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

[MarcusMaximus]

Complaining about the warm and cold conditions? Good grief. That describes probably most factories in the US.

You know, those frigid, arctic-like conditions in Fremont, CA.

 

[RobStark]

You don't need performance brakes unless you are doing repetitive full-on threshold braking as you would do at a racetrack. The regular brake calipers work just as quickly as long as you haven't exceeded their thermal capacity with repeated stopping. The regenerative braking can handle long grades down steep mountain passes without ANY use of the friction brakes.

In other words, if you request the 18" Aero wheels you will almost certainly get the smaller, lighter brakes. Which work excellent for driving on public roads.

Unless you are hired to Transport specific cargo from point A to point B without any further questions.

 

[Cherry Wine]

Not liking it. ASP will reduce making profits in Q3 difficult.

It was always going to be likely - given tax credit changes - but if they are getting more orders than production, why reduce prices ?

Most logical explanation (here come the disagrees) is that they are lowering the demand to match demand with supply. Especially now that tax credit is reducing. There was also probably some pull forward. So, to meet the guidance of increased production and delivery in Q3 over Q2, they have to reduce prices. I just hope the cost is improved and they can indeed maintain atleast ~20% margin.

BTW, any changes in S/X pricing ? If not, that shows post-Raven demand is good for S/X.

standard range S & X have been removed.

Long range price cut by about 4000 or 5000
Ludicrous cut about 15,000 or 16,000, which I think is fine as this may lead to more higher end sales.

Just quoted out the vehicle I’ve been keeping my eye on - LR X w/options - price has dropped by $6,000.

RIP rally.

 

[StealthP3D]

The extra cost is worth it to have the best looking cars possible on the road - this is how they sell more cars. And people associate white with Apple - they want people to know Tesla is the Apple of automobiles.

Now that I think about it - maybe Apple is buying a stake in Tesla and wanted white to be the main color?

I was going to give this post a "thumbs up" until I read the second half. I hope Apple doesn't get a stake in Tesla because then:

- Apple would demand a larger radius on the corners of the center screen of the Model 3. For the next two years, all we would hear about was how beautifully curved the corners of the center screen were.

- We would never get the ability to create a route on the GPS using multiple waypoints. Too complicated.

- Apple would insist on removing the software limitation on charging the battery cells to 100%. We would need to go in for battery replacements every 2-4 years depending upon usage habits. More profit and a shorter upgrade cycle.

- The base Model 3 would be raised to $55,000 and the Performance Model 3 would be $110,000.

- Apple would insist on hiring a Chinese contract manufacturer to make all Teslas because this would increase profit margins.

- Apple would require other EV makers to sign royalty-bearing patent licenses under threat of a lawsuit.

- Apple would try to avoid as much US tax as possible using elaborate schemes involving the Cayman Islands, etc. They would cite this as a good example of innovation when investors asked them why they were not innovating anymore.

-If Consumer Reports identified a braking anomaly that caused longer than ideal stopping distances, rather than fix the issue in one week by releasing an Over-the-Air Software Update, Apple would blame the driver for "pressing on the brake pedal wrong".

- The voice recognition would be migrated to Siri.

- A Tesla HPWC would cost $2000 and the UMC would be $899.

-Apple would insist a Tesla could only be plugged into a Tesla charger. Bye bye J1772 adapter compatibility.

- Apple would equip all Teslas with special wheels that required special Tesla branded tires. No more Michelin or Continental tires, no Pirelli or Nokian tires, they represent lost profit potential and don't create a powerful "ecosystem".

- Only a Tesla baby seat would work properly with the seat anchors. It would cost $1500.

- They would crow about the valuable "Tesla" ecosystem they had created.

No thank you!

 

[Singuy]

Just quoted out the vehicle I’ve been keeping my eye on - LR X w/options - price has dropped by $6,000.

RIP rally.

Hit piece from CNBC, price drop...we just need a fire or autopilot death and the shorts would have the biggest orgasm tomorrow.

 

[LN1_Casey]

Just quoted out the vehicle I’ve been keeping my eye on - LR X w/options - price has dropped by $6,000.

RIP rally.

Oooh, the Model S P100DL I want is only 108k!

If only I had an extra 100k floating about somewhere!

 

[StealthP3D]

Not liking it. ASP will reduce making profits in Q3 difficult.

I doubt it, Tesla has guided for profit in Q3 and Q4. They have far more information on which to base their decisions than any information the peanut gallery has access to. To me, this (and the planned increase in production) is a strong signal they were more than a little profitable in Q2. We will know shortly

It was always going to be likely - given tax credit changes - but if they are getting more orders than production, why reduce prices ?

