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

[Dave EV]

Otherwise he has has been consistently conservative financially., although he's bet the bank couple times in the early days.

Those two statements are completely contradictory. Tesla and SpaceX have both teetered on the edge of bankruptcy with Elon having gone all in on both. In addition, Tesla put a large sum of money into Bitcoin and lost a good chunk of it. And most recently he's spent $44B on Twitter. None of those things strike me as being fiscally conservative.

Elon is a big risk taker and been fortunate enough that his biggest bets have ended up going his way.

You don't create game-changing companies like Tesla and SpaceX without taking big risks - financial and otherwise.

 

[betstarship]

Those two statements are completely contradictory. Tesla and SpaceX have both teetered on the edge of bankruptcy with Elon having gone all in on both. In addition, Tesla put a large sum of money into Bitcoin and lost a good chunk of it. And most recently he's spent $44B on Twitter. None of those things strike me as being fiscally conservative.

Elon is a big risk taker and been fortunate enough that his biggest bets have ended up going his way.

You don't create game-changing companies like Tesla and SpaceX without taking big risks - financial and otherwise.

I think its understated that Elon Musk's entire purpose is to have humanity go to Mars. Unless you can fathom what that means and grok the weight behind that purpose and ability to execute on making that purpose a reality (I certainly cannot), then at least a minority of his decisions aren't going to rationally make sense.

My 2 cents. FWIW.

 

[Cosmacelf]

Those two statements are completely contradictory. Tesla and SpaceX have both teetered on the edge of bankruptcy with Elon having gone all in on both. In addition, Tesla put a large sum of money into Bitcoin and lost a good chunk of it. And most recently he's spent $44B on Twitter. None of those things strike me as being fiscally conservative.

Elon is a big risk taker and been fortunate enough that his biggest bets have ended up going his way.

You don't create game-changing companies like Tesla and SpaceX without taking big risks - financial and otherwise.

Yes, starting the companies were all exceedingly risky bets, but that can be said for any startup, almost by definition. Elon also always goes big. Tesla’s mission is to change the transportation sector. Not a small task, and thus, by definition, riskier than just being an EV company with a small niche. SpaceX wants to create a new civilization on another planet. Again, not a small task, so again, big vision, big risk.

But Elon is very, very thoughtful on how he executes. He actually has a very well thought out plan on how to get from A to B, unlike, say, Lucid or Rivian who don’t appear to know how to build a car profitably. He has been growing Tesla and SpaceX very fast, but he has made sure that he has done so without putting them on an undue risky path.

Tesla has had workforce reductions even while growing. Elon didn’t just keep raising money for SpaceX, even though he could have, without knowing how he was going to spend the money. There was a pause after he announced his ITS, the first iteration of Starship, because he didn’t know a) how he was going to build it and b) how to finance it. He took his time figuring that out, but once figured out, it was all hands on deck, and then he raised more money (for Starlink to fund Starship).

So the concept of Elon being “conservative” and de-risking means that he has good plans and backup plans for his company’s operations. And he quickly changes tactics as external conditions change to ensure the companies aren’t put at risk. Basically, he is a great businessman, great CEO, something that ironically, he consistently gets poor marks for. Which tells you all you need to know about how much the chattering classes know about running a company.

 

[TrendTrader007]

Yes, starting the companies were all exceedingly risky bets, but that can be said for any startup, almost by definition. Elon also always goes big. Tesla’s mission is to change the transportation sector. Not a small task, and thus, by definition, riskier than just being an EV company with a small niche. SpaceX wants to create a new civilization on another planet. Again, not a small task, so again, big vision, big risk.

But Elon is very, very thoughtful on how he executes. He actually has a very well thought out plan on how to get from A to B, unlike, say, Lucid or Rivian who don’t appear to know how to build a car profitably. He has been growing Tesla and SpaceX very fast, but he has made sure that he has done so without putting them on an undue risky path.

Tesla has had workforce reductions even while growing. Elon didn’t just keep raising money for SpaceX, even though he could have, without knowing how he was going to spend the money. There was a pause after he announced his ITS, the first iteration of Starship, because he didn’t know a) how he was going to build it and b) how to finance it. He took his time figuring that out, but once figured out, it was all hands on deck, and then he raised more money (for Starlink to fund Starship).

