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

[bkp_duke]

It's a Fool's Game to try to forecast Free Cash Flow (FCF). Well I'm your fool.

"Tesla Delivers $2 Billion in FCF in Q4". There I said it !

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Details of my Free Cash Flow are here:

Near-future quarterly financial projections

While it won’t be $0 fixed cost it won’t be linear to rest of factory as major costs relating to structure, heating, electrical were all already in place. Plus it’s also likely that several parts of the production process are already capable of handling more volume without increasing capital...

teslamotorsclub.com

We've seen it in the past, so I was wondering what your thoughts are on Tesla using that FCF to continue to aggressively pay down debt. With Elon's traches slowing, seems there would be more that can be pushed over to a purpose like that.

Obviously a better use would be to start another Giga Factory, but we haven't heard much along those lines (yet).

 

[Singuy]

their '22 EPS still too low

I think most don't want to be overly bullish and put in funky numbers that may have a chance of missing. It's all over the news when your company comes out with a PT of 2k or something...and then you have to defend this against all the naysayers on tv. On the chance Tesla miss, the stock gets punished and your clients blow up your phone.

Remember that clients only blow up your phone because they lost money. They never call you because you "missed out" on companies that had a good run.

 

[StealthP3D]

Well in Amazon's case, the reason the stock has flatlined for the past couple of years and really only up 66% in the last 4 years or so is because the promise of those giant profits hasn't really materialized. The idea was that once the ecommerce business grew to such a scale, profits would just suddenly start pouring in. That hasn't really happened and investors have started to question just how much profit will actually be rolling in and when.

AMZN is up a whopping 175% in four years, well over double the impressive returns of the S&P 500 (75%). It's true their growth has been somewhat tepid recently, but only for the last 18 months, which isn't really a long enough period of time to tell one much about the underlying company. This isn't the first period this long with tepid growth but the overall picture is one of strength.

 

[StarFoxisDown!]

I think most don't want to be overly bullish and put in funky numbers that may have a chance of missing. It's all over the news when your company comes out with a PT of 2k or something...and then you have to defend this against all the naysayers on tv. On the chance Tesla miss, the stock gets punished and your clients blow up your phone.

Remember that clients only blow up your phone because they lost money. They never call you because you "missed out" on companies that had a good run.

There's a difference between being conservative and having a 2022 EPS estimate of $7.89

Analysts are gaming the system by being intentionally way below where they know they should be on EPS, giving them a lot on room to up that number and issue many PT upgrades throughout 2022 and 2023 while at the same time not looking too overtly stupid right now.

 

[rolfrenz]

Claim that Berlin Model Y Performance customer in Austria has been contacted

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I do not think, this is anything related to Berlin. He just has an information that his Y P could be delivered within two weeks and is only speculating. I have a Y P Reservation in Austria too, and if you order one today order page is saying: delivery at start of 2022. So the might also come from Shanghai…

 

[Maarten]

Whatever is happening in market is not just TSLA. eg AAPL, MSFT, and GOOG graphs all look the same as TSLA today
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Well, what did we all expect here? This is utter self-fulfilling prophecy.
First some pages about an oncoming recession.
Then pages about happy retiring.
Combined with a whole lot of pages people being pretty content with the enormous TSLA stock price rise.

Now, everybody who is into investing in the world is reading here, didn't you know?
Of course that results in selling!
No, I am not serious.

 

[Singuy]

There's a difference between being conservative and having a 2022 EPS estimate of $7.89

Analysts are gaming the system by being intentionally way below, giving them a lot on room to issue many PT upgrades throughout 2022 and 2023 while at the same time not looking too overtly stupid right now.

This is true, but I was referring to the broad spectrum of analyst. They all have been woefully under estimating Tesla for over a year now. When was the last time Tesla missed? Q1 2019?

 

[Nocturnal]

Mizuho raised PT to $1300 from $950, maintained buy. I've seen many of the lower PTs being raised, but haven't seen the higher ones changed yet. I'm sure we will see something soon.

 

[StarFoxisDown!]

This is true, but I was referring to the broad spectrum of analyst. They all have been woefully under estimating Tesla for over a year now. When was the last time Tesla missed? Q1 2019?

The last miss was Q4 2020 earnings. Miss on earnings, beat on revenue. Tesla gave a clear reason for the miss (S/X refresh and the start of use of the Gigapress) which we all saw get remedied in Q1 2021 earnings.

I could understand being very conservative after Q1 2021 earnings and not being sure if margins would be sustainable. I would give them a pass for still using a bit of caution after Q2 earnings. But after Q3 earnings where margins continue to expand, it's becoming silly.

I actually have more respect for Piper

https://twitter.com/x/status/1477991342940856322

At least they just said essentially "Look the numbers are really good, we're underestimating by a large amount. We'll give a new PT/Upgrade after earnings". At least they're transparent.

 

[UkNorthampton]

I do not think, this is anything related to Berlin. He just has an information that his Y P could be delivered within two weeks and is only speculating. I have a Y P Reservation in Austria too, and if you order one today order page is saying: delivery at start of 2022. So the might also come from Shanghai…

I think you are probably right, he's updated some of his tweets to say he isn't sure & I think the most positive spin was on the youtube channel (who said they'd discussed further with him).

