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

[KSilver2000]

Wow, glad I live in the PNW, my power rate is $.071/kWh here. Granted we benefit a lot from water power and our rates have gone up over time here (but far less than the rate of inflation), but with renewable energy prices coming down over time, I think power rates overall will decrease as well.

I 110% doubt that. We have a CCA program with a non-profit here that provides the generation side of electricity from renewable sources. It’s an opt-out program with our utility. They’ve only been INcreasing rates over time. Starting July this year, we got notice that the rate difference will now only be 0.3%.

Economics 1A. Increase demand = increase price.
Same should be with Tesla.

 

[EVNow]

OT :

Total Oil market demand going down is still few years out, but what could happen is oil market growth will be taken out in next five years so Oil companies with high debt will get affected first, just like what happens to coal market, most coal using electric generation plant are still operational but on its way out, Oil price probably won’t collapse due to most of the middle east government budget is on 70-80/ barrels oil market, minutes demand goes down they will cut production, this will be good for EV adaptations, Ev price bound to fall at the same time oil prices steady.

You are assuming they are co-operating countries. There is no proof of that in last 50 years. KSA wants the price to be above where they need it but below where Iran needs it. Russia just wants to make a lot of money.

Yes, if we start looking at private oil majors with lot of debt, if they are smart they would slowly unwind their oil operation and put the money in renewables. I expect Europeans to do that earlier and better than US ones. The US ones will assume they can forever get political protection to pollute indefinitely. Anyway most executives care only about their own bonuses than long term health of the company.

 

[Remus]

Yesterday, the wife and I were driving on a local freeway to go mountain biking. In about a 15 minute span, we counted seven car carriers full of Model 3's on their way to Seattle. Seeing this, my wife, who doesn't follow the market at all, asked if the stock was relatively cheap. I nodded. "Maybe we should think about buying some more," she replied.

I guess that's one form of advertising.

or maybe vancouver

 

[Nocturnal]

I would expect wild fluctuations in gas prices, as sales drop, causing prices to fall and then gas companies close refineries, causing them to skyrocket. Gas prices will eventually land somewhere astronomically high as virtually all supply disappears, but there’ll be a roller coaster in between.

Don't forget gas stations themselves. Most of the smaller guys operate on super thin margins already. They will disappear along with demand and make gas even less appealing.

 

[EVNow]

Nice thesis, although I think you need to consider some lag in manufacturing to delivery in China in the second half of this year.

I don't even think there will be much saleable cars from GF3 this year.

Why would there be any more inventory buildup compared to what happened in Q1 already ? They know what rate of orders they are getting and can adjust the production to that. Infact, they may use the opportunity to reconfigure for Y as well. If they have more cells they can finally start making power walls.

The leaked second email basically says they are getting lots of orders and they want to increase production rate.

 

[VValleyEV]

Seen this?
https://www.digitaltrends.com/cars/tesla-is-dying-and-this-is-how-it-will-end/

Thesis of this sorry piece, which should be dead-easy to refute. Members here that can do much better than I, but here goes:

1. Tesla needs to sell and ship 700k to 1M cars annually to be profitable, and shipped less than 300k in 2018
-> Why is that the necessary number? No basis except that most car margins are about 6% so Tesla must be same. I recall Tesla said gross margins on model 3 were 20%, and they are expected to be much higher in GF3
-> Hmm, Tesla reported a profit in 2018Q4, with a production/sales of about 88k/90k vehicles S/X/3, so 4x to annualized makes it 350k/360k
One could quibble about special circumstances contributing to that profitability, but would not be expected to change the picture that profitable levels have already been achieved so can be repeated/surpassed, especially with that expanding global demand

2. China cannot save Tesla, if you were to accept #1 above, because, well, trade war makes Tesla too expensive in China, and no that new factory won’t help because they are going to have to go into huge debt to finance that factory and can’t afford it.
->As I recall GF3 is largely funded by Chinese loans with astoundingly generous terms including being “non-recourse”, meaning it is secured by collateral (presumably the factory itself) but Tesla is not actually liable. So I presume there will be more investment from Tesla for GF3 but that the bulk of this horrible weight referred to in the article is already covered by existing loans.
->So the China factory is in fact expected to provide a huge boost for Tesla bottom line and growth.

3. Recycled FUD: the popular misquote and misrepresentation of Elon’s comments to imply that he said they could go broke in 10 months if they don’t cut back drastically on expenses. No comment necessary on this BS.

ED: Contribution from @Mars ☰mperor :
Current Model 3 in China is 377,000 cny, or 54,600 usd. He said 73,000 usd.

 

[MarcusMaximus]

Don't forget gas stations themselves. Most of the smaller guys operate on super thin margins already. They will disappear along with demand and make gas even less appealing.

