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Friend(s) of JP - Conversations with Nicu
- Thread starter Nicu.Mihalache
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There are several things that happened during the last 2-3 years. I used to think too green and to feel guilty whenever I traveled long distances for my work or took the car instead of public transport. I used to think that at least the second part can be "solved" by some EV (not only for me, but for the ROW). Tesla does great EVs so it would have been the perfect match. Then I had a very obnoxious discussion with a more established colleague of mine who took the train even to go from France to China to avoid the plane and basically insulted me for owning a car (if you actually do the computation for that, it is much worse than taking the damn plane). It's then that I understood that there is no better explanation for such an intelligent person (basically the best research position you may imagine around the world - payed to do theoretical research with no teaching load at senior level, permanent position, and in maths no less !?) behaving like this, than all this eco-smugness is in fact a religion. So my inner self esteem just pushed me away from the movement. If I have the choice between recycling something or saving some energy or not, I still do the "right" thing, but I avoid any kind of discussion about that and I would never, never point out to someone that they should make my choice.
There is no 180. It's just going back to the center position and being able to look equally left and right both with admiration or criticism, depending on the facts. Of course I may be a bit off center and not realizing it. But as most of you guys are close to the rainbow in one side, you see me as if I would be at the other extreme. That's why I point extreme asymmetries like copying entire comments or articles but marking that your own comments are copyright. Asking extremely high standards from people who point out weaknesses in the TSLA story (like going back years in their lives and pointing out some error), but when one Musketeer (I hope this is not pejorative, I find it quite funny) is proven completely wrong, he just disappears and another one takes on the battle on another argument - and nobody has any problem with that.
I used to bee very emotional both about AGW (and related stuff) and Tesla. Now I only care about local poison (like diesel exhaust that has been proven cancerous, used by half the cars in this crowded and filthy city where my young daughter grows up) and investing. And I reason about AGW at global scale (because local solutions may prove to be global disasters, just like the German grid which increased by orders of magnitude solar and wind electricity production and now electricity is 2-3x the price, the entire european grid is at risk, and Germany's CO2 emissions went up). Not to count the example of ethanol, which basically is putting food in the SUV tank while billions of children are hungry or starving (I know nobody argues for ethanol here, but go back 5-8 years and read the ideological battles on forums, not far from what we have with EVs today).
If I come here to enjoy my cigar in Tesla's church, it's not for blowing smoke (I couldn't care less about your opinions about me) it is just to try to influence those who are not completely lost to come back to the center (and so avoiding losing their nice profits from TSLA). Those who are lost, you may clearly identify them, they answer facts with personal attacks, because they have absolutely nothing better to counter with.
As you may have observed during your life experience, there is basically no way to reason people out of their convictions, be it political, religious, alimentation (vegetarian, gluten etc.), strange theories about raising their children and even the brands on their shopping list. Therefore my attempt with sarcasm, humor and irony. Not claiming I'm a funny person, especially in my third language, but I do my best. That's how JP managed to communicate to me through a thick cloud of emotion.
If I had to resume all that JP says about EVs (not Tesla, he still gets some of the things wrong, but not the fact that TSLA is overvalued), is the following. Even if you use your lollypop assumptions (as in the instablog JRP3 pointed out to), EVs with small batteries are only marginally better than conventional or hybrid cars, and only in some places. And even if they improve a bit, large battery EVs will not be considerably better any time during the following 10 years. Moreover, the resources for such a movement to make any difference (double digits market share) are either not available or would be terribly constrained, therefore prices will go to the sky, and we know how cheap EVs are today compared to their ICE equivalent car ("equivalent" - make abstraction of the fact that EVs will save the world, I'm talking about going reliably from A to B in comfort and safety).
I'm not sure my time is well spent here so I don't know when I'll come back to the discussion. But I would like to offer some advice to those who feel the urge to throw eggs or stones here or in other forums:
Great minds discuss ideas, average minds discuss events and small minds discuss persons and gossip.
