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

[Singuy]

Here's the problem. Elon is aligning himself with the GOP likely for political expediency. Are other CEOs Republican or vote Republican? Yes, probably. But the difference is he has a megaphone when they do not. When you say things like the Democratic Party is the party of hate, after witnessing Charlottesville, white replacement theory, and everyone bowing down to their cult leader Trump, it's a huge difference. So yes, I canceled my Cybertruck order and I'm planning on selling my M3 and getting another luxury EV. I can't stand thinking that my $ is supporting these kinds of ideologies. Couple that with the Twitter deal, I'm officially done with Elon. I feel bad for those that work there and have to deal with this lunatic. So Rivian or Polestar here I come. And I'm happy to do so.

What you were supporting was a company with over 100k employees putting their blood sweat and tears into accelerating the transition to sustainable energy. There are actual plans in place that can make this a reality a decade in the making directed by the only CEO who put all his money where his mouth was.

What you are about to support are companies that hosed many investor's money with fraudulent SPACs and sleek power point presentation, riding on the tails of Tesla's success with zero plans on how to move the needle on transitioning to sustainable energy while publicly mocking and attacking the company that is.

Perception of doing good vs actually doing good..and I'm not talking about companies but yourself.

 

[StarFoxisDown!]

I believe the downside of a stock buyback (or dividend) is the opportunity cost.

Back in October, I was predicting that in the coming years Tesla would basically need to pay shareholders back because their growth of free cash flow would exceed their ability to invest it productively simply because their ROIC is so freaking high now.

After discussion with TMC members who disagreed I reversed on that prediction. Building up an in-house robotaxi fleet and in-house energy assets will be an immense capital sink for years to come.

I've seen this counter argument to a stock buy back many times but it's always been a flawed counter argument and doesn't really hold any weight to me

The reality is that a Robotaxi service is at least 1.5-2 years away. I think we can all agree on that. With each Gigafactory, we have an idea of just how much one can add to FCF once it's at volume production. We have two new factories going through that process right now. And Shanghai has a further expansion ahead of it. By the time a Robotaxi fleet needs to be built, and remember a lot of 3/Y's will be coming off lease by then that will be inducted into the fleet, Tesla will likely have 5-6 Gigafactories at volume production. You're talking 5-6 billion in FCF every quarter.

A robotaxi fleet isn't going to need 500,000 vehicles right at the start. It will grow over time. Let's say Tesla wants 150,000 Model 3's to act as a Robotaxi for the first year in the US. That's roughly 5.2 billion for Tesla to build those 150,000 Model's ($50k ASP minus gross margin - 35K cost to Tesla to build).

So just one quarters FCF will cover the start of the Robotaxi service.

But wait........you're forgetting another important aspect. If a Robotaxi fleet needs to be made, well then that means FSD has been solved and FSD is already in wide release, unlocking billions in additional profits and cash. I don't know why people don't get this. If Robotaxi is a thing.....then FSD was completed, unlocking huge levels of profits and cash. You can't have one without the other.

And lastly, it completely ignores the point of the post that I made. In that, it's better for Tesla to use the extra 2 billion in FCF per quarter for stock buy backs, especially when the stock has been cut in half by 50%.

Say Tesla succeeds with FSD, and then needs capital for Robotaxi, then they can do a offering......ya know I think Tesla's market cap just might be a bit above where it is today in a scenario where FSD is achieved

Plus recession risk, they need to conserve capital until macro picture favorable.

Tesla has 2022 already mostly sold out. The only trims that aren't are the high end 3/Y's. Tesla's order log is about recession proof as possible. Tesla has no debt and 18 billion in cash. Tesla is already prepared for a recession. In fact, I'd say they're overprepared. But that's never a bad thing.

It is bad to just have cash sitting there while you generate 2 billion more in cash each quarter in high inflation environment.

 

[RobStark]

California Q1 2022 Registrations

Tesla passes Honda Group( Honda brand + Acura) to become #2 CA automaker!!!

