Bubbles and Billionaires

[gg_got_a_tesla]

The market really never cares what self professed experts believe. That's what makes investing possible.

And, that's why those self-professed experts try to make a living out of giving out investment advice and stock ratings. If they really knew what they were talking about, they'd simply make money on their own in the markets without having to sell their advice.

 

[Topspin]

I am sure TSLA will have another pullback at some point. That is what stocks do, especially volatile ones. But will it be from 260 to 230, or maybe 300 to 270? No one knows? But saying "experts" think it's gone too far too fast doesn't sway anyone here since they have all been wrong making that claim all along, and I would say that many posters on here are much more "expert" is Tesla and it's growth trajectory than analysts whose job is to focus on many stocks and do not have the time or interest to spend as much time as those people here on true Tesla analysis. They may be professionals but in reading their reports on TSLA, one can easily see that they are a long ways from understanding the true Tesla story.

Tesla's bonds have a junk rating
I'm hardly alone thinking a golden future is not all but guaranteed

 

[NigelM]

Tesla's bonds have a junk rating
I'm hardly alone thinking a golden future is not all but guaranteed

If you want to be single focussed on that then you should also see it as a good opportunity to short the stock. If you're right that there's a TSLA bubble then how come the B- rating didn't burst the bubble?

OTOH look at the rational as reported by Forbes:

S&P’s ratings unit assigned an unsolicited corporate credit rating of B- to Tesla, with a stable outlook. The firm labeled Tesla “vulnerable” with respect to business risks, citing its “narrow product focus [and] concentrated production footprint,” as well as its short track record and limited visibility into future demand for its cars. S&P also noted Tesla’s “small scale relative to its larger automotive peers.”

and well, duh!

 

[Topspin]

I am sure TSLA will have another pullback at some point. That is what stocks do, especially volatile ones. But will it be from 260 to 230, or maybe 300 to 270? No one knows? But saying "experts" think it's gone too far too fast doesn't sway anyone here since they have all been wrong making that claim all along, and I would say that many posters on here are much more "expert" is Tesla and it's growth trajectory than analysts whose job is to focus on many stocks and do not have the time or interest to spend as much time as those people here on true Tesla analysis. They may be professionals but in reading their reports on TSLA, one can easily see that they are a long ways from understanding the true Tesla story.

I should have picked a different word than bubble. I love tesla and it's prospects.
I do think it's a game changing car. And I'll buy the stock many times over the next two years.
This stock is a speculative play, most of my stock are mature blue choppers.
I hope tesla become blue chip, it'll need consistent growing profits to get there

 

[eepic]

Tesla's bonds have a junk rating
I'm hardly alone thinking a golden future is not all but guaranteed

Sure but S&P, Moody's, and Fitch bond ratings themselves are known to be junk. I'm willing to listen to what they have to say, but they don't provide a convincing thesis supporting their claim. The actual debt market sees it the same way and financed Tesla's convertible debt offering at 0.25%/year.
No one is claiming a vastly successful future for Tesla is guaranteed, but the general long investor consensus is their risk-adjusted long term profitability makes the stock very compelling even at the $2xx levels.

 

[hockeythug]

This guys bit is getting old pretty quickly.

 

[Chickenlittle]

If you want to be single focussed on that then you should also see it as a good opportunity to short the stock. If you're right that there's a TSLA bubble then how come the B- rating didn't burst the bubble?

OTOH look at the rational as reported by Forbes:



and well, duh!

I think your missing the point. He already is short

 

[adiggs]

You should tread boldly--with fact-based insights. We welcome vigorous debate, but debate requires that one can back up one's opinions.

High-growth firms should not be putting profits to the bottom line. Corporations generate profits when they have no investment opportunities with above-market risk-adjusted rate of returns. Tesla is making a solid operating profit; for the six months ending June 30, 2014, Tesla generated over $57 million of cash flow from operating activities. Likewise, if Tesla hadn't invested $108 million in R&D last quarter, it would have had a GAAP profit of $46 million. (Figures are from the 10-Q, Cash Flow and Income statements.)

