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

[KarenRei]

Apple has been increasing its gross margins by raising prices over the last several years. If profit created innovation then we would have moved on from the iPhone years ago. Instead, we are stuck with the same old phone with a few software/hardware updates. Where are the innovative new products?



If Steve Jobs had half the balls of Elon Musk, their products would be revolutionary. Instead, they are evolutionary. And very limited in scope. Musk had the balls to re-land booster rockets that have fallen from the exosphere (100 miles above the earth's surface) and gently set down a tiny drone ship in the middle of the ocean. They need to decelerate from 3,000 miles per hour. Look, I don't want to take anything away from Steve Jobs but if you analyze what he has done and compare it to everything Musk has done, it kind of makes Jobs look more like an ordinary businessman and less of a visionary compared to Elon Musk. He's definitely been over-rated by the popular press.

I really can't believe you are saying Musk should look up to Jobs or aspire to emulate him.

Jobs was a marketing genius, not an innovation genius. He mainly took things that other people were already doing (for example, Nomad vs. IPod), made versions that may not have always won the stats race but were stylish and user friendly (rather than tools for nerds and businesspeople), and convinced people to not only buy them en masse, but to do so at a premium. And each new product launch was tied into a single ecosystem that just further encouraged people to stay within Apple's sphere.

Personally, I'm not much of a fan of Jobs as a person. But his marketing acumen can't be denied - spotting places where existing niche products can be transformed into mass-market phenomena, and convincing people about how this product is going to change their world and how anyone who doesn't have one is falling behind the times.

IMHO, he was a very different person to Musk. If there's anyone out there in the present who's most like Musk - and I know Musk would hate to admit this, but... it's Bezos. And in the past, I know he'd hate to admit this too (as he's a huge Tesla fan), but... he's most like Edison (the R&D-heavy, works-himself-and-his-workers-hard-but-they-still-line-up-for-the-chance-to-work-with-him-because-he's-doing-all-the-neatest-things CEO simultaneously involved in dozens of revolutionary "sci-fi" fields and bringing them to reality). Tesla, by contrast, had some brilliant insights into some specific fields (to the point of obsession and a bit of madness later in life), but was a terrible CEO and excelled at going broke while other people profited off of his work. Elon probably has a number of "Teslas" working for him right now

 

[StealthP3D]

Jobs was a marketing genius, not an innovation genius. He mainly took things that other people were already doing (for example, Nomad vs. IPod), made versions that may not have always won the stats race but were stylish and user friendly (rather than tools for nerds and businesspeople), and convinced people to not only buy them en masse, but to do so at a premium. And each new product launch was tied into a single ecosystem that just further encouraged people to stay within Apple's sphere.

Interesting. And the difference between a "marketing genius" and a "snake-oil salesman" is what? From your description, it's a fine line.

As a young child, the first "business" thought or idea I had was to wonder why advertising was necessary. At age 7 I thought if a product was useful and would make your life better, wouldn't someone tell you about it (besides the companies marketing)? I've always thought a good product will sell itself. Fast forward to present: It looks like that is exactly what the Model 3 is doing. As a child I thought the government should outlaw all non-factual marketing, leaving just a basic description of the product and its capabilities. I thought this would make capitalism work better for the people of the world. And I still do.

 

[Remus]

I saw a post on Reddit that someone supposedly said they've been investing in Tesla for a while and this is the first time they are scared. I mean this sounds crazy to me.

I saw exactly the same comments last year during Elon's Twitter disaster, Q1 delivery and Q1 earning. Honestly I saw that too many times.

 

[elasalle]

I saw exactly the same comments last year during Elon's Twitter disaster, Q1 delivery and Q1 earning. Honestly I saw that too many times.

reminder: Trolls/FUDsters appear everywhere ..

 

[Antares Nebula]

I see that uptick rule is really doing its job!

 

[W84M3]

TSLA implodes in a dark green market.. Watch it slide all the way back.

