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

[traxila]

The issue you fail to grasp is that the majors have huge amounts of capital, money and experience building lots and lots of cars. Tesla had to learn how to build EVs, now they are learning how to build mass market cars, something the majors have been doing for a long, long time.

But the real limitation Tesla is facing is they can only come out with one new model every year... if they are lucky. The majors can put into production half a dozen new cars each year if they want to. That's what GM is doing. Tesla will have maybe four or five models in 2022 while the majors will have that many each and more in the pipeline.

The real mass buyers will be swayed to buy EVs when nearly every automaker has them on the lot to test drive and kick tires. I used to think it would be the presence of chargers all over the place that would do the job. But I think it will be more important just to see EVs on the roads and in showrooms. People will figure out they can charge at home.

Nowhere did you mention that the ‘majors’ have to destroy their current business to truly compete with Tesla. Completely and totally. Every single one of them. And that none of them are close to Tesla’s battery management or production.

Enough people have figured out how this BEV thing works for essentially unlimited demand for Tesla, since the demand will grow as a function of the number of BEVs on the road, which thanks to Tesla, is exploding.

 

[adiggs]

I agree and I'm looking forward to watching this play out but my real eye is on the long-term growth of the company. Because as the company goes, so will the share price. What we have witnessed today is the beginning of the market adjusting to Tesla's actual prospects. It's still under-valued. Play the volatility at your own risk.

I agree with this and want to pile on.

I first bought shares in TSLA back in late 2012 when the stock price was bouncing around in the 20's and 30's. I'd test driven the Model S and somehow my brain put together the idea that the product mattered, and a product that altered your life was going to do well.

So I bought some shares with a 10+ year horizon based pretty much exclusively on Model S (and later X - the car I actually wanted).


Good thing I had that 10+ year horizon - in 2013 there was a surprise profitable quarter and the stock went from the 30's to the 180's over 6 months I think it was. I was never tempted to sell along the way, but I remember many people in the investor thread that sold / locked in their gains in the 40's, 60's, 90's. Many of them expecting the stock to trade back down where they'd get back in. And then later, after missing 10's of $ in gain, buying back in anyway (or never buying back in and missing a 5-10x move).


If you're trading the stock, then this doesn't mean anything to you. If you've got a 3 year time horizon, or you've got money that needs a particular outcome in a few months or years, this idea isn't meaningful (so ignore everything I'm writing).

If you're a long term owner of the company, then by definition you shouldn't be trading in and out. The risk is too high that a day like today will happen and you'll sell at $250 going into earnings, expecting to buy back at $220 tomorrow. Then wake up with the stock at $300 and miss that move.

Of course, the stock can still trade back down to $220 (the stock market is a casino in the short term, and can easily be irrational longer than any of us can stay solvent), but it also might never go back. With a 10+ year time horizon and a reasonable (to me) investment thesis for a $6000 share price, selling for anything under $2000 in the very short term is leaving a lot of money on the table. (NOTE - that's my investment thesis, and useful to my situation).

Which also means, and this is equally important - I no more made $50/share today on the earnings call, than I lost $150 on some of my shares on the way down earlier this year. I still own all of them, in both cases, and I'm still looking at a company I think worth $6000 sometime in the next 5-15 years, and that I think there's a reasonable chance I'll own until I'm dead (much more than 10 years).


Another interesting thought that's gone through my brain. I've been waiting for the market to have a collective oh heck moment, when it suddenly realizes TSLA is incorrectly valued (as happened back in 2013). Then it was a run from 30 to 180 (ish). I consider it at least possible that we're at the front end of a similar revaluation of the company - a run from here to $1500-2500 over the next 6 months doesn't strike me as silly.

At some point, the stock price will become disconnected from the last several years of trading history, and it'll float off to go find a new trading range. I don't know where that'll be - only that if I'm right, then the last several years of trading history will become irrelevant until a new trading range / valuation is found.

