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

[humbaba]

My anecdotal experience is that Tesla does quite a bit of service that is chalked up to “goodwill”. Definitely a good thing for PR and IMHO a wise decision when launching new and untried tech. They have also asserted that a large chunk of service calls result from AP issues that turn out to be user error. This is burning up tech time which is expensive as well. Management of parts inventory is a point for improvement as well.

There are efforts underway in all 3 of these areas to bring under more control. Tesla has always asserted that service will not be a profit area rather, a self sustaining one and we are seeing steady progress in that direction.

Fire Away!

Anecdotally, both times I've been at the service center they discounted all/part of a cost as "goodwill". Service is very different from what I've experienced pre-Tesla...

 

[wipster]

The answer is really simple IMO: Tesla has an incredibly young fleet due to exponential growth, with average car age below 2 years.

Traditional carmakers have average fleet ages of 10-15 years. (!)

I'd guess that 50%+ of Tesla Service activities are still warranty work, which hurts margins. The current negative margins are basically investments into a future service profit stream.

Give it a few years, Tesla Service will be a gold mine.

While I agree with your analysis, I truly hope Tesla service will never become a gold mine like it is for most auto dealers. I hope it becomes revenue neutral because most Tesla's won't require service. That's one of their stronger selling points and if the vehicles are manufactured properly with proven parts, service for issues not related to items that typically wear out (tires, brake pads, etc) hopefully won't be necessary.

Granted, we've got a ways to go before they get there, but I believe that should be the goal, not a profit center.

 

[CorneliusXX]

I find the fraud stuff baffling. I mean do they think every Model 3 on the road is just a Mazda 3 with a T logo stuck on? Or SpaceX is just a CGI studio for each launch?

It's quite confusing if they actually believe it. If they being "sponsored" to put this nonsense out there then I can at least understand it, though their integrity and self respect is out the window.

My hunch is that they are hoping for some changes in accounting assumptions.

E.g. if tesla have reevaluated the expected lives of their assets/equipment and think they can produce more vehicles with the same equipment they can reduce the costs attributable to each vehicle.

This is a totally legitimate decision if Teslas expectations have changed, but easy pickings for shorts to spin.

 

[Dan Detweiler]

Man, tomorrow is gonna be an absolute bloodbath. Best of luck shorts!

I gave it a dislike only because I wish the shorts absolutely no luck whatsoever. I appall the entire practice. I have no sympathy, remorse or regret. They get what they get and if that means they lose their shirts...so be it.

Dan

 

[ev-enthusiast]

New trading volume record?

 

[SpaceCash]

I bought more at $297.93
This isn't done "adjusting", earnings were a YUUUGE beat.

 

[woodisgood]

One of the earliest TSLAQ I talked to, before the term was invented, was a Honda mechanic.

We were talking about cars and discussing technicals when Model S first started manufacturing. How amazing it'd be to be able to work on something like that from scratch.

Then out of nowhere he said the integrity of Tesla higher ups were lacking. The characters and morals cannot be trusted. And watch out that they are scammers.

I was taken aback by that, as it was u called for with no basis. But I still did my due diligence and investigated the personalities of Tesla execs.

The only reason why I think he'd say that at such an early time in tesla's history are probably brainwashing from higher ups who needs to justify Tesla as a non threat. Eventually it snowballed from there to all employees of all automakers and their supplychain.

The thing is, at that time, it was too early to be able to determine fraud or not. As a startup, tesla had to pull some of the stuff they had to pull. Like having a ModelS on display that'll fall apart if you touch it too hard. Fake it till you make it. Is the SV motto. But I can see from a manufacturer with a long tradition of regulation to follow why it seems like fraud.

You can't expect the average joe in a safe unionized job to understand the things you have to pull to get a business started.

There's generally a mistrust of the Silicon Valley "elites" by the blue collar/manufacturing backbone of America. Tesla should be the great uniter in all of this, but for now, will suffer a bit because of it.

 

[wipster]

Damn, almost...

 

[SpaceCash]

Big Shmoil really doesn't want a 300 close today

 

[humbaba]

New trading volume record?

Not a new record, but it is up there. Last September it was ~33M and May 14, 2013 it was ~37M. At 28.9M not a small day of trading.