 

[UncaNed]

TSLA implodes in a dark green market.. Watch it slide all the way back.

How far back?

Is this just the usual MMD?

 

[Boomer19]

Bloomberg - Are you a robot?

The departure of Straubel, more so than the arrival of any new model of car or corporate merger, marks a new era for Tesla and for him. “It has been a really tough decision because I feel like I’m letting a lot of people down,” Straubel said. “But, also, you have to live life. I love inventing and creating and building things and am at peace knowing that about myself and wanting to reorient my life. I'm decompressing for a bit and having a little break, but I will have more to say in a few weeks.”

 

[KarenRei]

How far back?

Is this just the usual MMD?

Nothing spectacular IMHO. Markets aren't "dark green", and it's only down ~2%.

This might change, but at present... nothing dramatic.

 

[StealthP3D]

I want to buy but I want to wait to see what happens Monday when the shorts don't have the uptick rule restricting them.

I wouldn't think too hard about that. The uptick rule really doesn't do much except stop flash crashes. Tesla's adversaries will continue to pressure the stock but there is only so much they can do. The most powerful tool they have at their disposal is modifying public opinion. Because this can impact demand. And slamming the share price is part of this. If the stock price is not doing well, the public perception is that the company is in a weak position. If the share price is strong and rising, it gives Tesla a certain glow and radiance. The fight to lower the share price is mostly about this. Perception.

However, the power of a good value means they can only push the SP so low. People may be gullible and slow on the uptake but they are not completely stupid. At some point, the greed of the buyers takes over and there is no stopping it. This doesn't take profit, it only takes the perception in investors minds that Tesla might be unstoppable. Profit is one way to achieve that, strong free cash flow and never-ending growth is another. Welcome to the market!

 

[Krugerrand]

I think the issue is that no one will really accept the goal until they see a credible plan and the tech to make it happen. It's just so far from what is happening today.

That doesn't mean it won't happen but when the claim is so big it needs substantial justification.

We’re going to start a car company. Meh, I’ll believe it when I see it.

We’re going to make a worldwide fastest charging network for long distance travel. Meh, I’ll believe it when I see it.

We’re going to build a battery factory. Meh, I’ll believe it when I see it.

We’re going to build the most compelling, non-compromise EVs that out perform, out safety, out fun etc... any ICE in their class. Meh, I’ll believe it when I see it.

We’re going to produce more Lithium batteries than everyone else in the world combined. Meh, I’ll believe it when I see it.

We’re going to make reusable rockets. Meh, I’ll believe it when I see it.

We’re going to modularize wiring in our vehicles. Meh, I’ll believe it when I see it.

We’re going to build multiple Gigafactories around the world. Meh, I’ll believe it when I see it.

Hmm...*wonders if perhaps some people are a bit - what’s the word I’m looking for here?*

We’re going to make cars fully autonomous.
We’re going to create Robotaxis.
We’re going to make an energy sustainability ecosystem of solar roof, battery storage and EVs.
We’re going to show a path forward to producing 2 terawhatthehellever of batteries per year.

Meh, I’ll believe it when I see it.

Timelines aside, at this point if you’re still doubting where Tesla is going and what they’ll accomplish, and taking a ‘I’ll believe it when I see it’ stance then at best you lack the ability to connect the dots.

 

[AlexS]

Thinking of buying more now or wait, if it will dip to €200

 

[KarenRei]

Thinking of buying more now or wait, if it will dip to €200

You're pretty much already there?

When unsure... split the difference.

 

[brian45011]

So someone please explain to someone who doesn’t know anything about corporate finance how it works with losses and cash flow. From what I understand they lost 408 million. Ok. But how can they have 600 million more in the piggy bank now than they did last quarter? And if so why care about losses?

Not an owner (but an EV driver) Huge tesla fan.

Thank you.

