Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[PeterJA]

This man's humor is a bit insufferable, but his thesis is interesting.

He says a crash in Bitcoin's price may cause Tesla to report a big quarterly loss, crashing TSLA to a great buying opportunity. He claims this is because accounting rules consider a drop in the value of Tesla's Bitcoin holding to be a loss, even if Tesla doesn't sell the holding.

Do the accountants here (such as @The Accountant) concur?

Edit: A Bitcoin crash below the price Tesla paid may be less likely now if, as predicted by some pundits, Tesla's purchase starts a trend of big companies buying Bitcoin.

 

[MP3Mike]

He says a crash in Bitcoin's price may cause Tesla to report a big quarterly loss, crashing TSLA to a great buying opportunity. He claims this is because accounting rules consider a drop in the value of Tesla's Bitcoin holding to be a loss, even if Tesla doesn't sell the holding.

Do the accountants here (such as @The Accountant) concur?

Tesla said as much in their 10k filing. (It also said that they can't recognize a gain unless they sell. So it is sort of lopsided.)

 

[Singuy]

Tesla said as much in their 10k filing. (It also said that they can't recognize a gain unless they sell. So it is sort of lopsided.)

Well Tesla gets the tax benefits from the loss reported, but are required to pay that benefit back if or when BTC goes back up to its original value.

 

[dhanson865]

So do you think this software fix was 1. effective in avoiding a recall and 2. sufficient, from the customer's perspective, to correct the problem?

apparently the affected packs owners won’t even notice the issue. If I read correctly the conclusion.

I could suggest you read Sudden Loss Of Range With 2019.16.x Software which is a thread with a similar length and age as this one.

Sure the fix might be sufficient going forward but you have to acknowledge that people suffered for several years between the beginning of the issue and the final fix (if the fix is final yet).

You don't need to read 700+ pages of that thread but reading the first page and the last few pages would be a decent start.

Asking for cliffs notes is admitting that you didn't read Explaining Changes post-firmware 2019.16 Regarding Range Loss | wk057's SkieNET which literally is the cliffs notes for the 700 page thread and is what MC3OZ was pointing to in the first place.

 

[StarFoxisDown!]

For anyone who is particularly optimistic (or just curious) and is eagerly awaiting this, the 14th has been mentioned as the date because it's been the 14th the last few years. But from the filing history it seems clear that it's the first day the market is open after the 13th. I suspect that means we'll get it premarket on Tuesday.

This man's humor is a bit insufferable, but his thesis is interesting.

He says a crash in Bitcoin's price may cause Tesla to report a big quarterly loss, crashing TSLA to a great buying opportunity. He claims this is because accounting rules consider a drop in the value of Tesla's Bitcoin holding to be a loss, even if Tesla doesn't sell the holding.

Do the accountants here (such as @The Accountant) concur?

Edit: A Bitcoin crash below the price Tesla paid may be less likely now if, as predicted by some pundits, Tesla's purchase starts a trend of big companies buying Bitcoin.

There’s no way that can be correct. That would be saying Tesla has to take a loss on their investment anytime Bitcoin goes below the break even line....which could be multiple times over the course of a single year.

let’s say Bitcoin is above break even(33k) this quarter, then below break even next quarter, but then goes back above break even the quarter after....and then back below break even the quarter after that. Tesla would have to report a double loss under the scenario which makes no financial sense. You can only post a loss once.....which is when you sell the investment

 

[MC3OZ]

 

[Singuy]

There’s no way that can be correct. That would be saying Tesla has to take a loss on their investment anytime Bitcoin goes below the break even line....which could be multiple times over the course of a single year.

let’s say Bitcoin is above break even(33k) this quarter, then below break even next quarter, but then goes back above break even the quarter after....and then back below break even the quarter after that. Tesla would have to report a double loss under the scenario which makes no financial sense. You can only post a loss once.....which is when you sell the investment

No Tesla just reports a loss the first time, then gains the second time, then loss the third time. The tax savings and payment will go back and forth between loss and break even.

It'll be -33k Q1
+33k Q2
-33k Q3
then +33k Q4.

So at the end of the day it's still a net zero on Gaap earnings for the year, not -66k.

 

[Ipe]

A Huge Fund Bought Tesla, Apple, and Microsoft Stock. Here’s What It Sold.
PGGM of Zeist, Netherlands initiated a position in Tesla in Q4/20. As of Dec. 31/20 PGGM had $347B in assets, one of the 15th largest public pension plans in the World. PGGM now holds 79,048 shares ($64.5M) of Tesla. Small sum considering PGGM's total assets, however they now have Tesla, testing the waters before jumping in with two feet. Bershire Hathaway started investing in Apple in 2016 and now has X100 times the amount of Apple shares today than their original investment. Once the big firms are hooked, they turn into a solid growing catch. Tesla joining the S&P500 cannot be overstated.

I make monthly contributions to this fund on behalf of my employees. Happy to hear they put it to good use.

 

[Yuha]

For any vaguely computer nerdy folks, they essentially applied the concept of parity used in RAID storage to voltage readings on a module to be able to reconstruct the "real" value when a single cell group is reporting incorrectly but the correct "total" value of the module it's in is known.

