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

[mikevbf]

Yes, they should counter the FUD with facts mixed with humour where appropriate...this video has received 10.1 million views:

Anyone seen the Vinny videos:

 

[Krugerrand]

Of course the brand is being damaged. Don't be obtuse. The legions of people who think Tesla is on the verge of bankruptcy, or that the cars spontaneously combust, or that Musk is a bumbling fool/evil billionaire/asshole who calls people pedos exist. They grow by the day with the relentless FUD out there and Tesla's incompetent response to it.

That's clear and obvious on its face. The fact that many folks know better is not a refutation of damage being done to the brand. Nor is the idea that Tesla will pull through and people will eventually see through the madness any sort of pushback to the fact that the FUD is damaging the brand on a daily basis.

Look, those people were never going to be supporters of the brand in the first place, anymore than the folks who despise Apple (fill in company of choice).

I’ll never buy a Ford. Never have, never will, never had a positive thing to say about them. That’s based on nothing Ford has or has not done. It’s not based on adverts or people telling me they suck or vehicle safety or recalls or anything tangible. Their brand could never get better in my opinion even if they made an aluminum pickup or an EV and not even if they rescued kittens.

It’s the same for all the Tesla haters and most of the FUD believers.

The people who can damage a brand are the ones who support it and believe in it and then don’t. Think about that for a minute; the difference between that group of people and the ones you think are damaging the brand, who never had a good thing to say about it in the first place nor cared to.

 

[EVNow]

Does Tesla need to drum up extra business now? Can they handle the potential added volume which successful advertising is supposed to bring? Until the answer to both these questions is "yes" then Tesla doesn't need to advertise. In fact it would be a terrible idea.

Does Tesla want to
- Maintain premium brand image
- Regain 25% margin
- Regain high ASP

Then, yes, they have to advertise. Otherwise they can increase production and deliveries but struggle to have positive gaap EPS.

 

[shrspeedblade]

[QUOTE="Krugerrand, post: 3712296, member: 10007and not even if they rescued kittens.[/QUOTE]

I thought you were making an excellent point up to this, but now I’m skeptical as that’s a bridge/litter too far!

 

[sparcs]

Does Tesla want to
- Maintain premium brand image
- Regain 25% margin
- Regain high ASP

Then, yes, they have to advertise. Otherwise they can increase production and deliveries but struggle to have positive gaap EPS.

only if they make missteps with their self driving and other software updates.

As long as they keep driving the technology advantage with steady updates, they will be seen as a premium vehicle at a premium price. Very few cars get more features after your initial purchase.

 

[EVNow]

Very few cars get more features after your initial purchase.

How many people know that ? That is why you need to advertise (cheaply on the web).

 

[RFernatt]

How anyone can short this company is beyond me....so frustrating! Great succinct video showing what Tesla is and why a strong Tesla is good for America!

Reading the comments to that video, ignoring the trolls, there is a percentage that are just honestly uninformed about Tesla/EVs. Advertising could help this group. How many actual sales that would translate into is another matter...

 

[FreqFlyer]

Instead of Tesla advertising why not update the Tesla website, make a little more jazzy, more informative. Put positive Tesla news front and center on the website. It will increase clicks to the website, and attention to Tesla. Keep the money in house.

 

[AcesDealt]

I mean it's pretty simple. Every company in the world advertises. What makes Tesla so special? Elon says..? Is he a master of human psychology? The weight of the argument is strongly on the side of advertising. My wunderkind stock, the only one that allows me to lose so much money on TSLA, is Netflix and they were responsible for half the banner pop up ads used on the internet from 2004-2008 (I'm approximating). Apple does it. Bees do it.

It's not about countering FUD, or about information at all. It's about prestige.

'Once you go electric, you never go back'
'You've heard of Tesla. Now starting under 40k$'
'Say goodbye to gasoline'
'It's like a space ship in your garage'
'My kids think I'm cool again'
'The future is 3-6 months away'
etc.

This stuff works.

 

[EVNow]

Yeah this bothers me. Elon is being ideological about it. Advertising likely has some low-hanging fruit and the first 10 million dollars could go a long way. Most contrarian positions are wrong, they are just extremely profitable when you pick one that happens to be right. I don't see any deep reason why Elon would have insight into the productivity of advertising spend. It's not an engineering discipline.

