Man have you watched their climate change town hall on CNN? Every single one of the candidates said transition to EV is a given.
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
-
Tomorrow at 1PM PDT we will be discussing the latest Tesla Shareholder Meeting on the TMC Podcast. You can watch live on YouTube or X and participate in the chat.
Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Man have you watched their climate change town hall on CNN? Every single one of the candidates said transition to EV is a given.
At the risk of sounding like an idiot, how does the tax cr renewal help Tesla? Unless they propose some eternal tax credit, then ya there's some cash. I feel like I'm missing something.
But if their bull case is $4000 (and bear case is $700), how can they profit from their long term vision if they keep trimming when they get too far over 10%? This way they will miss a large part of the growth, unless the rest of their portfolio grows at the same rate.
Dan Detweiler
Active Member
See, there you go again. Dispelling the "Bot" thesis. lol.Hi MFranc. Thanks for the respectful intro, and welcome from the other side of the pond.
First off, I think you seem to have a misconception on hand: that the reaction to a quarterly report should be based on whether it's good or bad news. That's not how it works. The reaction to any news is (at least in theory) based on whether it's worse or better than what people already expect. Now, that's theory at least, and reality can differ. But, at least in theory, if bad news is expected, it should already be factored in. Your investment choices should be relative to how much better or worse you think it's going to be than what's expected.
The big money already expects a revenue drop YoY, and generally a lot more concerned with QoQ regardless. And they're always much more focused on profits than revenue. The focus on profit is IMHO is rather silly; its FCF that determines Tesla's ability to keep the lights on as it grows production, release new products and expands into new markets, which in the long-term outgrows the liabilities side of the profit equation). And it's cash on hand that determines their ability to weather adverse events. Tesla can at any point cut growth to boost profit, but investors prefer the opposite - drowning the liabilities side of the profit equation by growing future revenue. But I digress.
Most people aren't dumb enough to not understand why revenues are down YoY. A year ago Tesla was almost exclusively burning off years of accumulated reservations; today it's almost entirely new reservations. A year ago Tesla had a $7500 tax credit in its largest market; today it's $1875. Price cuts were obviously essential - and indeed, the very goal (I find it amusing to see the same shorts criticize Tesla for cutting prices, who previously were condemning them for not having released the $35k Model 3). Additionally, a year ago Tesla didn't have Model 3 competing with S&X in most of the world; now it self-competes almost everywhere.
The key figure to watch is COGS. Because the simple fact is that COGS has been declining rapidly every quarter, which is how margins are almost as high today - despite the price cuts - as they were in Q3, with its much higher prices. The COGS reductions are virtually inherent with Tesla expanding its production. Do you see any new buildings at GF1? There've been no new cell lines for quite a while. At Fremont, there's no new stamping lines. No new body lines. No new paint shops. No new GA lines. Only minimal hiring. Yet they're making far more vehicles now, with a given amount of infrastructure. This means an inherent reduction in COGS.
Now even if production ceases scaling at Fremont (news flash: it won't, and the trend and permit filings should make that clear), Tesla now has a brand new Gigafactory coming online. It contributed zero in Q3 - just a money sink. How much it contributes in Q4 is up in the air. But soon it's going to be producing 3k vehicles per week. What do you think that's going to do to revenue, FCF and profits? And if you think that the markets are blind to this fact, think again; they simply time-discount it relative to their assessments of timing and risk. The more progress they see, the more they adjust their revenue estimates up, and the higher they value the company.
Thus we invariably circle back to demand. Tesla shorts always predict "demand peaks", and they've done it every single quarter of Tesla's history. Which - spoiler alert - not only hasn't happened, but the opposite keeps happening. They'll obsess over any given market, without looking at the bigger picture, which is that "good market changes" are just as likely as "bad market changes", the overall global EV market grows dramatically every year, and even still, despite expanding into new markets each quarter, Tesla still hasn't moved into a number of the world's largest auto markets (Russia, Saudi Arabia, Brazil, India, etc etc). Until you hear something like "Tesla expanded into Rwanda this quarter", the expansion is still continuing unabated. FYI, you're talking to a person who's still sitting on a years-old reservation waiting for Tesla to expand into my market.
Markets go through phases.