So the concept of Elon being “conservative” and de-risking means that he has good plans and backup plans for his company’s operations. And he quickly changes tactics as external conditions change to ensure the companies aren’t put at risk. Basically, he is a great businessman, great CEO, something that ironically, he consistently gets poor marks for. Which tells you all you need to know about how much the chattering classes know about running a company.

Excellent take and definitely worth a read for anyone to better understand how Elon operates

 

[Bet TSLA]

In addition, Tesla put a large sum of money into Bitcoin and lost a good chunk of it.

This is false. Last I checked, they are about even on what they've sold and their break-even for the minor amount of remaining BTC was ~$25K per BTC. Which means they were (if they still have that BTC), just about even a couple of weeks ago. Of course at the all-time high of BTC they had just about doubled the value of their initial purchase, so they are certainly way down from the maximum.

Not that this negates your point that Elon has been willing to take big risks.

Tesla and SpaceX have both teetered on the edge of bankruptcy with Elon having gone all in on both.

SpaceX for sure. Tesla not so much. Elon has certainly made the "we were this close to running out of money" story about Tesla during the Model 3 "production hell" period into a big deal, but it's always been BS. He could have raised the money needed for another year of operations in a heartbeat. But he probably would have had to give up some ownership to do so. Not at all the same thing as bankruptcy.

Again, agreed that Elon has been willing to take big risks. But best to stick to the facts.

 

[unk45]

Those two statements are completely contradictory. Tesla and SpaceX have both teetered on the edge of bankruptcy with Elon having gone all in on both. In addition, Tesla put a large sum of money into Bitcoin and lost a good chunk of it. And most recently he's spent $44B on Twitter. None of those things strike me as being fiscally conservative.

Elon is a big risk taker and been fortunate enough that his biggest bets have ended up going his way.

You don't create game-changing companies like Tesla and SpaceX without taking big risks - financial and otherwise.

I don’t think they are as contradictory as they apear to be. Early in his career Elon did go all in at least three times, zip2, PayPal and SpaceX. Tesla was fiscally conservative compared with most startups, with insistence on positive margins on roadster an early example. It is odd to think of a startup being fiscally prudent, perhaps, but those with positive margins are the ones that survive.

As for Twitter, he did not leverage the deal, but funded with equity and has reached positive cash flow. That is rare and conservative. Weird, perhaps, but not the wild speculation it has been described to be. That entire deal never passed 25% of his net worth and he did not assume new debt to do it.

How is his ‘real estate empire’ financed? Oh he’s, he doesn’t have one.

Listen to his lectures of margin and regular risk warnings.

Then examine Tesla finances, the only public example there is.

A lifetime of startups, turnarounds and working on failing bank sales gives me a slightly unusual view of conservatism, perhaps. Clue on Elon; how many of his many startups have failed? Right, NONE. Taking risk is not so reckless as it appears to be when survival is not in question.

His obsession with disclosing risks and openly discussing survival fears is the stuff of financial conservatism in the midst of business innovation Really proves his financial conservatism.

Finally Bitcoin was a negligible risk when he did it. The loss was immaterial.

 

[Max Plaid]

https://twitter.com/x/status/1634647163014877184

This guy looks familiar but I can’t quite put my finger on it. @ZeApelido

What lovely hair!

 

[2daMoon]

After watching Tesla grow for years, seeing example after example of the scale of manufacturing they consistently develop, Morgan Stanley released a report where they speculate that Cybertruck production will remain in the 50K/yr range.

As if Tesla would even bother to build a 50K/year production line today.

SMR lambasts them, deservedly.

 

[Artful Dodger]

Sasha pans silicon valley venture capitalists trying to use fear of a bank run to force the Gov't to cover their SVB losses.

The Bank Run Apparently Starts On Monday | Sasha Yanshin Live

 

[kabin]

After watching Tesla grow for years, seeing example after example of the scale of manufacturing they consistently develop, Morgan Stanley released a report where they speculate that Cybertruck production will remain in the 50K/yr range.

