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

[TN Mtn Man]

Stagflation = low/no growth + high inflation

People’s wages are declining at a ~3% pace in real terms.

Productivity growth is also awful. It declined at a 7% pace in the first quarter… that’s awful no matter how you slice it.

The last time I heard that term was during the Carter administration. Sadly there are a lot of similarities. And that recession really was the worst since the GD.

 

[TheTalkingMule]

I would take the reality of the virus over govt officials. The virus grows exponentially so you need to look at log graphs:

View attachment 803139


What China have done is really impressive. Omicron is crazy transmissible, R0(which I think is a silly measurement but anyway) is closer to 12. But even with these extensive restrictions they have “only” decreased the number of cases by a factor of 3. To get down to 100 cases/day would require 6 more periods of the same extensive restrictions. And at some point restrictions stop being effective when people start to riot. Chinese might have a much higher tolerance for restrictions than Melbournians, but even they have their breaking point.

Maybe the Chinese strategy of local lockdowns are working and they will be able to open up more and more areas. But I have a feeling that soon there will be cases popping up in factories here and there and it will not be smooth sailing until Xi is reelected.

I see a few different outcomes:
1. China gives up -> short term high pain
2. China fights the entire year and win -> lots of small pain
3. China fights and then gives up -> lots of small pain and short term high pain

Right now it seems that 2 is most likely. Which imo doesn’t mean that Shanghai will run full steam ahead from Q3-Q4. No it means supply chain issues, risk of cases in the factory and full shutdowns randomly.

And the question is how long they will run zero covid, what’s their exit strategy? Imo they could try to develop a better vaccine, get it out, then open up. At least that‘s a strategy that you can motivate. Zero covid forever would make them a hermit kingdom forever. And with these outbreaks happening it would likely mean masks, social restrictions and testing forever. I can see Xi running zero covid the rest of the year, then once he is reelected he can finish up his weeding out of opponents due to their “failures” and then when he feels secure he can finally give up zero covid. But the rest of the year is gonna be messy in China one way or another…

They're not trying for zero covid, they're trying to save face and look leaderly.

They'll transition to a more moderate plan to try and stem the tide and not overwhelm the hospitals.

People say the Chinese vaccines are ineffective, but I doubt it. Or they'll just source something better. The key is.....it's back to work.

 

[JustMe]

Rob Maurer just posted a very good “Message to Tesla investors” on Tesla Daily.

Offers his perspective on market gyrations and Tesla’s strength going forward

 

[nativewolf]

To tie this in to the beating-a-dead-horse conversation about graduation night in a small town in the Robotaxi world, since the AI running the networked system has long since learned how to find major gatherings of people (like graduations or concerts) and knows when they are to happen (pretty easy to predict things that are widely advertised online well beforehand) and would let an appropriate number of taxis drift to that general area, and be ready for summons from close range.
Even though it might not know exactly which families would use them, in the aggregate the general number needed and their general locale can be predicted relatively well.
"But what about everyone in the nation wanting to leave at once?" Yes, there will still be cases where the limited resource cannot cover all requests. The expectation is the AI does a far better job than a tiny slow-processing human brain at this. As the OP indicated, this has been well studied and is implemented in many commercial applications today. It just requires a ton of data, which is now largegly available.
TL;DR Robotaxi plus AI is gonna rock and does not necessarily leave out all rural areas, once high volume and low cost are achieved.

Like many analysts I don't see the near term impact of robotaxi on transportation or Tesla bottom line. First the whole field is suspect, ride share that is. Uber as a model failed. Simply getting rid of drivers does not make their numbers magically great. Still a not very good business.

Tesla still hasn't been able to get solar going, 6 years after the solar city buy. 4 years ago they knew they'd be battery limited at this point if they hit production goals, has the battery strategy worked? On and on. CT, Semi, ..on and on. Outside of automotive innovations (octovalve, chips, battery packs, bms, etc) and the initial battery storage solutions what new products have been a hit?

