2017 Investor Roundtable: TSLA Market Action

[SunCatcher]

Every day, week, month, year that goes by while humanity still clings to its fossil fuel addiction, sees thousands of our fellow human beings die from polluted air in cities all over the world. And irreparable damage to our environment.

I will not gloat when those who have stood in the way of Tesla fall, and fall hard. But I will be very glad to see their empire come to a crashing end. Shorts, legacy auto makers, Big Oil, Coal; they've all had their time in the sun. And if they can't find a way to get in line with the paradigm shift of the century, then they have no one to blame but themselves. And as someone said upthread, no one forced shorts to invest their children's college funds and inheritance, hoping to profit from standing in the way of a much needed change for the good of us all.

 

[neroden]

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.

Oh, also, on the Supercharger front, every leak I've heard says that the leases or easements are mostly "peppercorn leases", no cash payment: the merchant gets paid in the form of patronage from visiting Tesla drivers. I think there are a few exceptions where they actually bought property, but in general the only opex on Superchargers is electricity and repairs. Both are negligible.

 

[Ulmo]

Ah, thanks, that answers the question I *just asked*.

The new robot-installable bus-based wiring is a huge deal. I assume once they get it working they'll spend the effort to backport it to the 3, the S, and the X, because it'll save tons of money and speed up the production line a lot.

That's my assumption as well. But, it might take a while.

 

[neroden]

I hate that word, the first time I read it now. (I'm allergic to corn, so that probably figures into that.) I'm prepared to read wiki's online about something I detest.

Update: Well, I do like the promisee's taste in Chappell vs Nestle; he threw out the corn

A more modern term is "lease for a nominal amount" or "dollar a year lease".

 

[kbM3]

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


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


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.



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.


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.


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.

In addition to those R&D expenditures you've already mentioned, I'm sure they're spending a lot on reinventing manufacturing. I.e. their most important future product. The Gigafactories themselves.

 

[geneclean55]

If the SP holds today, a forum moderator should pin TT007s post in perpetuity. Quite remarkable.

 

[maxlength888]

Every day, week, month, year that goes by while humanity still clings to its fossil fuel addiction, sees thousands of our fellow human beings die from polluted air in cities all over the world. And irreparable damage to our environment.

I will not gloat when those who have stood in the way of Tesla fall, and fall hard. But I will be very glad to see their empire come to a crashing end. Shorts, legacy auto makers, Big Oil, Coal; they've all had their time in the sun. And if they can't find a way to get in line with the paradigm shift of the century, then they have no one to blame but themselves. And as someone said upthread, no one forced shorts to invest their children's college funds and inheritance, hoping to profit from standing in the way of a much needed change for the good of us all.

Oh what a wonderful time to be alive.

 

[Yggdrasill]

I sympathize with the families of the shorts. With the shorts themselves, not so much.

 

[Bet TSLA]

Y'all make me feel like a small-time investor again.

We're all small-time investors here.

 

[MitchJi]

Well the "problem" is whatever Tesla disrupts next will add to the gross profit.

How is that a problem?!

 

[Waiting4M3]

How is that a problem?!

VA's argument is that it's a "problem" because Tesla can't get rid of all that cash without distributing it as dividends

 

[madodel]

Many companies never issue dividends. See Berkshire for example...

But what else is he gonna do with the money? I guess if the stock is still below $800 by 4Q18 he can start repurchasing shares... we'll see.

My primary point is: Tesla has more cash than it needs for 2H17 on its balance sheet, and it will soon start generating more cash than it can possibly spend.

Probably not next year, but maybe 2019 or 2020 buy AAPL.

 

[MitchJi]

All joking aside. Happy day for longs. I could not have scripted a better ER. I think we should all get together on TMC, put in $10 each and get then a new audio system.

They need to hire someone to either setup or do the audio!

I know someone who setup live audio for live events in circus tents on football fields. Anywhere in the tent, with three people speaking at wildly different volumes, the volumes were matched, and it sounded like you were a few feet from the live speakers.

 

[MitchJi]

I am a better person than the shorts. I'm not spending my time typing reams of lies trying to destroy a company who's mission is to improve life on earth and preserve the environment upon which we all depend.

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"? Many people think that's something that you should be forced to do, but it's in your own best interest to do that. Some of the happiest feelings possible are the feelings of falling in love. Imagine the happiness if you felt those feelings for everyone all the time! It's hard to do if someone is nailing you to a cross, but I think that most of us can at least feel compassion, for shorts who are responsible for increasing the income of many of us.

If Mark BS is getting ready to fold the tent, all the smart shorts will be covering tomorrow. I should get up early tomorrow and add to my stake before the jump.

All two or three of them?

 

[MitchJi]

thanks will do once ready to buy MS wanna wait a few weeks for SP to settle down first.

Please let us know before the SP "settles down so I can sell my options and buy puts.

 

[MitchJi]

Some people on SA are still saying "but they're losing $500m every quarter"

What is WRONG with people

Idiots!

 

[GoTslaGo]

Think of the "platform" as what the vehicle sits on. For Tesla, it's the skateboard that defines the wheelbase, the battery geometry, and location of the motors. S and X share a platform. The Model 3 platform will now be common with Model Y to get it to market faster. It will not be alien dreadnought 1.0, but maybe 0.75. Tesla has crazy demand. They know they need to capitalize on this.

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...)

 

[ValueAnalyst]

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.

 

[Dagger]

If Mark BS is getting ready to fold the tent, all the smart shorts will be covering tomorrow. I should get up early tomorrow and add to my stake before the jump.

Is it just me or do others also read Mark BS as Mark BullSugar? Everytime I read it, it just comes out like that. Seriously.

 

[smalltownguy]

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.

$450 year end 2017

$609 year end 2018