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

[Carl Raymond]

I also don't see any reason to hold any TSLA for the next 10 months....

Because the stock market is forward looking.

Stock is down because the narrative changed, twice. Went from story stock, to profit valued stock, suddenly back to story stock. Takes time for the stock to find people who trust the story again. Maybe they will, maybe they won’t. I’m certainly not taking the risk for the sake of 10 months liquidity. I’m staying in.

 

[Pras]

What is the meaning of break even here? Out of cash? Or PBT?

“This is a lot of money, but actually only gives us about 10 months at the Q1 burn rate to achieve breakeven!”

 

[mickificki]

So they are giving themselves 10 months to have Shanghai ramped, Model Y launched, Semi launched, etc.
I don't know that Elon realizes he just put a deadline on Tesla's return to profitability.
I also don't see any reason to hold any TSLA for the next 10 months....

I'm going to hold but you have a very good point. Elon STILL hasn't learned his lesson on public predictions. Media will have a field day with the 10month projection and burn rates.

 

[azaz]

Fred Alert: New Employee email from Elon. (But Electrek did not publish the full text so hard to know the full message)

More extremely stupid and misleading negative hyperbole from Elon to justify further (and sensible) continued cost cutting. His communication skills can be so incredibly bad at times - I know this is a part of who he is and he can't help it but its so counterproductive to all of his huge talents. There is no need for this hyperbole to justify and excuse cost cuts. He should just tell the truth that he is going to continue to cut costs to increase profit. No need for him to create an excuse with literal TSLAQ data cherry picking and misleading presentation.

maybe not everything TSLAQ says is nonsense?

 

[Krugerrand]

So, yeah, share price... down 3.5 bucks today, when Tesla confirmed the acquisition of a company with battery tech that could double their energy density in the next couple of years. This, I may add, against the competition that can't match Tesla's current technology and can neither source the volumes of cells that is needed to mount a credible challenge.

This is all without factoring Tesla's huge lead in autonomy - don't be drawn into the "they're in last place" bullshit, they're not, they are in front by a long way and it's going to increase very quickly. Also this doesn't take into account the hardware/software integration - aka the Mac versus the PC, if you like, where Tesla is out of sight, over the horizon.

So battery tech, autonomy and integration, for me, these are the critical success factors and no-one else is even in the frame. You can add OTA, lack of dealers, bottom-up design, GF1 and GF2, pending product launches, TE, roof shingles, etc.

Seriously, I look at the SP and I find it quite hilarious, but also somewhat comforting as I have a certain amount of common stock.

It’s like you must be imagining things. Or it’s too good to be true. Yet here we are. I’ve added almost 10% more shares this month. That’s more than 1 share but less than 10,000 shares (just to narrow that down for you). I am not comforted, though. Why, you ask? Because I have this nagging feeling that I still haven’t bought enough, while the ultra practical side of me argues incessantly that I will never find a use for two yachts.

 

[EVNow]

What is the meaning of break even here? Out of cash? Or PBT?

“This is a lot of money, but actually only gives us about 10 months at the Q1 burn rate to achieve breakeven!”

It just means - Musk is trying to scare the employees to cut costs. I don't know why he is such a drama queen.

 

[anthonyj]

Musk doesn’t fit with public market. He doesn’t help shareholders with statements like this. And the market doesn’t deserve him. He is too smart and unique of a CEO. It just doesn’t fit... wish he could take it private and come back in 10 years as a public company

 

[Remus]

It just means - Musk is trying to scare the employees to cut costs. I don't know why he is such a drama queen.

Yeah. I think maybe one of the reasons Amazon didn't have so many enemies is bezos kept his mouth shut. People didn't know he's after all the retailers, now even shipping companies.

 

[JusRelax]

“This is a lot of money, but actually only gives us about 10 months at the Q1 burn rate to achieve breakeven!”

Anyone who believes that the burn rate will stay the same as the Q1 burn rate for the next 10 months, raise your hand.









Hello??? Anyone?

Didn't think so.

 

[dqd88]

Tesla is not going to convince hardcore shorts - just need to convince the fence sitters. Let's say people who were long before Q4 bad news and the SP was at 350.

I think a lot of shorts still believe that after the tax credit phase out that demand will plummet. So after that all passes it will eliminate another bear thesis. I think 2020 is the year that TSLA takes off into another range, say $400-$550. (so accumulate many shares this year)

 

[neroden]

So only tendered shares get converted to TSLA shares? What happens to the rest - do they get cash equivalent?

No. All shares, tendered or not tendered, get converted to TSLA shares (at the .0193 ratio). Leftovers which are less than one share get cashed out.

 

[neroden]

This just in from Reuters:

REUTERS9:22 AM ET 5/16/2019
WASHINGTON, May 16(Reuters) - The National Transportation Safety Boardsaid Thursday that Tesla's Autopilot feature was engaged during a fatal March 1crash of a Model 3, in the latest serious crash reported that involves the driver-assistance system.

The NTSB said the driver engaged Autopilot about 10 seconds before crashing into a semitrailer

This is not a sensible way to use Autopilot!