Brand..................CA 2021 YTD.................................... % Share

1. Toyota........73,941 ...........,..........................17.4
2. Tesla.........48,038......................................11.3
3. Honda........38,706.........................................9.1
4. Ford...........37,106..........................................8.7
5. Chevrolet...23,469..........................................5.5
6. Nissan........20,156..........................................4.7
7. KIA.............18,893............................................4.4
8. Subaru......17,302............................................4.1
9. Merc Benz..16,521..........................................3.9
10. BMW..........16,168............................................3.8
11. Hyundai......13,368...........................................3.2
12. Jeep............13,161..........................................3.1
13. Lexus..........12,228..........................................2.9
14. RAM...........10,889...........................................2.6
15. Mazda..........10,095.........................................2.4
16. Volkswagen..8,388........................................2.0
17. GMC.............7,717..........................................1.8
18. Audi..............7,042.........................................1,7
19. Dodge..........4,412.........................................1.0
20. Porsche........3,463...........................................0.8
21. Acura ...........3,155.........................................0.7
22. Land Rover ..2,936.........................................0.7
23. Volvo.............2,913..........................................0.7
24. Cadillac.........2,619..........................................0.6
25. Chrysler........2,204..........................................0.5
26. Mitsubishi.....1,515..........................................0.4
27. Genesis.........1,490.........................................0.4
28. Mini...............1,446.........................................0.3
29. Infiniti............1,301..........................................0.3
30. Lincoln..........969............................................0.2
31. Buick...............958................,,..........................0.2
32. Alfa Romeo....590..........................................0.1
33. Jaguar...........436.............................................0.1
34. Other..............984.........................................0.2
    
    
    Total...........................452,216................................100

Fiat no longer generates enough sales to be ranked instead included in "Others."

https://www.cncda.org/wp-content/uploads/Cal-Covering-1Q-22-002.pdf

 

[henchman24]

Sell bitcoin and buyback shares!

 

[coolmanfever]

Anyone in the mood picking up more TSLA shares when it hits $700?

 

[thesmokingman]

Anyone in the mood picking up more TSLA shares when it hits $700?

I would but no more change left in the sofa, shrugs.

 

[henchman24]

On the whole buybacks things... I think the cash in general is a real question. Free cash flow is through the roof and far outpacing how Tesla is spending the money. I'd love for management to spell out what they are going to do with their cash. There is a legit chance that April 23 there is >30b cash on hand even with ramping up two factories and getting to the next stages of expansion. There has to be a plan and sharing that with shareholders would be really nice at this point. If they are spending 15-20b on new factories/mining/acquisitions/etc in 23/24... by all means keep the cash but let us know. If there is no plan for that, maybe it is time for a buyback or dividend. A buyback plan of 5-10b would set a nice floor for the stock right now and help with the dilution that has happened over the years to get here. A dividend of ~$1-2 per share per year sent out quarterly would cost ~1.2-2.4b per year and have a similar benefit along with putting extra pressure on shorts.

Regardless of the answer, I would like to know the plan with the cash. The question has been dodged before on earnings calls, it is starting to become beyond time with basically zero debt and a mountain of cash building.

 

[Singuy]

I've seen this counter argument to a stock buy back many times but it's always been a flawed counter argument and doesn't really hold any weight to me

The reality is that a Robotaxi service is at least 1.5-2 years away. I think we can all agree on that. With each Gigafactory, we have an idea of just how much one can add to FCF once it's at volume production. We have two new factories going through that process right now. And Shanghai has a further expansion ahead of it. By the time a Robotaxi fleet needs to be built, and remember a lot of 3/Y's will be coming off lease by then that will be inducted into the fleet, Tesla will likely have 5-6 Gigafactories at volume production. You're talking 5-6 billion in FCF every quarter.

A robotaxi fleet isn't going to need 500,000 vehicles right at the start. It will grow over time. Let's say Tesla wants 150,000 Model 3's to act as a Robotaxi for the first year in the US. That's roughly 5.2 billion for Tesla to build those 150,000 Model's ($50k ASP minus gross margin - 35K cost to Tesla to build).