Personally, I'm happy that Tesla management is finding lots to do with its cash flow from operations; it indicates that they see many ways to grow the company. A stock's price isn't about a company's current profitability, but rather the stream of future profits.

What Robert said, and said so very well. Tesla has plenty of dials to turn to suddenly show a profit should that be important.

I too prefer that the company continue the aggressive investment expanding production, supply, and demand. Even if that means we continue to see a negative bottom line. Especially if some of that negative bottom line comes from, in my estimation, overly pessimistic accounting handling of the buy-back guarantee vehicles by treating them as leases (when Tesla receives payment in full on delivery).

 

[chickensevil]

I should have picked a different word than bubble. I love tesla and it's prospects.
I do think it's a game changing car. And I'll buy the stock many times over the next two years.
This stock is a speculative play, most of my stock are mature blue choppers.
I hope tesla become blue chip, it'll need consistent growing profits to get there

The stock has it's ups and downs. Even I am still of a half mind that we are at this point about just as likely to see a retrace to 240 as we are to run up to 280/290... There is nothing wrong with seeing the very short term outlook at overvalued. That being said, although it might be a little hot right now, if the market thinks it should stay hot it could run up for a while before cooling off and dropping down. If you are going to play the short game you need to speculate (accurrately I might add) where the market thinks it will go, not where you feel it should be valued at. It doesn't matter what you think the stock is worth, it matters what the majority of the players on the market think it is worth. If >50% think it is a buy, then it will cause a supply issue on the stock and the price will go up. If >50% think it is a sell, then the price will fall as people are more willing to dump their shares at a lower price just to get rid of them... everyone else is just hanging on for the ride (current shareholders).

You have an average of 5.5M shares changing hands each day out of 123.63M shares... that means that only 4% of the people touching Tesla feel it is either a current buy or sell. That is the driving factor on the stock... 4%... So you need to figure out if the dominance is going to be sell or buy for whatever timeframe you are looking and plan for the price to move accordingly.

the mob's "feeling" is really what matters.

 

[Topspin]

Tesla’s free cash flow went even deeper into negative territory, hitting $177 million compared with $7 million a year ago, even Elon Musk went on the record last year as saying Tesla shares might be overvalued, back when they were fetching $160

 

[NigelM]

Tesla’s free cash flow went even deeper into negative territory, hitting $177 million compared with $7 million a year ago, even Elon Musk went on the record last year as saying Tesla shares might be overvalued, back when they were fetching $160

Oh please....

Why don't you read the actual statement here for explanations. Firstly, (and I give you the benefit of the doubt here) you mis-typed prior year as it should be $77m. Secondly, Tesla have made significant investments in inventory, capacity expansion and in R&D:

...$82 million increase in finished goods inventory from cars in transit to Europe and China, and $15 million of cash used for leasing vehicles. Capital expenditures in the quarter totaled $176 million.

We continue to invest in additional production capacity, continued Model X and Model S development, Gigafactory construction, and further expansion of our sales, service, and Supercharger footprints. We have also chosen to slightly accelerate our investments in production capacity and the Gigafactory.

 

[chickensevil]

They had also been holding a pretty decent cash flow positive for a while, it wasn't until after the GF push and "reckless" expansion announcements that we got the sentiment that they were likely to burn through cash for expansion as quickly as they can, but spending the money smartly.

They are also sitting on almost 3Bn in cash reserves to help fund their expansions, so it is quite alright for them to burn a little negative on the cash flow because that was the entire reason for the capital raise.

Finally about the shareprice comment at 160, when the stock started dropping in Q3 2013 there was good reason for it to pull back, I think it was amplified a bit more than it should have been, but it was overall a healthy correction. Elon said that as a hedge because he knew there were going to be lawsuits coming out about how Elon was lying to everyone and the stock price was overvalued and demanding to be compensated for the drop... which guess what? Someone actually (2 someones if I am not mistaken) filed a lawsuit against Tesla over the drop. It was a protectionist comment. Nothing more.