1) Backlog builds
2) Tesla starts delivering, and there's a flood of deliveries
3) Tesla fills the backlog, and the market becomes weak
4) New demand starts to build, and deliveries increase again - not up to flood levels, but to sustained levels (which A) will still show seasonal variations, will B) on average grow YoY alongside the overall global EV market, but C) respond highly positively or negatively to government policies - which again, may be more pro-EV or more anti-EV than previous policies).
On that last point, let me remark that some of the largest potential EV markets - US, Germany, I'm looking at you - have rather weak incentives for Tesla at present, so there's a lot of potential upside from future policy changes.
The various markets that Tesla operates in are in various phases. For example, the US is in stage #4 - backlog built, got filled, fell weak, then recovered - and now will fluctuate seasonally and follow the overall EV growth trend. Some markets like the UK and Australia went into #2 last quarter (still in #2, but should be filled by the end of this quarter). Some new large EV markets, like South Korea, are going into #2 this quarter, and will probably continue suchly into Q1. Norway could be argued to be in #3; we'll have to see how it evolves next quarter. And so on. But it's never a story of an individual market - it's the overall global picture that matters.
Do realize that the overall picture for Tesla is inherently noisy. Tesla does not maintain significant amounts of inventory (vs. traditional automakers which have months of inventory). Tesla has to forecast every single quarter how much demand will show up in that quarter, for each model and each configuration, because of how long shipping takes. It has to then decide on which markets to expand into that quarter and what pricing to set on each market (a complex optimization problem, balancing out the one-time and ongoing costs of expansion vs. potential reduced revenue from lower pricing in existing markets). If any part of Tesla's forecasting is wrong, it can totally mess over the company's numbers for that quarter (Q1 is a great example of this). Tesla's sensitivity to forecast accuracy will decline significantly once it has a Gigafactory in each market, as shipping times will be greatly reduced. We'll be seeing one level of this soon with the opening of GF3.
Note that we're only talking about the basic aspects of the company and discounting the potential value of FSD, grid-scale storage, solar roofs, etc - each one of which, if it were to become widespread, could justify a market cap of hundreds of billions to trillions of dollars on their own. Also keep in mind exactly how expansive Tesla's scale goals are for vehicle production: they're working toward the production of 2TWh/yr. Try running some numbers on how many vehicles that works out to. And remember that Tesla is, unlike most automakers, highly vertically integrated (and becoming moreso) - e.g. it keeps much more of the profit from a sale for itself.
Tesla is a growth company. These inherently mean high long-term revenue projections, but high discounting for risk. Their valuation thus changes dramatically and rapidly as the risk picture changes. When you take a long or short position, remember this fact. Even mostly "bad news" can actually increase the value of the company simply by retiring downside risk - for example, 97k deliveries this quarter was below "average" market projections, and there was a short-term selloff, but it also eliminated the fear of demand weakness. And now look at the stock price vs. before the deliveries report.
One final thing. And I know you'll be tempted to discount this, but beware of the "TSLAQ Bubble". They love blocklists (their Twitter blocklist blocks out almost all bull accounts) and insulating themselves from contrary information in general. Always look out contrary information that questions your views (I always try to), and look for your own blind spots.
Happy shorting. We'll be here on the other side of the pond.
Seriously fantastic post...thank you!
Dan
Why does the duration matter? I mean, longer is better, but even shorter term would still be huge.
If customers can get a meaningful rebate, more people will buy it, and those who already would have will tend to option it out more. It equals far more sales, at much higher ASPs.
I remember watching a “film” in grade school that showed “automation” in the form of a machine that applied six caps to a carrier of bottled milk in one step. This was displacing manual workers. There was a debate as to the effect on milk bottle-cappers.
Seriously
True, but they will have some short term profits that will show on their income statement this year. Purchase at $190, sell at $250, 60 * 14,000 is a fair chunk of change.
IMO, I do sense there will be pullback in the markets if Sanders or Warren were to win. Health insurance stocks will likely step back, and provider stocks will come to the forefront. The two that are most critical of corporate taxes and tech giants being too big. There's a reason why neither have been backed by the big names in SV tech.
People are taking out 6-7 year loans to buy more expensive cars these days. No way does that continue in a recession. It's not like Tesla, or any other luxury car, is a must have when you're budgeting expenses around you.
... said the black cat with beady eyes staring right at me.
Halloween spooky!
For 0.05% change to their net asset??
That's like an average Joe making all that effort to gain a single nickel ($.05) in an account with $100.
