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

[neroden]

One big takeaway from these and the SpaceX layoffs is it seems Elon's hyper focus has turned to building profitable and sustainable companies that don't need to go begging for capital.

Also, I have a feeling I'm still not getting a service center.

That would be a very serious mistake on Musk's part. There are things you can skimp on and things you can't skimp on, and the geographic distribution of service centers is in the "can't" category. Musk has written a tweet which indicates that he understands this... we'll see.

I'm watching this. It's an inevitability that TSLA will get added to the S&P 500 this year (if not after Q2 results, then after Q3 results they'll meet the criteria), and the consistent trailing profits, regardless of how "small" they are, will bring in a lot of stock buyers. But if Tesla haven't started to address their service problems by the end of the year, I'm out. 2020 is when the other electric cars really start to hit the market (though most not until 2021).

I love the point that they are obviously not in the least concerned if the stock stays below $360 and they have to pay off the convertibles in 100% cash.

Yeah, I thought he'd made that clear when he said that they would pay off debt ("not refinance, pay off") and referenced large one-time debt payments as the reason they might be cashflow negative in future quarters. But it has been reinforced now.

 

[SO16]

Water?


Elon cant catch a break. He gets slammed for being aggressive / optimistic. Then he gets slammed for being pessimistic.

I do enjoy the deep dives into the myriad of topics OT and OT. Elon is doing what he has always done. Trim the fat, move the needle, and the shorts be dammed.

No. Tap.

But I do agree with the rest of your post.

 

[Reciprocity]

Even Andrea likes what Tesla is doing...

View attachment 369849

The Real AJ (not to be confused with the fake AJ (Adam Jonas) is often very supported of Tesla, but she is also pretty sharp and not a push over by any means. She seems to call it pretty straight down the middle even though she is generally supportive of Tesla and Elon. She is a great follow on Twitter as well.

 

[neroden]

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.

Yeeeeah, but Elon is waaaaaay over-optimistic about "Full self driving", so give it another couple of years.

 

[gene]

Elon came up with the $35k Model 3 price many years ago. He could simply state that things have gone up since then, meaning normal inflation. The car of $35k 3 years ago, now has to be $37,500. Any sane person would understand this.

 

[neroden]

Especially since the macro timeline is the following:

• China trade agreement: March 1 deadline. It would be rather Trumpian approach to play brinkmanship up to the last minute before the 'greatest China deal ever' [closed by a toddler that is]. Plenty of opportunity for macro to be lousy in the Feb 15-28 time frame.
  
• Brexit: March 29 deadline, with PM May exercising brinkmanship.
• U.S. Government shutdown: Republicans are hurting in the polls, but November of next year is far away - maybe they have the stamina to try to change the narrative until end of March?

Don't forget the US Debt Limit, which has to be raised by March 1. If it isn't (and because Republican Senators are completely deranged lunatics, it might not be), all hell will break loose in the world financial markets and we will see something akin to 2008, only possibly worse.

I *think* enough Republican Senators will be scared straight by every CEO and financial company in the world screaming at them, so I *think* it'll get raised/postponed. But I would not guarantee it, because there be crazy in those heads.

 

[avoigt]

Cathie Wood buying a silly amount of shares. She knows where to buy from what I’ve seen
View attachment 369893

Verified account 1h1 hour ago
Got a little more of that Tesla stock too. $TSLA

...... see a pattern ?

P.S. Cathie also bought Netflix.

 

[EVNow]

Looks like you were right. Apparently the balance with a lot of genuine bears but few short-sellers is a floor at $300. This doesn't actually surprise me.

Today's action in the last 2 hours tells me that $300 may not hold next week. Previously SP has hit $295 (after Q3 ER) - that may get tested on Tuesday.

 

[neroden]

That is not correct. May genuinely doesn't have any good options i.e. options that can win majority in the parliament.

May's government is accurately described as a "zombie government". As Corbyn correctly explained, she has lost "supply" (can't pass a finance bill) and has lost "confidence" (can't pass any major legislation). Despite this, the diehards in the DUP and the Tories are insisting on propping up the zombie government because they hate Labour. This sort of thing never ends well. Basically the UK has no functioning government, and what it does have has lost the confidence of the people and will be unable to govern. May *ought* to be going to a general election but refuses to. Frankly the Queen should dismiss her. The only outcome is a general election, and the only question is whether it happens before or after the food shortages, before or after Scotland declares independence, before or after the rioting... May is making the absolute worst possible decision, trying to hang onto power when she's lost confidence and lost supply. Historically, I am not kidding, this leads to riots.

That's all I have to say about British politics right now.

 

[gora321]

 

[PhaseWhite]

That would be a very serious mistake on Musk's part. There are things you can skimp on and things you can't skimp on, and the geographic distribution of service centers is in the "can't" category. Musk has written a tweet which indicates that he understands this... we'll see.

I'm watching this. It's an inevitability that TSLA will get added to the S&P 500 this year (if not after Q2 results, then after Q3 results they'll meet the criteria), and the consistent trailing profits, regardless of how "small" they are, will bring in a lot of stock buyers. But if Tesla haven't started to address their service problems by the end of the year, I'm out. 2020 is when the other electric cars really start to hit the market (though most not until 2021).

Yeah, I thought he'd made that clear when he said that they would pay off debt ("not refinance, pay off") and referenced large one-time debt payments as the reason they might be cashflow negative in future quarters. But it has been reinforced now.

