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

[UncaNed]

Its really a challenge to understand the stock movement in relation to the fundamentals since a while. News are really positive and the... still the SP continues to be under pressure. Hard for me to explain and IMHO completely irrational.

Perhaps...

 

[neroden]

There are tons. Around me, last I checked, they had like 30 available still in online inventory, which had all been there for a long time. They’re a tough sell compared to the newer SR’s.

Not ideal, obviously, but a temporary problem(and probably mostly accounted for in Q1)

Not much choice other than discounting for "last year's model", when there have been major changes.

Tesla will have to keep doing this kind of clearance of obsolete inventory on a regular basis, as they make major product changes.

But the quarterly rush thing has to end.

 

[neroden]

Yeah, the Maxwell Technologies acquistion (technically a merger) was a stock swap deal (less the ~21% of shares not tendered, which will be paid in cash at the tender price).

Correction: All shares will be swapped for shares. The only cash payments will be for *fractional shares* -- so basically, take the number of MXWL stockholders and multiply by the price of 1/2 share of TSLA for the "leftovers". I have no idea how many distinct stockholders MXWL had, however.

 

[MarcusMaximus]

Huh, Reuters has now misquoted him as saying that the $2.7bn additional money from the capital raise(not actually mentioned at all, so far as I can tell) only gave them 10 months.

Not sure Elon should really bother watching what he says when major news outlets will just make stuff up anyway.

 

[Prunesquallor]

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.

And when Q2 comes in with a much smaller loss, that 10 months will recede way far into the future in peoples' minds.

 

[JusRelax]

Someone found some info on Tesla's website regarding insurance: The Tesla Show on Twitter

 

[bdy0627]

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

Agree it's for melodramatically justifying any and all cost cuts to Tesla employees, but Elon also knows this will leak. From that perspective, isn't he also trying to signal extremely low Q2 expectations for the market? The email conveys a strong sense of urgency to improve the financials, as if to say they have not improved from Q1 yet. This suggests a worse Q2 financial expectation than he guided for a few weeks ago.

 

[bdy0627]

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)

I sure hope so, but didn't we already say that about 2018? and 2019?

 

[EVNow]

Agree it's for melodramatically justifying any and all cost cuts to Tesla employees, but Elon also knows this will leak. From that perspective, isn't he also trying to signal extremely low Q2 expectations for the market? The email conveys a strong sense of urgency to improve the financials, as if to say they have not improved from Q1 yet. This suggests a worse Q2 financial expectation than he guided for a few weeks ago.

Musk should know the email will leak. But it certainly doesn't look like he cares - he probably takes the attitude bears will spin everything badly, so he is not going to bother to be diplomatic in his emails.

ps : It is possible he is just trying to make sure people don't get complacent now that Tesla has more money after cap raise. The main message seems to be every payment (procurement contract, I guess) will be reviewed by Zach and some 10% will be randomly reviewed by Musk.

pps : The Q2 financial guidance was basically loss, but not as much as in Q1. They haven't really said $300m loss or $100m.

 

[Navin]

I sure hope so, but didn't we already say that about 2018? and 2019?

Can you post an updated setup on your thoughts based on recent price action pls?

 

[JohnDinger]

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

Uhh, it might? More than doubling quarterly CapEx and declining international ASPs could increase cash burn, yes...

Isn't this why they raised money? The China factory needs to become fully operational to eliminate the burn.

 

[AlMc]

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)

I sure hope so, but didn't we already say that about 2018? and 2019?

@dqd88 : Agree with 'bdy0627' on this one. The SP may go to your range BUT those of us that have been around since 2015 have heard..'next year will be the year that the shorts get burned and the SP will skyrocket'.....Guess I am a bit jaded as the SBOTC turned into the LBOTC....

My advice: Diversify, consider ARKK If you like disruptive companies.

 

[Carl Raymond]

maybe not everything TSLAQ says is nonsense?

Good FUD takes a grain of truth, blows it out of all proportion and ignores overwhelming counter arguments. It’s only sometimes nonsense, but is almost always misleading.

 

[bdy0627]

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.

I actually don't agree with this when Elon knows damn well his emails will leak to the media. Every communication of his will have multiple effects, well beyond the direct recipient. He would do well to consider that and use that power to improve perception of Tesla's financial condition rather than actually fanning the fire. I already have a couple of friends who have driven my model 3 and love it, but expressed major reservations, not about the vehicle, but about buying it from a company they perceive to be in dire straits financially. They don't spend time trying to find forums to dig up information about Tesla like we do. They just hear that Tesla is burning massive amounts of cash and may run out soon, possible bankruptcy, yada yada. It makes them extremely hesitant to buy a Tesla. I can't say I blame them for being gunshy about buying a vehicle with technology that is already quite unknown to them when the company producing them, by all apparent accounts, appears to be on the verge of financial collapse. Elon continues to help foster that narrative. It's great to keep trying to cut costs and control expenses, but it's damaging to the public perception of Tesla to over-dramatize the challenging financial situation it is in.

 

[Carl Raymond]

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.

Bezos had the advantage that the product wasn’t a brand new concept. He didn’t have much to gain from 20 million twitter followers.

 

[bdy0627]

Can you post an updated setup on your thoughts based on recent price action pls?

I set up a thread titled Historical Stock Movement with some updates there.

 

[elasalle]

Agree it's for melodramatically justifying any and all cost cuts to Tesla employees, but Elon also knows this will leak. From that perspective, isn't he also trying to signal extremely low Q2 expectations for the market? The email conveys a strong sense of urgency to improve the financials, as if to say they have not improved from Q1 yet. This suggests a worse Q2 financial expectation than he guided for a few weeks ago.

Financials bad due to low deliveries, or bad because of increased spending on MY?
Do they want to cut down on waste as major initiatives start ..

 

[Artful Dodger]

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.

Yeah, IIRC ~$160M of that "loss" was a 1-time restructuring cost, which results in ongoing operational savings which will pay back the "loss" by the end of 2019Q4. So that "loss" is regained before the end of the period covered by the email (3 quarters worth of $$ left).

Then $500M of that was another 1-time write-down in the book value of Model S/X buy-back committments. When Tesla also knows used Tesla's are appreciating. Here in Canada, I can't find a used X for less than about $80K.

Meanwhile, somebody did another "arranged traded" for 249K shares today at 14:46 hrs (we know it was arranged since the vol spike did not move the SP). That's approx. $57M USD. Here's today's chart:

This isn't the 1st time this has occurred recently. I keep saying this: "Somebody's accumulating". Personally, I am hodling. I don't think this email targets employees; I think Elon's trolling shortz and weak (week?) longs. Or, just trollin 'redFay'...

Cheers!

 

[EVNow]

Financials bad due to low deliveries, or bad because of increased spending on MY?
Do they want to cut down on waste as major initiatives start ..

From past 2 quarters EM has been talking about cutting down cost and get into some financial discipline. Its not new. He spent quite a bit of time in ER talking about it. Infact he explicitly said he didn't want to do a cap raise because then he couldn't get employees to cut cost.

 

[Carl Raymond]

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.

Eerily similar to training humans. Faster to train somebody who has done similar before.