As if Tesla would even bother to build a 50K/year production line today.

SMR lambasts them, deservedly.

If I remember correctly MS didn't base that call on production capability rather it's based on the CT being a niche/cult vehicle the masses wouldn't embrace.

 

[kabin]

Sasha pans silicon valley venture capitalists trying to use fear of a bank run to force the Gov't to cover their SVB losses.

The Bank Run Apparently Starts On Monday | Sasha Yanshin Live

And VCs caused the run by being the first to tell their asset managers to pull all money from SIVB and essential pull the plug on SIVB's customer base.

It's scary how many stupid millionaires and CEOs had large % of their assets at one bank let alone well over the insured limits. And what a dumb#$% CEO at SIVB.

It's always a good time to avoid large balances in money market accounts but especially so today.

 

[2daMoon]

If I remember correctly MS didn't base that call on production capability rather it's based on the CT being a niche/cult vehicle the masses wouldn't embrace.

The point I'm striving to make is how unlikely it would be that Tesla would develop a new production line to support a niche/cult vehicle. (this is likely why the new Roadster isn't out yet)

The concept for production offered by Morgan Stanley is absurd when measured against Tesla's mission statement. Besides, Elon has already stated that if CT doesn't take off they will pivot to something more conventional.

However, the CT pre-orders alone (20+ years of production at Morgan Stanley's 50K estimate) speak volumes as to how ridiculous it would be to presume the vehicle will languish as a niche offering. The light truck market in the US is huge.

 

[kabin]

The point I'm striving to make is how unlikely it would be that Tesla would develop a new production line to support a niche/cult vehicle. (this is likely why the new Roadster isn't out yet)

The concept made by Morgan Stanley is absurd when measured against Tesla's mission statement. Besides, Elon has already stated that if CT doesn't take off they will pivot to something more conventional.

However, the CT pre-orders alone (20+ years of production at Morgan Stanley's 50K estimate) speak volumes as to how ridiculous it would be to presume the vehicle will languish as a niche offering. The light truck market in the US is huge.

$100 isn't much skin in the game. There's also a lot of double booking - I've got reservations on the CT, Silverado, F150EV. In the end it all comes down to the unknowns - price and economy status. No doubt the normal fan is expected to buy it.

Pivoting costs time, money and investment risk so good for MS to at least bring it up for discussion.

 

[Unpilot]

What lovely hair!

That guy seems like a pretty serious dude....not sure if he is welcome on my island. @ZeApelido

 

[30seconds]

And VCs caused the run by being the first to tell their asset managers to pull all money from SIVB and essential pull the plug on SIVB's customer base.

It's scary how many stupid millionaires and CEOs had large % of their assets at one bank let alone well over the insured limits. And what a dumb#$% CEO at SIVB.

It's always a good time to avoid large balances in money market accounts but especially so today.

Let me know how you would have handled $50m in treasury. You would have set up 200 accounts and then emptied a bunch of them every two weeks to run payroll and accounts payable? And made sure your accounts receivables were being placed into whichever account had less than $250k, but only up to the $250k limit and then switch to another account?

 

[Krugerrand]

$100 isn't much skin in the game. There's also a lot of double booking - I've got reservations on the CT, Silverado, F150EV. In the end it all comes down to the unknowns - price and economy status. No doubt the normal fan is expected to buy it.

Pivoting costs time, money and investment risk so good for MS to at least bring it up for discussion.

You have no idea how much ‘double booking’ exists. Just because you did it, doesn’t mean a lot did it. I didn’t.

It’s not even a little bit helpful for an analyst to guess, to speculate, to pull wild theories out of their ears, or to suggest an arbitrary SP range. They get PAID to do a job which is *supposed to* entail business ACCURACY. Unless, of course, their intent is to manipulate for others - not us - to benefit from incorrect information. Gosh, no. They’d never do that.

 

[2daMoon]

$100 isn't much skin in the game. There's also a lot of double booking - I've got reservations on the CT, Silverado, F150EV. In the end it all comes down to the unknowns - price and economy status. No doubt the normal fan is expected to buy it.

Pivoting costs time, money and investment risk so good for MS to at least bring it up for discussion.