It's a clever software workaround that avoids Tesla having to actually replace the failing hardware with working hardware.... though it does still leave a very very minor amount of genuine range loss compared to an otherwise identical pack not having the problem.

On the Battery Day, they said that they improved the formation phase by using techniques learned from their vehicle BMS. This could be at least a part of that.

 

[MP3Mike]

There’s no way that can be correct. That would be saying Tesla has to take a loss on their investment anytime Bitcoin goes below the break even line....which could be multiple times over the course of a single year.

let’s say Bitcoin is above break even(33k) this quarter, then below break even next quarter, but then goes back above break even the quarter after....and then back below break even the quarter after that. Tesla would have to report a double loss under the scenario which makes no financial sense. You can only post a loss once.....which is when you sell the investment

Did you even bother to read the 10k?

Moreover, digital assets are currently considered indefinite-lived intangible assets under applicable accounting rules, meaning that any decrease in their fair values below our carrying values for such assets at any time subsequent to their acquisition will require us to recognize impairment charges, whereas we may make no upward revisions for any market price increases until a sale, which may adversely affect our operating results in any period in which such impairment occurs. Moreover, there is no guarantee that future changes in GAAP will not require us to change the way we account for digital assets held by us.

 

[NicoV]

Tesla said as much in their 10k filing. (It also said that they can't recognize a gain unless they sell. So it is sort of lopsided.)

That seems to be a common accounting rule as it is the same in Belgium. Unrealised losses should be reflected in the balance sheet, since the balance sheet should reflect (at least) the (liquidation) value of the company. Unrealised gains not, since they are not realised. It means that companies may have more valuable assets than reflected in the balance sheet (e.g. typically the value of real estate may be much higher than in the books).
The reason for this asymmetry is probably because there are rules where companies are legally obliged to take certain actions on the road to bankrupcy when their assets become too low, but there are no such rules for companies that have very high asset values.

 

[Right_Said_Fred]

This is an amazing write up of the Tesla BMS battery issues. Following WK057 on Twitter too. Unfortunately WK057 says he was banned from this forum.

Just to be clear, and to prevent snarky remarks: his TMC account is active, there is no ban. Just hasn’t posted anything since 2015.

 

[Christine600]

For the record . . . tomorrow is a trading holiday. . .

Not in Germany - where TL0 is trading and currently up 3%

 

[chrsk]

Well, it's only up 0,7% from Friday's close(or 1,3% when it hit 827 this morning).

That aside, it's interesting that it's up in Frankfurt. Frankfurt tends to be flat(or negative) when US is closed.

 

[RobStark]

When's that Apple Car comin' again?

When Apple finally admits it has to have the iCar manufactured in China by a Chinese company.

 

[printf42]

When Apple finally admits it has to have the iCar manufactured in China by a Chinese company.

Wall Street just keep throwing iCar rumors on the wall and hope they sticks and knock TSLA down a few bucks for a day or two.

It’s getting ridiculous now, maybe their next rumor would be SpaceX was talking with Apple. Oh serious competition coming because we all know that company is led by a genius and could land a rocket in the middle of the ocean.

 

[petit_bateau]

I'm glad you noticed the difference. I wasn't going to make a fuss over it. It seems you have a strong interest in data visualization. Are you a data scientist? I'm an old school statistician.

I'm just a plain ordinary engineer. I always figure if I can make a picture simple enough for me to understand, then it may be helpful to others. I had a fiddle yesterday at doing the kludges that Peltier describes (Marimekko Charts - Peltier Tech Blog) to get these Maramekko/Mosaic charts out of Excel, and decided that life is too short, especially on Valentine's day. The Navajo blankets / Treemaps give me the visual insight that I was after, so as to better understand the industrial manoeuvring that is going on in the background. It is that manoeuvring that will create the opportunity (or not) for Tesla to scale in 2021 and 2022, and also the extent to which Tesla can retain its stand-out advantage vs most especially VAG, or lose it and end up in a two-horse race. This is a critical part of the valuation thesis and so deserves to have a wary eye kept on it, imho.

 

[JohnnyEnglish]

I have been looking at the Battery Day slides to try and estimate the improvements that the 4680 would bring to the made in Berlin (and Texas) model Y. The relevant graphic is below:

From what we have been told the Berlin Y should have the improvements due to cell design and cell vehicle integration. Together these would provide a range increase of 30% which would imply for packs of a similar capacity a model Y SR would probably be around 300 miles range and the long range over 400 miles.

I'm wondering if Tesla will decide to downsize the pack capacity a bit so that the Berlin Y has a range that is broadly equivalent to the existing Fremont model Y Long range. This would avoid having a major range discrepancy between Berlin Y and Fremont Y (probably more important for when Austin starts producing model Y). A reduction in the number of 4680s per vehicle would also help whilst ramping 4680 production.

What do you think?

 

[Christine600]

Jason Yang got a really nice video from inside Giga Shanghai. Interviewing several of the workers and management. Recommended!

It's the same video MC3OZ posted - but I did not click on that since no description.

 

[Nocturnal]

My favorite type of holidays are the ones where the market is closed but where I still have to work. :/