I have followed nvidia for a long period of time. They are a leader in graphics processing and bringing awesome arm based chipsets with screaming performance. They have a clear lead in infotainment system and autonomous data processing. However, this business is fiercely competitive. Qualcomm stayed ahead until now with their bundled approach (everything you need in one piece for mobile devices) for so many years. Nvidia should come up with bundled everything chipsets for cars and provide readymade and api driven solution. As the autonomous vehicles market improves from here, they will get more visibility.
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Since Tesla bulls seem to the enjoy the price targets from that report so much let's talk about getting there, i.e. investments.
Page 2 says:
"Tesla's pace of capex and R&D spending through 2020 vastly exceeds its current size and production footprint. We have modeled $14bn of combined spending from 2015 through 2020, for only 2 model families (Model S/X and Model 3), 1 assembly factory, and 1 very large battery factory. On a per-unit basis, this level of spending is nearly 10x that of Ford. "
$14 billion in five years. Coming from where exactly when there's an existing line of credit with collaterals pledged (mid-2015) and convertible bonds (early 2014) outstanding?
How will Tesla come up with the $14 billion in projected investments from 2015-2020 in your opinion?
My answer/prediction as I already discussed in the Gigafactory thread: Watch that Tesla share counter rise! There will billions needed and raised using new equity (dilution) imho.
Page 2 says:
"Tesla's pace of capex and R&D spending through 2020 vastly exceeds its current size and production footprint. We have modeled $14bn of combined spending from 2015 through 2020, for only 2 model families (Model S/X and Model 3), 1 assembly factory, and 1 very large battery factory. On a per-unit basis, this level of spending is nearly 10x that of Ford. "
$14 billion in five years. Coming from where exactly when there's an existing line of credit with collaterals pledged (mid-2015) and convertible bonds (early 2014) outstanding?
How will Tesla come up with the $14 billion in projected investments from 2015-2020 in your opinion?
My answer/prediction as I already discussed in the Gigafactory thread: Watch that Tesla share counter rise! There will billions needed and raised using new equity (dilution) imho.
Your post is neglecting the positive cash flow that Tesla will generate starting next year. The positive cash flow is used to fund capital improvements and expansion. If Tesla wasn't as aggressive they could probably fund their future from their positive cash flow starting next year. But since they're being very aggressive their positive cash flow probably won't cover all their investments, thus they're going to raise money occasionally along the way. But to say that they need to raise $14b by diluting stock from now until 2020 is not true.
Tesla's current CFO already predicted positive operational cash-flows in late 2013 for 2014. Didn't happen except for a single Q1 2014. Then the same was repeated for Q4 2015 , now it's projected for 2016.
I will believe it when I see it.
In any event, the current CFO will have left by then. Will the new CFO use the same projections and models? Not sure.
PS: I'm not saying all the money needed will be raised using equity, but likely large portions of it (and the $14bn projection itself is of course coming from Morgan Stanley).
Sus
Member
A way around this would be to have a good rating system within the Tesla Mobility app. For example, you can set your car to be available from 9-5pm today and only available to people with a 5 star rating and higher. If a person who wants a ride has 4 stars and below, your car would not show up for them as available.
Riders would be rated by the car owners by seeing the condition of their car afterwards.
Dilution is coming for sure (and has in the past as well) as Tesla will likely raise as much money as they can to grow as fast as they possibly can.
But dilution isn't the issue if the company can continue to grow quickly and justify a growing market cap. (ie., growing market cap will outpace pace of dilution)
The problem with dilution happens when the company can't grow quick enough to justify a growing market cap and the pace of dilution outpaces the growth of market cap.
In 2013 the CFO nor Tesla thought they would need to build capacity to sell as many cars as they plan to sell today. They weren't planning on scaling up S and X production or the Gigafactory quite yet. These are enormous growth engines and as a long term TSLA holder I want them to dilute the stock when they need to if it is to grow their revenues much faster. I'll be much happier with a $100 per share dividend in 2030 then a $10 per share dividend in 2025.
TFTF, are you still short?
I'm not related to JP, but I'm shorting TSLA... - Page 8
Or I assume you covered down at the lows of 180 as most shorts seem to conveniently claim in public that they covered at a major dip
The price was bumped because of rumors that Tesla will have a fleet of self-driving cars available for ride sharing by 2020?
That's the the most ridiculous thing I've ever heard. It's 2017 and Tesla can't even get the car to hold a lane or for TACC to work consistently. Pipe dream at best, stock manipulation at worst.
That's the the most ridiculous thing I've ever heard. It's 2017 and Tesla can't even get the car to hold a lane or for TACC to work consistently. Pipe dream at best, stock manipulation at worst.
Johann Koeber
Happy Owner
I do not get your point. If the contention is that because lane keeping or TACC is not perfect in 2015 the self-driving is not going to happen in 2020, it is just wrong. By this logic the fact that cellular service in early days of cell phones was very limited, the voices garbled and the phone calls dropped was an indication that cellular service was dead on arrival, just a pipe dream...
Come on, we can do better than this.
He's saying Tesla won't be the company pulling it off not that other companies won't pull it off.
You honestly believe, given all of the technical and AI hurdles that autonomous technology needs to overcome, that it will be in consumer's hands in only 5 years? And in such a state of sophistication that you can summon an autonomous vehicle to pick you up and take you to your destination? Anyone who thinks this is going to happen in 5 years is smoking a special brand of crack. Sorry. Not going to happen.
Seems like your wishful thinking may be lamer than my reasoning.
I have to agree with AR.
Google has been working on this for at least 5 years. Google will likely be first to market.
Uncle Paul
Well-Known Member
Some feel that Goldman pumped the stock, just as they were issuing the latest stock offering for hundreds of millions in new shares. Standard operating proceedure for Goldman.
Pre offering, post something to lower the stock price. Just prior to the offering tell how they expect an imminent price increase. When the stock price rises, issue the additional stock. They look like heros.
Autonomous driving is just a part of the story to sell more stock, at a higher price.
Pre offering, post something to lower the stock price. Just prior to the offering tell how they expect an imminent price increase. When the stock price rises, issue the additional stock. They look like heros.
Autonomous driving is just a part of the story to sell more stock, at a higher price.
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