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

[cricketman]

Tried this out, but with different results:

my original order price of 64.450 EUR would increase to 65.430 EUR. So of course I pressed cancel

Sorry! It must only work for some depending on when they ordered and in which country/options

 

[kengchang]

Even from one of the Free Trade Zones, which the GF3 is built in?

Tesla is in the unique position of owning a factory that is both on mainland China (counts as a domestic carmaker) and in a FTZ (not subject to any export tariffs).

Frankly Taiwan doesn't care what Emperor Xi designate as FTZ

 

[Dan Detweiler]

This is a common narrative but it's partially wrong and actually misleading in the context you're using it.

Amazon posted losses from 1995 - 2003, which is almost a decade. They then posted profits from 2004 - 2011, albeit extremely small earnings Vs revenue (2004 being the exception). They then had a number of years of pretty much breaking even, a deliberate growth and tax avoidance strategy

However they were not burning capital anywhere near the rate Tesla is, and certainly not posting $500m - $750m in quarterly losses so I am not sure where you're going with this comment.

Is this argument against Tesla not a catch 22 though? Their growth is what has made them the dominant force in EVs and the lone shining star in the entire auto industry lately in regards to sales. Yet, everyone bemoans them for burning through the cash that they use for that same expansion. All this while putting billions of dollars in the bank. Seems like a "having cake and eating it too" kind of argument.

Dan

 

[ReflexFunds]

This is a common narrative but it's partially wrong and actually misleading in the context you're using it.

Amazon posted losses from 1995 - 2003, which is almost a decade. They then posted profits from 2004 - 2011, albeit extremely small earnings Vs revenue (2004 being the exception). They then had a number of years of pretty much breaking even, a deliberate growth and tax avoidance strategy

However they were not burning capital anywhere near the rate Tesla is, and certainly not posting $500m - $750m in quarterly losses so I am not sure where you're going with this comment.

Amazon managed growth to cash flow breakeven - this is how to maximise growth while avoiding external capital. Profit fluctuations were a bi-product of this but were never a driver of business decisions.

Tesla is in a much more capital intensive industry and decided to raise more external capital initially to grow faster than possible with self funding (this is what the capital markets are supposed to be for by the way).
However for the past year Tesla has been consistently free cash flow positive (excluding quarterly working capital timing fluctuations). They also raised some additional capital as a buffer against a possible global recession.

Now Tesla has a very strong liquidity stockpile for potential recession (likely $5bn+ cash plus $2bn+ undrawn bank lines), I expect Elon to accelerate capex again to manage the business to cash flow breakeven.
Whether this means profitable or not depends on just how high capex is. Pre growth cash flow is significantly higher than net profit - but if growth investments are increased significantly it is possible cash flow breakeven will equate to positive net profit going forward.

 

[EVNow]

Same platform. Overwhelmingly the same parts. I'm in the "Model 3 variant" camp. I mean, different variants of the X have different numbers of seats, different amounts of room, etc.

Potential battery improvements? No. They clearly share the same packs. If one gets a battery improvement, so does the other.

But not this. That makes all the difference.

- Higher ride height?

We have booked Y for my wife. She wouldn't touch a low car (though she drives 3 a lot). All my sub-urban neighbors have a "low" car and a SUV/Van. By SUV I mean vehicles like CRV.

Ofcourse Y is not as differentiated from 3 as X is from S. But the demographic is slightly different. I expect most 3 owners to be men but a big % of Y owners to be women.

 

[KarenRei]

Frankly Taiwan doesn't care what Emperor Xi designate as FTZ

We're just trying to understand the legalities. Do you have a reference to some law or anything? Concerning PRC/Taiwan trade, Wikipedia states: "Mainland China has recently become Taiwan's largest import and export partner. In 2010, the mainland accounted for 28.0% of Taiwan's exports and 13.2% of imports.[58][59] This figure is growing rapidly as both economies become ever more interdependent." - Is there some special ban that applies only to cars?

