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

[Bet TSLA]

I don't think Tesla drove 100 autonomous miles in 2018, according to the legal definitions of autonomous driving.

Why would anybody care about "legal definitions" unless the technical solution is imminent? What matters at this point is how the technology is progressing.

 

[azaz]

Why should Tesla care as long as they can sell every car they can make at a price that they want?

If you still believe this.......

Elon literally just stressed the need to lower the price so that demand stays up

 

[lklundin]

Are you the real Anton?

No.

Real Anton

 

[dc_h]

What matters to price action is not how good the results are, but how well the ER is compared to expectations. A company can post really good results and the stock might still fall if investors expected even better performance.

(This is why bearish analysts are gaming the semi-official "Tesla Wall Street expectations" figures, to engineer an artificial miss to profit from.)

Elon's disclosures yesterday certainly lowered expectations. It would be very surprising to me if Tesla posted a larger than Q3 profit on the 30th - realistic expectations are a $150m-ish GAAP profit.

Revenue is a big question: if it's lower than Q3 then it will be seen as a big miss too.

Cash flow will be robust at around $1b I think, subject to headwinds and tailwinds:

• Potentially larger capex outflow (such as China spending or Supercharger expansion) than the usual $500m would reduce free cash flow.
• Lower than the expected $50m ZEV sales.
• Receivables was large at the end of Q3 and it's unclear how much of this has been worked down.

Tesla might also issue new guidance or update existing guidance for 2019 and this could be both good and bad.

So I'd expect ... volatility.

I’ve updated my profile picture to ensure I am correct when predicting Q4 earnings of $177 million and free cash flow after debt settlement of 563 million. I also predict Wall Street will find a way to make this sound bad and that Tesla still needs them for a cap raise. Elon will again confirm no cap raise and have some bold predictions for Tesla energy and just maybe guidance for small scale semi production.

 

[anthonyj]

Why should Tesla care as long as they can sell every car they can make at a price that they want?

I wish this was true, but it is not

 

[X Fan]

I look forward to learning about the multiple companies worth tens of billions of dollars that you've been CEO of.

So in your view, before Tesla got their lines to be efficient (and not need as much labour per vehicle), they should have... what then? Just not made cars until their lines were running as efficiently and low-labour as physically possible? Regardless of the fact that said lines were still strongly gross-margin positive? Simply because you'd have to hire some people and then later fire them when your lines become efficient and said people were no longer needed?

I sure hope you're not in charge of managing operations for a business.

If this is just about the "feeling bad for them" aspect - first off, I've been laid off before, I know how much it sucks. But there's a big difference between being laid off in a good job market (today) vs. in an poor job market. They'll find other jobs. And if they didn't? If they weren't chosen for performance reasons (mass layoffs are often an easy way to get rid of many poor-performers at once) - they may well get hired again by Tesla once it grows again to the point of needing more labour.

We’ll just have to disagree.

Btw: I did turnarounds and last company I ran had multiple tens of thousands of employees ( and was worth billions).

Difference was, I took out employee costs up (Lehman shock period) front and then gave employees a stable platform to work in.

Although not as dramatic as Tesla, we did grow tremendously and I’m proud to state never had to take draconian steps again (there continued to be some normal turning of ranks but that’s part of every enterprise).

If you think a 9% RIF followed by a 7% a few months later is normal (and you’re comment re: poor performers shouldn’t hold water here. If there were that many substandard, then shame on the HR practices for hiring them in the first place) and my criticism is “just felling bad for them” you’ve missed my point.

Thanks for the early morning rant though....back to sleep for me. It’s 3:30am in Hong Kong.

 

[winfield100]

Can you actually refute this analysis?

to loosely quote Monty Python
"I "'pass swamp gas'" in your general direction"
(if this is really AW from SA, he has not answered any comments on SA since early march 2016 when he had 20 reservations for Tesla model 3 that AW never completed, im seriously impressed he's commenting here, must be seriously hurting)

{Oh, and if AW from SA, thanks for partially subsidizing my trip to Kaua'i with your shortz, even tho i didnt get to see the Tesla battery and PV array, so hugz and kissez}
M'WAH!

 

[dc_h]

So you don't refute that e-tron will be able to charge more cheaply per kWh at higher kW stations, where available.

Possibly at both Audi charging stations, but we will have to wait and see for one to open.

 

[dc_h]

Trump to offer shutdown-ending immigration deal, still wants wall money - source

So, protection for Dreamers in exchange for $5.9B for wall.

Funny thing is 2 years back, Dems offered $29B for border security in exchange for DACA - that Trump rejected. The great deal maker that he is - he is now making a counter offer of DACA for $5.9B.

Would be interesting whether Dems will take it. I think this deal would have large support among Dem base.

DACA-Lite, but yeah, like the China trade deal, he’ll get less than he inherited from Obama.

 

[brian45011]

Thanks for describing some more of the details for Tesla's specific situation this quarter. I asked my question because it's been stated here many times, in ways that make it sound like an accounting axiom, that any repayment of debt will not affect the Operations Statement. I suspect (but don't know for certain since I'm not an accountant) that that's not true for many, many (other) business which routinely rollover debt. So I ask: if a business does pay an origination fee to roll over debt, doesn't that affect (negatively) the Operations Statement?

TL/DR: No such accounting axiom

I may have mis-comprehended, but the OP seem to imply that repayment of the principal debt would reduce Net Income by the amount of the debt repaid. (It doesn't)

If you inferred from my initial comment that there is NEVER any effect on the Income Statement, my comment was unartfully expressed. My apology.