Inventory at 3/31/19 $3.84 billion
Inventory at 6/30/19 $3.38 billion
Difference is ~$460 million
Inventory is carried at the LESSER of cost or fair market value.
Selling dated/obsolete inventory generates ready cash because the old products are sold at the then current market value (even if it has been discounted from prior pricing.)

Especially for quickly growing enterprises, just the opposite effect (i.e. consumption of cash) occurs when inventory levels (raw material, work-in-process, finished goods and parts) have to be built up for the new products.

 

[StealthP3D]

Timelines aside, at this point if you’re still doubting where Tesla is going and what they’ll accomplish, and taking a ‘I’ll believe it when I see it’ stance then at best you lack the ability to connect the dots.

The response to most of those things was not nearly as polite as "Meh, I'll believe it when I see it". It was more along the lines of complete derision and absolute statements of how foolish and stupid to think these things were even possible.

 

[SageBrush]

And each new product launch was tied into a single ecosystem that just further encouraged people to stay within Apple's sphere.

This is true and it gets to the heart of Job's genius but your portrayal is more Gates/Ballmer than Jobs, meaning products that forced users to buy other company products. Mostly monopoly, IP, and protocol abuse

In Job's case the insights were much, much deeper. He invested in technologies that spawned other technologies. Just as Elon realized many years ago that (paraphrased) 'it is the batteries, smarty,' Jobs realized that 'it is the OS, smarty.' Jobs also embraced the internet and common standards decades before his competitors because he saw how they could be woven together to make exceptional products that transcended the stodgy PC desktop.

Give the man his due.

We see Musk the salesman and Musk the tyrant -- true but no where all the story. We see Jobs the salesman and Jobs the tyrant -- true but no where all the story.

If Jobs was alive today (unfortunate hubris on his part), I imagine he would be up to his eyeballs in AI. Just like Musk

 

[X Fan]

Sigh...I wonder if the roller coaster will take SP back to 180

 

[Cosmacelf]

Umm. No. Can we please not use this thread for basic accounting questions that have already been asked before and given wrong answers again and again. Google is your friend - don’t wait for neuralink to use it

Edit: This guy Rob reads my mind (and this thread!).. please listen

Why Wasn't Tesla Profitable? (07.25.19) - TechCast Daily

That is a great podcast and I highly recommend everyone here listen to it. He gets to the point quickly, succinctly. It won’t be a waste of time to listen to it even if you know the punch line

The bottom line is that growth companies that grow 50% YoY almost can’t be profitable due to structural reasons. Analysts who bang on Tesla for not being profitable are either disingenuous or not very bright.

 

[StealthP3D]

Sigh...I wonder if the roller coaster will take SP back to 180

No, the trip to $180 was based on fake news and the company is in a stronger position now than they were then. $6.3 billion in revenue/qtr equals over $25 billion annually and growing rapidly with the addition of GF3 in China. The really important fact is that the cost to produce electric cars is dropping all the time and it drops further with volume efficiencies.

 

[Doggydogworld]

Your comment raises an interesting question. If maxcell production is due to start some time next year and that makes the huge Pana drying ovens obsolete, does that mean we are likely to see a substantial write down at the same time? Surely a machine that is longer than a city block must have cost a bomb.

I guess Pana could take the ovens back or buy them back to minimise any loss to Tesla.

Tesla doesn't really own the ovens. They're on Tesla's GAAP books for technical reasons. There is an offsetting liability. If the ovens go away, Tesla would simply deduct the value from both PP&E and the offsetting liability. No harm, no foul.

Maybe....

The tricky part is buried in the technical details of the Tesla/Pana contract, most of which are redacted. If Tesla is on the hook to pay a certain price for the cells based on Pana's capex, then the offsetting liability might remain and the oven writedown would be yet another "one-time" restructuring charge that decreases earnings.

I don't expect the ovens to go anywhere, though. As long as they keep needing more 2170s it makes sense to use DBE for new lines and keep the old lines running.