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

[Fact Checking]

This is what I'm looking at,

View attachment 392724

Indeed. Note that the other table is showing 20.2k S+X production expectations, based on 5 analysts.

The 5th analyst probably didn't break out S vs. X?

 

[SteveG3]

Indeed. Note that the other table is showing 20.2k S+X production expectations, based on 5 analysts.

The 5th analyst probably didn't break out S vs. X?

Gotta be a different 4 included with "the 5th," otherwise 5th estimate would of been a negative number, lols.

Main points,

1) Tom Randall clearly knows the 26.9k number was not a credible number to refer to as consensus because it was ~25% above the consensus from a much larger set of analysts (not to mention it contradicted explicit public guidance from Tesla).

2) He not only knows this wasn't a legit consensus number he acted to correct his article... so if the 26.9k number gets tossed out tomorrow by the likes of Business Insider, Cramer, etc., I think there's a reasonable chance we could have some success in persuading Tom to chime in on it as not a legit number. Not to say those outlets will correct their stories, but, if this happens and Tom pipes up on Bloomberg, that would be better than nothing.

 

[Fact Checking]

View attachment 392726 Ah, just noticed this when I hit that link... the article was updated Monday afternoon. Doesn't mention why, but, looks like Tom read point 5 of what I tweeted (towards the very end of that longish post above), and saw that the 26.9k number was not something he could stand by presenting as the S/X production estimate in an article. Glad he did that, but, not as pleased that he passed on explaining to readers what was updated and how questionable the "estimate" in the prior version of the article was, and how contradictory to the estimate of a much larger sampling of analysts..

Yeah, part of the problem is that deliveries (completed sales) are what matter to financials mostly, so there's a lot more analysts giving deliveries estimates than production estimates.

But Tom Randall is doing a Model 3 production estimate - so he has to compare against the much smaller sample of production estimates.

The S/X split doesn't matter much (Tesla shares much of the production capacity between S and X), so I don't think the synthetic 26.9k figure will be a source of credible FUD.

 

[EVNow]

Yeah, part of the problem is that deliveries (completed sales) are what matter to financials mostly, so there's a lot more analysts giving deliveries estimates than production estimates.

But Tom Randall is doing a Model 3 production estimate - so he has to compare against the much smaller sample of production estimates.

The S/X split doesn't matter much (Tesla shares much of the production capacity between S and X), so I don't think the synthetic 26.9k figure will be a source of credible FUD.

Tesla breaks out S&X deliveries, but not production.

 

[SteveG3]

Yeah, part of the problem is that deliveries (completed sales) are what matter to financials mostly, so there's a lot more analysts giving deliveries estimates than production estimates.

But Tom Randall is doing a Model 3 production estimate - so he has to compare against the much smaller sample of production estimates.

The S/X split doesn't matter much (Tesla shares much of the production capacity between S and X), so I don't think the synthetic 26.9k figure will be a source of credible FUD.

I think we're both in agreement Tom Randall didn't intend a set up Tesla to 'fail' effort.

Tom doesn't have an S and X tracker as far as we know... so, no Bloomberg tracker comp to analyst estimates to be made.

I suspect he's going to be more aware of whether there's a data set worth referring to when he does these articles in the future.

What would have been pretty sweet is if Tom found out and shared who the 4 analysts calling 26.9k S/X are. If they are bears, that is quite a story, though perhaps one Bloomberg would be unwilling to release.

All that said, watch Tesla somehow surprise us all in the PD report with secret massive efficiency improvements that allowed those 2 shifts to make as many S/X last quarter as 3 shifts had in the past and prove those 4 mystery analysts spot on.

 

[oneday]

OT

A poignant opinion piece from Bloomberg about how poor forecasters and analysts are at their jobs (This also applies to economists in the article as well). It goes into how nobody keeps track of the actual forecasts given and how accurate they have been. How they don’t indicate their levels of certainty. And never acknowledge their inherent biases.

I really hope ideas like these gain traction. As many people on here have always said how places like CNBC give airtime to these jokers that have been so consistently wrong in the past and they never mention it.

Bloomberg-The Forecasting Business Shouldn’t Be This Bad

 

[Fact Checking]

What would have been pretty sweet is if Tom found out and shared who the 4 analysts calling 26.9k S/X are. If they are bears, that is quite a story, though perhaps one Bloomberg would be unwilling to release.

Yeah, but I'm not entirely sure he's allowed or even able to do that - for example IIRC FactSet doesn't always disclose analyst names.

Also note that analyst delivery expectations have come down in the last ~2 weeks, here's the FactSet snapshots from March 13 and from March 28:

We now have a March 13 snapshot of FactSet expectations and consensus:

• 81,510 total deliveries. This is too bullish at the moment I think, perfect setup for a Q1 deliveries 'miss'...
  