(No trading advice here for anybody's particular situation - just an idea to think about - be clear about your own investment thesis and what you're looking to accomplish, and don't work at cross purposes to your own outcome).

 

[Causalien]

And that is going to be a while....most people woefully underestimate Chinese demand.

Imagine a country where:
Instead of TSLAQ, you have a TSLAV crowd. V for venture capital. Where tech and education is worshipped. Where online lynch mob berate rich people for owning expensinve sports cars, but if it's a EV Tesla, then it is ok.

Imagine a country where they'd give Elon everything he needs just so he can become a Chinese citizen and invent the Shiiiiiiiiiiiiiit out of things.

 

[M3Rider]

Every Model 3 sold reduces CO2 and pollutants, there is no need to sell to a specific person. Tesla can probably sell every Model 3/Y they can make without discount.

There is no reason a Mexican,Romanian, or South African making $70k/year should pay 25% more than a resident of Beijing making over $1M per year. That is complete and total bovine feces if Tesla does that and I expect more from Elon.

If Tesla wants to start giving discounts to employees I am fine with that.

Your argument boils down to this:
Can Elon charge them more(or same)?
Yes, no question about it.

Will he? Look at his justification for lowering AP/FSD prices (to $2k from EAP/$5k both AP/FSD before Fred made a fuss about it)- people want them, but can't afford them. This is not a question of whether the car itself will be sold, it already sold.
This is a question of rewarding his customers who go above and beyond and stretch their budgets. Yes, it is 6k now, because it's much closer to a state when other actors will buy it just for profit and not to support the mission or for safety reasons. This is a balancing act now to avoid vultures.

But underneath it all Elon wants fairness and if you think this is all just for profit and nominal CO2/FPM etc numbers, you are mistaken.

 

[elasalle]

wiping out 75% ....

 

[dc_h]

This is not the end. Nor is it even the beginning of the end. It is, perhaps, the end of the beginning.

Or something like that. Congrats everyone!

It’s the beginning of the middle.

 

[StealthP3D]

So the problem for Tesla and others isn't demand, it is making the batteries... end of story...

And the beauty of this is that Tesla looks at it not as a "problem" but as a huge opportunity! Because they have a huge lead. And it's not just the batteries they have a lead in, it's the motors and the Battery Management System (which is no small or easy thing to replicate).

Competition from "experienced" car makers is pretty much the last thing I worry about with Tesla. Because, if a car is assumed to be a BEV, then Tesla is the most experienced car maker. Little known fact: Which carmaker has the CEO with the most years experience making cars (of any kind)? Yep, Musk has been the CEO of a car company longer than any other CEO out there.

 

[Alphacrux]

WSJ Coverage of Q3 They heavily steer the narrative towards falling sales and demand:

Tesla Delivers a Surprising Profit

• Electric car maker’s results spur 20% rise in stock price; new products pose threat to margins
• But even as Tesla gets closer to showing it can consistently produce large volumes of cars, it faces the prospect that market dynamics might be shifting as demand slows.
• Tesla faces the elimination next year of a federal tax credit to its customers, a change that analysts say could affect demand.
• What’s more, industry experts fear overall demand for new vehicles might be about to slump after a prolonged growth period. Demand in China and Europe already is showing signs of weakness and the appetite for new vehicles in the U.S. could be in jeopardy, analysts have said.

Tesla Stock Charge Will Have Limited Range

• Shares surge on surprise profit, but falling sales mean debate over long-run viability is far from finished
• The top line was far less impressive, however. Total sales of $6.3 billion were slightly below analyst expectations, despite the recognition of deferred revenue. More important, they fell 8% from a year earlier. That is Tesla’s first annual sales decline since 2012.
• That decline won’t trouble bulls, who point to a new factory in Shanghai and a coming new crossover vehicle known as the Model Y. Those bets are no sure thing, however. China’s auto market is showing increasing signs of stress, and Tesla already revealed the Model Y earlier this year to minimal enthusiasm

No mention of energy products or next month's pickup reveal (but did mention limited production of semi next year, new factory coming in Europe, model 3 trial production in China, and model Y ahead of schedule).

