General Discussion: 2018 Investor Roundtable

[avoigt]

Since it is the weekend and this is the general discussion forum I'll add my thoughts on the short burn of the century.

Firstly, I think it is likely that some announcement is brewing. Elon buying more shares when he already has a monster options package suggests that there is going to be a hefty price increase in the not too distant future. Moreover, to count as the "sort burn of the century" I think the announcement has to push the share price up by a minimum of 25-30% to margin call a large enough number of the short positions to really burn and further increase the price.

Secondly, the announcement is not likely to be just hitting 5k model 3s per week. Too many people can see that we are close to that target to really put much upward pressure on the price. Even an upside on production or reservation numbers is unlikely to do this in just the remaining two weeks. I doubt enough people would believe Elon if he said he would be producing a significantly large number of 3s in a short enough period of time to really cause a short burn.

So the question is what can cause such a change? I think the announcement has to be one that underwrites the balance sheet in a way that the short thesis of bankruptcy becomes so impossible to the point of being absurd (although I think it's already absurd unless we see a huge shock to the financial system in the next 6-12 months). Here in no particular order are the possibilities I can think of...albeit many with low probability.

1) The German car makers have realised diesel is dead and they are in trouble. They don't have enough time to scale a battery alternative and one or more are turning to Tesla to be a supplier. This would lead to $10s of billions in supplier agreements and funding to build a gigafactory in Europe. Elon has recently tweeted about where he wants his euro factory, so there is potential for some movement here.

2) Same as 1 but replace Europe with China with construction work already underway for some time.

3) Energy storage agreements - Of all the products I think Tesla could ramp quickly, battery storage seem to be the most likely. Cell production appears to be working well and semi-automated pack production lines to be almost finalised. Combined with the recent reduction in cobalt as a supply/cost constraint there doesn't seem to be much of an issue duplicating the lines at the current gigafactory quickly. A multi GWh supply agreement with some utilities could be filled in relatively short order.

4) Partnership/acquisition with/of a truck manufacturer. Tesla has been testing their truck for quite a while now - they could have an agreement with an established truck manufacturer to roll out the vehicle faster than initially thought. Current manufacturing lines of competing truck manufacturers are likely to need less work to change to the Tesla semi. This would also feed into point 3 where battery and solar would be required in a large scale for the trucks and megachargers.

5) A purely financial move - Elon and a bunch of his rich mates have purchased enough options to take town the current share liquidity in the market and make short covering expensive. Surely Larry and Sergi could purchase 5% each. Possibly an attempt at taking Tesla private.

6) Dramatic increase in autonomous driving and a much quicker mover to the Tesla network. This seems unlikely as Elon doesn't seem to be the kind of person to withhold progress on this front. However a couple of hundred thousand vehicles starting to generate revenue for Tesla would have the desired effect.

7) Solar roof manufacturing has had a breakthrough and Tesla can produce far more than initially thought at a lower cost. Little has been said in this area, however I'm sure work is still being done. There is little concern around production materials - solar panels and glass are abundant. Sales could ramp quickly if there is supply. New rooves are being built every day and there is already a large workforce of roofers/electricians to install the product.

I'm interested to hear more on what others think could cause the short burn.

My thoughts about the from Elon announced short squeeze:

I agree to all your comments about achieving 5 k/w or more, the importance of CFP and Profit including positive implications but do not believe this will create what is called a short squeeze or burn. Such an announcement may very likely create some nice lift and maybe we head to new beyond ATH levels too but there has to be something else cooking here.

What Elon refers to IMHO is an announcement that kicks in hard and unexpected and nothing that is anticipated and discussed upside down from the market since months. Elons post is not driven by anger I believe but rather by love to people. He really wants to avoid people loosing their last money betting against Tesla. He has a truly good heard.

It ought to be an undisputed and clear strong positive fact people did not expect which makes them feel like they are about to miss a huge run unless they invest now regardless of the SP. Maybe a series of positive news instead of the one will make it too.

