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

[Mobius484]

Curious as to the likleyhood people choose the love icon over the like icon on this thread as it correlates to SP.... lots of loves today....Tesla bulls feeling good today!

 

[CaliBear1]

Port Hueneme is a transfer point for at least some BMWs headed to the West Coast. My "pre-enlightenment" special ordered BMW335is traveled by ship from Germany to the Bay Area via Port Hueneme. Tracking it was an exercise in extreme patience.

This may be unrelated to Tesla, but the Glovis Cosmos, a vehicle carrier with capacity identical to that of Glovis Captain is headed to San Franciso, with an ETA there of January 17, 01:00 (UTC):

GLOVIS COSMOS Current position (Vehicles Carrier, IMO 9707027) - VesselFinder

PS. Glovis Cosmos appears to be coming from Port of Hueneme, just North of LA. I have no idea what goes on there.

 

[Remster32]

Here are the highlights from the Baird article issued today.

Tesla, Inc. (TSLA): Highlighting Upcoming Delivery Cadence Reiterate Outperform rating. Investors have focused on the cadence of Model deliveries in 2019; we think deliveries could decline sequentially in Q1 solely due to timing of international shipments. While we expect production will continue to ramp, we expect higher cars in transit given it takes ~5 weeks to deliver to Europe. That said, European shipments appear on track to start in February and we believe Model 3 demand remains robust. We hosted tours of TSLA’s West Coast factories; please reach out for more information

The cadence of Model 3 deliveries in 2019 has been a central focus for investors; we expect deliveries will be down sequentially in Q1, but solely a timing issue as the delivery focus shifts to Europe. As demand has once again become a central focus, we think TSLA’s commentary on the Q4 call will be extremely important. That said, there are several levers to increase demand which have not been used yet, in our view. Furthermore, discontinuing the 75 kW Model S and X seems to be another positive data point to support strong demand.

We expect production will continue to grow sequentially in Q1; any decline in deliveries in the quarter would be a result of delivery timing, in our view. We expect production will continue to ramp in Q1, but think there could be more cars in transit at the end of the quarter due to delivery timing (takes ~5 weeks to ship cars to Europe). Importantly, we expect investors will look through any volatility in deliveries due to timing effects.

European deliveries appear to be on track to start in the next few weeks; we believe international deliveries will be an important driver in Q1. Model 3 production for Europe appears to be on track and we expect deliveries to begin mid- quarter; we estimate it takes ~5 weeks to ship cars from the factory in California to Europe. Importantly, we think TSLA could shift focus back to domestic deliveries
at the end of Q1/early Q2 to maximize deliveries ahead of the next tax credit step down (end of Q2).

We think cash flow will be impressive in Q4, particularly given the potential for working capital tailwinds in the quarter. With fewer cars in transit and lower inventories (due to the end of quarter delivery push), along with a reversal of the receivables build in Q3, we think cash flow metrics could be extremely strong in Q4. Additionally, we think TSLA may have some dry powder with ZEV credits; the company has recognized $102.6M of ZEV credit sales so far in 2018, vs. ~$280M for FY:17.

We think TSLA will be able to achieve long-term margin targets even with price reductions. Management appeared comfortable the company would be able to achieve long-term margin targets even after the price reduction; production appears to have stabilized following the significant ramp in recent quarters. Importantly, we think Q4 Model 3 margins will be strong (we model gross margin of 22% for Q4) given the favorable mix during the quarter.

We are updating our 2019 estimates to reflect our belief deliveries will be weighted towards the back half of the year. We now model 50k Model 3 deliveries in Q1, down from ~63k in Q4:18. Our FY:19 delivery estimate is unchanged at 285k.

$465 price target. Our price target is based on a ~15x multiple on our 2022 adj. EBITDA estimates. This is in line with other large-cap high-growth peers (median ~16x), which we believe is justified given TSLA’s strong growth profile. We discount our estimates to YE:19 at a 20% rate.

 

[MP3Mike]

I believe it's all. There aren't many places left in the nation that aren't on TOU or at least aren't moving towards that. All of the big utility companies (more than a few 100k customers) have smart meters which are the real requirement for TOU pricing. (aside from regulatory approval of course)

We do have TOU as an option but it doesn't make sense for many to actually use it unless you have solar or a Powerwall. (You get a ~3 cent discount for off-peak, mid peak stays the same, and peak goes up ~5 cents.)

And getting a second meter installed to just charge your EV would be cost prohibitive for most people. (Driving 12k miles a year and charging 100% off peak at home would only save you ~$100/year.)