If you think that this is the exact same company we saw in Q3 2013 vs a whole year later Q3 2014, then you are not looking hard enough. The gigafactory plan alone puts them in a totally different playing field.

 

[Topspin]

They had also been holding a pretty decent cash flow positive for a while, it wasn't until after the GF push and "reckless" expansion announcements that we got the sentiment that they were likely to burn through cash for expansion as quickly as they can, but spending the money smartly.

They are also sitting on almost 3Bn in cash reserves to help fund their expansions, so it is quite alright for them to burn a little negative on the cash flow because that was the entire reason for the capital raise.

Finally about the shareprice comment at 160, when the stock started dropping in Q3 2013 there was good reason for it to pull back, I think it was amplified a bit more than it should have been, but it was overall a healthy correction. Elon said that as a hedge because he knew there were going to be lawsuits coming out about how Elon was lying to everyone and the stock price was overvalued and demanding to be compensated for the drop... which guess what? Someone actually (2 someones if I am not mistaken) filed a lawsuit against Tesla over the drop. It was a protectionist comment. Nothing more.

If you think that this is the exact same company we saw in Q3 2013 vs a whole year later Q3 2014, then you are not looking hard enough. The gigafactory plan alone puts them in a totally different playing field.

Im only pointing out elon has said what I am saying before.

 

[pz1975]

How long will people keep bringing up that quote by Elon about the stock being overvalued (besides the fact it is always taken out of context)? That was almost one year ago now. In 2020 when TSLA is worth $800+ per share, will that still be a popular bear refrain?

 

[blakegallagher]

How long will people keep bringing up that quote by Elon about the stock being overvalued (besides the fact it is always taken out of context)? That was almost one year ago now. In 2020 when TSLA is worth $800+ per share, will that still be a popular bear refrain?

Pretty conservative price target. At that point I think it will be pretty clear that TSLA will surpass Toyota as the most valuable automaker with a stock price north of 1500, at which point it will be overpriced ... unless you factor in future growth

 

[pz1975]

Pretty conservative price target. At that point I think it will be pretty clear that TSLA will surpass Toyota as the most valuable automaker with a stock price north of 1500, at which point it will be overpriced ... unless you factor in future growth

I just picked a random number to be honest. I was using it just to prove my point.

 

[chickensevil]

How long will people keep bringing up that quote by Elon about the stock being overvalued (besides the fact it is always taken out of context)? That was almost one year ago now. In 2020 when TSLA is worth $800+ per share, will that still be a popular bear refrain?

In fairness bulls are very quick to jump to the quotes and comments about Elon saying that the shorts are going to regret betting against stock (Don't remember the exact wording)... which is actually older than the "more than we deserve" comment from 2013.

 

[AudubonB]

I sure miss Realist's posts. His negative comments were well thought out; some of his arguments were sensible, even if only for his specific situation. He made a good counter to all the Tesla bulls. Most commendably, he also was open to changing his mind; most surprising given how adamant he was for many months.

 

[chickensevil]

I sure miss Realist's posts. His negative comments were well thought out; some of his arguments were sensible, even if only for his specific situation. He made a good counter to all the Tesla bulls. Most commendably, he also was open to changing his mind; most surprising given how adamant he was for many months.

He clearly is still around, he posted a few weeks back (give or take) made on comment to clarify some discussion that was happening at the time, and then said he was not going to comment further and sink back into the darkness. I don't know who scared him off from posting because you are correct, he had some pretty good reasoning on his bear arguments.

Right now all we have are the more conservative bulls to attempt to reign in the collective forum to keep us from going to crazy about the future of Tesla and thing about things reasonably. I mean there are for sure some real negatives about the company... it just seems like noone can make a good and proper argument using them...

 

[Topspin]

I think your missing the point. He already is short

Ive never shorted any stock in my life, I wouldn't start with a company I love.
I've made thousands on tesla already. I'm a newb to tesla but not stock investing.
What would be too high for those of you hating, 400, 600, 1000