ARK can do no wrong it seems for some people. When they buy, it's a good thing. When they sell, it's a good thing. Some criticize swing trading TSLA. But, when it's ARK doing it, regardless of reason, it's a smart move.
I think you wasted too much time on him writing that long
I understand that and I do not think that electric/EV only jobs will provide an adequate replacement in terms of # of jobs.
I think that new types of jobs might appear, the ones we can't yet imagine. The capitalists with money - where will they invest that money if half the industries and jobs disappear?
They need to find something attractive that people will buy. I'm hoping for this scenario to play out instead of a UBI and bunch of people sitting on their hands.
There's been a number of scenarios in history like manual farming replaced with automation and unneeded people finding new jobs, horses replaced with cars etc. etc. Dramatic changes that nevertheless lifted people out of poverty and gave them new jobs.
Would be nice to be able to see a summary of such transitions - how many lost jobs, what new jobs they got, something that's positive in the overall impact of transitions.
Btw, in the future, how many space related jobs can appear? Exploration, asteroid mining, construction of space hubs/stations and livable worlds? Why do we have to limit ourselves to jobs on Earth?
Of course what you state is true and seems reasonable. However, as a manager of mutual funds they have a responsibility to be prudent and maintain diversity. That's what fund investors expect. The extreme would be for ARK to go 100% into TSLA, but then they could not justify their 0.75% annual fee, because investors can simply own TSLA separately. ARK trades shares within their funds virtually every day, and reports through emails to anyone who requests to be on their mailing list. I wouldn't be surprised if ARK's CEO Cathie Wood in her personal account owns shares of all of her funds and some more TSLA to boot.
RobStark
Well-Known Member
Being a Tesla investor/fan doesn't require you to dump on every other BEV on the market.
If you support Tesla's mission you should wish every pure BEV company well not take a *sugar* on it. Disagreeing with some or all of their strategies is fair. As it is for Tesla. But we shouldn't feel schadenfreude when other pure BEV companies experience hardship or you perceive them to experience hardship.
Elon has repeatedly said Tesla can't produce all the cars in the world and it can build all 100-200 gigafactories need to completely decarbonize the global economy.
Is why Yang & UBI but people will still need things to do with their newly freed time to provide structure and/or meaning
j6Lpi429@3j
Closed
There is no shortage of theoretical employment for people. Even the boring company could employ tens or hundreds of thousands of people globally. I would LOVE there to be high -speed direct underground tunnels all over the UK, whisking me from city to city at ten times the speed I can currently get around.
Everybody used to be employed getting food, and shelter. Then we needed fewer people to do those, so we started making new products like clothes, then eventually computers, even laptops, even Mobile Phones!
I dont know what will be next, but id be amazed if there is...nothing.
Everybody used to be employed getting food, and shelter. Then we needed fewer people to do those, so we started making new products like clothes, then eventually computers, even laptops, even Mobile Phones!
I dont know what will be next, but id be amazed if there is...nothing.
Darkfox021
Member
You're certainly on to something with your final statement.
Doggydogworld
Active Member
Great point. I should have said 98%
Actually, I don't know how to quantify this. If we simplify and say car-buying starts at age 22 and ends at 72 then each year 2% of car buyers are new to the market (and 2% die off). If Tesla grabbed 100% of the new buyers, they would take 2% of market share each year. That's ~320k new car sales in the US. Tesla will only sell ~180k cars in the US this year, so there's room for growth without a single defection from another brand. In theory, at least. Reality is a lot more complex since young, new buyers tend to buy used cars. A person's first truly new car is often their fifth car (or whatever) so they've had time to latch onto a preferred brand. Hmmm.
Note that those two statements are not necessarily contradictory. You can simultaneously believe that swing trading TSLA is bad for the company and hurts other investors while also believing it’s advantageous for those doing it. It’s like the jerks who see a super long line of cars waiting to take an exit on the freeway and zoom in the next lane all the way to the front before cutting in. It slows down everybody else around them, but they absolutely get to take the exit sooner.
That aside, there is a difference between plowing a bunch of money into TSLA when it’s low and then selling everything on the upswing vs maintaining a roughly constant percentage of your overall fund in TSLA. It’s sensible and reasonable for ARK to not want a single company to be 98% of their holdings, with a single large earthquake being able to wipe away everything.
Similar threads
- Locked
- Locked
- Locked
