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

[growler23]

At long stock-is-down times like this, folks have talked about "being greedy when others are fearful". But I'm not feeling greedy, and not particularly fearful. After some days of introspection, I'm pretty sure I'm just feeling beat down and exhausted (anyone else out there?) on the TSLA future front. Not sure what the recommendation is for this. I did expend a bit of dry powder on the dip, felt better about things for a day or so, for what it's worth.
I think I need to consider the TSLA investment as more like a garden. I have planted a pretty solid row of seeds over the last couple years. It does not behoove the gardener to keep adding more fertilizer, or compost, or root stimulant every day just because the plants didn't noticeably change overnight, and I sometimes feel that is the timescale I (we?) seem to be demanding here. "Oh wait, maybe it needs a little more fertilizer". "Just a little more water". You can kill a garden that way. Just need to let the sun shine on it and let it go for a time.
I am going to focus a bit more time and energy on other things for a while, and let future take its course, whatever that may be.
I know this is all just personal stuff but perhaps someone else will find value here for themselves.
(I suppose this is all just part of continuing to HODL)

 

[M|S|M MYP]

At long stock-is-down times like this, folks have talked about "being greedy when others are fearful". But I'm not feeling greedy, and not particularly fearful. After some days of introspection, I'm pretty sure I'm just feeling beat down and exhausted (anyone else out there?) on the TSLA future front. Not sure what the recommendation is for this. I did expend a bit of dry powder on the dip, felt better about things for a day or so, for what it's worth.
I think I need to consider the TSLA investment as more like a garden. I have planted a pretty solid row of seeds over the last couple years. It does not behoove the gardener to keep adding more fertilizer, or compost, or root stimulant every day just because the plants didn't noticeably change overnight, and I sometimes feel that is the timescale I (we?) seem to be demanding here. "Oh wait, maybe it needs a little more fertilizer". "Just a little more water". You can kill a garden that way. Just need to let the sun shine on it and let it go for a time.
I am going to focus a bit more time and energy on other things for a while, and let future take its course, whatever that may be.
I know this is all just personal stuff but perhaps someone else will find value here for themselves.
(I suppose this is all just part of continuing to HODL)

I feel you completely. It is during this time, i just have to constantly stick to my philosophy of buying on the dips and keep telling myself "The best investors are dead investors." We all know what we have in $TSLA, otherwise we would not have invested in them. Everything shall pass and they will emerge victorious, and make us a few bucks along the way

 

[Knightshade]

My point was refuting that a price cut was evidence of a demand problem. Given that prices have been cut for other things (fed tax credit qualification, etc..), then clearly you cannot assert that price-cut=demand problem.

Unless you expand the sentence to say "Without qualifying for the tax credit, demand would be lower... so they cut the price to qualify for the tax credit which would...increase demand...because it effectively doubles the size of the price cut for the consumer- and makes the value proposition even more compelling versus other vehicles that got either no, or half, credit"

In which case your refutation does not hold up. Considering "qualifying for the credit" in a vacuum isn't a "reason" really.

Context matters.

Precisely.

 

[SOULPEDL]

Eh the other poster was wishing for the failure of their EV business, not of their ICE business.

Eh, but keep the ICE division? I missed that but no change in my analysis.
Throw out the ICE with the bath and bathwater - rescue the baby but not the home.

(Edit: Except for this part: "Therefore, they should just die." which is where I assumed duke meant ICE as well.)

 

[EVNow]

it was a specific response to @EVNow , who said:

Context matters.

If context matters - why are you taking my quotes out of context.

Pls state your position here clearly - and I'll state mine.

Do you think any of the price cuts in the past few months were to increase demand ? Do you think ER guidance is that they will continue to do that, as needed, irrespective of effect on GM. ?

My position is yes to both.

 

[Buckminster]

Threads of the day:
Tesla phone anyone? For wearable device chat
Tesla bicycle?

Weather permitting, Falcon heavy launch tonight!

Also:

https://twitter.com/x/status/1651980576042123264

 

[Hiline]

Eh, but keep the ICE division? I missed that but no change in my analysis.
Throw out the ICE with the bath and bathwater - rescue the baby but not the home.

I mean I agree with everything you said. The other poster wanted Ford's and GM's EV ventures to fail. presumably along with their ICE operations, while I hope that their EV ventures do succeed.

