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

[scaesare]

You two guys are talking about different events. The person you are replying to was talking about the initial Model 3 ramp where Elon stated they were close to bankruptcy.

You are correct, scaesare, that Tesla was literally hours away from bankruptcy December 24, 2008. That's when the Tesla Board was about to pull the plug (no one wanted to fund its losses anymore), and Elon said, **** it, and put his last $40M he had into Tesla. At that point he was literally broke, having invested all his Paypal gains into SpaceX and Tesla. That so impressed the VCs around the Board table that they too then joined him and together put in place a rescue round.

BTW, I don't think Elon's comment about the Model 3 ramp was hyperbole. He often uses shortcuts when talking. What I think he meant when he said Tesla was on the verge of bankruptcy was that if they hadn't figured out the production ramp, they'd be burning through boatloads of cash, since they had hired and tooled for volume production (kinda like Rivian/Lucid today). They probably could have raised more money, but that wouldn't have been a solution. It was at most a stopgap. They had to solve their production issues to avoid bankruptcy.

And the market, oddly enough, knows this. That's why Rivian's market cap more or less follows their cash balance, effectively valuing Rivian's actual operations at $0. Tesla's actual valuation would have trended very close to their cash balance too (which was only a few $B) if they hadn't solved volume production.

The most recent point @Bet TSLA made used the Model 3 situation as evidence that Elon has not gone all in because Tesla was not really on the edge of bankruptcy. But that point ignores the earlier context of discussing the "early days" back up to when Elon jumped in to Tesla after Zip2. My point was that Tesla at some point was on the edge... just because it wasn't the Model 3 ramp doesn't mean it didn't happen, and using that ramp as evidence of such doesn't tell the whole story.

The context of the thread I replied to was this chain (emphasis mine):

unk45:

Elon has a long history, back to zip2, of being conservative financially. 'course he did total that million dollar McLaren. Otherwise he has has been consistently conservative financially., although he's bet the bank couple times in the early days. He'll not avid all the financial stuff but he'll continue learning step by step. From product financing to insurance to supplier support Tesla and SpaceX do make immense effort to avoid the risks they can, and mitigate the ones they cannot. In these fields they're conservative.

Dave EV:

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.

Bet TSLA:


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.

It's best to stick to ALL the facts...

 

[lafrisbee]

Sure. Give it a go, peeps. Forget the sledge hammer, but highly suggest a steel ball the size of a man’s - well, something that fits nicely in the hand with some heft behind it.

I actually believe there will be little targeted vandalism. It’s called Tesla glass, stainless steel and sentry mode, but more importantly people will be too awed and intrigued. Cybertruck will stop all in their tracks beyond any level that Model S, X, 3 or Y ever stopped people to gawk.

Just get a vanity take that saids something like "AR 15" or BUBBA.
When I was young an empty gun rack was "sentry mode."

 

[wipster]

Good article about what's coming tomorrow, sorry if it's paywalled:
US Plans Emergency Measures to Backstop Banks After SVB Fed and Treasury Weigh Emergency Authority for Deposit Backstop

 

[SmokyPeat]

It will be interesting to see what happens with interest rates. I'd be very surprised if we see +.5% now. .25% seems likely. Possibly even a pause.

 

[Artful Dodger]

Nassim Taleb has written a whole book about it, appropriately named "The Black Swan"

Taleb is the author of the Incerto, a five-volume philosophical essay on uncertainty published sometime between 2001 and 2018.

 

[scaesare]

Semi has been delivered to some customers and is being used in the real world so I think we can cross that one off the list.

Indeed..

And I'd argue that we've seen several more refined versions of CT, closing in on the final production version. Roadster's the one thing we haven't seen as much movement on, but Semi and CT both we have...

 

[scaesare]

True, but not in terms of public perception. Who even knows about this, who is not a Tesla investor? Have you seen one in the wild? Do you personally know anybody who has? A single customer, in a single location, in a single country. I'm sure production will increase, but as far as the public is concerned, the tesla semi has not happened yet.

I've had LOTS of people, who aren't TSLA investors talk to me about both Semi and Cybertruck.