 

[KarenRei]

But not this. That makes all the difference.

- Higher ride height?

We have booked Y for my wife. She wouldn't touch a low car. All my sub-urban neighbors have a "low" car and a SUV/Van. By SUV I mean vehicles like CRV.

Yes, that's one of the reasons why 3 and Y share only 76% of parts rather than 100% Model X by contrast shares only 30% of its parts with Model S.

A basic ride height difference is pretty trivial - you can raise a Model 3 5cm with just little metal spacers. Of course, Model Y is optimized (aerodynamics, aesthetics, etc) for the greater height.

 

[SO16]

This is a common narrative but it's partially wrong and actually misleading in the context you're using it.

Amazon posted losses from 1995 - 2003, which is almost a decade. They then posted profits from 2004 - 2011, albeit extremely small earnings Vs revenue (2004 being the exception). They then had a number of years of pretty much breaking even, a deliberate growth and tax avoidance strategy

However they were not burning capital anywhere near the rate Tesla is, and certainly not posting $500m - $750m in quarterly losses so I am not sure where you're going with this comment.

This article sums it up.
The Amazon Era: No Profits, No Problem

 

[TheTalkingMule]

This is a common narrative but it's partially wrong and actually misleading in the context you're using it.

Amazon posted losses from 1995 - 2003, which is almost a decade. They then posted profits from 2004 - 2011, albeit extremely small earnings Vs revenue (2004 being the exception). They then had a number of years of pretty much breaking even, a deliberate growth and tax avoidance strategy

However they were not burning capital anywhere near the rate Tesla is, and certainly not posting $500m - $750m in quarterly losses so I am not sure where you're going with this comment.

TSLA didn't just show two quarters of profit? What you describe with AMZN mirrors this almost exactly. We're at 2014/15 AMZN right now.

 

[Maitri982]

Selling options sometimes takes a pair of you-know-what, but i sold the Jan 2022 puts at the strike of $130 for handsome sum. Trading like $25 per.

So basically my assumption is that on Jan 2022 that Tesla is above $130 per share. I will likely not even get to that date as I think perhaps by EOY next year things should be rosier and I will buy these back and keep the difference.

 

[Dan Detweiler]

I was always in love with the idea of [having the option of] not buying a battery when you purchased your car, and just join a battery swap club for a monthly fee, plus a per swap fee (or instead of a per swap fee, a mileage fee).

Then all the folks who rant and carry on about how much the battery will cost to replace one day would be silenced. Plus, you'd always have a non-degraded battery for the life of your vehicle.

I think the cost and complexity of the swap stations really made Tesla work hard to poo-poo on the battery swap idea. It truly would have been incredibly cumbersome to build-out, and expensive beyond imagination. It might happen one day - but only if one of these 2 things DON'T happen - 300 mile charge times fall to less than 15 mins OR range increases above 500 miles (most people rarely drive over 500 miles in a day so you essentially eliminate the need to charge while traveling, and even when traveling over 500 miles in a day, only a 20 or 30 minute stop would be needed, assuming today's charge times, to make a 800 or 900 mile trip in a day).

I would have agreed with this scenario until I took my first long road trip in my Model 3. The car as it stands has WAY more range than both my stomach and certainly my bladder! Charging is really a non issue in a Tesla with the possible exception of extremely rare instances where you are traveling to an area with no Supercharging available for extremely long lengths of time. While this may be an issue for parts of the world, it certainly isn't here in the states. All it takes is a minor change in common traveling practice (aka, plan your eating stops in places where you will be charging). I have never been able to eat a meal before my car was done charging. Charging is a non issue anymore and it is getting better and faster all the time.

Dan

 

[Dan Detweiler]

Y
A basic ride height difference is pretty trivial - you can raise a Model 3 5cm with just little metal spacers. Of course, Model Y is optimized (aerodynamics, aesthetics, etc) for the greater height.

Please tell that to my knees and back! LOL!

