2018 when they haven't been dealing with it at all so far.

I guess I'm saying that they probably should increase SG&A in 2018 in order to keep their customers happy, but they clearly aren't actually going to. Maybe in 2019 they will. Or maybe this will become a big risk factor for the company going forward. But it seems pretty clear that for the near future, they're just not spending the money.

As far as R&D growth goes, IMO Tesla cannot stay on schedule with plans for a new MY (on a entirely new platform in an entirely new factory), the Class 8 tractor, the pick-up, the solar shingles etc. without significant growth in R&D during 2018.

That sounds superficially plausible until you think about it. The solar shingles have been spending R&D money at a steady rate for years now and are now heading for the more mature, less-R&D stage. The Model Y is essentially taking over the development position from the Model 3 as the Model 3 moves into the next stage. The class 8 tractor has apparently been in design long enough to have working prototypes, so again, the R&D is already going on. The pickup, which we haven't seen any sign of, is the only one which is likely to actually increase R&D.

I think Tesla's been pulling a bit of a "hidden in plain sight" trick here. I think people have been assuming that the R&D expenses for the last several quarters were almost entirely for Models S, X, and 3, and I suspect that's entirely false and that there's been massive R&D expenditures on the future products already. Basically, I think the elevated R&D levels which you're expecting have already happened. We'll probably see a mild increase, but I think this quarter's R&D level is a decent approximation of steady state.

YMMV.

 

[TradingInvest]

OT rant on
VA, I have been telling them for months to cover, and all I get are curses and vile imprecations. You post on Seeking Alpha.
You know what they are there.
You would be wise to realize they are sociopaths, with no morals, who could care less if you live or die. They are poisonous snakes, scorpions and spiders, it's their nature, what they are, not their fault. I would suggest perhaps "demons clothed in human flesh, masquerading" as a working defense. They would show you not mercy. Turn the other cheek if you will, but to use an Ian M. Banks allusion, keep a "lazy gun" in one hand, just in case.
"The world is a cold and cruel place, it cares not if you live or perish."
OT rant off

Why do you tell them to cover? Most of those shorts don't have a heart. I told them to stay short whenever the stock was ready to rally.

 

[TradingInvest]

One aspect that struck me was Elon bowing to the executive team on Model Y redirection. When you are as smart and correct as often as he is, it must be difficult to be able to really listen to their opinions and change his mind.

The Model Y case is so obvious. Elon is not dumb.

 

[supratachophobia]

Superchargers don't amount to a hill of beans financially, though. It just doesn't add up to much. Even the capital costs are small, but the operational costs approximate 0. So I'm going to ignore this too.

I think the last number I saw was that including all site-work and equipment, a 8 stall supercharger comes in at around $250-300k.

 

[neroden]

Of course anything is possible but on superficial memory of their skill sets, seems Dahn is into research while Kelty was more of a management guy into negotiation and management of battery pack production. Knowledge of Japanese is a unique thing. I once asked a friend, a professor of Asian history, if he knew Japanese. He said he wasn't sure, he only had 11 years studying and learning the language.

You management gurus can assess another WAG. Now that the first stage of the Battery G1 is completed, and there is talk of more to be announced just this year, I hope the negotiation with Panasonic has matured to the point where Kelty's really unique skills are no longer needed. If they are, watch out, fog ahead.

I have another interpretation of Kelty leaving: he needs a vacation. Musk is a workaholic and has been overworking many of the people around him -- Jason Wheeler specifically said that he needed a break, IIRC. If we've hit a period when Kelty isn't ABSOLUTELY NEEDED, I suspect Kelty would take the opportunity to spend a year or two doing somehing relaxing and fun.

 

[neroden]

Very jittery market overall. It's nice not to be very leveraged right now.

Yeah, I'm kind of allergic to debt... I'm actually more leveraged than I've ever been in my life due to repeatedly taking "can't miss" opportunities over the last few months... but I still have zero debt and am paying no interest so far. (All my leverage, and it's not much, is via options, mostly short puts secured by margin capacity, so a major drop would leave me with a small margin loan.)

 

[neroden]

It's at 5. Neither overly positive nor negative. Head and shoulders over the past few months doesn't help, though.

It's not a proper head and shoulders -- the neckline is crooked (going upward) and so's the shoulder line. Those "slouching head and shoulders" have very poor predictive value, I have read.

 

[neroden]

Deposits down $13 MM; ZEV credits up $100MM. Inventory up about $222 MM(about 10%). AP and Accrued Liabilities up ~$335 MM (about 10%) Something for everyone.

"Total capital expenditures of $1.5 billion in the first half of 2017 were lower than expected primarily due to the timing of milestone-based cash payments." Appropriately cryptic.

Oh, I can explain that. That's when Tesla pays a supplier when the supplier achieves a specified milestone. Like getting all the robots working with a lost-time-due-to-robot-failure rate less than X% for Y weeks, or something like that. In short, they haven't had to pay out some cash yet because some things which suppliers are contractually obligated to do haven't been accomplished, and they were expected to be accomplished already.