 

[Buckminster]

$465 price target. Our price target is based on a ~15x multiple on our 2022 adj. EBITDA estimates. This is in line with other large-cap high-growth peers (median ~16x), which we believe is justified given TSLA’s strong growth profile. We discount our estimates to YE:19 at a 20% rate.

$465 - why so low?

 

[Remster32]

$465 - why so low?

It's actually the highest price target on Wall Street. Remember that these are 12 month price targets.

 

[ClimateOptimst]

The weird thing with USA is that all demographics seem quite anti-Musk, even progressive liberals. I can only put this down to the continual FUD campaign from the media. Must be a bit soul-destroying for Elon, who works tirelessly to improve all our futures.

I'd be quite happy for Tesla to get out of the US completely, seems a very toxic country now and I'm not sure it's going to change for some time. I'd never move to the US, the idea of walking down the street where everyone has a gone terrifies me.

I would predict that the good ol' U. S. of A.'ll flip amazingly quickly (like in the next election cycle <2 years) to get on and lead the green tech revolution now that the economics are there & the cost of new energy generation from wind & solar are less than fossil fuel alternatives. Among the various freedoms (...of speech, ...of religion, etc.) we're founded on, freedom to make a buck is one of the most powerful and enduring. Moreover, public sentiment here is often in favor of many progressive things regarding energy and the environment that are common sense to people on this board but have been partially held back by too much money in the political system that's protecting the status quo & old wealth. That facade will crumble as green tech, economics and job creation take over with tesla in the vanguard here & abroad as GF3, GF4, GF5, etc. sprout in logical places on the various continents. One of my favorite Churchill quotes here is apropos, though i wish it weren't so, "you can always count on the Americans to do the right thing...but only after they've exhausted all the other possibilities"

 

[AudubonB]

Regarding Ben Kallo's (Baird) evaluation of $465 and why:

Not only Remster's answer, but he provides his own justification: 15X EBITDA. That gives you the ability to agree or disagree not only with his earnings estimate but, in my opinion more substantive, the multiple he uses.

 

[Rarity]

$465 - why so low?

Agreed. I don't think there are any big cap tech companies expected to grow their top line anywhere near 50%+ in 2019.

 

[Starno]

Who says there will be cars in transit to Europe and China at the end of Q1? If they produce European and Chinese cars up to mid February these can all be delivered in time. From mid February they can start producing cars for NA and deliver these in time as well. Q2: rinse and repeat.

Maybe, but I doubt that they will stop producing European cars just to be able to deliver everyone of them without any being in transit. I think they'll produce consistently for Europe without caring much about transit.

 

[anthonyj]

Allergic to $348. Only stock on my watchlist that’s fading it’s gains.

 

[SteveG3]

It was a differerent phase of the oft-quoted sequence -

#1 First they ignore you,
#2 then they laugh at you,
#3 then they fight you,
#4 then you win.

Tesla has finally, without ANY doubt, crossed over from #2 to #3.

CNBC's Fast Money had two amazing segments about Tesla. First, the Phil Lebeau report mentioned above. Melissa Lee teased the first segment this way - "The biggest carmakers are going electric, with General Motors and Ford among others trying to take on Tesla; but can the other car stocks catch up?" What the heck??? Where was the tone from 9 months ago? If it wasn't "Elon Musk has done something else crazy that we now need to associate with a negative outcome for Tesla" or "Tesla is losing money, will they go bankrupt" or "problems for Tesla as Jaguar reveals its new SUV" etc. etc. Anyone wanting to spread FUD would never be wording the teaser that way.

Phil Lebeau's segment almost wholeheartedly showed that Tesla is in front and they're REAL... not, in actual fact, a wobbling jello with Crazy Elon at the helm. I could hardly believe my eyes as I watched. Cadillac president admitted that Tesla have gotten "into the minds of consumers." Admitting that on TV must have been a tough cookie to swallow. Can you imagine the table-pounding going on at the marketing meetings? Cadillac is the epitomy of legacy manufacturers, selling substandard cars that maintain the status quo of wearing out after a few years, and dealerships who live off maintenance, and a large marketing push in print, TV, and movie product placement etc. is required to get into the minds of consumers. Tesla OTOH has done exactly that with nothing but twitter, facebook, a website, and Elon Musk.

CNBC have clearly gotten the message that Tesla are ahead. They will probably shift their position to one of admitting that Tesla is solidly ahead, but will keep the drama going by constantly exaggerating the significance of rivals' efforts. Still tough to be fair to a car company which gives them zero dollars... versus Cadillac, Ford, Daimler, BMW etc. etc. who give them lots of money all through the year.