FSD is by far far and away the most ambitious new product. Therefore what is the chance it is a product that enables robotaxis within 5 years? I put that about 0. I'd love to have it on a CT. If I don't get a ct

 

[TheTalkingMule]

I would take the reality of the virus over govt officials. The virus grows exponentially so you need to look at log graphs:

View attachment 803139


What China have done is really impressive. Omicron is crazy transmissible, R0(which I think is a silly measurement but anyway) is closer to 12. But even with these extensive restrictions they have “only” decreased the number of cases by a factor of 3. To get down to 100 cases/day would require 6 more periods of the same extensive restrictions. And at some point restrictions stop being effective when people start to riot. Chinese might have a much higher tolerance for restrictions than Melbournians, but even they have their breaking point.

Maybe the Chinese strategy of local lockdowns are working and they will be able to open up more and more areas. But I have a feeling that soon there will be cases popping up in factories here and there and it will not be smooth sailing until Xi is reelected.

I see a few different outcomes:
1. China gives up -> short term high pain
2. China fights the entire year and win -> lots of small pain
3. China fights and then gives up -> lots of small pain and short term high pain

Right now it seems that 2 is most likely. Which imo doesn’t mean that Shanghai will run full steam ahead from Q3-Q4. No it means supply chain issues, risk of cases in the factory and full shutdowns randomly.

And the question is how long they will run zero covid, what’s their exit strategy? Imo they could try to develop a better vaccine, get it out, then open up. At least that‘s a strategy that you can motivate. Zero covid forever would make them a hermit kingdom forever. And with these outbreaks happening it would likely mean masks, social restrictions and testing forever. I can see Xi running zero covid the rest of the year, then once he is reelected he can finish up his weeding out of opponents due to their “failures” and then when he feels secure he can finally give up zero covid. But the rest of the year is gonna be messy in China one way or another…

They're not trying for zero covid, they're trying to save face and look leaderly.

They'll transition to a more moderate plan to try and stem the tide and not overwhelm the hospitals.

People say the Chinese vaccines are ineffective, but I doubt it. Or they'll just source something better. The key is.....it's back to work.

 

[TheTalkingMule]

Like many analysts I don't see the near term impact of robotaxi on transportation or Tesla bottom line. First the whole field is suspect, ride share that is. Uber as a model failed. Simply getting rid of drivers does not make their numbers magically great. Still a not very good business.

Tesla still hasn't been able to get solar going, 6 years after the solar city buy. 4 years ago they knew they'd be battery limited at this point if they hit production goals, has the battery strategy worked? On and on. CT, Semi, ..on and on. Outside of automotive innovations (octovalve, chips, battery packs, bms, etc) and the initial battery storage solutions what new products have been a hit?

FSD is by far far and away the most ambitious new product. Therefore what is the chance it is a product that enables robotaxis within 5 years? I put that about 0. I'd love to have it on a CT. If I don't get a ct

The goal isn't fun products for you, the goal is speeding the transition to sustainability and EVs.

 

[StealthP3D]

The stock is been weak against the macro's day after day now, regularly down 3-4X it's BETA and not even up 2X it's beta on the up days. It's trading about as weak as it gets right now. And what's worse is that there's zero positive catalyst coming up and plenty of FUD material until we get Q2 P/D numbers. Everyone better buckle up unfortunately.

I recommend that individual investors are *always* buckled up. That way no special is action is required in response to market gyrations. This is something dead investors are particularly good at and why their returns are so high.

BTW, I don't think it's accurate to claim "there's zero positive catalyst coming up" (until we get to Q2 P/D numbers). Because positive catalysts that can move the share price significantly are, by their very nature, unknown. If investors *knew* about them, they would already be factored into the share price. Stock prices move strongly when there is *unexpected* news. That could be better than anticipated Q2 numbers but there are so many other potential unknown catalysts that could potentially come sooner that I would hesitate to try to imagine what they all might be.

As to there being plenty of potential FUD material, yes, that is always the case. Today's trading made no sense with markets mostly flat through the day (up a bit or down a bit) and TSLA down 8.25% considering I didn't see any impactful new FUD that could explain such an outsized move. It makes zero sense considering that the economic factors everyone seems worried about would probably have less impact on TSLA than companies more dependent upon business cycles and consumer vagaries to eek out good numbers. The only real threat to TSLA's continued growth is if supply chains continue to worsen (but I think common perception is they should be trending more towards normal in coming weeks and months). The price action today would make more sense if monied interests thought they could slow TSLA down by impacting their share price, but with no need to raise money, surely they know that will not harm Tesla (it actually helps the company recruit and retain top talent). So, I can only conclude big money players will be loading up on TSLA shares on the cheap in the coming days or weeks, whenever they think they cannot manipulate the price much lower. If you can't beat them, join them!

