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

[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.

 

[mrwuffles]

Why dont they offer leasing? That should create lots of demand for the more expensive model 3 versions.

Leasing is expensive. I'm no expert, but I'd think they would have to carry the full cost of the car and the sale would only hit their balance sheet in increments over a number of quarters. I know they lease S and X but 3 is lower margin, and they might be worried more about resale value, which they have to estimate well to not be left holding the bag on depreciation.

 

[avoigt]

Awesome!


Russ Mitchell‏ @russ1mitchell
BREAKING. Tesla spokesman: “We have received European vehicle type approval for Model 3.”
Russ Mitchell on Twitter

Homologation chatter is over.

 

[avoigt]

1. 
   12m12 minutes ago
   $TSLA short interest is $7.53 billion, 24.9 million shares shorted, 19.9% of the float. Shorts up $1.12 billion in mark-to-market profits today on #Tesla's 13% price drop, and are now up $783 million for the year.
   
   
   
   
   2 replies4 retweets9 likes
   Ihor Dusaniwsky on Twitter
   

 

[neroden]

They let go of 9% last June, yet employment increased by 30% last year.

This is called getting rid of poor performers.

Or *reallocating resources*. They can have too many people on the Model S production line and not enough in the Omaha service center.

 

[homer214]

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

I’m with Cathie - at a much lower level, of course.

 

[neroden]

Isn't it still the case that S and X have individual body lines, but share a final assembly line?

Yes. The X body line was supposed to also make the S body, but that changeover never happened. If they've (a) figured out how to do that, and (b) the total production possible by doing that is somewhat lower than for two body lines, but more than half, then they might have finally done that.

 

[Buckminster]

A bit of light relief from today's stresses:
Major Tesla event(s) Q1

 

[Fact Checking]

Can't sell to Europe until homologation.

So I'm 100% sure you are now relieved that European homologation for the Model 3 has been received today, that mechanic's liens were a blown-up nothingburger and that Tesla's negative GAAP working capital enabled profitability, right?

Any other concern trolling topics I forgot about?

Are you still worried about the fake cranes in Shanghai perhaps?

 

[neroden]

I think the main thing the market doesn’t like or understand from the letter was,

“This quarter [Q1] as with Q3, shipment of higher priced Model 3 variants (this time to Europe and Asia) will hopefully allow us, with great difficulty, effort and some luck, to target a tiny profit.”

Layoffs could of been shrugged off, even might of sent the stock up. Q4 not as good as Q3, some minor selling. Why, though, great difficulty, effort and luck for (maybe) a tiny profit this quarter?

Billion dollars in inventory on ships. I know manufacturing is breakeven from a GAAP perspective, but it means a bunch of the manufacturing in Q1 doesn't translate to deliveries, whereas nearly all of the manufacturing in Q3/Q4 did translate to deliveries. So much lower deliveries, therefore much lower profits.

 

[Driver Dave]

Amazing to see the overreaction compared to the basic reality:

Product still amazing.
Long term Tesla future in EV, Energy, AI still very bright.
ICE manufactures still way behind.
Dealers still stink.

Not much, if anything, has changed.

Time to buy.