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JRP3
Hyperactive Member
By that reasoning EV's are the ideal solution, they solve the local pollution issue for most quite well.
That rather describes Petersen quite well.
That may be the difference, my support of EV's and Tesla came from looking at data, data from other potential alternative transportation methods as well as EV's. I didn't wake up one day and think "EV's are cool, yay!", and no one ever chastised me about my "greenness" and caused me to question my "beliefs". I try to question my interpretation of data on a regular basis, that's one of the reasons I engage so often on SA and other sites, and if someone comes up with anything that suggests EV's can't scale up, can't improve, and can't be part of a more sustainable future then I'd have to change my mind. That has not yet happened. When disected, all of Petersen's arguments have fallen flat.
My "lollypop" assumptions are based on real world data and corroborated by other sources, but the main problem with your and Petersen's argument is the assumption that battery density will never improve and that their manufacturing has no room for emission reduction. That's like saying the first coal trains were so dirty that future ones could never possibly be cleaner. The idea that EV's can only come to market in their final, absolutely perfect form, is deeply flawed. We need to build them now and sell them now to push their future development. If you can't see that future potential that's fine, but many of us can.
And you have spent a good amount of time discussing the emotions and motivations of others, Petersen has made a career out of it on Seeking Alpha. Funny how you don't see that aspect of your friend.
It's very easy to pick a stock that has shot up 1000% in the last 2 years and say 'it is over valued and will go down at some point'. JP as a self-professed expert should be more knowledgable and right more often than most yet he hasn't gotten a single thing right about Telsa so far. Again, why anyone would listen to him just because he is a nice guy and used to live in a castle is beyond me.
JRP3
Hyperactive Member
From my point of view this has nothing to do with the stock price, it has to do with trying to discredit the company and EV's using bogus data, something Petersen does regularly, and pretending that Petersen is some saintly battery expert who doesn't use ad hominem attacks repeatedly. Nicu has chosen to defend that behavior, which is fine, but it's somewhat odd since he was once able to see through it.
I hope you continue to participate, but would agree that it might not be the best experience for you. It might be better to find common ground first and try to build from there.
How about we start from a fundamental: Can we all agree that we need sustainable transportation?
If so, then how about the next point: Is TM fostering that transition in the best possible way?
I doubt that point is ubiquitous so lets consider it up for debate so that might be the best place to start. So what could TM be doing better? If the debate is framed from this vantage it might be a more fruitful/valuable discussion. Once someone concedes a fundamental next step we can move the conversation forward.
I could be totally wrong...but I've refrained from debating since the conversation was a bit heated for my taste.
smorgasbord
Active Member
FACT: On June 28th you said: "Talking with people who are wrong by almost two orders of magnitude and then come back with cocky answers is not too interesting for me, sorry."
Petersen was wrong by three orders of magnitude on his TSLA/AXPW price prediction, yet continues to be cocky, and you're still interested in him.
FACT: You wrongly predicted that TSLA's Q1 announcement would be bad: "there is no way earnings (overall, not only the numbers) will beat the galaxy-high expectations."
FACT: Even after the Q1 announcement, you said the earnings were bad and that investors were stupid: "You should read the article and the shareholder letter. There was $0.00 EPS excluding the one time artificial profit, but INCLUDING the $68M of ZEV credits that Tesla themselves predict will go down dramatically starting this quarter. They guide for a Q2 loss, BTW!
The fact that investors do not know how to read this document or that they are happy for other reasons (reservations, gross margins etc.) does not invalidate at all the numbers presented in this article.
I am ecstatic that investors like you are wrong "
At this point, it seems extremely unlikely that TSLA will drop to the $50 level at which you first characterized it as being overvalued. Fact is, you sold TSLA too soon and bought AXPW too early (or perhaps should not have bought at all). IMO, buying AXPW only serves to help prop JP's own investment from failing completely. Like everyone else here, it was JP that introduced you to AXPW. The stock is down to less than 20% of its value when you first bought it, and down almost 50% since your claim of buying at the "all time low."
