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

[neroden]

Also, if (big if) Telsa is really serious about smoothing the wave, it makes sense it isn't sending as much ships early in the quarter because it will continue sending ships later in the quarter.

I think they're serious. The "wave" was to make EOQ reports look better, but Wall Street media has proven it will attack Tesla *anyway*. It was operationally bad in every way: led to bad delivery experiences, employees who alternated between overworked and underworked, and low cash in the middle of the quarter. If it had actually caused Wall Street to react positively, they probably would have kept doing the "wave", but Wall Street attacked the stock anyway, so what's the point? They're going to stop doing it.

 

[FreqFlyer]

This has got to be to fund Model Y production. $2B would be about right to do that.

Or we can finally find out what Lathrop is for, and no I don't believe its only logistics.

 

[Zhelko Dimic]

When they are fighting so hard on the game of pennies, a few hours working on a new software limit for the battery pack to get a CAD$5k price reduction seems like a good deal. If they are really worried this will reduce LR mix, they can increase SR+ price to CAD$55k and reduce LR price slightly.

Agreed.
BTW, Canadian government answer this morning was to increase limit to CAD55K unconditionally, so Tesla will likely scrap that 150km SR- offer

 

[FreqFlyer]

Or Tesla could just let the money sit there and have the balance sheet look stronger.

 

[Wooloomooloo]

On the one hand you seem to be claiming to be a rational person who does not like hyperbolic statements yet make these sort of claims.
It does not help your credibility.

And for the record were does EM say "we think we need to do an equity raise"?

This morning!

How my credibility doing now?

 

[neroden]

Hugs.

Also... DON'T BUY ON MARGIN. EVER. Unless maybe you've got something very liquid sitting right there in your desk drawer like a Gummint' savings bond to back it up with. An occasional review of a PBS video on the great depression would likely save some of us from ruin.

This. Avoid margin.

I am actually using margin to back some of my deep out of the money short puts (a few of which are slightly in the money now!), but I consider this an advanced and risky thing to do -- and it is entirely backed by non-TSLA, low-volatilty securities, including enough T-bills to satisfy all the maturities this year, and a pile of BRK/A sitting in the safety deposit box.

 

[Krugerrand]

Suspect stock price will increase during bond sale period then drop after the its complete. Look at previous convertible. The participating brokers will make that happen its in their interest. I am long on tesla but would urge those who buy in rising price now to be wary

Agreed. We’ve seen this before. I bought Monday and yesterday, now I’m sitting out to wait for the vultures to clear.

 

[Krugerrand]

Or we can finally find out what Lathrop is for, and no I don't believe its only logistics.

For the fifty-second time; it’s a castings factory first and foremost.

 

[neroden]

I don't know this industry well so excuse my back of a ciggie packet calcs. But...

Excluding the "customer agreements and incentives line", Sunrun's gross margins for "Solar energy systems and product sales" have been fairly consistent for a few years in the mid-teens percent. Their revenue from this item hit a record $350m for the year of 2018, from a market leading share of 9.5%. So that's $61m gross profit in 2018 (COGS of $294m). [NB: I've excluded the customer agreements and incentives line because it is said that Tesla now want a direct sales model, which I presume excludes this as an income stream].

For context, the sales and marketing bill in Opex of Sunrun was $294m, which is presumably the line that you think Tesla can be much more competitive on?

Lets say the US residential market has a good run, Credit Suisse predict a potential increase from c. 10 GW per year in 2018 to 40 GW per year by 2025. And that Tesla can regain Solarcity's lost market share (back to 33% from 9%), while maintaining a similar gross margin to Sunrun. That's still less than $1bn gross profit per year.

Many of us here are talking fairly seriously about a pathway to Tesla being a $100bn revenue company from their conventional auto business alone (i.e. excluding Tesla Network), with gross margins between 20-30%. Is this latest solar news not just a lot of noise from an investor perspective? Although it is definitely good for "the mission" and potentially also for Tesla auto demand, by bringing down total cost of ownership.

I think the key for Tesla Solar is that most people want to buy batteries & solar at the same time. The solar business is an adjunct to the Powerwall business. Tesla wants to be a "one stop shop". Musk has said that he expects *everyone* buying solar to buy batteries in the future.

 

[Big Blue 1011]

Is there such a thing as a "bull trap"?

 

[neroden]

For the fifty-second time; it’s a castings factory first and foremost.

There's two sites in Lathrop. One is castings. The other appears to be logistics. This all makes sense.

 

[Krugerrand]

There's two sites in Lathrop. One is castings. The other appears to be logistics. This all makes sense.

Exactly. Wouldn’t surprise me if the castings factory isn’t big enough to hold all materials related to casting.

 

[Singuy]

I think the key for Tesla Solar is that most people want to buy batteries & solar at the same time. The solar business is an adjunct to the Powerwall business. Tesla wants to be a "one stop shop". Musk has said that he expects *everyone* buying solar to buy batteries in the future.

The key to Tesla solar is to have enough employees to actually install solar. Too many stories lately where people's project gets massively delayed and customer service ignoring projects. I am in the middle of convincing someone right now on Tesla solar and she is telling me her neighbors horror story. Also helped a MD get Tesla solar and same story.

 

[JohnDinger]

Is it normal for all of the underwriters to have sell ratings and price targets below the current?

Wondering if this is a trap...

 

[Dan Detweiler]

Happy to see the stock in the green for once.

Having said that........I'm pretty disappointed with the news. Tesla's doing this from a point of weakness....extreme weakness. As much as I love elon, he is not savvy at the game of wall st. He pretty much got played by them by not raising when the share price was over $100 higher. I get that some things in Q1 were unforeseen but you gotta have a bit more insight into the future quarter for your business. Changes nothing about my overall thoughts of Elon or Tesla or their imminent domination of EVs.....just disappointing. I hate the Wall St machine and it pretty much won out once again.

He is not CEO to game Wall Street. He is CEO to build, expand, innovate and ensure the long term success of the company. He should raise capital when he feels he needs to. He should build a factory when he feels he needs to. He should introduce new products when he feels he needs to. Screw Wall Street. They have proven they have absolutely no clue how to value this company time and time again.

Do what you need to do, when you need to do it, and make the decisions you need to to ensure long term success (refer to the golf ball in a tea cup analogy in the CNBC interview with Chamath Palihapitiya.) Elon is pretty damn good at getting things done, even if the suits on Wall Street have no clue how to value it.

Dan

 

[Cherry Wine]

Someone used this as an opportunity to unload - $34M in block trade outflows executed thus far this morning.

 

[Remus]

I have hard time believing shorts are existing. Those who believe Tesla is heading for bankruptcy, they would see this as a confirmation. Raising can only delay the inevitable in their mind, since there's no one buying Tesla's anymore, the 2 b raised will be gone in less than a year.

 

[AlexS]

Is it normal for all of the underwriters to have sell ratings and price targets below the current?

Wondering if this is a trap...

Upgrades will start next week

 

[TheTalkingMule]

Suspect stock price will increase during bond sale period then drop after the its complete. Look at previous convertible. The participating brokers will make that happen its in their interest. I am long on tesla but would urge those who buy in rising price now to be wary

Rational. But looking backward avg share pop of 41% in the three months after Elon buys.

I suspect the major WS players are riding this mess up as well as down. Physically impossible to see TSLA much below $40B, so might as well start manipulating it the other way. Some good tweets out there this morning reminding us to look for a Goldman upgrade now that we let them handle the offering. This whole thing is rigged.

 

[Krugerrand]

Shenanigans.