So just one quarters FCF will cover the start of the Robotaxi service.

But wait........you're forgetting another important aspect. If a Robotaxi fleet needs to be made, well then that means FSD has been solved and FSD is already in wide release, unlocking billions in additional profits and cash. I don't know why people don't get this. If Robotaxi is a thing.....then FSD was completed, unlocking huge levels of profits and cash. You can't have one without the other.


Tesla has 2022 already mostly sold out. The only trims that aren't are the high end 3/Y's. Tesla's order log is about recession proof as possible. Tesla has no debt and 18 billion in cash. Tesla is already prepared for a recession. In fact, I'd say they're overprepared. But that's never a bad thing.

It is bad to just have cash sitting there while you generate 2 billion more in cash each quarter in high inflation environment.

I think there needs to be a master plan on how to make robotaxies profitable because it's not

1. Build robotaxies
2. Profit

I think it's more like this if FSD is considered solved

1. Have Tesla owners buy FSD to become comfortable with FSD <--profit
2. Have additional tesla cars sold to customers to multiple millions <--profit
3. Have these millions of new people getting comfortable with FSD
4. People start sleeping or watching TVs in cars
5. Start public ran ride hailing <--- money losing
6. Build robotaxies <--- money losing
7. Robotaxies become mainstream <--- profit

 

[Olle]

But wait........you're forgetting another important aspect. If a Robotaxi fleet needs to be made, well then that means FSD has been solved and FSD is already in wide release, unlocking billions in additional profits and cash. I don't know why people don't get this. If Robotaxi is a thing.....then FSD was completed, unlocking huge levels of profits and cash. You can't have one without the other.

This!
In addition to generating profits and cash, solving FSD should unlock a higher stock price, since a portion of present day Tesla institutional investors don't know what FSD implies, let alone believe in it.
So today's buyback may be sold back in a capital raise post FSD, for a profit, should the cash be useful later.

 

[Artful Dodger]

Hedge fund Melvin Capital returns cash to investors | CNBC TV on Youtube

PLOTKIN LETTER TO INVESTORS
ON WINDING DOWN FUNDS:
"The past 17 months has been an incredibly trying time for the firm... I have given everyting I could, but more recently that has not been enough to deliver the returns you should expect."
SOURCE: MEVIN CAPITAL LETTER TO INVESTORS

 

[dm28997]

I like the ideas about a stock buyback for two important reasons. Stock is cheap and inflation is high. Just my opinion. Lots of strategies for buy back are historical. Timing is critical but algorithms might work.

 

[Singuy]

I like the ideas about a stock buyback for two important reasons. Stock is cheap and inflation is high. Just my opinion. Lots of strategies for buy back are historical. Timing is critical but algorithms might work.

Stock buy back is what Tesla should do if they have no idea where to park their money when they can do an offering anytime to get this money back...or you know they can put it in BTC that trades exactly like the QQQ.

Question, if Tesla does a stock buy back and then do an offering later at a higher share price, are there tax consequences? (vs selling BTC at a higher price than they acquired it at. )

 

[StarFoxisDown!]

I think there needs to be a master plan on how to make robotaxies profitable because it's not

1. Build robotaxies
2. Profit

I think it's more like this if FSD is considered solved

1. Have Tesla owners buy FSD to become comfortable with FSD <--profit
2. Have additional tesla cars sold to customers to multiple millions <--profit
3. Have these millions of new people getting comfortable with FSD
4. People start sleeping or watching TVs in cars
5. Start public ran ride hailing <--- money losing
6. Build robotaxies <--- money losing
7. Robotaxies become mainstream <--- profit

This!
In addition to generating profits and cash, solving FSD should unlock a higher stock price, since a portion of present day Tesla institutional investors don't know what FSD implies, let alone believe in it.
So today's buyback may be sold back in a capital raise post FSD, for a profit, should the cash be useful later.

Exactly on both of these posts.