I submit that listening to your warnings is the last thing anyone should do.
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First, let me tell you how refreshing is to hear about facts around here. Then, if you also remember, I have stressed several times that JP should be used mostly as a data source wrt to Tesla, not as a crystal ball. Especially with stock price predictions. Everyone should have their own conclusions from the data. It's one thing to be wrong by a factor of x10 or x100 about historical facts or scientific truths, and another ball game to be wrong about the future of the voting machine on Wall Street.
Q1 and Q2 were good only wrt to # of cars delivered. But the "profits" were either one-time items or from hypothetical "non-GAAP" revenue (it's a phony non-GAAP, in fact). Especially in Q2, GM including ZEV was 22% and GAAP EPS was a disaster even including those. You guys remember how 8000 cars / year should be break-even for Tesla but annualized 20 000 now it's not enough with GAAP (standard accounting) ?
I am not pretending I know something bad will happen. Just that there is a non-negligible probability that it will. Both your argument above and hundreds of posts on JP's articles bring out this argument. You said it will be bad, but we got rich. If you have read "The Black Swan" (otherwise, I can recommend it, an easy to read, funny and deep book in the same time), this is like the turkey arguing that because it was fed and sheltered for 1000 consecutive days so will continue to be even after Thanksgiving.
What I'm arguing, is that if you are rich only on paper, maybe you should be at least half rich in cash and half-rich on paper. After having lost (small) fortunes once or several times from ignoring the downside, you become much more aware of risks. I have lost several times hundreds of thousands (which is a lot wrt to my salary as employed by the state in a semi-comunist country) and JP has lost several times a few millions.
smorgasbord
Active Member
No, Elon Musk said no such thing about 8000 cars.
Elon Musk said that they could break even at 8000 cars per year. But Tesla isn't operating on that basis so using it as an argument is bogus.
Norbert
TSLA will win
This isn't fair to Tesla, not at all. The company as it exists today, and with what it does today, in fact has turned into reality those promises which many industry experts claimed would be nearly impossible to fulfill, for a start-up auto company. And that's not just a high stock price. The promised to build the "best" car in a volume of 20,000 annually. And amazingly they have achieved this beyond most, if not all, expectations. Today. They didn't promise profits (neither GAAP nor non-GAAP), they promised growth, and they've proven, already, an unexpected ability to deliver.
For that which remains to come true (currently being most apparent is cost-effective mass manufacturing of the Model E, and the resolution of supply problems), there aren't nearly as many industry experts who say it wouldn't be possible for Tesla, as there were just 18 months ago, in regard to what is now a reality.
I don't think it is just wishful thinking to expect that the battery production "problem" (actually that was one of the goals, to create battery demand and thereby innovation) will be resolved, to expect that Model X and Model E will be as good as Model S, and that the company who has already achieved the "impossible" will also be able to implement mass-manufacturing cost-effectively.
As a data source for what though? What 'facts' has he been correct about? Why use him for data when he is consistently wrong in his predictions and analysis regarding Tesla (and other things it seems) over any other expert out there? I'm still finding it hard to believe why his expertise or track record makes him worth paying attention to. He posts on a financial and stock website and puts himself up as an expert and speaks with authority about Tesla as a company, the Model S as a car, EVs as inferior technology, and as TSLA as a bad investment but we are supposed to ignore that and just use him as a data source. Please help explain that.
gg_got_a_tesla
Model S: VIN 65513, Model 3: VIN 1913
Nonsense from John Petersen
I feel that Nicu thinks that JP brings some sort of an objective, dispassionate look at Tesla/TSLA while, in reality, JP appears to bring a lot of (negative) emotion to the discussion.