 

[neroden]

Apologies if posted earlier. Here's something interesting which might simplify neural nets. Simple description but assessing validity beyond my powers. Others here can critique it. Just food for thought.

A new way to build tiny neural networks could create powerful AI on your phone

Don't be misled by title. More profound than mere phones.

I can explain this.

(1) If you start your neural network with random or default connection weights, then train it, it ends up with some essentially unused space; then you can "prune" it to remove the junk sections. This has been known for a while.
(2) If you do this and then want to restart your neural network on a similar problem (with an all new dataset and all new training), you can start with a "pruned" network already, and the way to do this is explained in the MIT papers. It DOES have to be a sufficiently similar problem for the "pre-pruning" to work right; if it's a wildly different problem, you'll have to start fresh with a large, random network.

 

[MarcusMaximus]

So they are giving themselves 10 months to have Shanghai ramped, Model Y launched, Semi launched, etc.
I don't know that Elon realizes he just put a deadline on Tesla's return to profitability.
I also don't see any reason to hold any TSLA for the next 10 months....

I think you’re reading a bit too much into what he said. Cash burn in Q1 was ~$700mm. $2.2bn at the end of Q1 / $700mm/quarter * 3 months/quarter = ~10 months.

He was just putting into perspective that if things kept going exactly like Q1, the $2.2bn would be gone in 10 months. It’s not any kind of new information.

 

[neroden]

Its really a challenge to understand the stock movement in relation to the fundamentals since a while.

News are really positive and the Maxwell acquisition a true game changer in many aspects that will put the battery technology even more ahead of all others who try to bring a compelling BEV to market still the SP continues to be under pressure.

Hard for me to explain and IMHO completely irrational.

I wish I had dry powder but I'm now actually over my "don't buy any more" concentration percentage in TSLA (which is 50%, in case you were wondering). Managed to pick some up via MXWL and some directly, in the $230s, so I'm happy with that.

 

[ReflexFunds]

maybe not everything TSLAQ says is nonsense?

It's not all nonsense, but the majority is distorted, taken out of context or exaggerated to serve their purpose (which is to see Tesla fail and /or prevent the world's transition to clean energy).

It's annoying to have to correct FUD from Elon himself though. He has always liked the narrative that Tesla is on the edge and only he can save them. For some reason he thinks he needs this as an excuse to explain his stress and mistakes, and to justify staff cuts and cost saving (in reality the only excuse he needs is that he is only human and cost efficiency is just good business). I think this is part of the reason he decided not to raise capital last year - with a lower cash balance he thought it was easier to get staff to accept job cuts and heavy work load - I presume he thinks staff would get more upset and think the actions more greedy if Tesla had a $5-10bn higher cash balance.

In this email specifically, Elon deliberately understates current cash balance from $4.6bn (post raise) down to $2.2bn and then ignores $1bn of available credit lines. He also ignores that they can raise $3-5bn within 24 hours whenever they want with insignificant dilution. He also equates net loss to cash burn, when cash burn is actually far lower as many expenses are always non cash (in Q1 free cash flow was actually positive before one off working capital movements). He also suggests end of quarter cash balance is key to when a company runs out of money (in fact it is intra-quarter minimum cash balance that matters). He also ignores that key to improving from Q1 numbers is increased production and deliveries - cost cuts can only play a minor role.

Elon has always presented data and communicated in a way to serve his purpose. I am confident he always does this in a way he thinks serves the best interests of Tesla and transitioning the world to clean energy. I am also sure his often poor communication skills and sometimes lacking social awareness mean he is not always right about this. Either way, it means you have to be skeptical with what Elon says and use your own judgement to determine his current motives (as should always be the case when you consider any comment from any management team).

 

[EVDRVN]

It just means - Musk is trying to scare the employees to cut costs. I don't know why he is such a drama queen.

Because he lacks maturity in some areas. I know this first hand and this is one thing that keeps coming back to bite him. He needs to grow up a bit and take some PR/communication classes which would help the stock significantly in both the short and long term. That's my PC version of the reality. He also needs to hire a competent person in CS, it's still a pathetic joke.

 

[neroden]

Tesla Registration Stats

What's going on in Norway with S/X? The last 4 days they have registered 58 S/X (combined) after registering a total of 101 for the entire month of April. Also, 15 of the registrations between yesterday and today have been 75D variant (out of 41 total)

A ship arrived.

 

[Cherry Wine]

Lol, you are getting a little gunshy, wot? Any other big automaker announces belt tightening and their SP goes UP!

Just curious, is your investment horizon less than 1 year?

Cheers!

No I just like making some money when the stock falls in the short term as a consolation prize.

 

[Krugerrand]

Yeah. I think maybe one of the reasons Amazon didn't have so many enemies is bezos kept his mouth shut. People didn't know he's after all the retailers, now even shipping companies.

The e-mail wasn’t for ‘us’ or the media. It was for employees. Clearly nobody outside of Amazon cared what Jeff Who had to say to his employees.

Elon doesn’t have to and shouldn’t keep his mouth shut. He should convey whatever message he deems necessary to his employees, whenever and however he pleases.