What would this mean? That at some point in the not too distant future, TSLA will be Wall Street's darling again, more so than last time. Because big money players control the narrative and once they have a big stake, they will do what they always do, talk up their holdings. This dynamic is why I always cringe when the share price gets too far ahead of itself because it causes the big money players to sell which is what helps create these gyrations lasting months to a year or more. TSLA's rise to $1200 ($6000 split adjusted) caught many of the big money players off-guard and, not fully understanding the company, they were not able to take large positions before the price became so high they still couldn't. I suspect they have had time to digest just who Tesla is and what they will likely accomplish and they will jump in when they sense the price is not going to get much better. For too long the price of TSLA has been so high that only investors that fully understood Tesla could justify paying the price. Fortunately, TSLA is growing quickly enough that this downturn can't last too many more months. This market sell-off has created a lot of investment capital sitting on the sidelines, much of it controlled by people who have never owned a single share of TSLA. Much of that money will soon be flowing disproportionately into TSLA and the good times will roll once again.

 

[StealthP3D]

Does this price drop, if it becomes the new baseline for the next couple of quarters, affect the anticipated stock split?

I suspect Tesla had a reason for not announcing the split ratio that far in advance. I assume they will set the split ratio to meet their objectives and, certainly, TSLA's valuation is always a factor in that. But, no, I'm confident it will not affect their decision to split and probably not the timing either.

 

[TheTalkingMule]

If you want an example of an unforseen catalyst....Moodys could upgrade Tesla 2 notches tomorrow and create a temporary short squeeze to ATH.

Absolutely not out of the question that we could be at $1350 by the 4th of July and then ride the recovering macros higher.

What every TSLA investor absolutely MUST do to make sure they can gain from this rise is.....take a nap. Or God forbid go play with your kids! As advised it's always best to be dead, but I think that's a bit extreme.

 

[thesmokingman]

Did you guys catch the tale end of CNBC today before Cramer came on? I usually shut it down when he comes on lol. But on point they were saying a lot of execs where buying large amounts of their shares back. Good signs...

 

[Gigapress]

Like many analysts I don't see the near term impact of robotaxi on transportation or Tesla bottom line. First the whole field is suspect, ride share that is. Uber as a model failed. Simply getting rid of drivers does not make their numbers magically great. Still a not very good business.

Simply getting rid of the drivers does suddenly make the financial numbers great for ridesharing, because drivers are half the cost structure! By the following estimates, Uber could be at $50B annualized earnings right now if the drivers worked for free.

Uber drivers earn around $15/hr on average including tips and subtracting out typical vehicle expenses and Uber platform fees.

For an urban trip at 30 mph average, the driver cost is $15/30 = $0.50 per mile. However, it’s actually substantially worse than this because the $15/hr estimate includes waiting periods without fares and includes miles spent driving empty in between drop off and pickup locations. If a driver does two payload miles for every one empty mile, and waits 5 minutes per hour, then they’re only actually delivering someone 37 minutes per hour, making overall average driver pay cost per payload mile closer to ($0.50)*(60/37) = ~$0.80/mile.

The average Uber fare plus tip is around double that, which means driver cost is burning up about half the revenue on average.

Uber has been running core operating income around breakeven for the last two years. In Q1 2022, Uber posted $26.4B in total booking fares. If 50% of that went to driver take home pay, then that’s an annualized savings opportunity of ~$50B at Uber’s current scale. In other words, if Uber had autonomous software ready right now, they could in theory keep charging the same fares and have the same vehicle costs as before but suddenly go from earning nothing to earning ~$50B per year at ~50% net margin.

With a Tesla fleet, it would get even better because the dedicated million mile robotaxi would probably have a total cost of ownership around $0.15/mile which is an additional $0.45/mile cost saving vs the average Uber vehicle. In 2019 at Autonomy day the slide said <$0.18 per mile which Elon said was “current” and would be substantially lower in the future.

Tesla also would be self-insuring, thereby saving another ~$0.08/mile because their robotaxis would have at least 10x lower accident rates than the average Uber driver.