It's almost as if JP practically hates the company and wants it to fail; hence the way he dismisses us acolytes in his articles/comments. Trying to depress the stock price is his way of attempting to throttle the company's growth - directly, in terms of reducing future capital raise prospects and indirectly, via triggering key employee attrition over time.
I feel that Nicu thinks that JP brings some sort of an objective, dispassionate look at Tesla/TSLA while, in reality, JP appears to bring a lot of (negative) emotion to the discussion.
It's almost as if JP practically hates the company and wants it to fail; hence the way he dismisses us acolytes in his articles/comments. Trying to depress the stock price is his way of attempting to throttle the company's growth - directly, in terms of reducing future capital raise prospects and indirectly, via triggering key employee attrition over time.
I was indeed wrong about that PbC life cycle thing. It's not that I did not know what cycle life is, but I did not know those "cycles" they measured in the micro-hybrid test were only a few %. And I have acknowledged my error and the fact that you were right.
Unless there is some miracle in Li-ion tech, there will be material shortages before Tesla's cars will touch even a few % of the market to matter in the environmental debate. Talking about a short candidate is more a statement about future prices. Even if viewed as a "weighting" of the company at the present time, a bubble in the stock does not mean the stock is not over-valued, on the contrary.
The word "delivered" should make you think both production and demand (not to say the demand was accumulated over more than two years).
You seem a smart guy (even if a bit obnoxious) but sometimes you insist in not understanding things (if you let me quote JP here, I can explain things to you but I cannot understand them for you). The analogy is with this over-repeated argument, "look ma', huge profits". It only proves there is a bubble going on and you were in the right place at the right time, not that you are a genius who predicted the future (if you do that repeatedly and consistently, you should start thinking you are genius indeed). And the fact that everything worked okay until now, does not mean anything for the future.
As for my trades in TSLA, if you are really interested, I have posted almost everything in almost real time on traderhood.com (you enter TSLA on the left and then trades are in a different color). I still had in April about 1/7 of the # of calls that expired in March and about 1/18 of the # of calls that expired in January. Those that I got left were Jan 14 calls and I was already on margin due to AAPL so I could not continue my strategy with the short squeeze. When it started climbing, I knew it could be it, and I may have advised people to take some profits, because it was not sure. It may have been just a wave. I kept cashing out call spreads and every $20-$30 up I was cashing out completely a small double digit percentage of the remaining calls. Around $60-$70, my wife started to call me crazy for keeping them open and I kept insisting I have huge trust in human nature: "believe me baby, people are crazy! if they pushed it up to here, there is no hard limit !". At some point (end of May or early June) I have exchanged all my calls to Jul 20 calls (wanted my time premium in cash and more liquid calls for spreads plays - better prices for the same strike spreads), I could not believe the craziness could last longer than that (so I was contradicting myself, because people ARE crazy !). So I milked then until $129.9 and lost a few thousands in unrealized profits the last week when it took a dip.
Now if you insist, let me ask how do you think Tesla could justify a $20B valuation. I hope you know the basic rule of investing, that the intrinsic value of the company are future profits discounted for interest and risk. The stock price will oscillate from undervalued to overvalued and back around intrinsic value (which also moves by itself as the company realizes or not its goals, risks change etc.). While we are living in very low interest times, it will change, and at least 5% compound should be used for the long term, at least for inflation. But then including risk separately would be too hard to explain without an Excel table. So let's say we use 10% compound to include risk (It should be much more IMO). Tesla aims to have about 12% of operating margin on a Models S or around $10k. Same for Model X. About 10% OM or about $4k on a Model E. Or 2.5 high end cars for a standard car, that will be our unit (U). So lets's say 62.5k U in 2013, 130k U in 2014, 200k U in 2015, 300k U in 2016, 500k U in 2017 and another 100k U extra every year until 2022. 10 years out is more than anyone would count for valuation of a young growth company. My assumption are great success, no hiccups or delays, no demand problems or costs increases, not much risk.
