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

[KarenRei]

Lets sum up all the facts:

- Q4 will have less profit than Q3.
- With a lot of luck, hard work, Tesla will hopefully have some tiny porfit in Q1 2019.
- They are still miles away from being able to make the cheap model 3 version.
- Demand (outlook) is weak as the tax credit expired. Demand in China is weak as well.
- Tesla is laying off thousands of employees to cut down costs.
- There was no word about production figures - they likely will fall as demand is met with less than 4'000 M3 weekly.

 

[Don TLR]

‘My business had 100 employees...I added 30 to scale up to a greater sustained production rate...we learned a lot...we are smarter and better now...we’re letting 9 of those employees go to pursue other things since we don’t need that level of staffing anymore...we can handle our business with 121 employees now...challenges remain of course but we’re smarter, leaner and sustaining production...with leaner sustained production we’ll achieve even better margins and make lower cost products possible.’

Said any growing business ever...

Exactly and a percentage of those 9 people weren't the best employees as it typically happens with a big hiring push.

I still don't know enough to trade and appreciate the input all the smart investors share here. I just buy and hold and will be taking advantage of this dip to pick up a few more to hold.

 

[anthonyj]

This is where they downgrade it to steal your shares right before Q4 ER. Y’all know it’s gonna pop after ER even for no reason. This is TSLA

 

[lklundin]

this was it. Tesla stock will retest 250 soon. With very hard work... luck... and tesla will hopefully make a profit in Q1... bye bye sp500 inclusion.

bye bye tesla over 400. That stock will go to 250$. Mark my words.

When you really feel utterly miserable about the outlook of this stock, then it's time buy...

 

[schonelucht]

There is a $9k gap between the base SR and base LR RWD Model 3. I think keeping the MR available is a good thing - there could be plenty of people who need a little more range than SR, even if just to get over their own range anxiety, but for whom LR, especially now that AWD is mandatory, is out of reach.

It's a good thing, but the SR being available would be a better thing. As I read the memo, they need the SR to sell the volume to fill the line.

 

[Driver Dave]

Increase 30% for a big push.

Dial back 7% to tune things up.

Business person: Yep, that sounds about right.

Market: aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa!

Buy the dip.

 

[Wooloomooloo]

Bear hypothesis: Q3 profit was a one time event.
Letter: Q4 profitable

Bear hypothesis: Going bankrupt over Q1 debt repayment
Letter: Possibly positive Q1 earnings even with debt repayment and >$3B in cash and funding GF3 expansion

Bear hypothesis: Will never sell $35k Model 3
Letter: Cutting referals, 7% contract/temp workers to lower costs to make $35k possible

Sure the bull case took a hit with the lowered expectations, but this isn’t a slam dunk for the bear case either.

The bear case was always short term troubles. The bull case was always focused on long term growth. So the argument was, is and still will be, do you want to make a quick buck, or do you want to be a part of the future.

Today is black Friday for Tesla stock. It might take another haircut if the economy tanks (like everything) but the bad news is out of the way, and it doesn't change the 5 or 10 year outlook at all - if anything, it's better news for the long haul. IMO, Elon is finally being the CEO.

 

[Buckminster]

The silver lining: today about half of ALL options based bankwuptcy bets will expire worthless.

Are you kidding me! Say it again! This point needs more airtime.

GAAP profitability, S&P 500 inclusion is still on track if Q4 and Q1 GAAP profits are larger than ~$405m.

Can we safely assume that Elon knows enough about his costs and profitability to squeeze the juice enough to ensure Q1 is good enough for annual profit (individual quarterly profitability is not enough)? 70% likelihood?
Does Elon know that profit over 4 quarters (positive p/e ratio) and probably S&P500 inclusion will do wonders for SP - likelihood 95%
Does Elon care about SP at the moment (thesis being that he can pay back loans regardless)? - likelihood 50%
Likelihood that none of this matters because Tesla will be sufficiently profitable (with room to spare) in Q4 &Q1 - 85%

 

[jbcarioca]

Good information and interpretation in this post, but unless there is something that I’m completely misunderstanding, the fatal problem of your concluding paragraph is that, within most states in the US, Tesla very likely would be prohibited from so acting unless they restructured themselves as a utility...with all the very unfortunate baggage that entails.
I haven’t a clue as to whether your proposal could occur in non-US markets.

There are myriad exceptions to the public utility rules. Many are in flux today because of the semi-traditional practice of peak pricing, low-load pricing and complex variable pricing schemes that have long be practiced with commercial power users. There are many load-shedding agreements that offer cheaper pricing for commercial users taht agree to reduce their usage at defined peak times. There are also many load-absorption agreements which pay commerical users to run unnecessary electric loads to absorb excess power generated when demand is low. These agreements all anticipate responses measured in minutes or hours. When battery storage enters, response time can be in milli-seconds, thus being far in excess of traditional response systems.

