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

Sean Wagner

Member
Mar 2, 2016
612
2,383
-
Safety. Can't afford to risk the company against adverse events.

That's the conundrum to me. While it's smart to keep the enterprise lean and clean of ballast [I don't like mean companies], even a very lithe and agile Tesla may fare badly in a downturn. So if Musk does both [ie. also raises capital], kudos to him. Timing really need not be as perfect as Alan Mulally's at Ford when he securitized just about everything possible just before the last crisis, enabling the company to live another day and have a shot at survival.
 
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Reactions: neroden

scaesare

Well-Known Member
Mar 14, 2013
8,360
13,808
NoVA
Whoa there... NeXT was one of the greatest developments in personal computer history. It essentially took over Apple in ‘96 and NeXTStep’s Mach-kernel Unix OS and Dock-based desktop GUI became the basis of MacOS X and then iOS. Its influence lives on. Just sayin’...
OT:

But it wasn't a commercial success. It was only really "saved" when Jobs forced Apple to purchase it as a condition to his returning to save the company.
 

neroden

Model S Owner and Frustrated Tesla Fan
Apr 25, 2011
14,676
62,627
Ithaca, NY, USA
Wouldn't just slicing up the production batches for NA/EU/China into smaller batches have the same effect? The "wave" is due to EU/China boats arriving with large loads at nearly same time as the NA production reaches east coast for earlier portion of NA batch and west coast starts to get hit with the NA batch, right?

If they just cycled the region batches faster, there would be a steady stream of smaller amounts of cars to each region, instead of waves of cars coinciding at once.

That's correct. But think about the results.

The result of smoothing everything out is that the average (mean) days in transit predicts how many cars there will be in transit.

What Tesla *was* doing was producing for China, shipping, producing for the EU, shipping, then producing for the East Coast, shipping, and then producing for California and shipping, so that all the cars landed at the end of the quarter and there was essentially nothing in transit. Artificially low numbers in transit.

Unwinding this leads to higher, more *normal* numbers of cars in transit.
 

schonelucht

Well-Known Member
Mar 10, 2014
5,080
8,770
Nederland
Why is Cash from Operations adversely affected by repaying the principal of a convertible note?:
"Our cash position decreased from $3.7 billion to $2.2 billion mainly due to a $920 million repayment of convertible notes, of which $188 million negatively impacted operating cash flow."

Puzzling indeed. Another one I don't understand

TSLA 2019Q1 shareholder letter said:
As a result of the pricing actions, we adjusted our sales return reserve for cars sold with a Resale Value Guarantee or Buy Back Guarantee. This one-time adjustment had a negative revenue impact of $501 million with a corresponding decrease in automotive cost of goods sold impact of $409 million resulting in a $92 million reduction in gross profit.

What has a future resale value guarantee to do with a negative revenue impact today?

Also : was gross margin calculated on this deflated number? Likely doesn't change the number that much, but still. Sounds weird to me.
 
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Pezpunk

Active Member
Aug 12, 2016
1,532
13,653
Bristow, VA
What is this latest insanity from CNBC? Tesla cars are “quite old”?!

Tesla cars are now 'quite old' and the exclusive brand is at risk, analyst says

to be honest i understand where he's coming from. the Model S for example has had constant incremental improvements, but it's still basically the same car from 2012 in terms of interior and exterior styling (nosecone excepted).

the counterarguments are:
- The software has improved by leaps and bounds
- The battery and drivetrain (performance, reliability, life expectancy, and range) have improved by leaps and bounds
- The electronics hardware (computer capabilities and responsiveness) have improved dramatically
- The self-driving capabilities (both hardware and software) have improved tremendously as well, and cars built today with the 3.0 computer and camera suite are phenomenally, revolutionarily more capable than 2012 Model S vehicles.

although the cars LOOK virtually identical to the 2012 car (again, nosecone aside), every tangible feature -- performance, range, reliability, self-driving, UI, even handling and ride feel, have improved a ton.

it's not fair, but humans just aren't going to fully register all those accomplishments without a significant visible refresh of the interior and/or exterior of the vehicle. it's dumb, but unless Elon has a plan to make humans less dumb, it's something that has to be accounted for and catered to (assuming the plan is still to sell cars to humans).
 

InstiTes

Member
Apr 13, 2019
20
786
East Coast
Good to hear the "institutional view". I visualize you as a small glass fronted skyscraper. :)


They said that and gave no detail. I really hope there doesn't turn out to be another supply bottleneck, but given Tesla's history, I wouldn't bet on it. Come Q2 report, I wouldn't be at all surprised if something else was bottlenecking them below their targeted production rate. This is my primary cross-fingers worry.

I'm pretty confident they're telling the truth. There's several alternative data providers (no I'm not going to tell you which!) that monitor Tesla production very accurately. I've seen a big step up since mid-March.
 