• EPS of -$0.37.
• I think this maps to about a Q1 GAAP loss expectation of about -$70m. (@brian45011 or @ReflexFunds might have a more accurate interpretation.) Actual losses could be deeper: if Tesla realizes it's a loss they might front load some expenses and shift income to Q2.

Just repeating the info above, which was the latest FactSet consensus from two days ago:

19.7k S+X deliveries
55.5k Model 3 deliveries
= 75.2k total deliveries​

The S/X one is roughly around guidance, Model 3 deliveries were not guided for Q1.

I.e. expectations for total deliveries have come down from 81.5k->75.2k (-8%).

 

[oneday]

OT

Just snapped this pic of the hotel van in front of ours. It's a ZenithView attachment 392678

The place I park my car when I fly out of San Jose airport has like 3 of those Zenith busses as shuttles to the airport. They really seem like a no brainer for that kind of use. Makes me quite happy to drive electric from my garage to being dropped off at my airline. I looked up the company, their website is pretty low budget. They’re based out of KY. I bet their business will do well in coming years.

 

[Fact Checking]

Buffet's principle strategy is buying well run companies with durable business models and strong management when they are under short term head winds. Basically every part of that is opposite with tesla.

Yeah, so basically every part of what you said is false:

• Tesla has strong management: the idea that Elon isn't doing a good job is a false TSLAQ narrative in an attempt to push out one of the driving forces of Tesla: "Let’s Be Honest — There’s A Campaign To Push Elon Out … In Order To Harm Tesla".
• Tesla has an incredible business model: it is growing into the new 3000 billion dollars EV market that ICE incumbents have no easy access to, with jaw-dropping profit margins. Buffet never even came close to getting access to such a market - his biggest buy so far (AAPL) has maxed out at around at around ~250 billion dollars revenue - peanuts in comparison to Tesla's growth prospects.
• Tesla is facing incredible short term headwinds: both the U.S. media, Wall Street analysts, the U.S. administration and the SEC are opposing it, with an unprecedented smear campaign against Tesla and Elon, and an unprecedented 25% of its float shorted which 32 million shares sold short have depressed the share price by at least ~$200. Also, an unprecedented number of anti-Tesla trolls are swarming social media.

So yeah, nice try.

 

[lklundin]

It looks like my Maxwell shares are being converted. They have disappeared from my TD Ameritrade account

Margin call?

 

[Fact Checking]

I found it curious when Elon reused the “children’s toys”, reference with regard to Dodge Ram’s hauling capacity, since nothing came from his calling the 350 kW Porsche Taycan charger a mere children’s toy.

Would Elon really reuse this reference if 250 kW is the max V3 Supercharger rate?

How about the straightforward interpretation: children are allowed multiple toys?

I don't think there's a uniqueness requirement for zingers.

 

[Fact Checking]

Retail is mostly selling into this rally,

More than 96% of the peak Robinhood holders of TSLA are still holding TSLA today.

I think it's shorts deleveraging before two catalysts this week, plus the very strong $250 support, improving Tesla fundamentals and improving macro environment is attracting buyers.

Institutional investors are still careful to enter Tesla I think, due to the perceived SEC risk: if you are a money manager with a boss then the "Nobody ever got fired for selling a stock under SEC investigation!" principle is strong.

 

[RobStark]

EV Sales: Sweden March 2018

Commentary by Jose Pontes in link.

 

[Fact Checking]

Every supplier you cut out is either more profit for you, or the ability to pass a lower cost on to your customer.

Other big benefits to vertical integration:

• Higher quality can be achieved,
• consumer feedback can be incorporated much faster,
  
• much faster and cheaper R&D cycles,
• there's no contractual constraints and conflicts of interest:
  • With regular suppliers you get a price quote with a volume discount, and to get good discounts you also enter into long term contracts and you have to buy those units.
  • If you want better or cheaper seats then it's contract re-negotiation time, with the supplier having the upper hand due to the existing long-term contract...
  • Also, the supplier has no interest in reducing the cost of the seats - or to pass through any intermediate efficiency improvements to you.
  • With vertical integration it's all immediate and conflict free: find a way to save $10 and 1.5 minutes production time from every seat produced? You'll get a bonus and possibly a raise.

I'd even argue that these benefits are more important than the immediate cost savings: the first step of vertical integration is probably even an expense, because production equipment has to be purchased, workers have to be hired and the institutional know-how has to be built - which takes some time just to get break even. But after the break-even point it's a big advantage in terms of manufacturing process agility.