A google of either shows coverage of them at lots of popular media outlets (not just EV-fanboi sites). The Cybertruck has been in music videos for goodness sake.

As for seeing them in the wild, nope... I live on the East Coast and initial Semi deliveries are in CA. But I've seen "average citizen" youtube videos of folks that have seen the Semi. Cybertruck isn't in production yet, so obviously ain't gonna see many of those in the wild, but even then, there's been some "average Joe" videos a of it too.

I'd be willing to bet more average folks know about either Semi or VT than Lucid and Rivian combined... and heck probably Nikola as well (well... maybe not because of the Trevor Milton coverage... lol).

 

[skitown]

This is what I love to see. More Tesla semis delivering Teslas

https://twitter.com/x/status/1635051990131822592

It's from 2019.

https://twitter.com/x/status/1112106548363292672

 

[Artful Dodger]

GoJo is freakening out right now pleading for the feds to continue rate hikes for the sake of the working class..lol.

Lol, indeed. Worth the price of admission.

Cheers!

 

[Artful Dodger]

Even with the decline in sales over the last few years, annual US light truck sales in both 2021 and 2022 were nearly double what they were in 2010.

Indeed, much of that change in buyer preference was due to the Bush "Hummer Exemption" which granted generous depreciation schedules for company vehicles over 6,000 lbs. As such, represents the results of a move to hobble U.S. CAFE standards in spite of the will of the then current Congress. Big Winner? Big Carbon.

 

[Artful Dodger]

Good Grief! Their reserves were GONE! The rule is mark to market precisely because those are reserves. The rates absolutely were not "speculative", they were contractual

Hmm, other sources say that financial reporting requirements for bonds is the opposite (bolded above), that is bonds are reported at their book value based on maturity. We discussed this here at TMC during the first Tesla Bitcoin write-down episode. Are the requirements for Banks different than other public Companies? Care to elaborate? TIA.

. If you want to comment on this please, please read a bit about bank reserve calculations. Then read about CAMEL ratings. If that is too much work please don't promote these fallacious ideas. They are dangerous!

Thanks for that! The CAMELS acronym stands for "Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity". Source:

CAMELS Rating System: What It Is, How It Is Calculated | Investopedia.com​

Cheers!

 

[Bet TSLA]

The most recent point @Bet TSLA made used the Model 3 situation as evidence that Elon has not gone all in because Tesla was not really on the edge of bankruptcy.

My point was more that Elon likes to exaggerate and really can't be trusted when it comes to talking about the financial condition of his companies. For instance, I don't believe a word he says about his bird company -- state of advertising, financial condition, prospects, etc.

From what I can tell, Tesla may very well have ended up in bankruptcy in those very early days if not for good luck and Elon's steadfast financial support. No doubt Elon took big risks back then.

 

[Open Interest]

I think the issue is in finding buyers for the portfolio, not that the portfolio caused the inital problem.
(Had the same inital interpretation).

Loans and deposits are inextricably linked

 

[totoro722]

Sure. Give it a go, peeps. Forget the sledge hammer, but highly suggest a steel ball the size of a man’s - well, something that fits nicely in the hand with some heft behind it.

I actually believe there will be little targeted vandalism. It’s called Tesla glass, stainless steel and sentry mode, but more importantly people will be too awed and intrigued. Cybertruck will stop all in their tracks beyond any level that Model S, X, 3 or Y ever stopped people to gawk.

Paint, OTOH, is quick and easy … and nasty to deal with. I think you are very right that the Cybertruck will get a lot of attention.. Just not sure it will all be positive.

 

[ZeApelido]

Janet Yellen Announces All FDIC Payments To Be Delivered via Backseat of Bulletproof Tesla Cybertrucks

Jerome Powell to be held in the open trunk bed.

 

[Artful Dodger]

ighest average salaries in insured banks … the list goes on..,UK & India operations mimic?
The last time I recall a thing like this was BCCI.

Honestly, this is what I like about this forum: a DEEP BENCH on Indian Cricket.

Cheers to the Wides!

