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

[Snerruc]

BMW , Mercedes. and VW are arguably among the most desired cars in the world with high sales. All three used slave labor during WW2. Memories are short. Tesla is a company with an eccentric leader. we all knew it when we bought in. This too shall pass.

 

[Prunesquallor]

Brown sugar cinnamon!

And toast them extra long so the frosting melts.

 

[JustMe]

Futures are green

 

[MC3OZ]

These tweets decrease my confidence that the Mission will be achieved and that they world for my children will be at least as good as the world was for me.

Elon posts this kind of thing on Twitter from time-to-time, unfortunately.

But the reality is, the post is no big deal, it will have zero influence on the outcome of the war, people will eventually forget it, and move on.

The Mission is influenced by the planning, engineering, ambition and execution at Tesla, and on that score, Elon ticks all the boxes.

Elon and Tesla are doing all they can to achieve the Mission.

These Twitter posts are merely an unfortunate distraction,

 

[SmokyPeat]

BMW , Mercedes. and VW are arguably among the most desired cars in the world with high sales. All three used slave labor during WW2. Memories are short. Tesla is a company with an eccentric leader. we all knew it when we bought in. This too shall pass.

Somehow that parallel isn't super comforting.

 

[EverettRuess]

Elon posts this kind of thing on Twitter from time-to-time, unfortunately.

But the reality is, the post is no big deal, it will have zero influence on the outcome of the war, people will eventually forget it, and move on.

The Mission is influenced by the planning, engineering, ambition and execution at Tesla, and on that score, Elon ticks all the boxes.

Elon and Tesla are doing all they can to achieve the Mission.

These Twitter posts are merely an unfortunate distraction,

It is the wrong day for Elon to post this BS.

 

[TheTalkingMule]

I'm not a VIX person any more than I'm a chart person, but has the VIX peaked? Is that relevant to this macro "recovery"?

I see it rose on the back of the most recent Powell gut punch, but then peaked middle of last week. I was reading last week about people waiting for this peak.

UK has stabilized rates and GBP, reversing their moronic trickle down gameplan. There's been next-level peak inflation indicators like Credit Suisse default worries and various other margin call activity. Starting to look like another .75 rate hike would be really really dangerous and unwarranted.

TSLA obviously is getting smoked, but perhaps VIX peaking is a sign we've seen the bottom on S&P/nasdaq?

 

[RandomJohnny]

I bet Elon reads TMC, LOL

 

[ByeByeJohnny]

But he seems to try to backtrack a bit, realizing the pandora's box he unnecessarily created. Now it is just about Crimea (not anymore Donbas, etc), and it is not about referendums, but simply about what might be considered a pragmatic compromise (it is not, of course). Big difference, but unfortunately too late, a lot of reputational damage is done. He even now attacked Kasparov, as somebody who only tweets and does nothing... Kasparov, who was beaten up by the Russian police, who wrote a book 10 years ago warning exactly what will happen if Putin is appeased :-(

Well that's actually been the likely outcome all along. Zelenskyy said early on that they would probably agree to 'peace' if things went back to where they were.

But I can see how some here will now try to turn that result into Elon saving the world.

 

[Flehmenlips]

I have not seen an Elon tweet that I didn’t like. Not yet.

 

[JustMe]

I'm not a VIX person any more than I'm a chart person, but has the VIX peaked? Is that relevant to this macro "recovery"?

I see it rose on the back of the most recent Powell gut punch, but then peaked middle of last week. I was reading last week about people waiting for this peak.

UK has stabilized rates and GBP, reversing their moronic trickle down gameplan. There's been next-level peak inflation indicators like Credit Suisse default worries and various other margin call activity. Starting to look like another .75 rate hike would be really really dangerous and unwarranted.

TSLA obviously is getting smoked, but perhaps VIX peaking is a sign we've seen the bottom on S&P/nasdaq?

VIX goes up when put options are being bought up and IV rises. So vix dropping could reflect more positive sentiment (now) but that doesn’t mean we’ve seen the market bottom.

The fed seems intent on crushing inflation even if it causes a recession. Unfortunately the inflation data is a lagging indicator and fed interest rate hikes take time to slow the economy. So more analysts are now expecting a hard landing.

FWIW, some expect a strong bear market rally this fall/winter. Heck, it might have even started today, ironically

 

[Gigapress]

Does anyone know more about the point @Thekiwi brought up about the impact that the drastic shift in US$ exchange rates will have on 2023 vehicle pricing? I'm not even sure how to start researching this one but it's important because it looks like it could materially affect gross margins in Q4 and next year.

What I'm mainly wondering:

1. To what extent is Tesla hedged against forex changes, if at all?
2. How much of this is mitigated by the fact that most of Tesla's sales outside the US are coming from Berlin and Shanghai and so the costs are in yuan and euros?
3. What reasons might Tesla have had for not updating local prices in response to in some cases 20%+ swings in exchange rates in the last six months? I mean if I can actually buy a Tesla in New Zealand for the equivalent of US$38k right now before sales tax, what's stopping people or companies from buying them in bulk and shipping off to resell in the US for a $20k profit? I don't understand.

Tesla's 10-Q says they generally don't hedge forex risk.

Foreign Currency Risk

We transact business globally in multiple currencies and hence have foreign currency risks related to our revenue, costs of revenue, operating expenses and localized subsidiary debt denominated in currencies other than the U.S. dollar (primarily the Chinese yuan, euro, pound sterling and Norwegian krone in relation to our current year operations). In general, we are a net receiver of currencies other than the U.S. dollar for our foreign subsidiaries. Accordingly, changes in exchange rates affect our revenue and other operating results as expressed in U.S. dollars as we do not typically hedge foreign currency risk.