Yes, they should just have a budget of $1M per month. That can get them 1M clicks and at 1% conversion rate, 10k orders per month.

 

[AcesDealt]

Yes, they should just have a budget of 1M per month. That can get them 1M clicks and at 1% conversion rate, 10k orders per month.

That would be about a 100:1 return on money spent (going by gross profit). I don't know if it would be that effective.

I would simply argue for empirical A/B testing. They can hammer a single US state with ads, and then compare the impact to surrounding states. Run the experiment, right?

 

[JRP3]

Does Tesla want to
- Maintain premium brand image
- Regain 25% margin
- Regain high ASP

Then, yes, they have to advertise. Otherwise they can increase production and deliveries but struggle to have positive gaap EPS.

Did they do any of that initially with advertising? No.

 

[JRP3]

Every company in the world advertises. What makes Tesla so special?

How have they managed thus far with no advertising? Obviously Tesla is special. At some point Tesla might need to advertise, I don't think we're at that point.

 

[EVNow]

Did they do any of that initially with advertising? No.

But did they start losing ASP & Margin initially ? Did they discount S by $15k earlier ?

Take a look at the models in financial projections thread and you will know what I'm talking about. Now they are at a stage where they need more than 100k deliveries a quarter just to break even (gaap). That is more than they have ever delivered.

 

[jerry33]

Along with a huge FUD storm about how Tesla is in trouble because they needed to start advertising.

I recall a huge FUD storm about how they needed to raise capital so the stock price would increase. So they raised capital, stock price decreased. I don't expect any better results from an ad campaign. All they need to do is to keep executing--slower but surer.

 

[JRP3]

But did they start losing ASP & Margin initially ? Take a look at the models in financial projections thread and you will know what I'm talking about.

I'm sure their margin was terrible initially. ASP should drop as technology advances and becomes cheaper to build. Tesla has had issues with production and QC, neither of which can be fixed by advertising.

 

[EVNow]

I recall a huge FUD storm about how they needed to raise capital so the stock price would increase. So they raised capital, stock price decreased. I don't expect any better results from an ad campaign. All they need to do is to keep executing--slower but surer.

Stock price did increase - but renewed trade deal issues and then that one stupid line in the email brought SP from 250 to 185.

 

[EVNow]

I'm sure their margin was terrible initially. ASP should drop as technology advances and becomes cheaper to build. Tesla has had issues with production and QC, neither of which can be fixed by advertising.

Why should ASP drop - cost should drop and margin should improve. This is what happened earlier with S&X. With 3 - in Q1 - margin dropped (unexpected).

We need to consider demand and price together. If there is large demand, but at lower ASP that hurts margin, it is not useful. We need enough demand at higher ASP & Margin.

 

[TMThree]

No, that’s not how it works. At all. Elon’s margin account at Goldman and the Tesla board requirement of 25% loan to pledge have nothing to do with each other. Tesla board does not set Goldman margin policy. TSLA stock can hit that 25% loan to pledge ratio, but nothing will happen since that is not the number that Goldman cares about. Stock would have to get much lower, like around $5B market cap for Goldman to start margin sales. That’s about $30/share. Now, Elon would be in contravention of a Board policy if the stock hit the 25% loan to pledge, but so what. Do you think the Board would force Elon to start panic selling? No Board in their right mind would ever ask their CEO to start dumping shares. The Board options would be many, like:

A. Do nothing and wait for the stock to recover.
B. Ask Elon to pledge his SpaceX stock and remove the Tesla stock from the margin account, so no TSLA stock sales.
C. Negotiate a private sale of a part of Elon’s stock to another buyer.

C. Would be a last resort, and still not cause panic selling. The point is, a margin sale of Elon’s s stock just isn’t going to happen.

Thanks for the reply. If what you're saying is true, then it's a no brainer to buy as much of Tesla as possible before it bumps back up. It's hard to figure out what's real with so much FUD going around.

 

[sparcs]

How many people know that ? That is why you need to advertise (cheaply on the web).

Sentry Mode has only been out for a few months and its' already getting pretty significant traction in the media. The news is only going to get more widespread as they sell more cars. How many cars catch criminals?

All free advertising and it's just one example. Sentry Mode is only going to get better and more useful as they add features.