Those practices described above are all ones which are described sometimes as commercial grid services, but they are structured as commercial customer usage agreements. Most such deals can be easily structured as something different than utility services. Without question the advent of cheap, efficient, fast and reliable grid services is a major shock to public utilities worldwide. Legal challenges are imminent. Seemingly discontinuous, discordant events as the PG&E bankruptcy, Puerto Rico grid failures, Hawaiian Electric dramatic moves to solar plus storage and, of course, Hornsdale, all make it obvious that public utilities are undergoing more rapid change than they have since Tesla/Westinghouse went to Niagara Falls in 1895.
https://www.teslasociety.com/exhibition.htm

 

[SPadival]

Another big manpower cut? this is not normal behavior for a company in fast growth mode with lots of customer service needs.

As per the update, manpower grew by 30% last year. So they are still growing at a fast clip while making the necessary adjustment in manpower. Do read the update in full and give the proper context.

 

[lklundin]

He retweeted this yesterday, and he always tweets some cryptic messages (remember OPP?) he’s bluffing

So you are arguing that Elon Musk is not actually human ?

- maybe beta-testing a Neuralink break through ?

 

[Buckminster]

Bear hypothesis: Q3 profit was a one time event.
Letter: Q4 profitable

Bear hypothesis: Going bankrupt over Q1 debt repayment
Letter: Possibly positive Q1 earnings even with debt repayment and >$3B in cash and funding GF3 expansion

Bear hypothesis: Will never sell $35k Model 3
Letter: Cutting referals, 7% contract/temp workers to lower costs to make $35k possible

Sure the bull case took a hit with the lowered expectations, but this isn’t a slam dunk for the bear case either.

Well said.

 

[Hock1]

Don't gamble. Options are gambling, holding stock for a long time is actual investment.

I couldn't agree more. I've tried to convince people here to stop wasting their time and money. I suspect that today's SP and option action will go along way toward educating people about this simple truth. GLTA

 

[Driver Dave]

bye bye tesla over 400. That stock will go to 250$. Mark my words.

I think I marked words like this a year ago... and 2 years ago... 3... probably 4 too.

TSLA is a 10 year long term bet on where things are heading: EVs, Solar+Battery, Machine Learning.

Those that sell on news like this, just provide some good buy spots for clear thinking longs.

 

[thx1139]

The 7% reduction is sad for the employees, but this is typical. How is it that Tesla cut staff in 2018, but somehow ended up with more employees at the end of the year. Because companies like Tesla do this all the time. You see Microsoft, Apple, Google, etc. reorganizing and moving out the poor performers. It is the nature of the business. Guarantee at the end of 2019 Tesla headcount will be higher then it was at end of 2018.

 

[anthonyj]

So you are arguing that Elon Musk is not actually human ?

- maybe beta-testing a Neuralink break through ?

Science Reveals The Face Of God And It Looks Like Elon Musk

 

[Fact Checking]

A couple of $TSLA pre-market trading observations.

Firstly, I don't think any of the free charts is displaying useful pre-market trading volume data on a per tick basis - Yahoo Finance certainly doesn't - but I have access to the pre-market volume data and noticed the following pattern:

• Price dropped from ~$350 to below ~$320 on high pre-market volume.
• The 'falling knife' was caught on even higher pre-market volume.
• There's a number of very significant 30k+ shares buys (which are huge in the premarket) that maintained a $320+ price.

So all of that is pretty interesting IMHO. Either accumulation and dip-buying, or options related market maker price action.

 

[Highway2Heel]

I agree with others that timing is a tell.

If EM was really worried about this quarter, you give bad info after hours on the Friday before a long holiday weekend...

 

[Fact Checking]

I didn't want to interrupt the gloom-and-doom party so I haven't mentioned this before - but have you guys noticed the following small detail in Elon's announcement?

Company Update

"For those remaining, although there are many challenges ahead, I believe we have the most exciting product roadmap of any consumer product company in the world. Full self-driving, Model Y, Semi, Truck and Roadster on the vehicle side and Powerwall/pack and Solar Roof on the energy side are only the start.

I am honored to work alongside you.

Thanks for everything,
Elon"​

(emphasis added.)

Note how "Full self-driving" was added as the first entry of an otherwise chronological list of products, sorted by expected product introduction date?

Model Y, expected to be unveiled on March 15, is second in the list.

This raises the possibility that there potentially going to be a "Full self-driving" product introduction between now and March 15 - within less than two months.

Maybe it's just coincidence - but I think it at minimum suggests that FSD is in the center of Elon's focus of attention.

 

[traxila]

The labor market is so tight right now. I guarantee that Tesla’s hiring frenzy has accumulated a bunch of dead wood. Sorry to be blunt, but I am out there trying to hire people who think nothing of blowing off interviews. I have had people accept positions after two interviews and vetting only to never appear on day of hire. And of course, there are the people who show up....only to make you wish they had not. Simply put, it is hard to find good employees.

Do not know why it would be any different for Tesla unfortunately. Am puzzled in sense that this so called seven percent lay-off is not such a big deal for a company the size of Tesla that has been growing so fast. Many large companies routinely lay off similar percentages on an ongoing basis. Business as usual.

So why the email? Maybe Musk feels bad having all those people hit the road. Maybe.

Maybe this is a bit of a profit warning where Tesla gets to frame the message. People now know that 4Q will be OK, but not spectacular. They also know that going forward Tesla is aggressively looking at posting profits and continuing the new products.

I am quite the contrarian indicator, but my take is this dip does not last long.

Still waiting for 420.