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

[dc_h]

WOW ... No need to be so harsh not sure why this make me "clueless", I am long AAPL for nearly 20 years ... i am also long TSLA that iswhy i visit this thread pretty regularly... the Tesla mission is admirable(climate change is real and we all must do something about it... )
but without recurring profits at some point in time (admittedly not sure when that is ) the mission will fail ...I will repeat my point Brand matters ... a lot ... and i am sorry to say that Telsa is constantly creating self inflicting wounds to the brand with confusing messaging and pretty poor service experience ...they can get away with this with early adopters , but as they continue down market this will not be tolerated in will damage reputation/brand

This thread is about investing and you invest for the long run in companies with exceptional brands that was my original point

So often i wish i could hit two buttons. Helpful and disagree would fit here. I think profit will matter very long term, but for the next 3-5 years, they should focus on cash flow positive and GAAP in the hole. I think service is an ongoing issue with a fast growing company and if they are going to rely on the App, they should build the App into the Interface and make sure the mobile team can update and reroute service calls. While service is important, the strides in quality in the last year or more significant long term. Tesla can move out front on quality and should be the leader in quality and have the least service, by far. I think that we will see the impact of that change clearly in 2020.
I don't really know about confusing messaging. I think Elon gets a lot of visibility for the brand and overall that's good. The shorts FUD factor creates more confusion than Elon and magnifies any confusion 1000 fold.

 

[Bet TSLA]

Thats... obvious?

It's so cute when people confuse their models for reality.

Things have value because people will give you something for them. Check out the pieces of paper in your wallet. Consider the dividends they pay.

 

[EVNow]

I think the only people at Apple who are tasked directly with thinking about money are those who invest the cash hoard. And nobody at all is primarily tasked with thinking about the brand, not even SJ did that. It just isn't done. Great products that people will love. Everything else comes from that.

I'm sure a ton of people at Apple think about money - the entire finance & marketing departments, for eg. And the hardware designers. And the people negotiating contracts etc. Obviously not the software developers. But now we are getting quite OT - so I'll stop there.

 

[EVNow]

Even people saying "I'm just investing for capital growth" miss the point: The capital only grows BECAUSE there is an expectation of future revenue from dividends.

Not really. Tesla can sell all the assets and distribute the money to shareholders. So, never any dividend, only cap growth

Anyway, its all very theoretical at this point. I'm sure I'll be out of TSLA (except for core stock, may be) by the time they pay dividends.

 

[ggr]

its crazy to suggest TSLA will never pay dividends. Elon may claim so now, he may even really believe it, but if he continues to feel like that in 15 years time he wont be CEO. The percentage of investment capital in TSLA that is investing altruistically without a desire for return is trivial. Even people saying "I'm just investing for capital growth" miss the point: The capital only grows BECAUSE there is an expectation of future revenue from dividends. A company is only the current value of future dividend payments. You may choose to wait and collect the dividends over 20 years+ or you may choose to sell to someone with a longer time-scale than you, and collect the capital growth, but make no mistake the only reason TSLA is worth >$0 is BECAUSE of futrue dividends.

I don't see how thats even debatable. How else is the company providing anything in return for your shareholder funds? its not like investors get free supercharging.

I dont care if I dont get my first TSLA dividend for 20 years, personally, but I am 100% convinced that if somehow it was made impossible for the company to ever pay dividends, its stock value would be zero. Thats... obvious?

Berkshire Hathaway?

 

[dc_h]

Then this probably isn't the stock for you. You can see by how Tesla is handling things, cutting prices as they save on costs even though they could continue to sell at the higher prices.

If Tesla never gets into making a profit than this is not the stock for anyone. If Tesla is a non-profit environmental outfit that happens to make cars, great, but if it is a Corporation that is going to continue to emply 10s of thousands of people, AND pay them based on stock options, they better intend to make money some day.
Tesla today does not need to make money. Tesla today should focus on being cash flow positive every quarter, barring a major product rollout. First Q or two of Shanghai could have higher salaries prior to sales kicking in. First Q or two of Y could be the same. But long term to be safe from recession and come out of the recession stronger than legacy manufacturers, they should have 7-10 billion in the bank. I would hate to see Apple or some cash rich company come in and buy us long term investors out for pennies on the dollar.