 

[kbM3]

None of those statements are appropriate for the current price cuts. The reduced costs and tax credit comments were a reasonable justification based on concurrent events but they are not the reason - the reason is because Tesla couldn't have sold all the vehicles at the higher price. You can see the truth to this when prices were rising - if Tesla cut prices because costs came down as a rule they wouldn't have increased the price when they did and would have just let the orderbook blow out. They used the orderbook backlog as a justification to increase prices, but the reason was because they could and because big margins are good for the company.

Those justifications are completely standard in business. Have you ever heard a CEO say we are putting prices up because we can get away with it, or we're putting prices down because we can't sell them at the current price - that's implied in every pricing decision by every company.

It's clear that Tesla is looking for a new clearing price for their vehicles due to increased production and a more difficult economic climate. It's also clear that COGS isn't coming down nearly as fast as vehicle prices (even with the IRA tailwind)

The reason this matters is because Tesla is valued at a high multiple which has a substantial amount of growth and profit embedded in it. The price cut discussion is important to try and determine just how low and for how long the stock price will be down so we can plan accordingly.

It also is starting to matter because free cashflow was only $0.4b in Q1 - that's only c.$1k/vehicle and we know that Tesla has dropped ASPs by more that $1k already over the last month. Some of this can be offset by higher sales volumes and reduced cogs but it's becoming likely that Tesla will need to start drawing cash from its balance sheet to fund its CapEx plans. And if prices continue to reduce they may need to issue debt or trim their CapEx plans.

On reduced cash flow, remember that deliveries < production lately and although that doesn’t hit P&L too badly, it does directly impact cash flow.

The amount by which deliveries lag production are temporarily higher than normal because of wave unwinding, so once that’s done, cash flow should improve.

 

[DutchDriver]

Ending today at USD 160. Could we be finishing tomorrow at USD 165?

View attachment 932467

Looks like we might gonna make the $165

 

[Ogre]

Good clip from 10 years ago regarding Teslas pricing strategy. Musk suggested by 2026 or so 50% of all cars would be electric back then. Going to be a close thing but we have a solid chance.

We won’t make it to Mars by then though.

https://twitter.com/x/status/1651722660056014848

 

[NicoV]

But Tesla has dropped ASP by >10% and sales have only increased 5% QoQ. If the demand curve hasn't shifted then demand is quite inelastic.

I think it’s too early to tell. Buying a car is not an impulse buy. The people thinking of buying a new car in 2023 may have to warm up to the idea of buying a Tesla instead of whatever they had already planned to buy.

 

[Cosmacelf]

At long stock-is-down times like this, folks have talked about "being greedy when others are fearful". But I'm not feeling greedy, and not particularly fearful. After some days of introspection, I'm pretty sure I'm just feeling beat down and exhausted (anyone else out there?) on the TSLA future front. Not sure what the recommendation is for this. I did expend a bit of dry powder on the dip, felt better about things for a day or so, for what it's worth.
I think I need to consider the TSLA investment as more like a garden. I have planted a pretty solid row of seeds over the last couple years. It does not behoove the gardener to keep adding more fertilizer, or compost, or root stimulant every day just because the plants didn't noticeably change overnight, and I sometimes feel that is the timescale I (we?) seem to be demanding here. "Oh wait, maybe it needs a little more fertilizer". "Just a little more water". You can kill a garden that way. Just need to let the sun shine on it and let it go for a time.
I am going to focus a bit more time and energy on other things for a while, and let future take its course, whatever that may be.
I know this is all just personal stuff but perhaps someone else will find value here for themselves.
(I suppose this is all just part of continuing to HODL)

Yes indeed. Competing schools of thought. Find ONE (or a few) stock you love and bet all on it. If you are right you'll get 10x, 20x, 30x returns. That can work if you are smart/lucky, but even in that case, you have to realize that companies get big and after you've gotten your 10x or whatever return, it ain't going to keep happening. When Tesla reached $1T market cap, you needed to realize that it had at most a 2x return left in it over the span of many more years.

Meaning, Tesla is still a good stock, but over the long term, it'll act like a solid big company growth stock, and eventually turning into a solid dividend stock, not the rocket ship unicorn it was before.

So I'm happy keeping my investment in Tesla (since I have other investments that generate returns), but I've now got more than enough in Tesla and new money is going elsewhere for my speculative growth investment portfolio (which is also NOT my whole portfolio).