Yes, on new/rolled financings, origination fees may affect the P/L statement but are a relatively de minimis component of interest expense that are amortized over the term of the debt. To provide some quantitative perspective, underwriters’ discounts and commissions and estimated offering expenses for $2.3 billion of 2019/2021 convertibles were $35.6 million (~1.5%) The net of hedges/warrants on the 2019/2021 converts cost an additional $214 million (~9.3%). If the converts are redeemed before maturity, the unamortized amount of these types of expenses would be recognized.

If a debt repayment involves a renegotiation of the prior borrowing terms, there could also be an effect on the Income Statement:

In the second quarter of 2017, $144.8 million in aggregate principal amount of the 2018 Notes were exchanged for 1,163,442 shares of our common stock (see Note 14, Common Stock). As a result, we recognized a loss on debt extinguishment of $1.1 million.
In the third quarter of 2017, $42.7 million in aggregate principal amount of the 2018 Notes were exchanged or converted for 250,198 shares of our common stock (see Note 14, Common Stock) and $32.7 million in cash. As a result, we recognized a loss on debt extinguishment of $0.3 million.
In the fourth quarter of 2017, $12.0 million in aggregate principal amount of the 2018 Notes were exchanged or converted for 96,634 shares of our common stock (see Note 14, Common Stock). As a result, we recognized a loss on debt extinguishment of $0.1 million.
During the first quarter of 2018, $5.2 million in aggregate principal amount of the 2018 Notes were converted for $5.2 million in cash and 25,745 shares of our common stock. As a result, we recognized a loss on debt extinguishment of less than $0.1 million.
​

It's worth noting that for the 2017 redemptions, despite invariably stating in prior quarterly filings that the principal amount would be repaid in cash, shares were used for settlement including some share issued under an SEC registration exemption [ Rule 4(a)(2)]

​

 

[jbcarioca]

Are you able to expand on this a little more? What has changed in their opinion to allow for this? Was Tesla being penalised previously from a risk perspective or are they creating a new way to assess risk re Tesla?



Do you mean they bought leases directly from Tesla and have assumed the RV risk or have they purchased notes from the TALT deals?

Until the new regulations manufacturers/ dealers could provide residual value guarantees or originate leases then package them as securities and remove them from their balance sheets plus recognize income immediately. Because the rules changed companies like Tesla have found keasing to be disastrous for immediate income recognition. Right now major lessors/lenders are trying to develop approaches to solve that problem.

Exact approaches are quite varied.

 

[lklundin]

Unsure if others have seen this, but yesterday CNBC had a short debate between two analysts, one Tesla bear (from Needham) and one Tesla Bull (from Westly Group Managing Partner):

While the bear arguments have been heard before, the bull analyst made (and was allowed to make) some interesting points, that are probably new to the general public.

PS. The Tesla bull is not your average analyst, it is Steve Westly who was a Tesla board member 10 years ago,
Steve Westly - Wikipedia

 

[mrdoubleb]

Wow, what a tone-deaf reply from the troll!

True historic photo of me waiting for @KarenRei's reply:

Her reply:

Lol. Ima steal that gif... well, actually both of them if you don't mind. Epic.

 

[KarenRei]

Useful article for context to Tesla's biggest drops in history (Friday's was the 7th steepest):

7 times Tesla's stock has taken a nosedive

 

[anthonyj]

Anton, be a smart bear and play both sides. Buy this dip, sell at $350 and reshort. One day your short will blow up, but at least your making some money before that happens

 

[Electroman]

So you don't refute that e-tron will be able to charge more cheaply per kWh at higher kW stations, where available.

Anton can you please keep your comedy shows in Seeking Lies? I can’t stand silly humor in too many places.

I did post a note in SA that was promptly deleted by the mods. You are assuming or rather pretending no one would notice, that no battery technology can charge at the max rate for more than 20% and then it would taper fast. So your calculation of dividing battery size by max charge is silly. I don’t want to use the other ‘s’ word though that would be more apt.

I suggest that you stay in SA and not try to come here with your silly analysis.

Keep your “Bolt beat M3 with 30:1 ratio” in other comedy forums.

 

[dc_h]

Unsure if others have seen this, but yesterday CNBC had a short debate between two analysts, one Tesla bear (from Needham) and one Tesla Bull (from Westly Group Managing Partner):

While the bear arguments have been heard before, the bull analyst made (and was allowed to make) some interesting points, that are probably new to the general public.

Both arguments were well done. Not irrationally bearish or bullish. You’d be silly to say there’s no risk with Tesla, but long term, once they get a second plant going and have two mass market cars, their risk will be lower than any western manufacturer. I wish I had spare cash on Friday to buy a couple hundred more shares. I’d say Feb 1 call options too, but I think the shorts have figured out how to short circuit good news; in the short term.

 

[anthonyj]

Both arguments were well done. Not irrationally bearish or bullish. You’d be silly to say there’s no risk with Tesla, but long term, once they get a second plant going and have two mass market cars, their risk will be lower than any western manufacturer. I wish I had spare cash on Friday to buy a couple hundred more shares. I’d say Feb 1 call options too, but I think the shorts have figured out how to short circuit good news; in the short term.

I bought 150 shares at an avg of $309 Friday, but I think we will see $270 before ER. We slammed $300 three times in the past 30 days

 

[mrdoubleb]

Here is a good idea for an article - all the EVs that VW and others have announced but never built (or how much longer they took compared to when announced).

For eg. in 2011, Ghosn said Nissan will soon have 4 EVs. Still waiting after 8 years.

in 2017 I wrote a 4 part article on this and part 1 was about the VW group. Unfortunately Hungarian to English is pretty bad with google translate (you have been warned!), but you can try that if you need a list of their big announcements that never materialized.

 

[dc_h]

I bought 150 shares at an avg of $309 Friday, but I think we will see $270 before ER. We slammed $300 three times in the past 30 days

You may be right about 270, but isn’t 3 hits at 300 a sign of strong support (resistance to the downside)?