The total impact of autonomy and Tesla’s amortized vehicle costs being so low is to take ridesharing from a breakeven business model to a $0.80 + $0.45 + $0.08 = $1.33 per payload mile earnings potential.

All figures are approximate but remarkably close to Tesla’s own estimates from Autonomy Day in which they said $0.65/mile robotaxi gross profit assuming 50% empty miles, which goes to $0.65/0.5 = $1.30 per payload mile.

In the longer term, there are yet more cost savings from:

• Cheap renewable energy reducing electricity costs
• Collision frequency trending towards zero
• Economies of scale (less waiting, fewer empty miles travelled, lower vehicle manufacturing cost)
• Boring Co tunnel networks increasing average speed, reducing electricity consumption and reducing vehicle wear and tear
• Battery longevity improving beyond 4k cycles per cell
• Making smaller taxis right-sized for one or two occupants

Tesla Network, if it happens, will quickly become the most profitable business in the history of the world.

 

[StealthP3D]

Is rivian earnings after close going to drag us lower? Asking for a friend named Margin

It's important for investors to pick their friends carefully and not just the ones that are the most fun at the party. Because parties always come to an end.

 

[StealthP3D]

I would love for Elon to decide to pass on the Twitter deal and put the money back into TSLA

The SEC would be left with their jaw hanging, not knowing what to do.

 

[betstarship]

Well, this is interesting - my parents have now turned into Elon Musk haters and said the worst thing I did in my life is being a fan of Tesla.

Edit: their line of rationale - Elon Musk wants to be a "kaiser" and they were not big fans of him wanting to bring Trump back into Twitter.

 

[thesmokingman]

Well, this is interesting - my parents have now turned into Elon Musk haters and said the worst thing I did in my life is being a fan of Tesla.

That is weird. Though just now my mom texted me about the MCU recall and was like OMG OMG? I just lol'd and had to explain its overblow fud and what OTA is, like her phone.

What made them turn against Elon? Was it him joking about dying? My mom wasn't happy about that either but she doesn't understand who Rogozin is....

 

[betstarship]

That is weird. Though just now my mom texted me about the MCU recall and was like OMG OMG? I just lol'd and had to explain its overblow fud and what OTA is, like her phone.

What made them turn against Elon?

Trump on twitter again

 

[betstarship]

Sorry, this is a rather confusing one for me. I went to a space science academy in high school, so been a huge SpaceX fan for a long time. Then, wanted to work on internet engineering and worked in routers and switches...so, huge fan of Starlink.

Climate change is important and finding solar companies, in 2012, to invest in resulted in going for growth and investing in Tesla instead in my 20's.

I'm used to being a fan of what Elon Musk does because it dovetails with a lot of my interests (like many others that are into Space technology, the Internet, and care about humanity). Now, my parents got me into computers at age 7-8 helping to build my first computer, to hear them conflict with a guy that seems to be doing some awesome things for people in areas I'm interested in and care about...just feels odd.

 

[Accident]

If you want an example of an unforseen catalyst....Moodys could upgrade Tesla 2 notches tomorrow and create a temporary short squeeze to ATH.

Absolutely not out of the question that we could be at $1350 by the 4th of July and then ride the recovering macros higher.

What every TSLA investor absolutely MUST do to make sure they can gain from this rise is.....take a nap. Or God forbid go play with your kids! As advised it's always best to be dead, but I think that's a bit extreme.

The day you become pessimistic will be the signal that we have hit bottom. I’ll get a second mortgage and sell whatever I can to go all in.

 

[TheTalkingMule]

The day you become pessimistic will be the signal that we have hit bottom. I’ll get a second mortgage and sell whatever I can to go all in.

Explain to me why and when I should be pessimistic about the prospects of Tesla and TSLA.

 

[Accident]

Explain to me why and when I should be pessimistic about the prospects of Tesla and TSLA.

I guess I’ve been feeling pessimistic about the market in general, and I don’t see the stock price reaching ATH until the Fed finish hiking interest rates, which might happen late this year.

I just wish I had some of your optimism sometimes

Long term we know Tesla will continue to surprise WS, and nothing has changed their thesis, but I really doubt an upgrade from Moodys is the catalyst we need. What I’m really looking forward is hearing about China fully opening. That will be the biggest catalyst short term IMO.