Second, the Cathie Wood segment where she finally got her chance to strut around and peacock, vindicated that Ark's position was right all along. Wood kept pressing the significance of Tesla's lead over the rest, including battery costs & technology, AI for autonomous driving, and the Autopilot miles already driven/data sent back to Tesla. You gotta admit, it's hard to imagine scenarios where rival companies work harder and faster than Tesla are working, and actually eclipse Tesla to get in front.

Melissa Lee asked "I mean, comparing a Bolt to a Model 3...?" and she was almost laughed out of the studio. 9 months ago, mention of the Model 3 on CNBC never came without also mentioning production problems or delays. Her question today referenced the 2017 North American Car Of The Year. Remember when the MSM (including CNBC) was crowing that Chevrolet was beating Tesla to the affordable EV? I wonder if industry automotive journalists will ever be held to account for such an obvious sell-out.

Final note - Melissa Lee has always struck me as someone who appears to put herself last in line to throw mudballs at Tesla. Often leaving open the possibility that Tesla may be getting unfairly portrayed. I found out recently that she is married to Ben Kallo from Baird, who has been a Tesla bull for years. Surely they have talked over the dinner table and she has a lot more detailed opinion of them than her co-hosts.

Final final note - to come back to EVNow's comment (which I agree with)... in 2012/2013 Tesla was nothing but an inconsequential observation. Their juicy exploits could be reported and would have no effect on their advertisers. Fast forward to 1.1% market share in USA in 2018, and the legacy advertisers are making a lot of noise behind the scenes, asking to make sure Tesla is portrayed badly at every possible opportunity - in exchange for advertising buys.

Thanks for your post and insights, really interesting and I agree.

Cathie has in a very consistent and balanced way identified the key differentiators and pointed them out in interviews with CNBC before. From that perspective there is not really news in the statements for most here but the really interesting part is indeed the responses and questions from the hosts which did change very much. I talk about behavior change here.

For years they did repeat the narrative and invited people they could spun the story about a doomed Tesla but now they start to ask the right questions like: "why can't other automakers catch up?". That question will be repeated in the future many times and may be followed with a new story line about Tesla is ahead and the others are trying to catch up but don't manage.

CNBC may fall back in their old narrative talk from time to time dependent whom they interview but it feels like a new story may emerge they will report on.

Tesla is a great name for the media as it makes them pay their bills. Not directly with ads but people listening to interviews and absorbing other ads they get paid for. For that reason the more sensational and unbelievable the story is the better as the click rate will go up. For most people its a sensational story that Tesla is ahead of the industry therefore I hope that this will be the new storyline they are building for 2019.

Quite boring for all of us here as its been right in front of our eyes all the time but nobody wanted to believe us but now the story has a chance to go mainstream. That mainstream, reporting can be very helpful for demand as well as an influence on investors.

After the ER and the 2nd time positive numbers its difficult to stick to a story of Tesla is doomed. CNBC is more and more repositioning themselves. With the 3rd positive quarter ER in May they still will fish for sensations or something negative but the financial stability story will be gone forever.

Below another interview from December where she 2 times briefly touched on Tesla.

One of the best analysis I heard so far. Very smart Lady!

Good to see Cathie on CNBC.

For me, we haven't seen enough to call a shift in CNBC coverage, much less media coverage generally.


PS Anyone else catch that Anton Walhman was standing next to the President of Cadillac during the on air CNBC interview with Phil Lebeau?

Sort of symbolic of how utterly false foolish ideas have been placed right in the picture (fwiw, Anton, like Chanos, and quite a few in the campaign including some analysts, is by no means 'stupid'... pretty sure he's just carrying out an assignment to try to have the public believe 'stupid' things by fire hosing those ideas with a confident tone and a media police escort so to speak).

 

[KarenRei]

Just thinking out loud here, curious what others think about this:

If the stock is trading in the mid-to-high $300s – say, $360ish – and there are bits within the ER data that give something for bears to sink their teeth into, however ephemeral that may be, such as low Q1 US deliveries, or high numbers of in-transit vehicles, I think it’s possible we may not get the pop for which we’re hoping post ER call.

Think about where the stock was trading just prior to the Q3 call, where expectations for that report were relative to what they actually were. Now, the stock is trading much higher relative to recent lows, and expectations are higher. There is less room for upside, and more of it may be priced in going into the call -- think about the buying action that's been taking place since shortly after the P&D; that happened on the backside of the Q3 call. I think that in order for us to get the spectacular jump we’re hoping for we’ll need a very solid beat (I’m crossing my fingers for $3.50 EPS non-GAAP) and continued substantially positive guidance for 2019.