Let's look at it another way.
(from tfltruck.com)

U.S. Full-size Truck Sales: Full-year 2022​

Model	2022 sales	2021 sales	Change (%)
GM Trucks (COMBINED)*	754,876	768,698	-1.8%
Ford F-Series	653,957	726,004	-9.9%
Chevrolet Silverado	513,354	519,774	-1.2%
Ram Trucks	468,344	569,388	-17.8%
GMC Sierra	241,522	248,924	-3.0%
Toyota Tundra	94,429	81,959	15.2%
–> F-150 Lightning**	–>15,617	New	New
Nissan Titan	15,064	27,406	-45.0%
Hummer EV	854	1	New
TOTAL:	1,987,524	2,173,456	-8.55%

*COMBINED: Silverado + Sierra sales (but not Silverado MD), **Lightning is part of F-Series totals


At annual sales of around 2M, Morgan Stanley's 50K/yr would be 5% of the market. This is a declining market, with most offering's sales falling off since the reveal of the CT. (coincidence?)

A 5% market share is something the CT will easily achieve during the 2024 production ramp. If only 1 in 20 of the "normal fans" of pickups opts for the CT the rate of 50K/yr is easily met. Meanwhile, the legacy brands and the startups will still be struggling to bring their EV production up to profitable levels. Many, while simultaneously attempting to shore up their earnings with continued ICE production.

Pickups are the largest vehicle market in the US and it is mostly populated with ICE models. The electric choices are at very limited production rates, due mostly to limited battery supply and a steep EV production learning curve. Two factors which do not affect Tesla.

What are the odds that the pickup market in the US will see similar displacement by EV models as has been seen in the markets for the 3/S (Sedan) and Y/X (SUV) models?

Taking these factors into consideration the numbers do not seem to support Morgan Stanley's map for the future of the CT when there are no EV alternatives expected to reach volume production for quite some time. Except Tesla.

"Joe 6-pack" will be won over as the beer-and-bacon money saved outweighs any qualms over the new styling direction. Particularly, once his neighbor has one in the driveway.

 

[scaesare]

Having just returned from a trip to So Cal, and charged at numerous SC locations, I can report that .42 cents kWh is now common in that region. So yes; price for juice has gone up. I don't mind; still cheaper than gas, and I like to know that Tesla is making a profit.

Between being grandfathered in for free Supercharging and my pano-sunroof, it makes me hesitant to consider giving up my '13 Model S...

 

[scaesare]

This is false. Last I checked, they are about even on what they've sold and their break-even for the minor amount of remaining BTC was ~$25K per BTC. Which means they were (if they still have that BTC), just about even a couple of weeks ago. Of course at the all-time high of BTC they had just about doubled the value of their initial purchase, so they are certainly way down from the maximum.

Not that this negates your point that Elon has been willing to take big risks.

SpaceX for sure. Tesla not so much. Elon has certainly made the "we were this close to running out of money" story about Tesla during the Model 3 "production hell" period into a big deal, but it's always been BS. He could have raised the money needed for another year of operations in a heartbeat. But he probably would have had to give up some ownership to do so. Not at all the same thing as bankruptcy.

Again, agreed that Elon has been willing to take big risks. But best to stick to the facts.

Well, there's a difference between "we were this close to running out of money" and being unable to raise money, right? Having watched/read several accounts about the last minute xmas infusion from Mercedes Benz back in the original Roadster days, I don't think the claim they were close to running out of cash is BS.. And it appears even raising cash was a bit of a challenge... unless I'm missing something?

 

[betstarship]

Even with everything going on with black swans, anyone else also under the impression TSLA is going to spike/run-up sometime this year? maybe even in the next few months?

Some rationale for 2023:
- Strong (historically) Q1 / 2023 P&D and earnings
- Berlin & Texas are ready for scaled production
- Cybertruck production/deliveries start
- Semi scale up
- Starship successful launch and regular cadence
- Starlink enabled for most of the world
- Growth of EVs and huge market (thus increasing market size of the entire ecosystem)
- Much wider knowledge that the world needs to moving to sustainability (advocates on advocates)

I think we're probably at an inflection point in 2023.