True. This is actually something I find really interesting. Shell and now Chevron have announced that they’ll be putting more chargers at their stations. That’ll stem the tide for a while, but I can’t help but think that most people charge at home the vast majority of the time. So, instead of being a necessity that everyone has to get usually multiple times a month, their entire business model becomes something people use very occasionally on long trips once or twice a year.

 

[Motor Mouth]

I 110% doubt that. We have a CCA program with a non-profit here that provides the generation side of electricity from renewable sources. It’s an opt-out program with our utility. They’ve only been INcreasing rates over time. Starting July this year, we got notice that the rate difference will now only be 0.3%.

Economics 1A. Increase demand = increase price.
Same should be with Tesla.

I wouldn't extrapolate PG&E rate issues to anything outside of their service area. PG&E has many reasons to be increasing rates that have very little to do with energy production and everything to do with litigation liability.

 

[anthonyj]

Seen this?
https://www.digitaltrends.com/cars/tesla-is-dying-and-this-is-how-it-will-end/

Thesis of this sorry piece, which should be dead-easy to refute. Members here that can do much better than I, but here goes:

1. Tesla needs to sell and ship 700k to 1M cars annually to be profitable, and shipped less than 300k in 2018
-> Why is that the necessary number? No basis except that most car margins are about 6% so Tesla must be same. I recall Tesla said gross margins on model 3 were 20%, and they are expected to be much higher in GF3
-> Hmm, Tesla reported a profit in 2018Q4, with a production/sales of about 88k/90k vehicles S/X/3, so 4x to annualized makes it 350k/360k
One could quibble about special circumstances contributing to that profitability, but would not be expected to change the picture that profitable levels have already been achieved so can be repeated/surpassed, especially with that expanding global demand

2. China cannot save Tesla, if you were to accept #1 above, because, well, trade war makes Tesla too expensive in China, and no that new factory won’t help because they are going to have to go into huge debt to finance that factory and can’t afford it.
->As I recall GF3 is largely funded by Chinese loans with astoundingly generous terms including being “non-recourse”, meaning it is secured by collateral (presumably the factory itself) but Tesla is not actually liable. So I presume there will be more investment from Tesla for GF3 but that the bulk of this horrible weight referred to in the article is already covered by existing loans.
->So the China factory is in fact expected to provide a huge boost for Tesla bottom line and growth.

3. Recycled FUD: the popular misquote and misrepresentation of Elon’s comments to imply that he said they could go broke in 10 months if they don’t cut back drastically on expenses. No comment necessary on this BS.

Not to be fuddy, but Tesla calculates their Gross Margin differently than other manufacturers. For example, we found that EV credits were applied to the Gross Margin on the last 10K. Someone correct me if I’m wrong

 

[Mars ☰mperor]

Seen this?
https://www.digitaltrends.com/cars/tesla-is-dying-and-this-is-how-it-will-end/

Thesis of this sorry piece, which should be dead-easy to refute. Members here that can do much better than I, but here goes:

1. Tesla needs to sell and ship 700k to 1M cars annually to be profitable, and shipped less than 300k in 2018
-> Why is that the necessary number? No basis except that most car margins are about 6% so Tesla must be same. I recall Tesla said gross margins on model 3 were 20%, and they are expected to be much higher in GF3
-> Hmm, Tesla reported a profit in 2018Q4, with a production/sales of about 88k/90k vehicles S/X/3, so 4x to annualized makes it 350k/360k
One could quibble about special circumstances contributing to that profitability, but would not be expected to change the picture that profitable levels have already been achieved so can be repeated/surpassed, especially with that expanding global demand

2. China cannot save Tesla, if you were to accept #1 above, because, well, trade war makes Tesla too expensive in China, and no that new factory won’t help because they are going to have to go into huge debt to finance that factory and can’t afford it.
->As I recall GF3 is largely funded by Chinese loans with astoundingly generous terms including being “non-recourse”, meaning it is secured by collateral (presumably the factory itself) but Tesla is not actually liable. So I presume there will be more investment from Tesla for GF3 but that the bulk of this horrible weight referred to in the article is already covered by existing loans.
->So the China factory is in fact expected to provide a huge boost for Tesla bottom line and growth.

3. Recycled FUD: the popular misquote and misrepresentation of Elon’s comments to imply that he said they could go broke in 10 months if they don’t cut back drastically on expenses. No comment necessary on this BS.

That idiot does not know what he's talking about.

Current Model 3 in China is 377,000 cny, or 54,600 usd. He said 73,000 usd.

Don't waste our time by this idiot.

 

[Zero CO2]

Maddening excerpt:
“There's little argument that Tesla faces major survival challenges in the coming months, but downtrends rarely move in a straight line ...”

So their thesis seems to be not that the stock will rebound because the long-term financials are good, but that they will rebound for a short period before tanking permanently.