We have also experienced, and will continue to experience, fluctuations in our net income as a result of gains (losses) on the settlement and the re-measurement of monetary assets and liabilities denominated in currencies that are not the local currency (primarily consisting of our intercompany and cash and cash equivalents balances).

We considered the historical trends in foreign currency exchange rates and determined that it is reasonably possible that adverse changes in foreign currency exchange rates of 10% for all currencies could be experienced in the near-term. These changes were applied to our total monetary assets and liabilities denominated in currencies other than our local currencies at the balance sheet date to compute the impact these changes would have had on our net income before income taxes. These changes would have resulted in a gain or loss of $63 million at March 31, 2022 and $277 million at December 31, 2021 assuming no foreign currency hedging.

I found @unk45's post about this, but I don't know how to attempt to translate this to ASP and COGS forecasts.

That is slightly misleading. They say they do not enter into hedging contracts. The definitely do use funding and payment terms to minimize exposures. Rather similar to the normal Apple process, although Apple does use some forward contracts. I would be surprised if Tesla did not do sue fo that without violating their "no hedging" statement. They do not hedge for "rates" but they do buy and sell forward amounts. I'm informed they also do some swaps. Thus they reduce risks without buying those expensive interest rate hedges.

When looking at the currencies they list they seem to imply that those are vehicle sales rather than capital items. This is the operative loophole "...These changes were applied to our total monetary assets and liabilities denominated in currencies other than our local currencies."

"Other than our local currencies" allows them to hedge Euro, US$ and Renminbi with a few other currencies potentially included also. Thus this really means 'vehicle sales to countries without enough activity to be considered "local".

 

[Ipcress]

Badly done, Elon. Badly done.

Like Jane Austin's Emma, I think the best that could come out of this latest twitter fiasco is that Elon really gets his a$$ kicked by people he respects. Maybe he'll learn not to tweet so much on controversial topics where he has no expertise, and likely when he's 420'd up the wazoo.

He really should apologize to people for this. A simple--"I was wrong about this--I apologize" would go a long way towards rehabilitating his increasingly negative image worldwide. Talk about unforced errors! More and more people I talk to, including friends and family will never buy the stock, or the car, because of some of the truly disturbing positions He's taken. I won't enumerate them. The whole thing is just so sad and unnecessary.

 

[Drumheller]

Badly done, Elon. Badly done.

Like Jane Austin's Emma, I think the best that could come out of this latest twitter fiasco is that Elon really gets his a$$ kicked by people he respects. Maybe he'll learn not to tweet so much on controversial topics where he has no expertise, and likely when he's 420'd up the wazoo.

He really should apologize to people for this. A simple--"I was wrong about this--I apologize" would go a long way towards rehabilitating his increasingly negative image worldwide. Talk about unforced errors! More and more people I talk to, including friends and family will never buy the stock, or the car, because of some of the truly disturbing positions He's taken. I won't enumerate them. The whole thing is just so sad and unnecessary.

Elon does not partake in 420. He has explained this in two interviews I've heard. He went into depth about it recently

 

[JRP3]

BMW , Mercedes. and VW are arguably among the most desired cars in the world with high sales. All three used slave labor during WW2. Memories are short. Tesla is a company with an eccentric leader. we all knew it when we bought in.

Don't think any of us thought the company would face the comparisons you brought up. Way to set the bar low.

 

[elasalle]

I'm not a VIX person any more than I'm a chart person, but has the VIX peaked? Is that relevant to this macro "recovery"?

I see it rose on the back of the most recent Powell gut punch, but then peaked middle of last week. I was reading last week about people waiting for this peak.

UK has stabilized rates and GBP, reversing their moronic trickle down gameplan. There's been next-level peak inflation indicators like Credit Suisse default worries and various other margin call activity. Starting to look like another .75 rate hike would be really really dangerous and unwarranted.

TSLA obviously is getting smoked, but perhaps VIX peaking is a sign we've seen the bottom on S&P/nasdaq?

VIX above ~35+ more likely would have been a complete capitulation, but VIX has been bouncing b/w ~20-30 and I don't think any have been bottom/top indicators so far ..

 

[Raisin45567]

Elon does not partake in 420. He has explained this in two interviews I've heard. He went into depth about it recently

Maybe he should.

 

[Maarten]

 

[The Accountant]

Does anyone know more about the point @Thekiwi brought up about the impact that the drastic shift in US$ exchange rates will have on 2023 vehicle pricing? I'm not even sure how to start researching this one but it's important because it looks like it could materially affect gross margins in Q4 and next year.

What I'm mainly wondering:

1. To what extent is Tesla hedged against forex changes, if at all?
2. How much of this is mitigated by the fact that most of Tesla's sales outside the US are coming from Berlin and Shanghai and so the costs are in yuan and euros?
3. What reasons might Tesla have had for not updating local prices in response to in some cases 20%+ swings in exchange rates in the last six months? I mean if I can actually buy a Tesla in New Zealand for the equivalent of US$38k right now before sales tax, what's stopping people or companies from buying them in bulk and shipping off to resell in the US for a $20k profit? I don't understand.

Tesla's 10-Q says they generally don't hedge forex risk.


I found @unk45's post about this, but I don't know how to attempt to translate this to ASP and COGS forecasts.

I can shed some light on this topic. I am busy this week on a number of things but will try to post a reply tomorrow.

 

[Ipcress]

Elon does not partake in 420. He has explained this in two interviews I've heard. He went into depth about it recently

Sadly, that makes it even worse.