General Discussion: 2018 Investor Roundtable

[RobStark]

Again from Shareholder letter

" Due to higher upfront cash sales, lower emphasis on less profitable commercial projects and consolidation of our sales channels, our solar business had slightly positive cash flow throughout 2017. We are expecting cash flow from our solar business to remain at this level in the first half of 2018 and then improve significantly thereafter."

 

[MattEnth]

Shorts should fear the reaction on this board more than any information that came out of the investor letter.

I'm not afraid, because the analysts and institutional holders aren't reading this board. They were listening to that call. They heard Elon Musk decline to answer the two most important questions, and they heard him sound pretty dejected and disconnected.

The two questions Musk brushed aside:

• Model 3 production targets post-July
• Percentage of those invited to configure a Model 3 that actually begin doing so

He could have absolutely destroyed the shorts if he'd answered either one in a positive way. And given Elon's history of taunting shorts, and that his compensation is based on stock price, you'd assume he would have savored the opportunity. Instead, he replied "boneheaded questions aren't cool" to the first and "dry questions are killing me" to the second, completely avoiding the questions.

They're at -2.2B working capital and have another 2.35B planned in CapEx this year. They are down to 2.67B in cash and made it quite clear they won't be raising more. This is a precarious cash position at best.

They also made it clear that they won't have a new product to market before 2020. The Tesla Semi was pushed back. The Model Y was pushed back. Full Self Driving was pushed back. The Roadster was never even mentioned.

There's no way out of this hole. They don't have the money to invest in the next generation of product. Their current valuation doesn't make sense. And competitors are closing in.

 

[KLC13]

What I really like was reservations holding above 450,000. Despite the company being dragged through the mud, the consumers still want the products. In the end, that matters most.

I missed the call, but are these 450k M3 reservations? Did we get any updates on the M3 reservations at all?

 

[EinSV]

I missed the call, but are these 450k M3 reservations? Did we get any updates on the M3 reservations at all?

Yes re >450K reservations. From the letter:

Model 3 net reservations, including configured orders that had not yet been delivered, continued to exceed 450,000 at the end of Q1 even though fewer than 20 stores worldwide had Model 3 on display. We are planning to deploy significantly more Model 3 vehicles in our stores in Q2 this year. Tesla - Current Report​

 

[Oil4AsphaultOnly]

I missed the call, but are these 450k M3 reservations? Did we get any updates on the M3 reservations at all?

Yes, 450k is the m3 reservations. I'm ~120k, and I'm getting my 3 next week (vin 159xx). So you can extrapolate the take-rate yourself (which Elon said us TMC's were pretty good at tracking)

 

[jhm]

My thoughts on the letter and CC...

I liked the Model 3 market share chart. This is the right way to frame their success with Model 3 thus far. I do wonder if Tesla will finally start reporting monthly sales numbers. It would look good on them.

Pleased that Model 3 is still on track for 5k/week by end of quarter. This will go a long way to making Q3 profitable and cash positive.

I'm sorry TE is on a back burner. The supply constraint seems to be a casualty of the Model 3 ramp difficulties. Even so TE revenue is up over 90% y/y. Clearly this segment can do much more to grow revenue.

My biggest disappointment is that total revenue only grew 26.4% y/y. My focus as an investor has been on 50% revenue growth. So Tesla is about 6 months behind on delivering that growth. They still have 3 quarters to deliver on 2018, but this is a rough start.

On a positive note, growth in opex has been limited to about 10% y/y while building out a lot of infrastructure needed for Model 3 growth. So Tesla is exercising expense discipline where they can.

In sum, Tesla seems to be stretched thin. They need the Model 3 ramp to go well over the next 5 months to get through this difficult pass. I am confident that they will get to 5k/week production some time in Q3, which will suffice for Q4 to be profitable and cash positive. Fingers crossed, they can get to that in Q3 as Musk expects, but that is not make or break.

My outlook of share price for the next two months is not good. I suspect we will be revisiting $250 again. I will not be selling, but I will be waiting to buy near $250.

Buckle up for a bumpy ride.

Edit. One more thing, I'm very happy to see advances in battery density, especially in cutting cobalt content. Huge relief on a difficult social issue.

 

[elasalle]

I missed the call, but are these 450k M3 reservations? Did we get any updates on the M3 reservations at all?

Let’s go to YouTube

 

[Bebop]

I’m glad the one guy asked about Tesla Network. Really looking forward to that becoming a reality.

Was EAP mentioned towards the end by any chance? I left the stream after the forst Semi question.

 

[kelevra]

I planned to add shares after QR. Shorts can do whatever, I will be adding at a pace with free cash. As I mentioned before, I don't try to predict near term moves. There are lots of unknowns, and so many parties are trying to manipulate the market. I don't want to play their game.

Instead I value the business, make a plan, then act according to my plan. To me TSLA is a buy and hold. I appreciate the volatility that shorts help to create. They will pay for it down the road.

thx guys for all the feedback. I especially liked @JRP3 comments about different types of geniuses. Never thought about it but it is true those geniuses who get crazy are mostly in the theoretical/aesthetic space like e.g. philosophers, theoretical physicists, artists.
It's rare for a engineer/entrepreneur to get crazy at least i have no obvious examples right away. After all Elon seemed and still seems very clear/brilliant. Other arguments i have for myself are that Elon managed to come out on top of worse situations and as a first principle thinker he probably figured out how he works and how not to get insane or burnout.

I tend to be hyper critical in the first moment but after hearing the call again and not getting distracted by the fact that Elon refused to answer 2 questions i think that Tesla demonstrated their brilliance and focus on innovation once again or even more than ever. I also start to believe that the refusal to answer the questions could as well be a sign of confidence.