We also and of course cannot rule out that his comment was driven by wishful positive thinking what they will achieve end of Q2 rather than knowing. Too much ambient with red win mixed with sleepless nights combined with ambitious Elon timing.

However there are some aspects that come to my mind but they all can be turned by shorts in a negative light as well for instance a merger with The Boring Company and or SpaceX maybe just under a holding with operational independency. Another one could be a large new long term investor who take 5-10% of the float away for 2 decades.

All makes sense to me given the technology transfer and supplier relationship we have seen in the last year increasing between those 3 companies worth billions each.

Obviously and to your disappointment I know as much as you do which is absolutely nothing.

Would it make a difference for me knowing something? Absolutely not!

As a true very long investor who never sold a single share it does not matter really to me if the market cap doubles this year or will stay flat in 2018 and triples next.

 

[Drumheller]

I think it very unlikely, but since we are speculating.... a significant battery tech breakthrough announcement might cause a significant upward push on the stock price.

 

[hiroshiy]

Since it is the weekend and this is the general discussion forum I'll add my thoughts on the short burn of the century.

Firstly, I think it is likely that some announcement is brewing. Elon buying more shares when he already has a monster options package suggests that there is going to be a hefty price increase in the not too distant future. Moreover, to count as the "sort burn of the century" I think the announcement has to push the share price up by a minimum of 25-30% to margin call a large enough number of the short positions to really burn and further increase the price.

Secondly, the announcement is not likely to be just hitting 5k model 3s per week. Too many people can see that we are close to that target to really put much upward pressure on the price. Even an upside on production or reservation numbers is unlikely to do this in just the remaining two weeks. I doubt enough people would believe Elon if he said he would be producing a significantly large number of 3s in a short enough period of time to really cause a short burn.

So the question is what can cause such a change? I think the announcement has to be one that underwrites the balance sheet in a way that the short thesis of bankruptcy becomes so impossible to the point of being absurd (although I think it's already absurd unless we see a huge shock to the financial system in the next 6-12 months). Here in no particular order are the possibilities I can think of...albeit many with low probability.

1) The German car makers have realised diesel is dead and they are in trouble. They don't have enough time to scale a battery alternative and one or more are turning to Tesla to be a supplier. This would lead to $10s of billions in supplier agreements and funding to build a gigafactory in Europe. Elon has recently tweeted about where he wants his euro factory, so there is potential for some movement here.

2) Same as 1 but replace Europe with China with construction work already underway for some time.

3) Energy storage agreements - Of all the products I think Tesla could ramp quickly, battery storage seem to be the most likely. Cell production appears to be working well and semi-automated pack production lines to be almost finalised. Combined with the recent reduction in cobalt as a supply/cost constraint there doesn't seem to be much of an issue duplicating the lines at the current gigafactory quickly. A multi GWh supply agreement with some utilities could be filled in relatively short order.

4) Partnership/acquisition with/of a truck manufacturer. Tesla has been testing their truck for quite a while now - they could have an agreement with an established truck manufacturer to roll out the vehicle faster than initially thought. Current manufacturing lines of competing truck manufacturers are likely to need less work to change to the Tesla semi. This would also feed into point 3 where battery and solar would be required in a large scale for the trucks and megachargers.

5) A purely financial move - Elon and a bunch of his rich mates have purchased enough options to take town the current share liquidity in the market and make short covering expensive. Surely Larry and Sergi could purchase 5% each. Possibly an attempt at taking Tesla private.

6) Dramatic increase in autonomous driving and a much quicker mover to the Tesla network. This seems unlikely as Elon doesn't seem to be the kind of person to withhold progress on this front. However a couple of hundred thousand vehicles starting to generate revenue for Tesla would have the desired effect.

7) Solar roof manufacturing has had a breakthrough and Tesla can produce far more than initially thought at a lower cost. Little has been said in this area, however I'm sure work is still being done. There is little concern around production materials - solar panels and glass are abundant. Sales could ramp quickly if there is supply. New rooves are being built every day and there is already a large workforce of roofers/electricians to install the product.