Vertical integration allows "Agile hardware development" - in addition to the "Agile software development" methods they are already using on the software side.

Vertical integration of parts suppliers is the main trick that allowed SpaceX beat every other rocket company on the planet, and it makes a huge difference.

 

[Fact Checking]

They need a railway track to pier 80.

Tesla needs a tunnel from Fremont to Pier 80!

(Sorry about that, I'll show myself out.)​

 

[Carl Raymond]

Institutional investors are still careful to enter Tesla I think, due to the perceived SEC risk: if you are a money manager with a boss then the "Nobody ever got fired for selling a stock under SEC investigation!" principle is strong.

In my head it was the other end of the stick. “Somebody might get fired for buying a stock under SEC investigation”... leading to half the market treating TSLA as unbuyable right now.

Same effect, even if they hold on to existing stock. As shorts add to the supply of shares, the price falls, with only cashed up retail investors holding the price up. And hold it up they did.

Which is why I was inspired to buy more shares last session. SP was climbing under retail confidence alone, and I figure the sidelined institutional buyers will be back soon, one way or another.

Edit: Further, GF1 appears to be at max, yet the media were reporting output of cars is low. Unless staff have taken to eating battery cells for lunch, that simply doesn’t gel.

 

[Fact Checking]

In my head it was the other end of the stick. “Somebody might get fired for buying a stock under SEC investigation”... leading to half the market treating TSLA as unbuyable right now.

Agreed. The big funds like ARK Invest were buying, but top managers like Catherine Wood have broad discretion. Managers of smaller and more dependent funds and other buy side money managers, not so much.

It's so rare that the SEC sues a major firm that I believe it's almost universally treated as a red flag and Tesla is currently "uninvestable" for them - even if they privately don't agree with the SEC's position.

Which conclusion they'd have a really hard time to arrive at to begin with, given the extremely distorted reporting on this topic. Almost every article portrayed Elon as unhinged and erratic, the tweet as erroneous and most of the articles didn't question the SEC's regulatory clout either.

So I think the market is mispricing this event, because:

• Many institutional investors don't have a choice when there's a red flag.
• The SEC sued in the SEC's "home court" S.D.N.Y, where they have a very high win rate and friendly judges.
  
• In a now-again bull market it's also so easy for a money manager to skip a single company when there's so many other companies still trading way below last year's highs. Institutional investors are not in an overheated bull market with a lot of over-valued companies, where they have to be careful to not buy into the hype before a big correction - instead they have hundreds of excellent high-tech companies that just performed a big correction to pick from.
  
• Reporting on the SEC lawsuit has been even more distorted and slanted than usual, I cannot cite a single article that comes to a neutral conclusion. Even the EV-friendly blogs have mostly shied away from trying to cover the topic analytically - which is heavy in legalese.

BTW., this is why I believe the SEC rushed this enforcement action, and this is why their legal filings are so inflammatory in their language: they are using this as pressure tactics to force and coerce Elon to settle/comply. Those tactics worked back in September after all ...

The TSLA "SEC discount" at the moment could be anywhere between $50-$100 in my opinion.

(Not advice: there's a tail risk that the court ruling could go against Elon.)

 

[AlexS]

Wait, wait, wait, I'm confused...
Few days ago somebody posted a map showing the "most desired" cars per country.
On that map I saw this for Estonia:
View attachment 392714

Are you claiming that Skoda represents the top line of "fancy cars" ???

Skoda is the most sold car, but we have a lot of luxury cars on the road.
Skoda is doing good job BTW. Affordable, reliable, nice looks, good service. Beating parent VW in many(most) markets and tests. Heard rumors back in the days that from time to time VW got frustrated that Skoda is doing so well and then they fired some people or limited designers ideas. I guess now VW is happy about Skoda doing well.

 

[Fact Checking]

GF1 appears to be at max, yet the media were reporting output of cars is low. Unless staff have taken to eating battery cells for lunch, that simply doesn’t gel.

I'd nevertheless urge caution: that GF1 is at capacity is based on a single unverified, anonymous source, Carsonight. It's single-source, anonymous anecdotal evidence in essence. He has a good track record, he has been giving accurate GF1 information for a long time (including less bullish estimates last year when everyone assumed a 35 GWh/year capacity expansion), but past performance is no guarantee of future results.

 

[lklundin]

Reuters - 45 minutes ago: Tesla will pay $31,000 to settle U.S. EPA hazardous waste claims | Reuters

Tesla bears including those in the media were making this out to be a big deal when the investigation began. Much ado about almost nothing.

I like that in addition to the 31k $ fine, Tesla also had to buy 55k $ worth of equipment for the Fremont Fire Department.