 

[samppa]

Yeah, that local Tesla Owners Club got in trouble with Tesla for inviting Sandy Munro and
Cory Steuben (President - Munro & Associates) on the Club's visit to Giga Berlin. The Club is now banned from attending further events at Giga Berlin. Sandy and Cory discuss what happened in this video: (posted yesterday)

What Did Sandy & Cory See at Tesla's Giga Berlin Factory? Germany Trip Recap | Munro Live on Youtube

In the Army we had two applicable aphorisms:

1. No names; No pack dril, and
2. it's better to beg forgiveness than ask for permission.

I'm sure it'll be fine, most likely just a 'time-out' for the 'offenders', at least until they do something helpful (then it'll be 'all-is-forgiven')

Cheers!

That wasn't our club.

Must have been some german owners club that invited them. wasn't us.

Edit: it was Austria.

 

[SOULPEDL]

I mean I agree with everything you said. The other poster wanted Ford's and GM's EV ventures to fail. presumably along with their ICE operations, while I hope that their EV ventures do succeed.

I see. What are the odds of the legacy succeeding at either?

Also, if xyz fails <insert your favorite car brand here>, then you'll be looking for a new brand (or transportation method), especially if the cause for closure is a decline in ICE sales to further encourage a switch to alternative rides.

 

[Ogre]

I think the conversation has been surprisingly cognizant of the above. But Tesla has dropped ASP by >10% and sales have only increased 5% QoQ. If the demand curve hasn't shifted then demand is quite inelastic. The demand curve should have moved as the economy worsens, it's natural.

This is bubble nonsense. Please stop quoting things relative to prices during the auto pricing bubble. We've talked about this a bunch and comparing to those years is absolutely pointless. I'm not sure how people can forget 18+ months of cars stacked on runways and in lots waiting for parts because they can't be sold due to missing parts. Last year we saw a massive crash in auto sales and a huge price spike due to lack of inventory.

Relative to early 2021 and prior, Tesla prices are almost flat and effective cost with interest rates is actually up.

 

[Hiline]

I see. What are the odds of the legacy succeeding at either?

Also, if xyz fails <insert your favorite car brand here>, then you'll be looking for a new brand (or transportation method), especially if the cause for closure is a decline in ICE sales to further encourage a switch to alternative rides.

Small odds, but I hope they do overcome the small odds. Tesla alone cannot complete the switch to EV. It's going to take them 6-7 years to reach 20M units/year worldwide. We need other automakers to scale, if for nothing else than accelerate the phase-out of ICE vehicles. And I hope those auto workers don't lose their jobs - it would be much better for them to be re-trained to work on EV production than to lose their auto jobs altogether.

 

[EVNow]

On reduced cash flow, remember that deliveries < production lately and although that doesn’t hit P&L too badly, it does directly impact cash flow.

The amount by which deliveries lag production are temporarily higher than normal because of wave unwinding, so once that’s done, cash flow should improve.

Yes - I'm less worried about cash flows than GM (and that only because of SP).

Obviously cash flow has been adversely affected because of inventory build up. As long as the inventory is around this 15 days of sale, it should be fine.

 

[CorneliusXX]

This is bubble nonsense. Please stop quoting things relative to prices during the auto pricing bubble. We've talked about this a bunch and comparing to those years is absolutely pointless. I'm not sure how people can forget 18+ months of cars stacked on runways and in lots waiting for parts because they can't be sold due to missing parts. Last year we saw a massive crash in auto sales and a huge price spike due to lack of inventory.

Relative to early 2021 and prior, Tesla prices are almost flat and effective cost with interest rates is actually up.

Only if you want to accept the stock price as it was prior to the bubble years.

 

[EVNow]

Eh, but keep the ICE division? I missed that but no change in my analysis.
Throw out the ICE with the bath and bathwater - rescue the baby but not the home.

(Edit: Except for this part: "Therefore, they should just die." which is where I assumed duke meant ICE as well.)

Nobody wants ICE to survive .... but the big issue would be a system-wide collapse if Detroit collapses. So, the best possible outcome is an orderly (but quick !) transition to EVs Now !

 

[EVNow]

I think it’s too early to tell. Buying a car is not an impulse buy. The people thinking of buying a new car in 2023 may have to warm up to the idea of buying a Tesla instead of whatever they had already planned to buy.

That is the reason many of us think a small % of price cuts are better spent doing you know what ...