Remus

Active Member
Apr 14, 2016
1,381
6,326
California
Within the further future, Tesla will probably have geofenced, limited robotaxis which bail out, pull over, and dump you at the sidewalk occasionally -- which still makes money in San Francisco or LA.
Instead of dumping people out, why not wait for a minute to reach a remote driver?
 

neroden

Model S Owner and Frustrated Tesla Fan
Apr 25, 2011
14,676
62,627
Ithaca, NY, USA
Puzzling indeed. Another one I don't understand
Part of the bond sales was recorded to equity on a speculative basis due to the accounting for conversion features. Paying off the bond was then reduction in equity, and due to the elimination of most forms of "other comprehensive income" in a recent GAAP change, it ended up in operating cash flow. I think that's right! (Sigh. The accounting rules here are ugly and I may be totally wrong)

What has a future resale value guarantee to do with a negative revenue impact today?
The revenue from the car was originally reduced by the allowance for the resale value guarantee, i.e. the booked revenue was revenue - (expected value of buyback). The expected buybacks just increased -- they expect more people to take advantage of the resale value guarantee-- so it has to be booked as a retroactive reduction in revenue, which is accumulated and dumped on the balance sheet this quarter.

They expect more people to use the RVG because the market value of their old cars just dropped with the price cuts to the comparable new versions of Model S and X. In fact, I expect to see a second charge like this in Q2 due to the introduction of the "new" Model S and X reducing the value of the old Model S and X again.
 

KarenRei

ᴉǝɹuǝɹɐʞ
Jul 18, 2017
9,619
103,829
Iceland
That's the conundrum to me. While it's smart to keep the enterprise lean and clean of ballast [I don't like mean companies], even a very lithe and agile Tesla may fare badly in a downturn. So if Musk does both [ie. also raises capital], kudos to him. Timing really need not be as perfect as Alan Mulally's at Ford when he securitized just about everything possible just before the last crisis, enabling the company to live another day and have a shot at survival.

Yep. You can't reach the goal if you're dead.

Let's not kid ourselves about the potential for adverse events to slam Tesla. Picture an all-out trade war with the EU, for example. That would seriously, seriously hurt. You have to have cash reserves to deal with the unexpected.
 

Causalien

Prime 8 ball Oracle
Nov 19, 2012
3,750
13,674
Pothead's Republic of Canukstan (PRC)
I'm pretty confident they're telling the truth. There's several alternative data providers (no I'm not going to tell you which!) that monitor Tesla production very accurately. I've seen a big step up since mid-March.

Perhaps you should get in touch with the teslaq crowd and let them use these services instead of having them run around stalking ppl and causing unnecessary harm.
 

bdy0627

Active Member
May 19, 2015
3,505
12,087
Appleton, WI
The accounting for the convertible was convoluted. Especially due to the stupid bull call spread Tesla bought in conjunction with the deal. The 10-K says:

In accordance with GAAP relating to embedded conversion features, we initially valued and bifurcated the conversion features associated with these notes. We recorded to stockholders’ equity $188.1 million for the 2019 Notes’ conversion feature and $369.4 million for the 2021 Notes’ conversion feature. The resulting debt discounts are being amortized to interest expense at an effective interest rate of 4.89% and 5.96%, respectively.​

You can think of it as a reversal of the 188.1m of non-cash interest they expensed over the 5 years of the bond's life. It ate away at the 188.1m of equity, but on 3/1 when nobody converted that equity "reappeared" and created a non-cash profit. They subtract that non-cash profit when calculating OCF.

At least that's my first take, I need to spend more time on it to be sure.
Ok, that just makes my head hurt. I need a cliff's notes version when it comes out.
 

Nocturnal

Supporting Member
Aug 23, 2018
6,460
33,631
Deepening Crisis!
The "tesla cars are old" comment sounds stupid at first, but we should really think about it.

Why do people buy cars? What's the number reason after "it moves"? Style/looks. Even Tesla die-hards are unlikely to upgrade for tech changes. You can say that the ICE cars update their styles very few years to hide lack of technological change and maybe that's accurate, but people either intrinsically want new looks OR they are trained to expect that. Either way it's time for something new.
Can we stop showing India traffic as the problem for FSD to solve? I mean we can just assume that fsd won’t be in India until people start to obey basic traffic laws.
With traffic like that FSD is probably even easier. At that kind of speed I think my Roomba could control a self driving car without crashing.
 

Cloxxki

Active Member
Aug 20, 2016
1,362
147
Rotterdam
I can imagine some people ask for insurance payout for hit and runs when the car was parked. With TSLA, I suppose the sensors would log certain events, say parking errors. Would Tesla drivers have less of a chance to rip off their insurer if it's Tesla? Insurers are usually allowed to do all kinds of investigation to try and not pay out.
 

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