You get to a total present value of around 2.772M units, or at $4k / unit in operating profits a total of $11.1B. Even today when the company is still small, they burn about $400M per year in R&D and S,G&A. Let's assume that by some miracle it does not increase with several factories around the world, super-charger networks on three continents and so on. That's about $4B expenses in 10 years. About 25% of the remaining $7.1B go to the tax man. So with the best assumptions in the world, you get a $5.3B company, not a $20B one. How do you hope to get another double or two from here? Do you really think it will become obvious Tesla is a $50B company faster than the market changing hats and start perceiving a $5B company as a $2B or $3B company when there will be some dark clouds gathering around?
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I never said Tesla is a bad company (unless I was drunk, which as far as I remember was not the case during the last three years). I have even said they have done the impossible. The problem lies with valuation and the hopes people put into a stock that has almost no room to grow in the short term and on a rational basis, but can go much lower without being out of touch with reality.
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John has 10 years of experience in the battery industry as an insider. He has recently been invited to give talks to some of the most prestigious battery conferences, both lead-acid and Li-ion. He meets the CEOs of the largest companies in these industries and shares with SA readers their broad views about the evolution of their industry. If you think you can get that anywhere else and on top of that for free, be my guest.
TSLA is very probably a bad investment today (again, because of valuation, not the company). Nobody knows for sure if it is so, but the market is a weighting machine and will give us the answer, even if it takes longer than shorts can stay solvent.
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You will probably understand when it will be too late. After all this talk, you come back with the turkey argument ?!? Let's agree to disagree and leave it here.
Nice dodge. Could he be right in 5-10 years? Maybe. Question again of you can answer it is what had he gotten right? Is he really the world's expert in this area and no one can question his judgement? He certainly has a big fan in you so kudos to him for that.
Norbert
TSLA will win
While this isn't part of your response to my post:
I think for most of those who expect there to come a general transition to electric cars, it *already* appears very likely that Tesla will be a BMW-like ($50B) company, if not larger than that (and aiming for higher margins through exceptional cost/value ratio).
Given the "idealistic" value of Tesla's goals, many will be willing to invest without "discounting" as much for risk and interest, the vote-with-your-wallet component comes into play, as many supporters are affluent enough for it to matter.
Furthermore, Tesla will keep growing and also expand into more areas, still in 10 years, so the share price then will still reflect growth expectations, not only revenue/share -like metrics.
Tesla will also in 10 years not be a company perceived merely through its balance sheet.
"To understand why the hype cycle happens again and again with each new innovation, and why it keeps seducing even those of us who have been burned before, we must look more deeply at what drives the rise and fall of expectations that create the cycle.
In a theoretical, completely rational world ruled by logic, excitement about an innovation would track perfectly with the reality of what the innovation could do. As the performance of the innovation improved, and as people's understanding of how to derive value from it evolved, people would become increasingly confident about it, and their adoption of it would grow. [...] in the real world, wonderful, warm, passionate human beings repeatedly develop levels of excitement and disillusionment that don't match the current reality of what the innovation can do."
My first impulse was to offer a real world prize for the first to identify the source, but Google is simply ruining the joy of that kind of games. Anyway, the chapter explaining why this happens with regularity and predictable results if full of gold nuggets, I wholeheartedly recommend it.
In a theoretical, completely rational world ruled by logic, excitement about an innovation would track perfectly with the reality of what the innovation could do. As the performance of the innovation improved, and as people's understanding of how to derive value from it evolved, people would become increasingly confident about it, and their adoption of it would grow. [...] in the real world, wonderful, warm, passionate human beings repeatedly develop levels of excitement and disillusionment that don't match the current reality of what the innovation can do."
My first impulse was to offer a real world prize for the first to identify the source, but Google is simply ruining the joy of that kind of games. Anyway, the chapter explaining why this happens with regularity and predictable results if full of gold nuggets, I wholeheartedly recommend it.
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