Julian Cox
Banned
Well this is all very interesting indeed.
My read on this is that a lot of external nonsense is occurring while Tesla itself quietly gains strength. In other words the slide is superficial to the business of Tesla while the strength continues to accumulate unabated and will become reflected in the stock.
The big Q2 downer (battery supply constraint) resolved, 25% Gross Margins inbound, Q3 is the first quarter that combines European sales with US sales (including a carry-over from Q2), production is reputedly ramping to the 600 weekly levels, Q3 profitability GAAP and Non-GAAP in no doubt, lots of big money still requiring 20 straight days of $184 ish to exercise bond conversion, lots of juicy shorts to squeeze.
I have been reviewing the valuation piece respected NYU Prof Damodoran (the only marginally plausible looking valuation analysis that I have seen) and from what I can see it is not only contextually wrong (you can't analogize the disrupted with the disruptor in a market) it is also materially wrong. There is a really gross error in Damodoran's assumptions regards the cost of capital applicable to TSLA sufficient to consider the analysis fundamentally misleading. Just correcting the mathematical error changes the picture from circa $67 to circa $120 immediately and compounding the effect of internally generated cash instead of purchasing cash at up to 10% would amply justify the $200 to $210. Note that the last time Tesla bought cash it did so at 1.5% not 10% (the $600M of bonds), internally generated revenue costs 0%. The whole raft of short-assumptions requiring Tesla to face inevitable dilution beyond staff options incentives to hit ample levels of growth (or large costs of borrowing) is just not true.
It would seem that there is a gorilla in the mist and the mist will inevitably clear. We will not have a regular occurrence of hitting large lumps of metal, by definition isolated random highly improbable events cannot be expected to occur with regularity. More likely Tesla will conclude their technical analysis and Musk will awesome everyone with some highly satisfactory announcement. Regardless of which, as a society we are comfortable with the concept that the freedom of private transportation is so hugely valuable that the occasional incident, including loss of life is in fact tolerated in the trade for that freedom. While so far no loss of life, there has been a fire with a Model S, and with ever increasing numbers it is hard to escape the inevitability that one day there will be another fire and possibly a fatal collision no matter how inherently safe the vehicle or how improbable the circumstances. The reason for that is because it is a road vehicle intended to travel amongst other road vehicles. There is only one point of real difference and it is not whether or not cars suffer or survive accidents, the private transportation offered by Tesla is not just equally valuable when compared with the past, it is more valuable than the technology it replaces providing as it does, value from both replacing an internal combustion engined vehicle and replacing the need for the fuel upon which previous technologies relied.
Here is a google image search for the term "Vehicle Fire". Not a Tesla top be seen (within my limit of patience for looking in any case).
The US government will not fail to vote itself back into operation. The mist will inevitably clear to reveal the gorilla.
In my opinion the recent appearance of $165 ish is in fact a lucky dip for those who have been despairing for the appearance of such an opportunity to reappear.
It is doubly lucky because it has nothing at all to do with the business of Tesla which is in fact improving. It is not as though TSLA slid because it failed to secure enough battery supply for Model E now was it. Long term Tesla will more than likely continue on track to compound sold production by 100% annually for many years to come. There is plenty of un-tapped market, plenty of trend indicators in California to sweep the US and the rest of the world, there is still no viable competition to prevent that from happening, just progress like EV home-wiring in Palo Alto, new store openings (Virginia), new sales in the EU and Asia, owning the Norweigian new vehicle sales space and so on and a company run by a fellow investor named Musk who had the sense and the guts to build Tesla through a recession and come out selling ten years ahead of the market. A guy that pretty much owns space transportation despite crashing and burning his first three rockets and is still gunning for a $43.2bn TSLA market cap because he can.
To conclude these musings for now, I actually put a line in the sand. In fact I thought that $165 was so tasty I bought the company for the first time ever.
My read on this is that a lot of external nonsense is occurring while Tesla itself quietly gains strength. In other words the slide is superficial to the business of Tesla while the strength continues to accumulate unabated and will become reflected in the stock.
The big Q2 downer (battery supply constraint) resolved, 25% Gross Margins inbound, Q3 is the first quarter that combines European sales with US sales (including a carry-over from Q2), production is reputedly ramping to the 600 weekly levels, Q3 profitability GAAP and Non-GAAP in no doubt, lots of big money still requiring 20 straight days of $184 ish to exercise bond conversion, lots of juicy shorts to squeeze.
I have been reviewing the valuation piece respected NYU Prof Damodoran (the only marginally plausible looking valuation analysis that I have seen) and from what I can see it is not only contextually wrong (you can't analogize the disrupted with the disruptor in a market) it is also materially wrong. There is a really gross error in Damodoran's assumptions regards the cost of capital applicable to TSLA sufficient to consider the analysis fundamentally misleading. Just correcting the mathematical error changes the picture from circa $67 to circa $120 immediately and compounding the effect of internally generated cash instead of purchasing cash at up to 10% would amply justify the $200 to $210. Note that the last time Tesla bought cash it did so at 1.5% not 10% (the $600M of bonds), internally generated revenue costs 0%. The whole raft of short-assumptions requiring Tesla to face inevitable dilution beyond staff options incentives to hit ample levels of growth (or large costs of borrowing) is just not true.
It would seem that there is a gorilla in the mist and the mist will inevitably clear. We will not have a regular occurrence of hitting large lumps of metal, by definition isolated random highly improbable events cannot be expected to occur with regularity. More likely Tesla will conclude their technical analysis and Musk will awesome everyone with some highly satisfactory announcement. Regardless of which, as a society we are comfortable with the concept that the freedom of private transportation is so hugely valuable that the occasional incident, including loss of life is in fact tolerated in the trade for that freedom. While so far no loss of life, there has been a fire with a Model S, and with ever increasing numbers it is hard to escape the inevitability that one day there will be another fire and possibly a fatal collision no matter how inherently safe the vehicle or how improbable the circumstances. The reason for that is because it is a road vehicle intended to travel amongst other road vehicles. There is only one point of real difference and it is not whether or not cars suffer or survive accidents, the private transportation offered by Tesla is not just equally valuable when compared with the past, it is more valuable than the technology it replaces providing as it does, value from both replacing an internal combustion engined vehicle and replacing the need for the fuel upon which previous technologies relied.
Here is a google image search for the term "Vehicle Fire". Not a Tesla top be seen (within my limit of patience for looking in any case).
The US government will not fail to vote itself back into operation. The mist will inevitably clear to reveal the gorilla.
In my opinion the recent appearance of $165 ish is in fact a lucky dip for those who have been despairing for the appearance of such an opportunity to reappear.
It is doubly lucky because it has nothing at all to do with the business of Tesla which is in fact improving. It is not as though TSLA slid because it failed to secure enough battery supply for Model E now was it. Long term Tesla will more than likely continue on track to compound sold production by 100% annually for many years to come. There is plenty of un-tapped market, plenty of trend indicators in California to sweep the US and the rest of the world, there is still no viable competition to prevent that from happening, just progress like EV home-wiring in Palo Alto, new store openings (Virginia), new sales in the EU and Asia, owning the Norweigian new vehicle sales space and so on and a company run by a fellow investor named Musk who had the sense and the guts to build Tesla through a recession and come out selling ten years ahead of the market. A guy that pretty much owns space transportation despite crashing and burning his first three rockets and is still gunning for a $43.2bn TSLA market cap because he can.
To conclude these musings for now, I actually put a line in the sand. In fact I thought that $165 was so tasty I bought the company for the first time ever.
Last edited by a moderator: