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

[Doggydogworld]

@SOULPEDL, You want to know what I really wanted to say?

- Jay Van Sciver in that Real Vision interview is an idiot. Most of the things he said is stupid. His "short at $270, price target $50 within 12 months" conclusion is also stupid.

I respect Zhelko Dimic, so I would like to know which part makes him think this Real Vision video has good argument. I'm ready to explain my points. That's all.

You said you disagree with most of his points. Why don't you start the discussion by listing his points and identify with which ones you agree and disagree. That way the rest of us won't waste time on the "agrees".

Ignore the price target. That's something they have to say on TV, not the way they think about the investment. They continuously monitor metrics (test drives, etc.) and will change the position if the data changes.

 

[ZeApelido]

As to why a Tesla with FSD could appreciate, it's pretty simply. If you tried to sell it, Uber or someone would buy it.

How much would they buy it for? Let's make a bunch of assumptions, you have a minimum wage (say $10) employee driving around for 8 hours a day, 5 days a week, so 250 days / year.

That's $20,000 in salary, not including any overhead. For an inefficient vehicle (only being used ~ 25% of the time it could be). For one year.

So Uber could buy the vehicle for $80,000 and maybe break even in a year or 2.

The vehicle is probably worth $100,000+ simply because of the FSD.

If Tesla really wanted to make money (but probably alienate fan base), they start pumping out SR+ next year with FSD upgrade at $100,000 and let Uber buy them. Then work down the price over time. But this would hurt Tesla Network so don't see it happening.

 

[ZachF]

solid buying so far today

 

[jerry33]

Reading email is never a stress-free event for me. Tesla can have all my money if they can solve that.

At my last place of employment, I averaged 8K emails a day, seven days a week, but sometimes up to 24K. I don't understand where the stress comes from?

 

[Krugerrand]

You clearly don’t understand a thing about the size of the castings Tesla makes. Or the number of castings. Or how they are made or you wouldn’t have asked a fundamentally ignorant question, engineer or not.

It’s a castings factory. Inside it they’ll have warehousing for raw material and warehousing for thousands upon thousands of castings in various stages of completion.

They need a crap ton of space for the actual casting procedures as well the CNC machines and whatnot for the machining that has to be on the castings.

With three additional vehicles coming down the pipe line with castings of their own, prudent to have additional space ready for those vehicle castings.

Perhaps they’ve carved out a corner as a hub for local parts sourcing to regional SCs, but I’m pretty sure the 100s of thousands of straight up warehousing they have in Livermore is for that.

Conclusion: it’s a castings factory per Tesla’s report.

 

[Curt Renz]

Barron's - an hour ago: Tesla Stock Could Suffer if Buyers Wait for the Improved Model S and X Cars, Analyst Says

Oppenheimer’s Colin Rusch, who has an Outperform rating and a $437 price target—some 36% above FactSet’s $320 average—on Tesla stock, lowered his 2019 revenue and non-GAAP profit estimates in part due to concerns about sales for the company’s more profitable cars.

 

[VValleyEV]

New and extremely positive, overall seems fair:
Tesla's Autopilot: Their Most Lucrative Asset - Tesla, Inc. (NASDAQ:TSLA) | Seeking Alpha

Piece is mostly about autonomous driving, lots of stuff about Tesla/Cadillac/Waymo/Uber/Lyft, and the huge upside for Tesla, but also takes a swipe at the “demand shortage” pitch.

“Many investors are currently worried about a serious demand shortage of the Model 3, especially after the Model Y was recently unveiled. Regardless of whether or not a demand shortage is currently an issue for Tesla and its Model 3, the ability to sell their vehicles as fully autonomous will be a large boost for Tesla and its future profitability. Tesla's only constraint for selling their vehicles after they reach full autonomy will be their current production capability projections - about one and a half million vehicles in 2021 and three million in 2023 (as stated on the Ark Invest podcast).”

 

[sparcs]

If Tesla really wanted to make money (but probably alienate fan base), they start pumping out SR+ next year with FSD upgrade at $100,000 and let Uber buy them. Then work down the price over time. But this would hurt Tesla Network so don't see it happening.

Why wouldn't commercial companies buy thousands of FSD vehicles and rent them out on the Tesla Network?

That would cause ride share prices to crater and the value of renting out to drop. Once you cut out human drivers, you can ruthlessly lower prices. That's a benefit to Tesla in the sales price of their car and the FSD package, but I don't see how that translates to the average joe shmoe who has a Tesla where prices appreciate. The average person will have to deal with special insurance, liability, wear and tear, etc. The value proposition appears to decrease as the number of vehicles involved scales up.

 

[Krugerrand]

Only if customers are willing to pony up for FSD. I'm interested in a Model Y and there's a zero percent chance I would pay for FSD if it increases in price beyond what it is now.

People will buy FSD. It’ll be abundantly clear down the road (not sure when-will differ for different people) that if a car doesn’t have it, its resale value is greatly affected.

So unless you plan on keeping the car until the motor gives out at 1 million miles or the body falls off, which could be replaced panel by panel...your car is worth that of a useless old nag - glue.

I delayed buying it on my 3, which saved me a bit of money. Yay, me! I ordered it without hesitation for my Y. Yay, me again!

 

[SW2Fiddler]

And my team trains all of the neural networks that analyze the images streaming in from all the cameras for the Autopilot. For example, these neural networks identify cars, lane lines, traffic signs and so on

Just pinning his statement for future reference. I still see too many smart, eloquent TMCers talk like they think the NN is going to drive, or be taught to drive.
The NN is taught to see, to recognize, to grok the surrounding situation. Other considerations in driving are: the Goal (destination, that is grabbed from input) and the Rules (varies a bit from place to place statutorially but is going to be a relatively static ruleset). The NN doesn’t need to know for example where you can turn Right on Red, just pass along that the light is red and if it’s clear to the right.

