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

[bkp_duke]

The update was no new products?

Yep. Question - if that's the update, then why have Elon on? He himself said he would stay off quarterly calls unless there was something substantial to update.

 

[IdahoRenegade]

To me, the biggest takeaway was that the CEO of GM, who majority owns Cruise, had never been in the product until that evening (i.e. self driving car)! How is that possible?!?!

Funny, but that struck me as well. When you hear Elon talk, he knows technical details and status of nearly everything, battery tech, AI, FSD, auto manufacturing, status of Optimus robots, solar, SpaceX, Starship/Super heavy, Starlink. Saw an interview with him walking through Starbase and explaining what was going on in every building, and with every vehicle.

In comparison-as you said, Mary seemed surprised by Cruise. Even though it only operates in a small, highly mapped, geofenced area-and only at night on deserted streets. She should try a ride in an FSD beta on those same streets in the day, in congested traffic with a mass of moronic pedestrians and bicyclists. Or just watch the dozens of youtube videos of FSD 10.9. She'd realize how hopeless Cruise is, especially when TSLA has that technology on EVERY Tesla sold since what, 2017? Cruise investment may hurt GM even more than Nikola.

 

[Favguy]

She bought at her own risk for the long term, correct?

I got my investments wiped out completely with the Model 3 ramp debacle. Whose fault was it?

Mine.

Tell her to deal with it. If she holds on she should probably be doing great in 2023. Or not. Also borrowing to buy stocks is not wise.

Borrowing to buy stocks? Maybe I'm the exception, but I beg to differ!

Borrowing to invest at low rates, 2%-4% or so within affordability for servicing that debt from ongoing income without compromising your lifestyle, and whilst understanding the risk of loss and need for a long time frame on the investment can often pay off very handsomely.

I see it as no different to buying a house, if you wait whilst saving to buy it outright, you'll never get to own one as prices continue to increase, same with TSLA stock.

 

[Singuy]

Competitors have to recognize that TSLAs EPS was up 217% YoY, they have a 29.4% gross margin on autos, sales up 70% and 4680 cells and structural battery packs, which they don't have, are real. And TSLAs manufacturing capacity is more than doubling with Austin and Berlin (granted ramping involved). Oh, and Freemont, their oldest, least efficient plant is NOT at capacity-and is still the most productive auto plant in the US. If I were GM or Ford, I would be very afraid.

Yes, but as for stock price usually there's a positive reaction as Tesla is not gunning for their economy segment which is a good portion of their sales.

 

[Boomer19]

Why such tone?
Did she do something to you?

we all need to remember to think from the perspective of adoption curves. as we progress up the curve, people are buying the Tesla story, and thus the product or the stock (or both). its not a bad choice to buy either. we should not judge the method at which they buy either. its also important to remember they are later to the story than many of us. the sentiment, right or wrong, is that the call did not capture the story that needed to be told at this particular point in time. ill let the short term market be the judge for those who want to argue one way or the other. im in the middle, up tons respectively, yet still licking wounds today. I own the story, yet still try to capitalize on it, to a much lesser extent. we should not confuse those that buy the story, with those that want to capitalize on the story. that said, if those are in the bullish direction, they are more useful than those aligned with wishing Tesla failure. im not happy about the call, but im also leaning towards today was a foregone conclusion no matter how the call went. we will all be rewarded in time, as usual. and I agree there's no need to be judgmental towards a newly minted adopter of tsla or Tesla. best wishes to her

 

[heltok]

I think the problem is that Elon speaks Elon but Wall St hears Wall st.

Wall St: When is 25k coming?
Elon: We can sell every car we produce at $50k and will be ramping 50-90% for the next few years, making the 25k car doesn’t make any sense until we have supply of chips and batteries…
Wall St: So you are saying that your business is struggling and you no longer can make the $25k car?

In the past:
Elon: I will pay >$1.4B in taxes…
Wall st: So you are saying you are done selling and will not pay more than $1.5B in taxes?

Elon: Tesla will have 1M cars capable of robotaxi on the streets in 2020:
Wall St: So you are saying you will be producing 1M cars in 2020 and all of them will be lvl5 in 2020? Yeah, that didn’t happen, Elon again fails to deliver on his promises.

This is the problem here, Elon speaks Elon, Wall St hears Wall St.

 

[willow_hiller]

The update was no new products?

The funny thing is everyone heard "product roadmap" and assumed Elon was going to talk about new vehicles models. But the products he specifically joined to talk about were FSD and AI.

And the fund managers know how to put a value to vehicle unit sales and project those forward. But they don't know how to value AI. Nobody knows how to value AI; except Elon, apparently.

 

[IdahoRenegade]

Yes, but as for stock price usually there's a positive reaction as Tesla is not gunning for their economy segment which is a good portion of their sales.

I'm not sure I follow. GM and Ford's economy segment isn't where they make money. And (for some time anyway) they certainly won't with EVs in that segment, since they don't have the technology (4680 cells or better) to do so. Ford has to hope, desperately, that they can spin up Lightning production quickly to pick up the inevitable drop in F-150 production when other EV trucks hit the market and ramp. They should be able to build a good number, given that it's basically an F-150 with a battery and electric motor(s). Bad part is it's horribly overpriced, has poor range and takes a massive battery due to how inefficient it is vs a vehicle designed from the ground up for EV. I think GM will have a better EV truck in Silverado, but will take too long to ramp and not offer the performance and unique features of CT. And will be priced way too high. Also think they will have serious supply chain issues. They don't even have a factory to produce batteries for it yet.