The counterargument, I suppose, is that two solidly profitable quarters, with continued sustained profits forecast for 2019 and beyond, is enough.

I don't care about an instantaneous pop. I care about the fact that two profitable quarters in a row opens the stock up to a new class of investors that's been sitting on the sidelines waiting to see if Tesla could repeat Q3, or if it was just a rigged one-quarter profit.

 

[Fact Checking]

Not only Remster's answer, but he provides his own justification: 15X EBITDA. That gives you the ability to agree or disagree not only with his earnings estimate but, in my opinion more substantive, the multiple he uses.

$465 on 173m common shares is a valuation of $80.4, and 15x EBITDA means the per quarter EBITDA is $1.3b.

In Q4 I believe Tesla's EBITDA could be closer to $2b. If so then that is going to force a lot of valuations to be re-evaluated.

 

[anthonyj]

I don't care about an instantaneous pop. I care about the fact that two profitable quarters in a row opens the stock up to a new class of investors that's been sitting on the sidelines waiting to see if Tesla could repeat Q3, or if it was just a rigged one-quarter profit.

Bears have ammo until Q1 report. They will say Q1 won’t be profitable because of less demand

 

[SteveG3]

I agree mostly, but Tesla's and in particular Elon's relationship with the media is ... complicated: for a complex set of reasons Tesla first started out a tech startup media darling poster-child that the car industry didn't take seriously, but in 2017-2018 media sentiment flipped over into Tesla and Elon becoming the safe media bullying target everyone is punching.

Tesla was handled particularly roughly by the business media, [due to unstoppable seeming red ink during the Model 3 ramp-up](https://pbs.twimg.com/media/Dwr4b9RVYAEYQ9W.jpg:large) and also due to convincing affinity fraud by prominent, well-connected shorts such as Chanos or Einhorn.

In 2019 all of this is changing - because of $$$,$$$,$$$ results.

This will convert most of the business media to much more neutral Tesla coverage (which is all we are asking for), and will discredit the shorts and unlock a much larger set of investors.

I see this very very differently than your view that this began in 2017. I think it was at best mixed/somewhat negative through 2014, and by 2015 it had turned into blatantly misinforming unflattering shouting from the vast majority of media outlets- again, basically a police escort for false bearish narratives.

This is probably a significant part of why I'm more skeptical of the Tesla media coverage flipping to neutral this year. I've seen the unrealistically unflattering coverage as many years long, emboldened in naked disregard of facts/reason with time, spreading to nearly all big media outlets with time, and clearly pre-dating Elon's criticism of the media last year.

 

[KarenRei]

Bears have ammo until Q1 report. They will say Q1 won’t be profitable because of less demand

"Demand will be less than Tesla forecast" and "Tesla killers will cut into Tesla's demand" doesn't have quite the zing of "Tesla is fundamentally unprofitable and rapidly en route to bankruptcy" (in addition to the former two).

In Q4, that latter thesis dies.

 

[Hock1]

Let them say whatever they want. At this point they are just making themselves look more and more desperate and pathetic. Tesla will keep doing what they do. Build out Giga 1 and 3. Open European and Asian markets. Release Autopilot hardware 3. Premier Model Y and Pickup (maybe). Start Semi production. Etc. etc. etc.

Bears are trying desperately to save their shirts. The FUD will comically run thick and hot this year.

Dan

What concerns me is that criminals are at work continuing to somehow stop the Tesla freight train. These criminals have ratcheted up the level of criminality to match the intensity of their growing financial pain. Where does it stop? Is there anything they wouldn't do to not lose?

 

[avoigt]

2h2 hours ago
$TSLA short interest is $8.51 billion; 25.46 mm shares short; 20.27% of float; stock borrow is 30 bps. Shs shorted is down 437k, -1.7%, over the last week as its stock price increased by 3%. #Tesla Shorts are down $295 mm in MTM losses on today's +3.9% move, down $341 mm YTD.

3 replies19 retweets44 likes
Ihor Dusaniwsky on Twitter

 

[Electroman]

We now model 50k Model 3 deliveries in Q1,

Spot on. Primarily due to the low number of deliveries in the first 6 weeks of this quarter attributed to a combination of M3s in transit to Europe, and US deliveries pulled forward in Q4 due to expiring tax credits.