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

[Jack6591]

I have been following some bears over the years. What is consistent with them is that they believe they have always been right, which seems strange given that Tesla is not bankrupt yet, Elon is not in jail etc. Anyday now I guess.

Before they used to say that Tesla loses money on every sold car and will never make a profit. Then they said Tesla only made money because of tax credits but would never make profit without it. Now they are saying that the only reason Tesla makes profit is because of the FSD fraud. As FSD will never happen, Tesla will have to pay back customers and thus go bankrupt. I wonder what they will say when FSD has been delivered. I guess that NHTSA will cancel FSD and Tesla will go bankrupt. Because one thing will remain true, the bears have always been right.

They will probably always believe that compeition is coming, that Teslas have low build quality, that Elon lies about everything, that Autopilot is inferior to competition, that Tesla has squeezed out that final demand this quarter by some clever one time shenanigans and that Tesla is extremely overvalued at current valuation.

Imo what is sad to see is that previously they believed that Tesla was overvalued at $30B, now they believe that Tesla is overvalued at $900B and should have a fair value of say $100-200B. But they fail to see that their extremely overvalued at $30B estimation model must have been based on a flawed mental model.

This quote from Edwin Hubble regarding scientists, has always been a favorite of mine:

“A healthy skepticism, suspended judgment and disciplined imagination, not only about other people's ideas but also about their own."

I like to think that I possess an open mind to to new evidence; an openness to changing my beliefs once presented sound reasoning.

After ten years of separating signal from noise — especially as it relates to Tesla FUD vs reality — I fear I’ve grown to quick to dismiss Tesla bears.

But d?!$, they’ve been wrong for ten years.

 

[Oveeus]

Something about that number...and a calculator....hmm...what was it...?

It’s obviously a Chinese speaking investor who thought a fortune number to punch in on the buy order. For those unaware, the pronunciation of 8 in Chinese is very close to “to prosper” or “get rich” in Chinese. That’s why plates with all 8s are sold at premium in China.

 

[UnknownSoldier]

It’s obviously a Chinese speaking investor who thought a fortune number to punch in on the buy order. For those unaware, the pronunciation of 8 in Chinese is very close to “to prosper” or “get rich” in Chinese. That’s why plates with all 8s are sold at premium in China.

Chinese people can't buy TSLA anyways. At least not the ones in China. I will give credit to the simulation though, it's very powerful indeed.

 

[larmor]

Apple's operating margins are around 26% and gross margins at 43.3% so they don't.

Apple is making phones, watches, ear buds, and charging cables and a software platform that leaches revenue from other's work. Tesla is making durable goods and working on software to hopefully sell/license to other manufacturers.

 

[M|S|M MYP]

Apple is making phones, watches, ear buds, and charging cables and a software platform that leaches revenue from other's work. Tesla is making durable goods and working on software to hopefully sell/license to other manufacturers.

Do not forget the Apple polishing cloth.......

 

[CLK350]

Not sure if this has been noted before, but the Model Y is now $56,990 with delivery in April 2022 with 20" induction wheels chosen as standard by the website when you start an order, although on the first presentation page the listed price is $54,990, unchanged from before, except that delivery is now JULY 2022, with standard Gemini wheels.

In other words if you want April delivery, you need to pay $2,000 extra and get the induction wheels.

Similar story for the Model 3: August delivery unless you get the extra $1,500 sport wheels to get May delivery
Model X doesn't have these tweaks, same delivery date with either wheels.

Smart way for Tesla to increase (future) profits with same limited battery supply!

 

[Singuy]

Don't know why all the hate on Gary. Everything he is saying is pretty reasonable and I feel like he's much better at defending Tesla and his thesis than some of the bulls from CNBC interviews. Anyways, TLDW

1. More conservative fund managers that track the S&P are underweight on Tesla due to valuation, but are bringing to equal weight after Q2 2021 report(per research via from his broker)

2. Believes Tesla will hit 5M cars by 2025, but thinks they need to start investing into more gigafactories now as he doesn't see Tesla scaling fast enough with just Berlin/Texas by 2025.

3. His theory that Elon didn't want to talk about new factories is because he is trying to get Tesla investment grade

4. Believes Tesla is investment grade already(and provides the math for it).

5. Risk consist of competition as other legacy makers are finally "waking up" by using existing brands and having the EV version of that brand (ie. F150 EV, Porsche Macan EV) vs using off brand names like ID4 and such.