If Tesla wants to compete in the "economy" segment (and by that I mean mainstream vehicles like Equinox, Rav-4 or CR-V) they can. They have 30% gross margins now across all their vehicles. Likely far higher on Model Y, with volume, with 4680s and dual gigacasting, on a more efficient production line (Austin). Strip some more expensive features (perhaps Autopilot, cheapen sound system, use RWD LFP batteries, ditch glass roof) and reduce margins. I'm thinking they can sell them in the price range of those other vehicles now-in which case the competition is kicked in the nuts. Now-when they have a 6 month backlog of these vehicles at $60+, it doesn't make sense to sell $35k vehicles. In time, supply will catch up with demand. Question is when.

 

[ZachF]

The next 5-6 trading days seem like they're shaping up to be critical for determining the trajectory of the market as a whole for the short term...bear market, or recovery rally?

Unfortunately, I think the market is probably going to stink for the next few months.

Given the fed raising rates and the gigantic record-breaking rise in inventories last quarter, a recession is probably likely sometime this year…

Buy the dip.

 

[Singuy]

I'm not sure I follow. GM and Ford's economy segment isn't where they make money. And (for some time anyway) they certainly won't with EVs in that segment, since they don't have the technology (4680 cells or better) to do so. Ford has to hope, desperately, that they can spin up Lightning production quickly to pick up the inevitable drop in F-150 production when other EV trucks hit the market and ramp. They should be able to build a good number, given that it's basically an F-150 with a battery and electric motor(s). Bad part is it's horribly overpriced, has poor range and takes a massive battery due to how inefficient it is vs a vehicle designed from the ground up for EV.

I am referring to the entire auto market. Toyota is down, volkswage is down. They are all down.

 

[ZachF]

The funny thing is everyone heard "product roadmap" and assumed Elon was going to talk about new vehicles models. But the products he specifically joined to talk about were FSD and AI.

Well, people assumed this because it was in response to questions about Cybertruck IIRC.

 

[S3XY]

Elon promised a bunch of new details on new products on this ER, implying this was basically the only reason he’d be there, then devoted ten seconds to say there’s no new products this year.

It’s not surprising the market is reacting negatively TBH.

I know that this isn't what other people want to hear, but I've been a bull since '13. What Elon said has shaken me and the bull case significantly, and I think we are in for another period of the lost years from '14-'19.

Imo, Tesla is taking too many gambles to maintain the 50% growth per year, and I think it will ultimately bite back in the ass.

WS thanks you for your shares. Please come again.

 

[ZachF]

Competitors have to recognize that TSLAs EPS was up 217% YoY, they have a 29.4% gross margin on autos, sales up 70% and 4680 cells and structural battery packs, which they don't have, are real. And TSLAs manufacturing capacity is more than doubling with Austin and Berlin (granted ramping involved). Oh, and Freemont, their oldest, least efficient plant is NOT at capacity-and is still the most productive auto plant in the US. If I were GM or Ford, I would be very afraid.

GM and Ford have averaged about $6b a year in profit the last decade, and have a negative CAGR.

I think it’s likely Tesla will make more profit than Ford and GM put together this year, and the gap will only get wider.

 

[mrmage]

Yep. Question - if that's the update, then why have Elon on? He himself said he would stay off quarterly calls unless there was something substantial to update.

It would have been bad for anyone but Elon to say that CT and other models were delayed until next year. A nice follow up would be to say it's because demand is so high that all capacity has been diverted towards building the current high margin models, but Elon reserves that kind of stuff for twitter.

 

[ZachF]

WS thanks you for your shares. Please come again.

What are you even talking about?

 

[loquitur]

Well, it's not the macro. WS didn't like the call. Hopefully like in the past they push past the pain and think a little over the next few weeks.

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I'll be in Akumal for a few days starting tomorrow. I expect you folks to get together and fix this while I'm gone. Thanks in advance.

The heat maps at finviz.com (no paywall!) are great. Can drill down over different time periods and financial ratios.
The forward P/E listed for Tesla was just lowered from 101 to 89, however it is calculated.

 

[IdahoRenegade]

I am referring to the entire auto market. Toyota is down, volkswage is down. They are all down.

Sry, my bad, I guess I misunderstood what you were saying.

 

[Ogre]

Yep. Question - if that's the update, then why have Elon on? He himself said he would stay off quarterly calls unless there was something substantial to update.

Telling everyone the Cybertruck, Semi, and Roadster are delayed indefinitely is substantial.

I wish they’d done the lead up to this differently, but I’m glad they had Musk come on the call to say it.

 

[heltok]

https://twitter.com/x/status/1486880325871587329

Imo same for mass producing profitable electric vehicles.

 

[MC3OZ]

Yep. Question - if that's the update, then why have Elon on? He himself said he would stay off quarterly calls unless there was something substantial to update.

The problem here may lie with the original Tweet promising a Road Map Update.

Twitter is a platform prone to impulsive Tweets.

Regardless, it is done now we can't change the past, we need to accept it, and move on.

IMO the short term price action is just that, short term, not the first time the share price has moved in a different direction to what I expect. In the past, that type of movement has tended to unwind overtime.

On the actual financials and the substance of the call, I'm very happy with it, but I do agree Elon's update can be spun as a negative by those inclined to do so. When I reflect more on it, I don't actually see it as a negative,

Often the negative impact comes from the surprise element, the Cybertruck reveal being one instance. So people don't like surprises, and Elon doesn't always explain things well.