To add to your thought:
The service centers are probably a bottleneck to sales at this point as well. There are many markets outside of large cities that don't have service centers near by and average car buyers (not fanboys/girls) do not want to buy a car when the nearest service center is >100 miles away. They also aren't likely to schedule a test drive. I have family who live in Wisconsin. They might consider a Model 3, if there was a service center near by. The closest one is in Highland Park, IL. Now I realize the issue in this case is the dealership protection law in WI, but regardless of the reason, they won't consider buying a vehicle without local support.

 

[lascavarian]

Nicely, I did sell 1 of the 2 Jan 18 342.5 calls bought ($2.10) yesterday, today at twice the price ($4.20) so the cost of remaining call is covered as we ride toward the 18th. I have another Jan 18 380 call that I am likely to take a bath on so this helps ease the pain.

AND..., freshly out of the bath! Both the Jan 18 calls were held to expiration so a loss that stings a little there. Darn that memo. Ever a little bullish, I did pick up 2 May 17 460 calls just at the close for $3.40. These add to the single Jun 21 410 still holding.

I think the next few months are going to be clean-up time that will prune some things and polish a few others all the while catching up on some nice to have items.

 

[neroden]

At minium I'd expect HW3 to massively improve the EAP-like features of the FSD mode, over baseline EAP. That's a natural property of neural networks that increase by an order of magnitude.

OK, sure, substantially better EAP, that is likely in the next few months. "Full Self Driving" is another ball of wax.

 

[EVNow]

on't forget the US Debt Limit, which has to be raised by March 1. If it isn't (and because Republican Senators are completely deranged lunatics, it might not be), all hell will break loose in the world financial markets and we will see something akin to 2008, only possibly worse.

Currently the govt shutdown isn't hurting the Senators (frankly they are caught between Trump and shutdown). Debt Limit, they won't touch - every one of their donors will be at their throat.

 

[viridi]

I apologize if this has been covered already (it has been a bit hard to keep up today), but I think that the bears and analysts as a whole are missing a lot here. First, from what I am hearing (from a very reliable source), the majority of the folks being let go are contractors. Companies do this all the time - there is tremendous pressure from large shareholders, especially those of the more activist nature, to get companies to eliminate expensive contractors (and to trim full-time employees to keep operations more efficient). Many companies are getting ahead of this issue before the activists come in and tell them to do so. I am also hearing that many being let go are non-manufacturing administrative types - this makes tons of sense. Tesla likely built up this part of its workforce to get ready for the 3rd and 4th quarter pushes. As he always does, Elon has likely created efficiencies in the processes so that many of the non-manufacturing admin people are no longer needed. Also, as I do believe some pointed out earlier, with a RIF the language in the announcement has to be fairly negative - people are losing their jobs and there need to be valid reasons why. The words in the statement were likely vetted by, among other people, an employment lawyer. The words about challenges ahead, etc. likely need to be taken with a major grain of salt. These words were likely necessary from a legal perspective.

In my view, this is the most important part of the letter: "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." There is so much good news in this paragraph!

From a long-term perspective, in my view, nothing has changed. One could argue easily that in fact things have improved. Elon is focused on efficiencies and getting the Model 3 down to $35,000 so that the car becomes this generation's Model T.

As an owner of a Model 3, and a major car enthusiast, I know that Tesla has created one of the world's great automobiles. The Model 3 is a technological marvel while being an absolute blast to drive. I own a few cars, and since getting the Model 3, they do not get driven other than for me driving them around the block to ensure they do to sit too long.

Today's reaction was ridiculous. It might take awhile for things to settle down. But, for those with a long-term approach to owning this stock, today should be a non-event.

 

[neroden]

To add to your thought:
The service centers are probably a bottleneck to sales at this point as well.

Probably? No -- Certainly. I mean, I can personally name dozens of sales in my area which didn't happen specifically because of the distance of the service center.

There are many markets outside of large cities that don't have service centers near by and average car buyers (not fanboys/girls) do not want to by a car when the nearest service center is >100 miles away. They also aren't likely to schedule a test drive. I have family who live in Wisconsin. They might consider a Model 3, if there was a service center near by. The closest one is in Highland Park, IL. Now I realize the issue in this case is the dealership protection law in WI, but regardless of the reason, they won't consider buying a vehicle without local support.

Here, Tesla could open a service center today, and simply has chosen not to because of management incompetence.

 

[gene]

Verified account 1h1 hour ago
Got a little more of that Tesla stock too. $TSLA

...... see a pattern ?

P.S. Cathie also bought Netflix.

Ross Gerber‏Verified account @GerberKawasaki 6h6 hours ago



Ross Gerber:
"Elon: were profitable. We’re disciplined on costs. And we’re scaling a affordable EV as planned. Of course it’s hard and there are challenges. People selling this stock. The goal was to be sustainable so there would not be pressure in funding. They’re making the right move."

 

[gora321]

BREAKING. Tesla spokesman: “We have received European vehicle type approval for Model 3.”
Russ Mitchell on Twitter

 

[neroden]

I took neroden's advice a while back and started selling calls. Today is a great day to buy them back, so refreshing to have time on my side in the Option game.

That was not advice, just so you know. I don't (normally) give investment advice! I just explain why *I* do what *I* do. If you choose to do the same thing, please don't call it advice!

 

[PhaseWhite]

Don't forget the US Debt Limit, which has to be raised by March 1. If it isn't (and because Republican Senators are completely deranged lunatics, it might not be), all hell will break loose in the world financial markets and we will see something akin to 2008, only possibly worse.

I *think* enough Republican Senators will be scared straight by every CEO and financial company in the world screaming at them, so I *think* it'll get raised/postponed. But I would not guarantee it, because there be crazy in those heads.

I'm pretty sure the debt limit is only an issue Republicans worry about there's a Democratic president in office.