6. The risk he sees is low as Tesla continues to expand TAM as he believes EV shares increases

7. Believes Rivian has a better chance of competing against Tesla than legacy as he sees other automakers are doing a lot of theatrics. Diess "lighting a fire under his manager's butt" is an example of doing it for show but don't see any progress.

8. X holding company is very negative for investment portfolio managers as it takes the profits down since Space X/boring/others are not profitable. Essentially diluting Tesla's profits. He sees himself and others massively dump shares if this is announced.

9. He rather Tesla buy back shares than to buy BTC. His thinking is if he can invest in it, then the company shouldn't as it creates no additional return. He then calculates the value of holding cash and why it should be returned back to the shareholder as a form of buy backs if you have nothing to do with it. However BTC position is a rounding error and he has made his peace with it.

10. Believes Tesla is cheap if you believe next year's EPS is 10 dollars. Does some calculation to show why it's cheap vs other techs and the S&P.

 

[OrthoSurg]

Apple is making phones, watches, ear buds, and charging cables and a software platform that leaches revenue from other's work. Tesla is making durable goods and working on software to hopefully sell/license to other manufacturers.

I had to replace all the screens of my iPhones after 3-4 years because the touch screen was becoming erratic. I had the choice to buy a new phone for twice the price or change the screen and live with outdated apps. Because of my treehugger secret persona, I have replaced 4 iPhone screens over the years, for my wife and I, with ifixit.com parts. I have so much more free time during the day now not spending useless time growing my slow ass safari outdated iPhone 6 Plus. I hope the Tesla joins the right to repair movement. As a consumer point of view. As an investor I hope they make as much money possible with out of warranty service.

 

[RobDickinson]

Do not forget the Apple polishing cloth.......

Which is now on back order for 2 months...

 

[JRD1]

Not sure if this has been noted before, but the Model Y is now $56,990 with delivery in April 2022 with 20" induction wheels chosen as standard by the website when you start an order, although on the first presentation page the listed price is $54,990, unchanged from before, except that delivery is now JULY 2022, with standard Gemini wheels.

In other words if you want April delivery, you need to pay $2,000 extra and get the induction wheels.

Similar story for the Model 3: August delivery unless you get the extra $1,500 sport wheels to get May delivery
Model X doesn't have these tweaks, same delivery date with either wheels.

Smart way for Tesla to increase (future) profits with same limited battery supply!

When I go to the Model Y order page only the white with Gemini wheels says July. Every other color has April. To me that means people that want the absolute cheapest LR will have to wait longer. Everyone else can have it earlier at a $1000-4000 premium.

I noticed the other day the wheels would default to whatever you last looked at so you must have last looked at the 20” wheels. When I just now pulled it up it had the 19” wheels automatically selected.

 

[woodisgood]

Our LR Y order was previously estimating Dec-Jan delivery, now Feb-Mar. Wonder if this is because they’ve decided it’s coming from Austin…

 

[Accident]

Not sure if this has been noted before, but the Model Y is now $56,990 with delivery in April 2022 with 20" induction wheels chosen as standard by the website when you start an order, although on the first presentation page the listed price is $54,990, unchanged from before, except that delivery is now JULY 2022, with standard Gemini wheels.

In other words if you want April delivery, you need to pay $2,000 extra and get the induction wheels.

Similar story for the Model 3: August delivery unless you get the extra $1,500 sport wheels to get May delivery
Model X doesn't have these tweaks, same delivery date with either wheels.

Smart way for Tesla to increase (future) profits with same limited battery supply!

It's either upgraded wheels or the white interior to not get the delivery date pushed back 3 more months. Profit on those options is probably near 100%.

 

[SPadival]

NOT-an-investment advice: Unless there’s WW3 or Mayor Pete runs the US logistics system into the ground, $1000 SP is going to be a walk in the park by year end.

 

[M|S|M MYP]

NOT-an-investment advice: Unless there’s WW3 or Mayor Pete runs the US logistics system into the ground, $1000 SP is going to be a walk in the park by year end.

2021 right??

 

[MC3OZ]

2. Believes Tesla will hit 5M cars by 2025, but thinks they need to start investing into more gigafactories now as he doesn't see Tesla scaling fast enough with just Berlin/Texas by 2025.