Dan

 

[anthonyj]

https://pbs.twimg.com/media/EGCaJ0zWkAI_ct7?format=jpg&name=large

Stock dumping on this btw

 

[Bobfitz1]

I don't think so. Captial expense is amortized over the expected life of the production equipment purchased, typically 3-5 years for robots. Perhaps you're thinking of the effect on cash or debt?

Yes, I'm sure you are right. I was disagreeing with the original poster that another big drag on Q1 20 financials would be all the 'costs' associated with the ramp of GF3.

Tesla's huge advantage with GF3/Shanghai is that the building and infrastructure which supports the factory is being build with local non-recourse debt (at super-low interest rates to boot). Because the facility itself is the collateral for these loans, the debt doesn't appear on Tesla's balance sheet.

100% spot on. I think it's understood by all that the Chinese central and regional leaders are willing to grease any skids to get GF3 producing the world's most advanced EVs as soon as possible, and that this is arguably the fundamental huge advantage that spawns others.

Wanna bet Tesla builds 1 giga-phase per year in China while these terms are available?

I'm not taking any of that bet! China will surely quadruple down if GF3 succeeds in accelerating their goal of transitioning to EVs and clean up their air.

 

[EVNow]

However they were not burning capital anywhere near the rate Tesla is, and certainly not posting $500m - $750m in quarterly losses so I am not sure where you're going with this comment.

Can you explain what you mean by "burning" ?

Since Q1 '18, they have a cumulative $2.3B positive operational cash flow.

 

[KarenRei]

Any way to see who the petitioner is?

"Population: 2000 (Estimated)." Times, what, $20k per pack for a full replacement? $40M max liability (assuming that there's no punitive risk - I don't know whether there is).

 

[Drax7]

https://pbs.twimg.com/media/EGCaJ0zWkAI_ct7?format=jpg&name=large

Stock dumping on this btw

Probably another scam , with a half life of 10 minutes

 

[Dan Detweiler]

https://pbs.twimg.com/media/EGCaJ0zWkAI_ct7?format=jpg&name=large

Stock dumping on this btw

Just goes to show the wackiness of Wall Street right now regarding Tesla.

Dan

 

[Antares Nebula]

https://pbs.twimg.com/media/EGCaJ0zWkAI_ct7?format=jpg&name=large

Stock dumping on this btw

Yep, on the SA newsfeed too. There is currently some regulatory risk around Tesla as I pointed out yesterday, re autopilot and smart summon. The above, however, is for a battery issue.

 

[EVNow]

https://pbs.twimg.com/media/EGCaJ0zWkAI_ct7?format=jpg&name=large

Stock dumping on this btw

Or this.

This revenue forecast is in line with my model as well as @luvb2b.

Don't Expect Tesla to Deliver 'Hypergrowth,' Bearish Analyst Says -- Barrons.com

Investors who see Tesla as a "hypergrowth" stock should dial their expectations back, an analyst wrote Friday.

Tesla stock (TSLA), which closed Thursday at $233.13, was down 0.2% in premarket trading as Credit Suisse analyst Dan Levy -- one of the Street's bigger bears -- predicted an 8% year-over-year revenue dip in the third quarter. He has an Underperform rating on the stock and a price target of $189, well below the average of $271 among analysts tracked by FactSet.

A fall in revenue would represent the first such dip since 2012, Levy noted.

"To be fair, we forecast continued growth for Tesla beyond this year, as Tesla increases its volumes, driven by [ the] Model Y and China," he wrote. "Yet for a stock with elevated valuation driven by prospects of hypergrowth, the third-quarter print is a reminder that the Tesla growth story may not be as robust as the bulls hope for."

Levy's prediction suggests quarterly revenue around $6.29 billion, below FactSet's $6.47 billion estimate and last year's $6.82 billion.

Wall Street is looking for 2019 revenue of $23.5 billion, about $1 billion below FactSet's consensus estimate.​