Probably going to add some shares too. Especially because i reduced them a bit before the ER.

 

[RiverCard]

it would have been better for just Deepak and JB to have done the CC

Even better: JB & Doug Field

 

[Sancho]

Just had time to listen to the CC and am very impressed overall. I am even more bullish about the stock price within 3 months' time, and the rise can happen at any time before that. In 3 months, the next conference may affirm 5,000 M3 production, reaffirm guidance of positive cash flow and GAAP profits for the very next quarter, and announce the details of a deal for a Chinese gigafactory/manufacturing plant. Anyone with a short position would be crazy to maintain it much longer, particularly given its crowded trade.

Don't be distracted by Musk's rebuking responses to several questions, and the press and analyst reaction to it. That's all noise. Everyone knows Musk is not a polished public-facing CEO, and thank heavens for that! At some point soon, he needs to let his team be the first responders to many of these questions, and pipe in when he has something positive to add.

 

[Time]

Great conference call!

I expect peak Tesla/Elon hate to start promptly tomorrow morning on every financial news website and channel.

Everyone will question his sanity. Everyone will say he needs to go. Everyone will say he is terrible. Tesla's stock will drop and everyone will panic on TV and Bloomberg/CNBC.

I will sit here and think about...

Almost $1 Billion in customer deposits...

A ~230,000 S/3/X production run rate as of April 2018 (I WAS TOLD THERE WOULD BE NO CARS AND NO ONE BUYS TESLAS ANYMORE, WTF SHORTS)

Highest ever Q1 orders, which came after highest ever Q3 and Q4 orders ever (I WAS TOLD DEMAND WAS PLATEAUING, TESLA WAS GOING TO CANNIBALIZE SALES, WTF SHORTS)

Sales and growth. Delicious.

 

[TradingInvest]

Just had time to listen to the CC and am very impressed overall. I am even more bullish about the stock price within 3 months' time, and the rise can happen at any time before that. In 3 months, the next conference may affirm 5,000 M3 production, reaffirm guidance of positive cash flow and GAAP profits for the very next quarter, and announce the details of a deal for a Chinese gigafactory/manufacturing plant. Anyone with a short position would be crazy to maintain it much longer, particularly given its crowded trade.

Don't be distracted by Musk's rebuking responses to several questions, and the press and analyst reaction to it. That's all noise. Everyone knows Musk is not a polished public-facing CEO, and thank heavens for that! At some point soon, he needs to let his team be the first responders to many of these questions, and pipe in when he has something positive to add.

My suggestion is don't focus on short term. I don't care about the next 3 or 6 months. Tesla is a long term buy and hold. AI, autonomous driving, EV, clean energy, these are all major themes for the next 30 years. These are all trillion dollar markets. We are right at the turning point. Tesla is in the center of all of the above. Tesla is leading and moves faster than anyone else. I keep saying this, don't waste your hard earned money, buy low and keep adding with new cash. For most people with buy and hold approach, they probably shouldn't even listen to CC. I think in the end those buy and hold guys will gain the most.

 

[Waiting4M3]

I'm on the same page as you. That was embarrassing. If he didn't want to answer boring questions then it would have been better for just Deepak and JB to have done the CC and Elon could have done a 1 on 1 special interview with Galieo and everyone could have been happy.

Now what would be funny is if he walked into the Q3 CC after a profitable quarter and just said "no questions today." *Mic drop*

Now that I think about it, JB and Deepak were just sitting right there when Elon dissed the analysts. If this wasn't planned and Elon had indeed gone crazy, would they just sit there?

 

[Waiting4M3]

I expect peak Tesla/Elon hate to start promptly tomorrow morning on every financial news website and channel.......

What do you mean "start"?

 

[Jonathan Hewitt]

Now that I think about it, JB and Deepak were just sitting right there when Elon dissed the analysts. If this wasn't planned and Elon had indeed gone crazy, would they just sit there?

Well considering Elon kind of cut off Deepak when he was talking about "best in class" because Elon wanted to make it clear it was just "best" I think they've learned that it's best to let Elon say what he wants to say unless it's really important. So maybe they thought Elon was not going crazy and it wasn't worth getting in the middle of it.

 

[Waiting4M3]

Well considering Elon kind of cut off Deepak when he was talking about "best in class" because Elon wanted to make it clear it was just "best" I think they've learned that it's best to let Elon say what he wants to say unless it's really important. So maybe they thought Elon was not going crazy and it wasn't worth getting in the middle of it.

That's probably closer to the truth than some conspiracy that Tesla had planned to show up the analysts like this. So we get a Elon on the loose. I said before that he has been backed into a corner, and I like Elon backed into a corner. Now I think we're starting to see why.

 

[schonelucht]

How should we interpret the total liabilities dropping by $1.5billion, while cash only dropped by $700million?

Reclassified resale value guarantee related liabilities.

 

[NicoV]

thx do you remember which calls? I vaguely remember maybe Q3 2016 when sentiment was also bad.



i don't care so much about the headlines and would even like to see the SP drop so i can buy more cheaply but of course only as long as i can stay confident. (i guess i still am)
may biggest longterm concern with Tesla is actually that Elon cloud collapse or become crazy at one point because he works so much and there is a fine line between genius and insanity. just look at the original Nikola Tesla for example. Therefore it concerns me when he sounds tired or doesn't want to answer questions. Do you think this concern is far off? Any arguments that can ease me?

Actually, I think the best answers on the CC always come from JB Straubel. Always to the point, concise, and clear.

 

[Waiting4M3]

Second this: