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

[Pras]

So ironic. We are almost half of the 420 tweet. If indeed the saudis were interested then, this is a good deal.

 

[JohnDinger]

However, Google's execs (or Tencent's) are quite capable of looking at facts and ignoring the FUD campaign, if it came down to the point where Tesla needed a buyer/recapitalization. The company is not at any risk of disappearing, ever.

I agree, but I think a Google or Tencent would wait to snatch up Tesla after a large restructure.

No one is going to want to pick up SolarCity or Tesla energy. They're persistent liabilities for the company, including off-sheet liabilities like penalties for failing to staff Buffalo or huge purchase obligations to Panasonic.

They'd wait for it to be wiped clean.

 

[PhaseWhite]

I get your point, but the stock is down because Elon sent an internal email that said the company would run out of money in 10 months after raising $2.7B. Which is an odd thing to say if you intend to deliver 400k cars this year. Seems to have spooked the market.

In terms of the crash. It's clearly a case of distracted driving or suicide, but really is there a difference? AP can be forgiving when it comes to distracted driving, but when it comes to take its share it is very unforgiving. I am sure there have been other cases of distracted drivers going under a semi, its a very dangerous act and Darwin always wins that battle sooner or later.

Elon can't stop making statements that hurt his investors. This is just the latest incidence. Tesla has so many things of value, they should be forming partnerships but it seems like they have missed out on all those deals. Billions of dollars have been invested in EVs and Autonomous vehicles and it's not going to Tesla. Why is this? My theory it's mostly about Musk. He doesn't want to make deals, or others view him as someone they can't do business with because of all the controversy.

Instead of the solution being everyone reporting to Musk, he needs to find the right leaders he can delegate to and trust those smart people to do their jobs. I think Jerome would make a good COO, or even CEO.

What frustrates me to no end was the attitude Elon had on raising capital. He was way too confident after Q3/Q4, then when things didn't go his way, he seemed to remain stubborn, and only reversed that decision when a lot of damage had already been done. I don't believe for a second that all the drama we saw in Q1 would have happened if not for Elon's decision not to raise capital, and the resulting financial pressure Tesla was put under as a result.

This is part of the short narrative that makes sense. Lots of shorts were short for the very reason that Elon said he would not raise capital.

1. Stock price: 360 - Elon : We're not going to raise capital. Analysts: What about Model Y, Semi, Roadster... how will you fund them?
2. Stock price: 250 - Elon: There is some merit to raising capital
3. Stock price: 235 - Elon: Let's raise capital.

In Elon's focus on cost cutting he seemed to miss something about the fundamental valuation of Tesla, that is it was valued for extreme growth. The focus on stock dilution was the wrong focus and it hurt investors, instead the focus should have been on growth all along, and a capital raise would have increased the value of TSLA, not decreased it.

They needed more like 10B in capital to realize their plans, and they need to advertise and form partnerships. This is pocket change for large tech companies, again why can't Apple take a stake in TSLA? I think it's because of Musk.

 

[neroden]

But no buyers in sight. People think that Tesla won’t meet their own Q2 guidance, and Elon’s email was alarming. So they are thinking “why buy now?”

If there's a large group of people planning to buy "cheaper later", it forms a weird self-fulfilling / self-negating prophecy.

Stock goes down until they start going "oh dear, what if everyone else gets there first" and start buying and the stock price shoots up.

I'm guessing I'm saying that I expect the price to go down perhaps more and then go sharply up -- like February 2016. I'm not going to predict when it will hit the bottom or at what price.

 

[neroden]

I agree, but I think a Google or Tencent would wait to snatch up Tesla after a large restructure.

No one is going to want to pick up SolarCity or Tesla energy. They're persistent liabilities for the company, including off-sheet liabilities like penalties for failing to staff Buffalo or huge purchase obligations to Panasonic.

They'd wait for it to be wiped clean.

Nope. Tesla Energy is a major profit center, needing only higher battery pack production. I suppose some people still haven't noticed yet, but the Hornsdale Power Reserve should have been a clue.

As for SolarCity, it has basically already been closed down, though Tesla still employs its installers. Essentially, Tesla now sells solar panels to go with your batteries if you order batteries.

The only remnant of SolarCity as a company is a bunch of PPA/lease income streams, most of which are maturity-matched to long-term loans, and some of which are simply income. Google already owns a bunch of such things, it'll be happy to shove them into its financial investment portfolio.

 

[Drumheller]

If anyone is willing to take the time to read this post and respond with reasoned arguments (either way), I'd appreciate it.

I'm more invested in TSLA than I've put into any other single stock in my investment career, by a large difference. It's all common stock and no margin. I will be ok if I lost it all, but that idea doesn't feel good.

I don't understand what is going on with Tesla in 2019. 2018 Q3 and Q4 were fantastic. Margins were good, cash flow was good, and it looked like Tesla had gotten over the hump. My thought was that the company would stay profitable, or focus on the break even point so as to re-invest as much as possible back into growth while not posting losses. Seems like a very positive point to be.

Then guidance was that there might be a small loss in Q1. That was not a small loss. That was a WTF happened quarter. Current guidance doesn't seem very believable, to me, for Q2 or the entire year.

I keep seeing people post how there is no demand problem. However, I've received multiple emails this year (2019) from sales advisers asking if I'm ready to buy my next Tesla. If demand is greater than supply, why are these emails going out?

Now the tours are being canceled. Is that because good changes are happening at the factory or to reduce visibility into problems going on?

If demand is as strong as it was in Q3 and Q4, why is Tesla struggling to turn a profit now?

Elon's cost-cutting email was terrible. I've been through that at another publicly traded company. I was in middle management back then and the message to squeeze every dollar of cost out, while good-intentioned, lead to a morale drop and uncertainty among staff. I had staff in my office asking me if the company was going under. Were they going to have a job soon? etc. My answer was that the company was doing well (it was) and they wanted to continue to make it more efficient (which was true). But many people figured I was simply giving the company line that a manager was expected to say.

It also hasn't set well with me that suddenly the focus is on Tesla being all about robotaxi. I understand that's part of the shift from Master Plan 1 to Master Plan 2, but it wasn't supposed to be a "bet the company" approach. It was supposed to be the focus after Tesla was established.

So, if someone would care to write a response, explain it to me like I'm five, if you prefer. Because I'd like to emotionally feel better about being in TSLA since early 2016 and realizing I've lost money compared to having just dumped all of that money into an index fund and forgotten about it.

What'd I'd really like to see: Proof that demand is strong. a simple to understand explanation of why Q3 and Q4 were good but Q1 and Q2 are crap despite sales being strong.

So, long rambling post... if anyone cares to respond with some data to clear up some of these questions, I'd appreciate it.

 

[Nocturnal]

Only if demand is an issue here, we have a fundamental issue.

Rest is just noise. (but constant FUD bombardment could be impacting demand as well)

Interestingly there are no updates in teslastats.no today.
Yesterday there were some tweets regarding trucks hauling M3's from Zee. So next week, I think we should see some activity in EU.
TMC M3 has had good activity for last 1 mth atleast. We longs have not figured out how many cars in each ship still .. sheesh

I don't believe demand is an issue at all, or at least not one that can't be solved with some minor advertising. Most people still think Teslas are 100k cars. Many others have no idea how to even buy one. Still others just have easily handled objections.

I think the most severe FUD doesn't have the impact that we think. Weirdos on Twitter yelling about slaughterpilot and Ponzi schmes, the average consumer filters that crap out as noise. (which it is) The mainstream news stories about Teslas catching fire etc. can mess with people's decisions but it's not like those stories don't pop up with other makers here and there and don't seem to do much damage. Weirdly (I say weirdly because I think people are rarely rational, not exempting myself either) people aren't usually phased by that kind of thing. People buy cars because they like how they look, or drive etc.

 

[EVNow]

OT :

It's possible the driver was totally irresponsible, it's also possible he was hands on and eyes forward right up until the moment of impact and couldn't react in time, or anywhere in between or combination thereof.

If he was paying attention do you think he wouldn't have slammed the breaks, esp. if AP was engaged just seconds before ? Personally I'm more careful when I drive with EAP on than when its off, esp. near intersections, curves, oncoming traffic etc.

ps : Anyway I think we should take the discussion off this thread.

Another tragic fatality with a semi in Florida. This time a Model 3

 

[Tslynk67]

Why don't tractor trailers have side guards?

This has been debated as far back as 1969. But forcing the extra cost on truck companies is apparently impossible.

Surely can't be that expensive? Could at least be a requirement for any new trailers being manufactured.

 

[neroden]

I get your point, but the stock is down because Elon sent an internal email that said the company would run out of money in 10 months after raising $2.7B.

That appears to be false. Nobody outside employees and Electrek have seen the actual email, but the paraphrases from Electrek indicate that Musk simply compared the cash position at the end of Q1 (*before* raising money) with the cash burn in Q1 (which was substantially inventory build) -- for the purpose of telling employees that 2.2 billion isn't that much cash for a big company.

It has of course been twisted by the media, because of course it has.

 

[neroden]

Quickly approaching three years or pre-tax salary. I'm completely out of money and will barely have enough to scrap by the next few months. The only way I can profit (for lack of a better word) is to turn my Jan21s into Jan20s, but that's extremely risky.

See, that's why I sell options instead of buying them. I turned my Sept 2019 short puts into Jan 2021 short puts at a lower strike, increased cash and *reduced* risk. I'm still exposed in a super worst case scenario, but I reduced exposure while generating cash. This is only possible if you're selling time value rather than buying it.

 

[hershey101]

Enjoy your CNBC "breaking news" about 24 hours too late: Read the email Elon Musk sent to Tesla employees calling for 'hardcore' control of expenses

 

[anon]

Assuming that Electrek's quotes were accurate, this was misreported by Reuters, then copied by CNBC and perhaps others. According to the quote on Electrek, Musk actually said that Tesla would run out of the $2.2 billion they had in cash at the end of Q1 within 10 months at the Q1 burn rate. In other words, he totally ignores the raise of an extra $2.7billion since then and doesn't mention it in the Electrek quote - but Reuters reported it differently, saying that Musk was commenting that the $2.7billion raised recently would run out within 10 months at the Q1 burn rate.

CNBC just posted Musk's full email and it looks like Electrek was wrong and Reuters was right - Musk was referring to the recently-raised money and not the money remaining at the end of Q1.

 

[neroden]

Assuming that Electrek's quotes were accurate, this was misreported by Reuters, then copied by CNBC and perhaps others. According to the quote on Electrek, Musk actually said that Tesla would run out of the $2.2 billion they had in cash at the end of Q1 within 10 months at the Q1 burn rate. In other words, he totally ignores the raise of an extra $2.7billion since then and doesn't mention it in the Electrek quote - but Reuters reported it differently, saying that Musk was commenting that the $2.7billion raised recently would run out within 10 months at the Q1 burn rate.

I will say that for all the faults of Electrek I trust them to report accurately more than I trust Reuters. I suspect Electrek is correct and Reuters is wrong.

EDIT: Now that CNBC has posted the full email, I find that both Electrek and Reuters were wrong. :sigh:

Musk listed the net proceeds of the capital raise (2.4 billion, after paying for all the hedges and fees) and stated that this would last about 10 months if they kept doing as badly as in Q1 ( -$700 million/quarter)... which is simple math. (It's actually 10.2 months.) It was clearly an attempt to give employees perspective on how much money it is.

Nobody serious believes that they're going to do as badly as in Q1, which had two tax credit hangovers (US and Netherlands), seasonality, a delayed Project Raven, delivery failures, and writedown of old cars (though this last will happen repeatedly). But the point made to employees is that they must do better -- they have to get back to +$XXX per quarter rather than -$XXX per quarter.

It seems like a perfectly reasonable way to motivate employees.

 

[dww12]

Does any sell order on your shares lock them so they can’t be shorted?

 

[anon]

I will say that for all the faults of Electrek I trust them to report accurately more than I trust Reuters. I suspect Electrek is correct and Reuters is wrong.

Actually, turns out that Reuters was right and I was also wrong to trust Electrek! CNBC has the full email and Musk references the recently-raised cash, not the end of Q1 amount.

 

[StarFoxisDown!]

If anyone is willing to take the time to read this post and respond with reasoned arguments (either way), I'd appreciate it.

I'm more invested in TSLA than I've put into any other single stock in my investment career, by a large difference. It's all common stock and no margin. I will be ok if I lost it all, but that idea doesn't feel good.

I don't understand what is going on with Tesla in 2019. 2018 Q3 and Q4 were fantastic. Margins were good, cash flow was good, and it looked like Tesla had gotten over the hump. My thought was that the company would stay profitable, or focus on the break even point so as to re-invest as much as possible back into growth while not posting losses. Seems like a very positive point to be.

Then guidance was that there might be a small loss in Q1. That was not a small loss. That was a WTF happened quarter. Current guidance doesn't seem very believable, to me, for Q2 or the entire year.

I keep seeing people post how there is no demand problem. However, I've received multiple emails this year (2019) from sales advisers asking if I'm ready to buy my next Tesla. If demand is greater than supply, why are these emails going out?

Now the tours are being canceled. Is that because good changes are happening at the factory or to reduce visibility into problems going on?

If demand is as strong as it was in Q3 and Q4, why is Tesla struggling to turn a profit now?

Elon's cost-cutting email was terrible. I've been through that at another publicly traded company. I was in middle management back then and the message to squeeze every dollar of cost out, while good-intentioned, lead to a morale drop and uncertainty among staff. I had staff in my office asking me if the company was going under. Were they going to have a job soon? etc. My answer was that the company was doing well (it was) and they wanted to continue to make it more efficient (which was true). But many people figured I was simply giving the company line that a manager was expected to say.

It also hasn't set well with me that suddenly the focus is on Tesla being all about robotaxi. I understand that's part of the shift from Master Plan 1 to Master Plan 2, but it wasn't supposed to be a "bet the company" approach. It was supposed to be the focus after Tesla was established.

So, if someone would care to write a response, explain it to me like I'm five, if you prefer. Because I'd like to emotionally feel better about being in TSLA since early 2016 and realizing I've lost money compared to having just dumped all of that money into an index fund and forgotten about it.

What'd I'd really like to see: Proof that demand is strong. a simple to understand explanation of why Q3 and Q4 were good but Q1 and Q2 are crap despite sales being strong.

So, long rambling post... if anyone cares to respond with some data to clear up some of these questions, I'd appreciate it.

My post here pretty much sums it up

Tesla, TSLA & the Investment World: the 2019 Investors' Roundtable

The model 3 ramp was not organic. You can't ramp up overseas logistics from S/X volumes to suddenly 2-3k a week in a Q1. It creates tons of waste in money, you're going to have quarters with large inventories that hit profits and cash flow, etc... Demand has never and still isn't an issue for Model 3, nor will it be for the foreseeable future.

 

[W84M3]

Brutal ending to a brutal week.

Last weeks I'm just looking forward to weekends so markets are closed but the company progresses day by day

 

[Krugerrand]

What happens if the deliveries in Q2 are well off the 90k guidance, as sales estimates are indicating?

The unicorn becomes extinct and the sky falls.

 

[capster]

So. When do folks think the shorts will really put their backs into it?

Asking for a friend.