I tend to agree, but the next factory sites will probably not start construction until 2023..

In 2022 I expect to see additional construction at Austin, Berlin and Shanghai but particularly at Austin...

As production ramps at Austin and Berlin in 2022/2023 that will help fund the next phase of expansion including IMO 1-2 new factory sites which might start construction in 2023. But at each new site there needs to be a team to design the new factory, oversee construction, install equipment and ramp the initial production. A fair portion of these specialised teams are going to come from Fremont, Austin, Berlin and Shanghai.

For that reason, IMO possible sites for the 2023 factories are limited to US, Europe, China, and IMO Mexico.

I chose Mexico due to proximity to Fremont (in some parts) and Austin (in other parts)...because some of the team would need to come from Fremont or Austin.

 

[Paul_SF]

2021 right??

“Two weeks.”

 

[Singuy]

NOT-an-investment advice: Unless there’s WW3 or Mayor Pete runs the US logistics system into the ground, $1000 SP is going to be a walk in the park by year end.

Keep your eyes on that 10yr. It's not like some stupid inflation fear haven't shaved off 300 bucks in a few weeks before.

 

[22522]

Don't know why all the hate on Gary. Everything he is saying is pretty reasonable and I feel like he's much better at defending Tesla and his thesis than some of the bulls from CNBC interviews. Anyways, watch this as he has some information on fund manager's weight on Tesla. Spoiler alert, many of them didn't have Tesla but started buying after Q2. He speculates with Twitter, Google, Snap, and FB falling, fund managers will be looking for winners tomorrow.

Gary is really smart and acts with first hand knowledge of how money moves in the trading industry (Portfolio Managers).
What he does on Twitter is very useful for explaining Tesla to a broader audience (including me).
Current TSLA stock price is likely 10% higher at this point in time because of the clarity of his communications. I am not saying he is responsible for that value. He is responsible for it being recognized in the stock price at this point in time. He pulls recognized value forward.

I appreciate both Gary and the contributions of the people on this board.

Now to answer your question about why all the hate on Gary. I can only speak for myself, and it is not hate.

1) He tries for force (badger) Tesla/Elon into the pattern of behavior that plays best to portfolio managers. The big 3 have been playing to portfolio managers for years. This behavior is why they are where they are. So he is trying to force Tesla to be more like GM (in every respect, as you can't pick and choose.) So there is conflict. People here do not want TESLA to perform like GM. Gary does not know that GM like performance is what he is asking for.

2) He thinks Telsa should direct funds to PR and advertising. That means lower R&D expenditures and consequently worse product as the money has to come from somewhere. Someone here pointed at advertising costs vs R&D costs per vehicle for car companies. I parroted it. Reflect on that a while.

3) He has talked about developing a service revenue stream [IIRC]. That means holding customers hostage and extorting money from them. This destroys Net Promoter Score and kills the durable demand that Tesla relies on. If people don't want to tell their friends to become hostages, Tesla flexibility on delivery and upgrades disappears. The company dynamic changes completely and they get trapped in traditional automakers' "pay people to take it" flow requirements.

So Elon and Tesla have worked very hard to structure the company to avoid the pitfalls of the big automakers.

No advertising.
No discounts.
No distribution channel (even though distribution can help you magically dress your numbers at the end of each quarter).
Distribution channel has no voice on the car ( A car salesman is very self confident. Their input is "I am great." "I can sell anything with your badge on it." "Just make it as cheap as possible so I maximize both profit per sale and service revenue." "if you do that for me, I will help you make the numbers look good at the end of each quarter.")
Etc.

Gary yells in Elon's ear to get Elon to behave like they train you to behave in business school, not caring, or understanding that that behavior will make TESLA and it's products mediocre - Just like all the dead and dying companies in, and products from, the rust belt.


So we all know that a Harvard MBA will kill Tesla and make them just like all the other companies with a high concentration of Harvard MBAs.
Do a demographic study.
Gary is taking a run at it and softening Elon up to where caring about Tesla is not worth the trouble. Body blows in early rounds.
He has probably already hastened Telsa's demise by 18 months.
Eventually Elon will hand the reins to a Harvard MBA who will hire their friends and TESLA's moment will have passed. They will start preying on customers, forget about Net Promoter Scores, start advertising, create a PR department to lie to the public before facts are in, and lie to the public to protect stock prices - just like the oil company PR people.