 

[Carl Raymond]

its crazy to suggest TSLA will never pay dividends. Elon may claim so now, he may even really believe it, but if he continues to feel like that in 15 years time he wont be CEO. The percentage of investment capital in TSLA that is investing altruistically without a desire for return is trivial. Even people saying "I'm just investing for capital growth" miss the point: The capital only grows BECAUSE there is an expectation of future revenue from dividends. A company is only the current value of future dividend payments. You may choose to wait and collect the dividends over 20 years+ or you may choose to sell to someone with a longer time-scale than you, and collect the capital growth, but make no mistake the only reason TSLA is worth >$0 is BECAUSE of futrue dividends.

I don't see how thats even debatable. How else is the company providing anything in return for your shareholder funds? its not like investors get free supercharging.

I dont care if I dont get my first TSLA dividend for 20 years, personally, but I am 100% convinced that if somehow it was made impossible for the company to ever pay dividends, its stock value would be zero. Thats... obvious?

An obvious but clearly uncomfortable truth.

I suppose a dividend banned share could have value through corporate takeover, but only because you trade for some other stock that is not dividend banned.

Ban all dividends, the stock market collapses.

 

[RobStark]

Many investors are going for gain in the SP that will reflect the value of the company in the future. This potentially dwarfs any dividends.

The future of the company only has value if it pays dividends. If Tesla has a trillion dollars in assets and cash but will never give a cent to investors then it has zero value. Tesla would only have value as a potential takeover target where someone would sell the assets and give shareholders the proceeds. In other words dividends.

If not then Tesla would not have investors. It would have donors. Or creditors that make loans to Tesla without interest. In other words donors.

Donors would not be giving Tesla billions of dollars like investors.Or at least there is not an example in the real world. People have given billions to Universities and charities that help the poor directly but not industrial companies.

Tesla might only pay dividends after Elon sells and moves to Mars. Or after Elon dies.

But dividends must come at some point.

 

[Cosmacelf]

The future of the company only has value if it pays dividends. If Tesla has a trillion dollars in assets and cash but will never give a cent to investors then it has zero value. Tesla would only have value as a potential takeover target where someone would sell the assets and give shareholders the proceeds. In other words dividends.

If not then Tesla would not have investors. It would have donors. Or creditors that make loans to Tesla without interest. In other words donors.

Donors would not be giving Tesla billions of dollars like investors.Or at least there is not an example in the real world. People have given billions to Universities and charities that help the poor directly but not industrial companies.

Tesla might only pay dividends after Elon sells and moves to Mars. Or after Elon dies.

But dividends must come at some point.

As ggr said a few posts back, what about Berkshire Hathaway? They’ve never paid dividends, nor are ever likely to. The stock price reflects the value of the combined assets...

 

[MC3OZ]

This is my take Tesla/Maxwell/Panasonic.

Making cells fast in high volume might be difficult, but making them slowly in low volume isn't overly difficult.
For validation only low volumes are required.

Apart form cell testing, I hope there is a Model S and Roadster driving around with a pack containing Maxwell cells in 18650 format.
Once you can make cells slowly it is a matter of ramping up the process, something Tesla Grohman is good at.
IMO the first step is making 18650 cells for Model S/X somewhere near Fremont before battery investor day.

The old 18650 line in Japan can be converted to make 2170 cells for Tesla energy.
That is my other point, Tesla energy will need cells for the foreseeable future, for Powerpack and Megapack these don't need to be Maxwells any time soon.
So I see the Panasonic GF1 output eventually being re-purposed to make cells for Tesla energy.
So one option is Tesla and Panasonic both simply honour/rollover all existing contracts.

The sweetener for Panasonic is they can buy Dry Cathodes from Tesla at close to cost price, not the IP, the products.
Under this model, who makes Dry Cathodes into Maxwell cells at GF1 doesn't matter, that can be negotiated by Tesla and Panasonic and can change at anytime.

Similarly for China dry cathodes can (I think) be imported in bulk and given to local cell makers to make cells as per Tesla's formula. The IP for Dry Cathodes stays exclusive to Tesla and US based for at least a few years.

Tesla buying or not buying the Panasonic facility at GF1 is a whole other matter, once it is fully ramped I expect Panasonic can make money, But I don't think Panasonic will be offended by Tesla making their own cells, they don't want to follow Tesla's aggressive ramp, so this is the only alternative.

I'm not certain this can be done, but IMO it is at least as likely as all other alternatives being proposed.

 

[Carl Raymond]

There is caring about the receiving of dividend v caring about the existence of the concept of dividend. Different things.