I'm interested to hear more on what others think could cause the short burn.

Re (1), is that the reason for Euro Gigafactory in Germany? Just saying...

 

[JRP3]

Since Panasonic is Teslas partner in the Gigafactory, does it make sense to load up on their stock as well for the longterm?
Or is GF a separate business entity, and if so, are there stocks available for it as well?

I bought years ago figuring they would ride up with Tesla. Should have just put the money into TSLA

 

[pz1975]

I see Panasonic as just very diluted Tesla stock.

 

[30seconds]

Short thesis is basically 1. Tesla isn’t profitable and 2. Even if they hit profitability in Q3/Q4 large capital raises are still needed to expand business

Any squeeze needs to take these both off the table - something like Q3 profitability plus co-investment into China GF

I don’t think any new products / model Y/ large future revenue ideas will cause a real run up

 

[Remus]

"“They’re out to get me,” Tripp told Jalopnik in a near half-hour interview by phone."

https://jalopnik.com/tesla-leaker-is-looking-forward-to-the-lawsuit-over-all-1827032982

It would be in his own best interests to keep his mouth shut. Sadly I hope Elon has some constraint too

 

[avoigt]

It would be in his own best interests to keep his mouth shut. Sadly I hope Elon has some constraint too

It looks to me he does not quite understand what he did and what he confessed already.

This with him intending to sue Tesla without making a clear claim for what makes me believe he has a somewhat "different" reflection of reality. Also Business Insider will hopefully loose all of its reputation if they had any for decent reporting. Its time that the media acknowledge this and calls this out.

"Tripp told Jalopnik that he admitted to obtaining information from Tesla’s MOS and sending it to Business Insider, but said it required no hacking.

Tripp acknowledged that he provided information from Tesla’s MOS to Business Insider, but said that there was no “hacking” involved; he claimed that he simply queried the database to provide verification of his claims to the reporter."

 

[Remus]

It looks to me he does not quite understand what he did and what he confessed already.

This with him intending to sue Tesla without making a clear claim for what makes me believe he has a somewhat "different" reflection of reality. Also Business Insider will hopefully loose all of its reputation if they had any for decent reporting. Its time that the media acknowledge this and calls this out.

"Tripp told Jalopnik that he admitted to obtaining information from Tesla’s MOS and sending it to Business Insider, but said it required no hacking.

Tripp acknowledged that he provided information from Tesla’s MOS to Business Insider, but said that there was no “hacking” involved; he claimed that he simply queried the database to provide verification of his claims to the reporter."

He is dummer than dumb. I can take my work computer out of the office without any hacking. If I sell that on eBay I should be in jail.

 

[AlMc]

@Curt Renz and any others that may have contact with CNBC or other news outlets: Galileo Russell of HyperChange most recent video debunked many of noted short seller James Chanos' claims about why Tesla will be worth nothing.

During that broadcast he invited/suggested that he and Chanos debate one on one the merits of investing in TSLA and the reasons Chanos feels Tesla will fail.

I propose we all do our best to make this happen. Call, email, tweet, etc. to CNBC and others about this challenge. Financial news outlets love to headline news about Tesla/EM. This would be great on a couple levels: A bear and a bull....or a seasoned veteran vs a millennial ..

I have emailed Cramer/CNBC about this......We helped get Galileo on the last conference call and it led to a spot on CNBC where he held his own very well.......Let us do it again.

 

[elasalle]

Does the recent spooling tweet regarding GF mean that we are going to see a big/huge uptick in power wall sales?

 

[Yggdrasill]

Does the recent spooling tweet regarding GF mean that we are going to see a big/huge uptick in power wall sales?

Don't think so. The production equipment is for Model 3 modules/packs.

We should still see Tesla Energy continue to ramp up, but not because of the Grohmann line. This is on a completely separate path.