I hope this answers your question. Munro has seen this progression before, first hand. He knows how the story goes.

I like Gary.
Elon is way better at creating wealth.
Gary does not act as if he respects Elon, or what Elon has done.

[Edited for clarity by adding words and commas here and there.]

 

[Singuy]

Gary is really smart and acts with first hand knowledge of how money moves in the trading industry (Portfolio Managers).
What he does on Twitter is very useful for explaining Tesla to a broader audience (including me).
Current TSLA stock price is likely 10% higher at this point in time because of the clarity of his communications. I am not saying he is responsible for that value. He is responsible for it being recognized in the stock price at this point in time. He pulls recognized value forward.

I appreciate both Gary and the contributions of the people on this board.

Now to answer your question about why all the hate on Gary. I can only speak for myself, and it is not hate.

1) He tries for force (badger) Tesla/Elon into the pattern of behavior that plays best to portfolio managers. The big 3 have been playing to portfolio managers for years. This behavior is why they are where they are. So he is trying to force Tesla to be more like GM (in every respect, as you can't pick and choose.) So there is conflict. People here do not want TESLA to perform like GM. Gary does not know that GM like performance is what he is asking for.

2) He thinks Telsa should direct funds to PR and advertising. That means lower R&D expenditures and consequently worse product as the money has to come from somewhere. Someone here pointed at advertising costs vs R&D costs per vehicle for car companies. I parroted it. Reflect on that a while.

3) He has talked about developing a service revenue stream [IIRC]. That means holding customers hostage and extorting money from them. This destroys Net Promoter Score and kills the durable demand that Tesla relies on. If people don't want to tell their friends to become hostages, Tesla flexibility on delivery and upgrades disappears. The company dynamic changes completely and they get trapped in traditional automakers' "pay people to take it" flow requirements.

So Elon and Tesla have worked very hard to structure the company to avoid the pitfalls of the big automakers.

No advertising.
No discounts.
No distribution channel (even though distribution can help you magically dress your numbers at the end of each quarter). Distribution channel has no voice on the car ( A car salesman is very self confident. Their input is "I am great." "I can sell anything with your badge on it." "Just make it as cheap as possible so I maximize both profit per sale and service revenue." "if you do that for me, I will help you make the numbers look good at the end of each quarter.")
Etc.

Gary yells in Elon's ear to get Elon to behave like they train you to behave business school, not caring, or understanding that will make the TESLA and it's products mediocre - Just like all the dead and dying companies in the rust belt.


So we all know that a Harvard MBA will kill Tesla and make them just like all the other companies with a high concentration of Harvard MBAs.
Do a demographic study.
Gary is taking a run at it and softening Elon up to where caring about Tesla is not worth the trouble. Body blows in early rounds.
He has probably already hastened Telsa's demise by 18 months.
Eventually Elon will hand the reins to a Harvard MBA who will hire their friends and TESLA's moment will have passed. They will start preying on customers, forget about Net Promoter Scores, start advertising, create a PR department to lie to the public before facts are in, and lie to the public to protect stock prices - just like the oil company PR people.

I hope this answers your question. Munro has seen this progression before, first hand. He knows how the story goes.

I like Gary.
Elon is way better at creating wealth.
Gary does not act as if he respects Elon, or what Elon has done.

Can you explain further about what the service revenue stream Gary wanted Tesla to implement?

Also I agree that advertisement at legacy car level is a waste. However, there's also a cost to not advertise, which is the anti-tesla advertising campaign by MSM. This destroy brand value which is not exactly free. I would rather Tesla figure out an advertisement number of insignificance that can offset the cost of brand value destruction. I don't know if this number even exist, but it's worth a discussion.

 

[Skipdd]

Gary is taking a run at it and softening Elon up to where caring about Tesla is not worth the trouble. Body blows in early rounds.
He has probably already hastened Telsa's demise by 18 months.

I so hope that this is NOT the case. Terrible for us as investors, terrible for the mission as well. I'm still in awe from what I've learned over the past month or so about how Tesla operates internally, and have been evangelizing it within my own circle, to include the company I work for. I want the Tesla model to succeed for all sorts of reasons. A huge breath of fresh air.