 

[ZeApelido]

Just pinning his statement for future reference. I still see too many smart, eloquent TMCers talk like they think the NN is going to drive, or be taught to drive.
The NN is taught to see, to recognize, to grok the surrounding situation. Other considerations in driving are: the Goal (destination, that is grabbed from input) and the Rules (varies a bit from place to place statutorially but is going to be a relatively static ruleset). The NN doesn’t need to know for example where you can turn Right on Red, just pass along that the light is red and if it’s clear to the right.

You should read up on all of Andrej's blog posts / talks about Software 2.0 and then evaluate if you think he thinks NNets are only going to be used for perception.

 

[TradingInvest]

You said you disagree with most of his points. Why don't you start the discussion by listing his points and identify with which ones you agree and disagree. That way the rest of us won't waste time on the "agrees".

Ignore the price target. That's something they have to say on TV, not the way they think about the investment. They continuously monitor metrics (test drives, etc.) and will change the position if the data changes.

It's a very long video, I don't want to waste hours to explain why I think the video is wrong. What's the point? To convince people to stay long? I don't want to convince anyone. Each investor should do their own research and make their own decisions.

I'm just curious why an intelligent investor like Zhelko thinks that video has the best bear arguments. If he can list the main points, maybe I can spend 10 minutes to explain my view.

 

[Tslynk67]

At my last place of employment, I averaged 8K emails a day, seven days a week, but sometimes up to 24K. I don't understand where the stress comes from?

One assumes these were mostly notification emails and you likely had a rule setup to put most directly into the trash?

When I was service manager for a system that was permanently on fire, I was getting 400 per day and assuming you need to actually do real work, this was already completely unmanageable.

These days I'm getting 100-150, which is still too many.

 

[Causalien]

It'd be great if investors get free FSD upgrade if they own a Tesla car. Watch the stock soar.

 

[mongo]

It'd be great if investors get free FSD upgrade if they own a Tesla car. Watch the stock soar.

It would be great if investors could preorder a pickup before the FSD price increase....

 

[Nocturnal]

Why wouldn't commercial companies buy thousands of FSD vehicles and rent them out on the Tesla Network?

That would cause ride share prices to crater and the value of renting out to drop. Once you cut out human drivers, you can ruthlessly lower prices. That's a benefit to Tesla in the sales price of their car and the FSD package, but I don't see how that translates to the average joe shmoe who has a Tesla where prices appreciate. The average person will have to deal with special insurance, liability, wear and tear, etc. The value proposition appears to decrease as the number of vehicles involved scales up.

IMO, this will keep our used prices very high. A company doing what you describe won't care one bit if the paint is a little faded and the car is 3 years old, that is a small price factor to them. For us though it means selling our used cars 3 years later for only a 20% drop (random number)

 

[KSilver2000]

Just a couple more days like today and it’s all gravy.

 

[Nocturnal]

When true level5 autonomy actually comes to pass (and I think we are still a little ways off, even with recent hints and speculations to the contrary), I think the price for full self driving will quadruple from current rates. The implications are just too significant not to.

Dan

I think we will live in Level 4 land for quite some time. Even if you are in the seat reading a book, if the car goes nuts you can take over within say 30 seconds.

But for sure, L5 FSD will be super valuable. We fly because it's fast, not because it's cheap. Why spend $400 to fly to Florida, rent a car down there etc. when you can get into your Tesla at 6pm, watch a movie, take a rest break, and then sleep in the back, arriving at your destination for a cost of $50 in electricity, with your own car and you being well rested?

We are thinking of disruptions to the auto and taxi industry, but airlines, trains, buses...heck, even fast food restaurants will suffer.

Barron's - an hour ago: Tesla Stock Could Suffer if Buyers Wait for the Improved Model S and X Cars, Analyst Says

Oppenheimer’s Colin Rusch, who has an Outperform rating and a $437 price target—some 36% above FactSet’s $320 average—on Tesla stock, lowered his 2019 revenue and non-GAAP profit estimates in part due to concerns about sales for the company’s more profitable cars.

What's the difference between that vs a standard model year refresh? Is Tesla hit harder by this type of thing because of their short production cycle?

 

[Causalien]

It would be great if investors could preorder a pickup before the FSD price increase....

Or a one time gift card of FSD that can be attached to a tesla car of your choosing in the future.
Or a lifetime subscription of FSD for one person that follows the person to different tesla cars before subscription based FSD comes into effect.

But only available if you own the shares.

 

[lklundin]

I hope the Apr 22 event will explain this question:

Say I buy a Model 3 and elect to "put it in the Network" so that it can make money as a ride-sharing vehicle.

Question: what happens if/when the FSD makes the 1-in-a-million mistake and does something that causes injury or property damage or worse? Who is responsible? Tesla? Me? The passengers? Say it is a really obvious case: the logs show the driverless car drove, at full speed, straight into an 18-wheeler crossing the road, the car simply didn't see the side of the trailer, and drove under it, passenger dies, etc.

Now scale it up to say 5-10 freak 1-in-a-million (heck, 1-in-a-billion) edge-cases a year, resulting in fatalities or serious injury. Is Tesla going to own this risk? Will individuals putting their car in the Network own the risk? Will Tesla indemnify such owners?

Inquiring minds, etc.

The business model of insurance companies relies on accurately evaluating such risks.

So I guess that once they feel convinced they understand the risk (and how to profit from insuring against it), they will propose reasonable legislation that will allow the driverless cars on the road - with proper insurance.