I'm half sorry to have posted it, but it may be taken up by others and have an influence on short-term price moves. In essence it's speculative, spun anti-FUD (Hope Certainty and Assurance).

 

[Artful Dodger]

I know that some of you may be reacting emotionally to the price action today, but think of it from the point of view of the typical Portfolio Manager (PM) who is buying steadily throughout the week.

PMs only consider their Dollar Cost Average (DCA) when comparing their costs of acquiring shares. And that means the day-to-day share price that matters most to them is the volume weighted average price (VWAP).

So how does this week stack up so far? Let compare:

​

Monday's VWAP: $1,169.93​

Tuesday's VWAP: $1,162.12​

Can you spot the difference? That's right: it a massive 0.67% drop in avg share price. /s

And what does all this mean for the typical Retail Investor? Don't react EMOTIONALLY!

Cheers!

 

[Artful Dodger]

They should hold another CES in the summer.

They do. Summer CES is usually held in Chicago at the McCormick Center in June. I attended back in '89. It's a massive event.

Cheers!

 

[The Accountant]

We've seen it in the past, so I was wondering what your thoughts are on Tesla using that FCF to continue to aggressively pay down debt. With Elon's traches slowing, seems there would be more that can be pushed over to a purpose like that.

Obviously a better use would be to start another Giga Factory, but we haven't heard much along those lines (yet).

Tesla does not carry much debt for a company of its size. If they were to paydown debt, it would likely be the $1.8B Credit Agreement but my hunch is they won't.
If Elon truly believes that a recession may be coming in 2022/2023, Tesla will want to stockpile its cash. Perhaps they grow cash by another $8B to $10B before paying down any more debt.

 

[Todd Burch]

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Tesla finish the year at 49% of the NZ market.

<s>My God, look at all those companies taking Tesla's market share.</s>

 

[Skryll]

Tesla does not carry much debt for a company of its size. If they were to paydown debt, it would likely be the $1.8B Credit Agreement but my hunch is they won't.
If Elon truly believes that a recession may be coming in 2022/2023, Tesla will want to stockpile its cash. Perhaps they grow cash by another $8B to $10B before paying down any more debt.

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Stockpiling cash with potential inflation fire is not exactly a safety measure is it?

How do we interpret the 'roaring 20s' references Elon keeps flaunting?

 

[Artful Dodger]

We've seen it in the past, so I was wondering what your thoughts are on Tesla using that FCF to continue to aggressively pay down debt. With Elon's traches slowing, seems there would be more that can be pushed over to a purpose like that.

Stock-based Compensation (SBC) is a non-cash expense. It does not affect Free Cash Flow (FCF).

Obviously a better use would be to start another Giga Factory, but we haven't heard much along those lines (yet).

We have heard. During the Q&A session at the Oct 2021 AGM, Elon said that Tesla would begin to look for a site for a new Gigafactory in 2022, then make a decision and begin construction in 2023.

Important background to this is an older comment by Elon that Tesla would favor fewer, larger Gigafactories than he originally envisioned in order to best use Tesla's most scarce asset: engineering talent.

I think that's why the new Model 2 plant at Giga Shanghai will be built right next door to the newly completed R&D Center. It'll be much more convienient for engineers and designers to visit the new plant during construction, build-out of production tooling, and working through any issues during the production ramp itself.

Cheers!

 

[Artful Dodger]

Analysts are gaming the system by being intentionally way below where they know they should be on EPS, giving them a lot on room to up that number and issue many PT upgrades throughout 2022 and 2023 while at the same time not looking too overtly stupid right now.

Lol, on Wall St. that's not called "gaming the system", that's called "playing the game". And it how they make their money, by slow-walking retail while their "preferred clients" have plenty of time to buy into their positions.

 

[RobDickinson]

<s>My God, look at all those companies taking Tesla's market share.</s>

even smashed the used import leaf numbers...

 

[Todd Burch]

I think that's why the new Model 2 plant at Giga Shanghai will be built right next door to the newly completed R&D Center. It'll be much more convienient for engineers and designers to visit the new plant during construction, build-out of production tooling, and working through any issues during the production ramp itself.

Cheers!

I definitely agree with this. Once you have enough factories to lower your logistics costs in shipping to the regions your product is sold in, it's far more efficient to have fewer but larger factories than to have a bunch spread out all over the place. And we all know how Elon feels about efficiency...

 

[Knightshade]

We have heard. During the Q&A session at the Oct 2021 AGM, Elon said that Tesla would begin to look for a site for a new Gigafactory in 2022, then make a decision and begin construction in 2023.

Not exactly...he said "we will probably get to new factory locations, start to investigate them next year. Maybe make a decision in ‘23."

So MAYBE decide on a location in 2023. No mention at all of any construction on a new factory by 2023.

Important background to this is an older comment by Elon that Tesla would favor fewer, larger Gigafactories than he originally envisioned.

He actually addresses this in the same paragraph at the '21 meeting where he mentioned the "maybe pick a location by 2023" remark- commenting on how building a NEW factory is really hard, and there's tons more they feel they can do with existing ones