Robotaxi fleet's capital comes after FSD is solved in every scenario. Which means profits/cash from FSD before cash needed for Robotaxi fleet. And as @Singuy said, the actual Robotaxi fleet may be many years away.

 

[MD70]

How about using some of the cash to buy a stake in a chip maker ?

 

[thesmokingman]

How about using some of the cash to buy a stake in a chip maker ?

Last week was a much better time to jump into AMD, NVDA, or TSM. Those are the ones I'd play and I've been a long time holder of AMD. Also, Wallstreet doesn't value TSM so it hardly gets any love.


***Gdamn, this market is damn fickle...

 

[inconel]

Hedge fund Melvin Capital returns cash to investors | CNBC TV on Youtube

PLOTKIN LETTER TO INVESTORS
ON WINDING DOWN FUNDS:
"The past 17 months has been an incredibly trying time for the firm... I have given everyting I could, but more recently that has not been enough to deliver the returns you should expect."
SOURCE: MEVIN CAPITAL LETTER TO INVESTORS

Is it possible that Melvin Capital has been lately unwinding their long TSLA positions? If true this might explain part of the drop...

 

[Cherry Wine]

What you were supporting was a company with over 100k employees putting their blood sweat and tears into accelerating the transition to sustainable energy. There are actual plans in place that can make this a reality a decade in the making directed by the only CEO who put all his money where his mouth was.

What you are about to support are companies that hosed many investor's money with fraudulent SPACs and sleek power point presentation, riding on the tails of Tesla's success with zero plans on how to move the needle on transitioning to sustainable energy while publicly mocking and attacking the company that is.

Perception of doing good vs actually doing good..and I'm not talking about companies but yourself.

I've never understood purity tests - and unfortunately they have become all too common in society, with people willing to sever all ties with someone over a single point of disagreement.

People are complicated. Elon is human. He does things with which I disagree, and as of right now, I don't feel to be in a moral quandary owning TSLA or a Tesla, and I'd be curious to hear from those who do feel that way. I am frustrated with him for various reasons, but at the same time I acknowledge that he is probably the singular human being who could have helped Tesla succeed in the way it has. Does all of that -- all of the good he has helped bring into the world -- deserve to get thrown out over political differences?

And, as @Singuy points out, if this tirade by Elon is the litmus test by which individuals are found to be so abhorrent that one feels compelled to sever all ties even in the face of so much positivity, I think we would all have a very difficult time supporting any company.

I encourage any investor or customer who feels like they need to completely step away from Tesla to ponder it for awhile before making a hasty decision.

 

[TheTalkingMule]

Hedge fund Melvin Capital returns cash to investors | CNBC TV on Youtube

PLOTKIN LETTER TO INVESTORS
ON WINDING DOWN FUNDS:
"The past 17 months has been an incredibly trying time for the firm... I have given everyting I could, but more recently that has not been enough to deliver the returns you should expect."
SOURCE: MEVIN CAPITAL LETTER TO INVESTORS

Only in America can you make a short bet that should've bankrupted you 6x over, and they literally close the markets to let you dig your way out.

The SEC is a joke.

 

[Prunesquallor]

Anyone in the mood picking up more TSLA shares when it hits $700?

I usually don’t do this, but 660 is my magic number. I may reveal why in better times.

 

[StealthP3D]

For those that are interested it looks like the case brought by Mr. Greenspan against Elon and Qazi has been dismissed, parts with prejudice: https://storage.courtlistener.com/recap/gov.uscourts.cand.359812/gov.uscourts.cand.359812.171.0.pdf (Which is about time.)

Expect Greenspan and his "charity" to start posting a lot of crap about the judge.

I wonder if Qazi and Elon can, or will try to, recover their expenses for defending against this crap.

I think any recovery of expenses from Mr. Greenspan would be highly unlikely. People that have hated Tesla and Elon Musk for this long and with so much spite have generally lost a lot of money betting against him. Ideally, people like this sue before they have lost everything but that's not normally the way the ball bounces.

One by one these hateful, despicable people fall by the wayside and that is more rewarding than any cash recovery could ever be.