We all care about the latter. For now, however, we don’t care about the former because of cap growth. But we have to acknowledge that a share’s value *cannot* grow, it’s permanently stuck at zero, without the promise of dividend.

 

[RobStark]

Berkshire Hathaway?

Berkshire Hathaway has stock buybacks in lieu of dividends.

So it puts cash in investors hands.

Also companies like Heinz Kraft with which Berkshire Hathaway has a "permanent partnership" with has dividends.

Edit @Cosmacelf


In the future if Tesla wants to stop issuing new shares and start buying them back in lieu of dividends that is fine too.

 

[MC3OZ]

Once fully mature I expect Tesla to pay dividends, once they stop growing rapidly, it will be hard not to make a profit.
And while they are growing rapidly, there is no reason for concern.
Cost savings and improving margins is very easy for a fully mature company that is only growing slowly, any savings made typically result in improved profit as long as you retain market share.

 

[Zero CO2]

That makes little sense. I'm just looking for cap gains

why not i said in the future .... 20 + years ago i did not expect MSFT, AAPL or ORCL to be dividend stocks but today i have a nice income stream from all 3 in addition to capital appreciation ... this is basically how a company becomes a grown up ... i am not suggesting that TSLA does not invest in capex/R&D heavily in the short run they should eventually be able to do both , but I am suggesting that a 16 year old company needs become profitable in order to better control its destiny

 

[EVNow]

why not i said in the future .... 20 + years ago i did not expect MSFT, AAPL or ORCL to be dividend stocks but today i have a nice income stream from all 3 in addition to capital appreciation ... this is basically how a company becomes a grown up ... i am not suggesting that TSLA does not invest in capex/R&D heavily in the short run they should eventually be able to do both , but I am suggesting that a 16 year old company needs become profitable in order to better control its destiny

You concentrate on profitability after you have "grown" and "matured". In other words, once you stop growing much, if you aren't profitable your stock won't be worth much.

When will Tesla stop growing ?

 

[ReflexFunds]

A company's value is its perceived ability to pay dividends in the future. This does not mean it ever has to actually pay dividends. Its ability to pay dividends could instead be redirected to capex or R&D if management think this will get the best return on capital for its shareholders. It is future steady state (pre growth costs) cash generation ability that has value, not the choice of how to spend that cash.

It's unlikely a company will find growth projects to invest in for ever though so eventually Tesla is likely to be forced into dividends or share buybacks. Hopefully Tesla/Elon keep their imagination a lot longer, but I'm sure at some point they will have more capital than they are able to spend so dividends or buybacks will be launched.

 

[Yonki]

Re: this dividend / stock price discussion. Isn't Elon not going to make a penny unless TSLA does pretty well? I'm sure he will (eventually) make it happen.

 

[Zero CO2]

Then this probably isn't the stock for you. You can see by how Tesla is handling things, cutting prices as they save on costs even though they could continue to sell at the higher prices.

it certainly is the stock for me ... i keep loading up on shares during these SP lows of the last few months ... i have done my homework on the financials .. i own the car .... i see no real competition... i just want to be rewarded for my invested capital in the long run, and that is how a successful corporation rewards its long term shareholders through dividends and buybacks ... I am not a trader , it seems like there are a lot of traders on this thread

 

[Zero CO2]

So often i wish i could hit two buttons. Helpful and disagree would fit here. I think profit will matter very long term, but for the next 3-5 years, they should focus on cash flow positive and GAAP in the hole. I think service is an ongoing issue with a fast growing company and if they are going to rely on the App, they should build the App into the Interface and make sure the mobile team can update and reroute service calls. While service is important, the strides in quality in the last year or more significant long term. Tesla can move out front on quality and should be the leader in quality and have the least service, by far. I think that we will see the impact of that change clearly in 2020.
I don't really know about confusing messaging. I think Elon gets a lot of visibility for the brand and overall that's good. The shorts FUD factor creates more confusion than Elon and magnifies any confusion 1000 fold.

my long term is at least 10-20 years this a really long process ...this is where the analogies to AAPL really breakdown ... smartphones have a really short lifecycle compared to cars/energy so not sure why you would disagree except that i am from NYC which in that case it makes a lot of sense to disagree with me
all TSLA long holders will need to have a lot of patience..... but i believe we will be rewarded handsomely for that virtue

 

[Unpilot]

Trying to find the dividend AMZN pay's.....they are a trillion dollar company...must be somewhere?

I plan on selling some shares of TSLA when it hits my sell point (2k or so would work) then give the rest to my kids and enjoy life.