I don't know, perhaps creating the perfect bear trap?

 

[Cherry Wine]

I doubt it, Tesla has guided for profit in Q3 and Q4. They have far more information on which to base their decisions than any information the peanut gallery has access to. To me, this (and the planned increase in production) is a strong signal they were more than a little profitable in Q2. We will know shortly



I don't know, perhaps creating the perfect bear trap?

Would be nice, but longs have been burned several times this year finding good news in tea leaves where there was none to be found. As always, I hope to be proven wrong.

 

[Thekiwi]

Obviously supply/demand is finely balanced In the US market. Demand isn’t hugely overwhelming, otherwise there would have been no need for this small price cut, even if it’s to accommodate increased factory output.

I imagine this might reignite the “should Tesla advertise?” debate again. Eg Would the cost of running a large advertising campaign bring in more orders at the old prices, than the foregone revenue from these demand generating price cuts?

On the other hand it shouldn’t be overlooked that Tesla eliminated the SR model S & X models today - meaning the margins and ASP on those models will increase significantly, and also eliminated the off menu model 3 LR (now if you want long range you need to pay for AWD).

 

[SOULPEDL]

I doubt it, Tesla has guided for profit in Q3 and Q4. They have far more information on which to base their decisions than any information the peanut gallery has access to. To me, this (and the planned increase in production) is a strong signal they were more than a little profitable in Q2. We will know shortly



I don't know, perhaps creating the perfect bear trap?

With Advanced Summon

 

[azaz]

Obviously supply/demand is finely balanced In the US market. Demand isn’t hugely overwhelming, otherwise there would have been no need for this small price cut, even if it’s to accommodate increased factory output.

I imagine this might reignite the “should Tesla advertise?” debate again. Eg Would the cost of running a large advertising campaign bring in more orders at the old prices, than the foregone revenue from these demand generating price cuts?

On the other hand it shouldn’t be overlooked that Tesla eliminated the SR model S & X models today - meaning the margins and ASP on those models will increase significantly, and also eliminated the off menu model 3 LR (now if you want long range you need to pay for AWD).

the advertising thing really can't be argued the other way anymore with all these price cuts

 

[neroden]

Frenchboy:
For you to have 100% of every penny/Euro that you have in ANY one stock is a huge risk, and especially any stock that is volatile. Sure -- you can make a fortune by being so heavily concentrated, but you can also see massive losses. Understand that I am not limiting my comments to TSLA, as there are loads and loads of volatile stocks out there and the same rule apply. As a former licensed stock broker, taking such an approach is not investing, it is gambling. An investor diversifies into 30 - 40 different stocks so as to not get wiped out if the market moves against him. Also, I'm not knocking TSLA stock as I've traded in it and made money, so don't think that I'm bashing the company. I'm simply saying that 100% concentration is incredibly risky in any 1 stock.

This is false. They teach it to licensed brokers, but it's part of something called "Modern Portfolio Theory" from the 1950s which has been comprehensively disproven. Both Warren Buffett and Peter Lynch have disparaged diversification; they agree that it is not inherently safer than concentration.

There are some single-stock risks; there are also risks from buying lots of stocks, particularly the risk that you can't really analyze all of them (you don't have the time or energy). And if the market really moves against you, as in 1929, you may get wiped out either way.

The fundamental risks, as always, come from not doing enough analysis. If you know a company backwards, forwards, and upside down, know its entire industry and all its competitors and the entire macro situation, you are probably safer investing everything in that company than diversifying into 30 stocks you don't understand.

Of course borrowing money carries substantial, huge additional risks. And borrowing money makes diversification more valuable and concentration more risky, so if you're a high-flying gambler who borrows money, you need to diversity. But if you're an investor who doesn't borrow... it may be unwise to diversify.

 

[Singuy]

I doubt it, Tesla has guided for profit in Q3 and Q4. They have far more information on which to base their decisions than any information the peanut gallery has access to. To me, this (and the planned increase in production) is a strong signal they were more than a little profitable in Q2. We will know shortly



I don't know, perhaps creating the perfect bear trap?

He no longer guide for profit but just cash flow positive per investor day event. .

 

[Thekiwi]

the advertising thing really can't be argued the other way anymore with all these price cuts

A tv advertising campaign would also have the very positive side effect of removing a lot of FUD from selected media outlets where the quid pro quo is obvious and used by every other auto maker - eg “you stop talking crap about us on your finance channel and you get some juicy ad money on your networks”. It ain’t pretty but that’s the way it works. Whereas these price cuts have the exact opposite side effect.

