General Discussion: 2018 Investor Roundtable

[mmd]

All what I can say to you is that if you have read Karens mail carefully all arguments you brought up have no basis. Have you read it at all?

Oh yes, I did! The problem with such analysis is an over reliance on management projections, and not fact checking these with realities. Most likely these analysts (or poster in this case) have no experience in analyzing auto sector. Just take a look at the college kids becoming Tesla auto analysts and showing up on TV for some face time.

For example, how likely is it that Model 3 will hit 25% gross margin (the conflated definition that Tesla uses)? Their luxury line up hover between 18-25%, and was down to ~14% (may be slightly higher, as Model 3 margin was negative) last Q in a push to sell more cars. It is simple economics. You can't reach higher volumes without some price concessions or further product improvements in a saturated market.

The notion that rising revenue guarantees rising profits can be wrong. Please see Tesla's own comp here. Margins got compressed as they increased revenues.
The addition of Solarcity losses (in the full picture, not in auto margin) doesn't help either.

 

[ValueAnalyst]

Maybe you are misunderstanding me. The minimum cash buffer is not because Tesla from time to time needs to make a payment on current debts and loans but because the convenants of the loans themselves require Tesla to keep certain measures of liquidity.

"the approximately $500 million in minimum cash that we estimate Tesla must maintain for normal operations;"

Moody's downgrades Tesla's corporate family rating to B3, senior notes to Caa1. Outlook is negative.

Even Moody's, who for whatever reason did not wait a few days to see the actual ramp, estimates $500 million in cash is enough to run operations.

 

[AZRI11]

You make a good point. It won't be straight down. When Enron tanked there were several up days where investors were able to sell. Today is Easter, a day of Resurrection, no relief today, but who knows Monday?..

TSLA is unlike any other. In the end only the longs will survive.

 

[Menifeer]

No? But multiple large buildings in California are built right by or on fault lines. If you know what you are doing, you can ensure public safety even up and including to the building splitting in half. As long as people aren't killed, the building being destroyed and unsalvageable afterwards is not that big a deal.

"Not that big a deal" ???

Public safety is important, of course, but why would an enterprise risk destruction/loss of a facility due to being located on a fault? There are plenty of non-fault areas available.

 

[anticitizen13.7]

The poster writes "how spectacularly wrong" the shorts have been, then takes management's projections at face value. How spectacularly wrong have the Tesla projections been? 100k-200k M3 in 2H of 2017? How wrong have the bull side analysts been over the last many years on profit projections? How wrong were you in projecting Tesla's ramp to millions of cars in a short span?
In reality, the shorts have been more right about many things Tesla than Tesla itself.
At this point, anyone who takes management projections at face value are themselves to blame. I have no sympathy for such people.

What the short sellers have failed to understand though, is the power of the "Reality Distortion Field". It doesn't matter that Tesla has been late on most projects or missed some projections. What they've delivered has been far, far more than good enough to keep the debt and equity markets throwing money at them in the past.

Tesla may not run out of cash, but its constant need of external capital can keep on diluting the shareholders or put it in a debt hole.
With the recent setbacks, the bond market is essentially closed. That leaves us with equity dilution the only major way.
Tesla's plunging bonds signal investor worries that it will run out of cash

Unless Tesla figures out a way to manage without more spending, which is unlikely IMHO. With high volumes of M3 comes a need for more service centers, super chargers, and so on. If Tesla doesn't keep up with these, then the brand gets tarnished, which will be a bigger loss in the long run.

And if Tesla is able to make the Model 3 production line work, and prove that its different way of manufacturing is better than what existed before, I suspect that the markets, if they were closed, will open back up. If the Model 3 production lines eventually support themselves, Tesla may not need to go to the markets for capital. At this point, what happens is entirely dependent on how well Tesla executes. I see many people here and on Reddit, on both the Bull and Bear sides, vociferously saying that X or Y will/must happen... and few of any of them seem to accept the fact that it is out of their hands. I have no no control. You have no control. The guys on Reddit have no control. Everything will spin and land where it will land.

What is going is nothing new. The Roadster was a showboat to get investors onboard for Model S. Model S got people on board for Model X. Model X and S got people on board for Model 3.

 

[anticitizen13.7]

Maybe you are misunderstanding me. The minimum cash buffer is not because Tesla from time to time needs to make a payment on current debts and loans but because the convenants of the loans themselves require Tesla to keep certain measures of liquidity.

Ok, I understand what you are saying now. This may fall under the "Restricted Cash" portion of the balance sheet: 155,323, or just over 155M USD.

20 years ago, I worked for an Internet startup that took out loans from bank to fund operations and expansion. This particular startup was required to keep a certain amount of capital deposited at the lending bank. Without knowing the terms of the debt agreements between Tesla and its lenders, I cannot say for sure what their arrangement might be.

 

[Mike Smith]

I'm thinking the 'important news' Elon tweeted about is actually going to be important news. On April Fools the idea is to fool, and right now everyone thinks this is going to be an April Fools joke. This could be next level fooling.

Edit: guess I was wrong - he just declared bankwuptcy.

Edit: Unless the 'important news' is still coming, and this is super next level fooling..

 

[MikeC]

 

[ggr]

You can't reach higher volumes without some price concessions or further product improvements in a saturated market.

And there, in a nutshell, is why you are wrong.

 

[skitown]

View attachment 291058

OMG, this is so funny. "The worst one." [edit: I literally can't stop laughing]

 

[MXWing]

I am eagerly waiting for the 20 different Seeking Alpha Articles from misc writers

stating "Elon Musk tells the truth for the first time".

Followed by 1 article from @ValueAnalyst saying "This was an April Fool's joke".

 

[HG Wells]

Now that we KNOW that Tesla is bankrupt will the shorts PLEASE stop talking ?

 

[uselesslogin]

Bankruptsy!

 

[Mkorpal]

I'm broke!!!!!

 

[evster]

This is so funny

Am I the only one seeing a man taking a pee? The Tesla wall charger box where Elon passed out

 

[sundaymorning]

With all these chapter 14.5 talk I hope the algo bots don’t screw it up for us tomo.

 

[sweter]

Oh Elon please never change.

 

[avoigt]

With all these chapter 14.5 talk I hope the algo bots don’t screw it up for us tomo.

If that happens than the investors behind have a guaranteed loss because the bots can't interpret irony. Stock price will swing back right after .... great buying opportunity.

 

[Waiting4M3]

If that happens than the investors behind have a guaranteed loss because the bots can't interpret irony. Stock price will swing back right after .... great buying opportunity.

I do hope algo bots sell based on Elon's tweet and take a bath, bot traders deserve it

 

[KLC13]

I think the 'w' in 'bankwupt' is for Keith Leech's continuous calling out of 'Ewon' and his fake 'wockets'... Iol