 

[Artful Dodger]

After SVB failure, US guarantees all deposits to stem fallout | Reuters (30 mins ago)

March 12, 2023 8:05 PM EDT Last Updated 42 min ago

After SVB failure, US guarantees all deposits to stem fallout​

WASHINGTON, March 12 (Reuters) - "U.S. officials stepped in to stem financial fallout from the failure of tech startup-focused Silicon Valley Bank (SIVB.O), saying that all customers will have access to their deposits starting on Monday.

"The move will not lead to losses by American taxpayers and all depositors, including those whose funds exceed the maximum government-insured level, will be made whole, according to a joint statement by U.S. Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and Federal Deposit Insurance Corp Chair Martin Gruenberg on Sunday evening.

"The moves reassured financial markets, sending stock indexes up in early Asia trading, but left questions unanswered about buyers for the banks, and left equity and bondholders of the two failed institutions with steep losses.

"Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system," the federal regulators said in their Sunday evening statement. "This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth."

"The officials said that depositors of New York's Signature Bank (SBNY.O), which was closed Sunday by the New York state financial regulator, would also be made whole at no loss to the taxpayer.

"Signature, like SVB, had a clientele concentrated in the tech sector, and the securities on its balance sheet had eroded as interest rates rose. As of September, almost a quarter of Signature’s deposits came from the cryptocurrency sector, but the bank announced in December that it would shrink its crypto-related deposits by $8 billion."

Latest Updates​

• Biden says will address banking crisis on Monday morning
• U.S. Treasury says Silicon Valley Bank, Signature Bank 'not being bailed out'
• Regulators close New York's Signature bank, say depositors will be made whole
• Exclusive: PNC, RBC interest in SVB cools as regulators seek bids
• Silicon Valley Bank deposits to be available Monday, U.S. officials say

Market like it: (9:30 pm ET futures)

S&P Futures​

3,905.75​

+43.00 (+1.11%)​

​

Dow Futures​

32,177.00​

+259.00 (+0.81%)​

​

Nasdaq Futures​

11,960.75​

+120.50 (+1.02%)​

 

[MC3OZ]

My point was more that Elon likes to exaggerate and really can't be trusted when it comes to talking about the financial condition of his companies. For instance, I don't believe a word he says about his bird company -- state of advertising, financial condition, prospects, etc.

From what I can tell, Tesla may very well have ended up in bankruptcy in those very early days if not for good luck and Elon's steadfast financial support. No doubt Elon took big risks back then.

For every comment Elon makes, there often seems to be 30-100 mostly negative comments from various commentators, amateur and professional who are often pushing a thinly disguised agenda.

I trust the comments Elon makes about his businesses more than I trust the comments of most others. At least Elon is trying to be honest, open and transparent a lot of the time.

Often those that misunderstand Elon's intentions are not doing it deliberately, they just have narrow "tunnel vision" about how things are done, and what is possible, What Elon is doing doesn't fit their model if how things are done and new ways of doing things seem risky.

New ways of doing things are risky, but Elon has considered the risk/reward equation and decided the potential reward is worth the risk.

I have now re-watched Investor Day twice (one section in particular). I re-watched because a critical video raised serious questions about Elon's understanding of Lithium mining and refining. At first the critical video seemed right, and it took 2 X re-watching and paying very careful attention to what Elon and Drew said to understand the strategy Tesla was pursuing.

My eventual conclusion was, that the expert commentators had "tunnel vision" and completely misunderstood the strategy Tesla was using.

And every time I re-watch I learn something new, which broadens the scope of Tesla's ambitions. if you have only watched the Investor Day video once, it is likely that you have missed a lot.

When Elon is part of a team putting together comprehensive and ultimately successful plans in one or more businesses, he perhaps deserves the benefit of the doubt, or are least some effort to fully understand the plan.

 

[Krugerrand]

OMG! Just saw a Lucid commercial being played during The Oscars.

 

[EVNow]

Honestly, this is what I like about this forum: a DEEP BENCH on Indian Cricket.

Cheers to the Wides!

Did someone say Indian Cricket ... ?