 

[MichaelP90DL]

Nowhere did you mention that the ‘majors’ have to destroy their current business to truly compete with Tesla. Completely and totally. Every single one of them. And that none of them are close to Tesla’s battery management or production.

Enough people have figured out how this BEV thing works for essentially unlimited demand for Tesla, since the demand will grow as a function of the number of BEVs on the road, which thanks to Tesla, is exploding.

Thank you!

 

[dc_h]

You guys can laugh about this, but my position remains as I stated:

Margins in China will be similar to margins in U.S.
Will it be because of ramp inefficiencies?

No. My thinking is this: Chinese people spend the same hard earned money we do and it would be unfair to them to take 40-50% margin(premium) if we in U.S. pay 25% margin. It would be a form of discrimination based on national origin.

Elon has transcended national and language barriers and applies universal fairness to all. This is my expectation of him, anyway.

I think they will manage the margins down in China by reinvesting in continuous expansion and possibly speeding up depreciation. With SR+ selling for 45,000 and lower production costs margins should be outrageous, or at least 30%.

Didn’t see much comment on model Y margins. Sound like 30%+ with cost of production approximately equal to the 3, but costs 5000 higher. ARK’s call for 30% margins is looking very well thought out now.

 

[MC3OZ]

WSJ Coverage of Q3 They heavily steer the narrative towards falling sales and demand:

Tesla Delivers a Surprising Profit

• Electric car maker’s results spur 20% rise in stock price; new products pose threat to margins
• But even as Tesla gets closer to showing it can consistently produce large volumes of cars, it faces the prospect that market dynamics might be shifting as demand slows.
• Tesla faces the elimination next year of a federal tax credit to its customers, a change that analysts say could affect demand.
• What’s more, industry experts fear overall demand for new vehicles might be about to slump after a prolonged growth period. Demand in China and Europe already is showing signs of weakness and the appetite for new vehicles in the U.S. could be in jeopardy, analysts have said.

Tesla Stock Charge Will Have Limited Range

• Shares surge on surprise profit, but falling sales mean debate over long-run viability is far from finished
• The top line was far less impressive, however. Total sales of $6.3 billion were slightly below analyst expectations, despite the recognition of deferred revenue. More important, they fell 8% from a year earlier. That is Tesla’s first annual sales decline since 2012.
• That decline won’t trouble bulls, who point to a new factory in Shanghai and a coming new crossover vehicle known as the Model Y. Those bets are no sure thing, however. China’s auto market is showing increasing signs of stress, and Tesla already revealed the Model Y earlier this year to minimal enthusiasm

No mention of energy products or next month's pickup reveal (but did mention limited production of semi next year, new factory coming in Europe, model 3 trial production in China, and model Y ahead of schedule).

The most impressive thing about this quarter's result is how easy it should be for Tesla to do even better.

Everything on your list + improved cost control and more demand for Model S/X, higher margins on the Model Y when it ships..

If I had to grasp a negative higher, margin Model Ys may displace some lower Margin Model 3 sales and perhaps some even higher Margin Model X sales... But overall Model Y means more deliveries and almost certainly better margins...

The next challenge is how to grow revenues, and it is not hard to see where that is going to come form...

Q1 2020 will be interesting, that is typically a bad quarter. Can Tesla take some momentum into that quarter and get a reasonable result?

 

[Remus]

WSJ Coverage of Q3 They heavily steer the narrative towards falling sales and demand:

Tesla Delivers a Surprising Profit

• Electric car maker’s results spur 20% rise in stock price; new products pose threat to margins
• But even as Tesla gets closer to showing it can consistently produce large volumes of cars, it faces the prospect that market dynamics might be shifting as demand slows.
• Tesla faces the elimination next year of a federal tax credit to its customers, a change that analysts say could affect demand.
• What’s more, industry experts fear overall demand for new vehicles might be about to slump after a prolonged growth period. Demand in China and Europe already is showing signs of weakness and the appetite for new vehicles in the U.S. could be in jeopardy, analysts have said.