 

[ValueAnalyst]

Canada Model 3 Deliveries

 

[SW2Fiddler]

@Curt Renz and any others that may have contact with CNBC or other news outlets: Galileo Russell of HyperChange most recent video debunked many of noted short seller James Chanos' claims about why Tesla will be worth nothing.

I don’t disagree, and “OMG Young Cheddar vs. Old Truffle” would be potent clickbait, but another option could be to go “Wall St. vs. Chicago” and send Curt ...to debunk them all.

He has a truly good heard.

Wait what?
Did I just read an Amber Alert?

 

[Words of HABIT]

Canada Model 3 Deliveries

Living in Greater Toronto Area, after first deliveries late May, I now see more M3 on the road than MS and MX combined which started deliveries here in 2013 and 2017 respectively. At 200 M3/day for Toronto alone, my guess is 5,000 minimum Canadian deliveries for Q2.

 

[neroden]

That's correct -- there haven't been any AWD registrations since the small test batches in February. I think it could be one of two things... 1) The registrations have been small enough to elude detection (as it stands I'm only sampling every ~50th VIN to check for AWD, although I plan to check every VIN soon) or 2) The VINs were registered as RWD but will be modified to AWD VINs closer to delivery (similar to how the 2017 VINs were changed to 2018, after the initial registration)

In terms of the Performance Model 3, it doesn't appear that Tesla has even submitted to NHTSA the VIN decoder for that variant. Per the VIN reporting requirements, they need to do that at least 60 days before offering for sale to the consumer. It's a little puzzling TBH. Additional discussion of this topic here.

This is an interesting puzzle. Maybe no Performance models will be delivered for 60 days? Maybe there's a loophole in the 60-day rule that we don't know about? Any ideas?

 

[neroden]

Wildcards could be different speeds of different factory engineering.

At this point, I suspect the lead time on most of the lines (general assembly robots, battery pack robots, general assembly human work, body line, most stamping) is pretty short -- 2 or 3 months. I suspect getting another paint line up and running may take longer, since there's a whole emissions permit thing and lots and lots of chemicals and heat booths and other things which are kind of finicky and permit-dependent. These are just educated guesses. If I were Tesla I'd be figuring out which lines may need to be duplicated for 10K/week, and then sorting out which of these have long-lead-time items, and starting to line up the long-lead-time items.

 

[neroden]

Thoughts that may be repeats...

I think you figured it out. Seems to be enough wiggle room for Tesla to delay reporting Performance VINs to NHTSA, or not break them out at all.

 

[neroden]

Since it is the weekend and this is the general discussion forum I'll add my thoughts on the short burn of the century.

Firstly, I think it is likely that some announcement is brewing. Elon buying more shares when he already has a monster options package suggests that there is going to be a hefty price increase in the not too distant future. Moreover, to count as the "sort burn of the century" I think the announcement has to push the share price up by a minimum of 25-30% to margin call a large enough number of the short positions to really burn and further increase the price.

Disagree. Elon has to make a point, legally speaking, of not trading on material nonpublic information. Therefore I think everything which will cause the short burn must already be public information -- not a new announcement.

That doesn't mean we've *noticed* it. As someone else pointed out, the magician's art is misdirection. Look for things which are already public where their obvious implications are somehow not getting much attention. (11,000 Powerwall/Powerpack installs in progress in Puerto Rico, for instance... how much revenue and profit is that going to be? What will the effect of the SolarCity cuts on the cost structure there be? Has anyone been carefully following the timing of the old SolarCity lease income? -- I know I haven't. Are Canadian delivery numbers something which have essentially been published only we didn't notice?)

 

[neroden]

Since Panasonic is Teslas partner in the Gigafactory, does it make sense to load up on their stock as well for the longterm?
Or is GF a separate business entity, and if so, are there stocks available for it as well?

Look at the completely wacky collection of businesses Panasonic owns. It is not, at this point, a pure-play. I've been burned by investing in conglomerates before, when the part I liked did very well but the profits were sunk by the part I didn't like. Do your own analysis of ALL the parts and figure out how material each on is.