On the other hand, as long as the cars are still profitable To sell, I’m in favor of the model 3 becoming as cheap as possible. It not only accelerates EV adoption. but creates more daylight between Tesla and it’s competitors (many of which still have the $7500 tax credit advantage)

 

[Singuy]

Obviously supply/demand is finely balanced In the US market. Demand isn’t hugely overwhelming, otherwise there would have been no need for this small price cut, even if it’s to accommodate increased factory output.

I imagine this might reignite the “should Tesla advertise?” debate again. Eg Would the cost of running a large advertising campaign bring in more orders at the old prices, than the foregone revenue from these demand generating price cuts?

On the other hand it shouldn’t be overlooked that Tesla eliminated the SR model S & X models today - meaning the margins and ASP on those models will increase significantly, and also eliminated the off menu model 3 LR (now if you want long range you need to pay for AWD).

I vote for advertising just to buy off MSM so they can stop shitting on Tesla on a daily basis by inflating fires/deaths/lack of quality/paying employees for BS
"insider information" with no context...all which has real impact on the brand.

 

[neroden]

A question for all the experts here... Over the last month I've started buying TSLA shares but before that I've never had any stock, never even had a trading account, so there's some basics that I'm curious about.

People here make statements like "If it breaks-through X, then it's an easy path to Y" or "if it falls-through Z, then Q is the next resistance". How do you know these numbers?

They don't. It's called "technical analysis", so Google that to see why people talk about such things; but many people think it's voodoo.

 

[StealthP3D]

Would be nice, but longs have been burned several times this year finding good news in tea leaves where there was none to be found. As always, I hope to be proven wrong.

I agree the share price will likely take a hit tomorrow based on a number of things, the least of which is not how fast we have run up.

But I think it bears emphasizing that, unless you are a day-trader, the daily price swings are not important (at all). We are, what, one week away from a major earnings release which will negate all the noise about workers toiling in San Francisco heat, getting frostbite in the frigid San Francisco winters, learning that mice really exist (beyond Tom and Jerry), slashing prices of their products as they ramp production volumes, etc, etc.

What we will learn is demand is not a problem, Tesla has seen major increases in manufacturing cost efficiencies and the cars are affordable to a wider swath of the motoring public. This is a good thing and the way you become a true disruptor. Remember, their next offering, the Model Y, is a little more expensive, on average (and will appeal to a much wider market). The only way you become a true mass market player is by making your products compelling AND affordable.

In my opinion, Tesla is making all the right moves to keep the momentum in their favor.

 

[kengchang]

I think Tesla is better to scale the production since by contract Tesla has to purchase all the output coming out of GF1.

 

[neroden]

When you are bull on a stock, spent most of your time researching and defending the company every which way..just to see the share raise while you sit on the sideline because you were baited into selling early is the WORST feeling as an investor. I was down -40k with AMD at my worst and it didn't even phase me. I just kept cost averaging down. But that moment I sold 70% of my shares after making a 40k profit and then watch it balloon up to what could have been a 300k profit..I couldn't eat for a week. Learned it the hard way. Just going to buy and Hold. I don't have magical powers or a crystal ball. Everything is hindsight 20/20. The only thing you can control is how you feel about the company, not how you feel about the stock price.

I agree that it feels terrible to get out too early. The only exception I'll make to that is for using margin. If you're using margin in any way, you may *have* to cut your shareholdings when you least want to in order to avoid being totally forced out, and it feels good to be safer. I don't regret my sale of 3.6% of my position at a lower price than I would have liked because it was done to insure against potential increase of the margin requirement on TSLA by my broker (which could still happen); I paid the "insurance premium", and it's gone, and I don't expect to get it back, but I've eliminated a tail risk so I sleep easier.

So deleveraging is a reason to sell early. Once you're no longer leveraged, I wouldn't.

 

[EVNow]

I doubt it, Tesla has guided for profit in Q3 and Q4. They have far more information on which to base their decisions than any information the peanut gallery has access to. To me, this (and the planned increase in production) is a strong signal they were more than a little profitable in Q2. We will know shortly

Tesla keeps track of order rate. If it falls below where they want it to be they cut price, announce an incentive etc. Like all other car companies.

Anyway actions speak louder than statements from months ago. In any case EM no longer talks about profit. It’s all about cash generation now.