Tesla Stock Charge Will Have Limited Range

• Shares surge on surprise profit, but falling sales mean debate over long-run viability is far from finished
• The top line was far less impressive, however. Total sales of $6.3 billion were slightly below analyst expectations, despite the recognition of deferred revenue. More important, they fell 8% from a year earlier. That is Tesla’s first annual sales decline since 2012.
• That decline won’t trouble bulls, who point to a new factory in Shanghai and a coming new crossover vehicle known as the Model Y. Those bets are no sure thing, however. China’s auto market is showing increasing signs of stress, and Tesla already revealed the Model Y earlier this year to minimal enthusiasm

No mention of energy products or next month's pickup reveal (but did mention limited production of semi next year, new factory coming in Europe, model 3 trial production in China, and model Y ahead of schedule).

Judging by the market reactions he's pissing against some strong wind

 

[PeterJA]

WSJ Coverage of Q3 They heavily steer the narrative towards falling sales and demand:

Tesla Delivers a Surprising Profit

• Electric car maker’s results spur 20% rise in stock price; new products pose threat to margins
• But even as Tesla gets closer to showing it can consistently produce large volumes of cars, it faces the prospect that market dynamics might be shifting as demand slows.
• Tesla faces the elimination next year of a federal tax credit to its customers, a change that analysts say could affect demand.
• What’s more, industry experts fear overall demand for new vehicles might be about to slump after a prolonged growth period. Demand in China and Europe already is showing signs of weakness and the appetite for new vehicles in the U.S. could be in jeopardy, analysts have said.

Tesla Stock Charge Will Have Limited Range

• Shares surge on surprise profit, but falling sales mean debate over long-run viability is far from finished
• The top line was far less impressive, however. Total sales of $6.3 billion were slightly below analyst expectations, despite the recognition of deferred revenue. More important, they fell 8% from a year earlier. That is Tesla’s first annual sales decline since 2012.
• That decline won’t trouble bulls, who point to a new factory in Shanghai and a coming new crossover vehicle known as the Model Y. Those bets are no sure thing, however. China’s auto market is showing increasing signs of stress, and Tesla already revealed the Model Y earlier this year to minimal enthusiasm

No mention of energy products or next month's pickup reveal (but did mention limited production of semi next year, new factory coming in Europe, model 3 trial production in China, and model Y ahead of schedule).

The market for horses "is showing increasing signs of stress," so cars "are no sure thing."

"Tesla already revealed the Model Y earlier this year to minimal enthusiasm" from WSJ.

 

[SoGA Fan Club]

Someone is not happy today.. blocked right away after he lost all of his mom's money joke

View attachment 469359

The Southerner in me wants so badly to kick the living *sugar* out of him right now!

I'll just have to be satisfied with the markets doing it.

 

[MXWing]

I’m gonna pop some ambien and uncork some red wine to celebrate today.

Not good for bears if the best car in the world is under 40K.

 

[CaliBear1]

I don't know that. If I could get my money back, I think I would. I will say autopilot is pretty nice, but I'm going to have to start paying rent at my service center.

I wondered what happened to the Care Bears. Well, well, well, after reading about five posts by EO, I found one. He right hare! ;-)

 

[Antares Nebula]

Is this accurate:

"Gigafactory Shanghai was built in 10 months and is ready for production, while it was ~65% less expensive (capex per unit of capacity) to build than our Model 3 production system in the US."

The entire GF3 is 65% cheaper than the Model 3 production lines in Fremont? Am I reading this correctly?

 

[CaliBear1]

Hunting season opens tomorrow! ;-)

 

[elasalle]

So Adam Jonas not feeling well for the call today?

 

[StealthP3D]

TSLAQ tears taste delicious.

Get 'em tonight while they're still salty. After a couple of days, they just taste like plain water!