What in blazes are these “major survival challenges” for a company with solid growth and dominance in a massively expanding market, holding cash reserves plus a new cash infusion to support maximum growth? Sure Q1 was a quarterly numbers reporting disaster, but I thought that investment professionals were supposed to look beyond the headlines , maybe to find that the Q1 numbers were not indicative of any change in the long-term story.

Instead we get the cryptic:

“... long-term relative strength has dropped into the most extreme oversold technical reading in the stock's public history“.

BUT WAIT, if the stock is “oversold” that means it is trading below the company’s fundamental value. So the “long-term relative strength” they are referring to is presumably the relative strength of long-term investors vs short sellers, not the actual “long-term strenght” of the company. Probably lots of folks will read “oversold” to mean something like “over-hyped” and sold above rather than below the real value, because they won’t even follow the link provided on the site.

So maybe a translation of that cryptic phrase is “short seller attack levels have hit new highs against to long-term investors”.

Sorry for the rant.

I like this version better
There's little argument that Legacy ICE manufacturers faces major survival challenges in the coming years.

 

[VValleyEV]

True. This is actually something I find really interesting. Shell and now Chevron have announced that they’ll be putting more chargers at their stations. That’ll stem the tide for a while, but I can’t help but think that most people charge at home the vast majority of the time. So, instead of being a necessity that everyone has to get usually multiple times a month, their entire business model becomes something people use very occasionally on long trips once or twice a year.

I have been surprised by a local reduction in gas pumps already, and we are not an EV-friendly community. Our local Circle K dug up the parking lot maybe 6 months ago or more, to replace 4 gas pumps with 2. Quite surprised to see that, maybe this is a corner case because they make more on the cupcakes and beer in the store than they do on gas, or maybe some strategic move company-wide. Can’t find anything on the web about it.

 

[Curt Renz]

Electrek - 44 minutes ago: Tesla owner says Autopilot saved him from crash unknowingly until checking dashcam - Electrek

 

[EVNow]

1. Tesla needs to sell and ship 700k to 1M cars annually to be profitable, and shipped less than 300k in 2018

Tesla needs to sell roughly
- 250k cars / year to be Operating cash flow positive
- 350k cars / year to make non-GAAP profit
- 450k cars / year to make GAAP profit

 

[MarcusMaximus]

That idiot does not know what he's talking about.

Current Model 3 in China is 377,000 cny, or 54,600 usd. He said 73,000 usd.

Don't waste our time by this idiot.

What is with the recent plague of journalists completely botching Tesla's prices for their cars? I mean, how hard is it to just go to the website and check?

 

[ClimateOptimst]

RMB 377k = $54k
RMB 328k = $47k

So, not exactly cheap compared to US prices.

May be I shouldn't assume the ASP will go down when GF3 comes online !

Seems like it should be lower if production costs are lower in China, as long as they protect their margins. I hope resale also starts taking orders for China produced M3 on the 31st. Then by the annual meeting in June or later with the P&D report they can reveal their backlog of orders to put the demand issues to rest. If we then get a good P&D report in early July the stock should turn around convincingly.
Interesting to think back one year ago prior to the annual meeting that we were in production he'll and stock was in the dumps before getting a nice pop with a reassuring discussion of the matter from Elon. Hard to believe how much farther along things on the production and new factory front and many other fronts are now. The stock price will catch up eventually as year over year increases will be more often measured against the regular declines posted by the incumbents in the sectors where head to head competition occurs. Stay the course...

 

[mrmage]

Trying to find them on the TD platform with no luck. Anyone buy these on TD?

TD doesn't sell high yield bonds, so I had to set up an eTrade account just for these.

 

[InDaClub]

I've received 8 disagrees in one day. I only had 2 total. Guess who's going on my ignore list?

 

[Nocturnal]

Wow, glad I live in the PNW, my power rate is $.071/kWh here. Granted we benefit a lot from water power and our rates have gone up over time here (but far less than the rate of inflation), but with renewable energy prices coming down over time, I think power rates overall will decrease as well.

.07 is a good amount under the national average.

But don't forget that if you were on time of use rates (you will be eventually) the peak amount will likely be double that, but your non-peak should go down a little.

I've received 8 disagrees in one day. I only had 2 total. Guess who's going on my ignore list?

View attachment 412933

OT, I find that annoying in general. The worst is having an argument with somebody that needs to spend the effort to click disagree with every single post you make.

 

[jerry33]

I have been surprised by a local reduction in gas pumps already, and we are not an EV-friendly community. Our local Circle K dug up the parking lot maybe 6 months ago or more, to replace 4 gas pumps with 2. Quite surprised to see that, maybe this is a corner case because they make more on the cupcakes and beer in the store than they do on gas, or maybe some strategic move company-wide. Can’t find anything on the web about it.

Gas stations have been closing for the last forty years. 7-11's initial strategy was to purchase closed gas stations and turn them into convenience stores. (That was in the early 1970s).