 

[StealthP3D]

As someone who had been burned before in both directions (missing the rest of the 2013 run up, and adding more after funding secured), never be afraid to take profit ... Just be systematic about it and not in large chunks (my strategy is to add/remove 5% for every 10% SP change from the last trade).

I'll agree 100% because emotions have no place in the decisions of a successful investor and fear is an emotion. So, yah, don't be afraid to take profits. But you need to eliminate the "fear" of missing out on big profits just as much as you need to eliminate the fear of giving up your gains. Fear has no place in investing. If you are standing on the edge of a tall cliff with no handrail, fear is more likely to make you lose your balance and fall off. You don't need fear to avoid falling, your rational mind knows the consequences and is more than sufficient to cause you to be careful with your footing. The fear just gets in the way. Make your decisions to buy and sell based on whether you think it's a good investment for you or not and whether you have the proper amount, not on fear.

It's a mistake to say "Well, I love this company but it's kinda volatile so there is a good chance if I sell now I'll be able to buy it back for $20 less a share". Because if you miss that opportunity (either because it never goes into your new target range or because you fail to pull the trigger when it does) and it climbs up and up, it becomes progressively harder to pull that trigger (and you get fewer and fewer shares vs. never having sold in the first place).

And that's exactly the nature of the share price movements of the kind of disruptive companies that can make you wealthy so this tendency to try to game the volatility can end up hurting you on the very company that you want to hold forever. Even if you do OK playing the volatility of companies like Proctor and Gamble or a mature company in a highly cyclic industry, it will likely never cover the loss of the big gain you missed out on. Saying you caught the big gain with a *portion* of the intended shares doesn't cut it. It's still a huge lost opportunity.

 

[j6Lpi429@3j]

What I've really enjoyed about today is that we have had a huge jump, NOT on the basis of a new product announcement, NOT on the basis of any hype or tweet or crazy prediction by Elon, but based purely on solid, hard financial facts.
That feels like a stock price climb that is not easily unwound the next day, week, month or even year.

 

[LN1_Casey]

Not a new record, but it is up there. Last September it was ~33M and May 14, 2013 it was ~37M. At 28.9M not a small day of trading.

I'm super curious as to see Grand @Papafox's debrief tomorrow, specifically the % of short selling. Someone has spent a lot of money today capping the SP to below $300 despite the massive buying pressure.

 

[SteveG3]

So it seems to me that the narrative, among those analysts that are talking today, is going back to the "great competition" that is soon to pull market share away from Tesla. I really need someone to point out all this competition for me because I am totally blind to it. All I see are manufacturers figuring out that they just don't have the resources to produce a vehicle with remotely the same specs, charging options, and price as anything Tesla is offering. Bollinger just figured this out and others have as well.

So what am I missing? I just don't see anybody, and I mean ANYBODY that can do this within the next several years. If nothing else, where are they going to get the batteries? Tesla? I just don't get it. Someone please enlighten me because all the talking heads seem to have it figured out and I just can't see it happening.

Dan

pretty sure it’s just fossil fuel economy paid programming.

the fact that they turn to narratives that are so obviously unconvincing and/or false to anyone thinking for themselves who takes even a brief look into Tesla is a testament to how strong Tesla’s position is. That is, if the people pushing out this programming had strong arguments based on facts and reason, they wouldn’t leave those convincing arguments on the shelf to collect dust while they trotted out these clunkers they do.

 

[SpaceCash]

Anybody have deets on the Solar event? Time/place/stream?

 

[Southpasfan]

I once had a discussion with a friend who used to be a broker as to why short selling was even legal. I didn't really see it, because the only purpose of short selling is betting on price, and its a form of betting which doesn't seem to add anything to the actual market, but may in fact distort it.

He told me (he's not a short himself) that it does help the market, but maybe I am still missing something because its not the gambling part of it which is odd, its that there is no equivalent on the buy side, so its not like short selling balances out anything.

What am I missing? There seem to be many informed folks on this thread.

 

[Ulmo]

I hope those of you who could take profit (to buy another Tesla product and keep from Black Swan events in your finances) did take profit.

But the long term is up past $1,000, so you should keep enough to stay in for that. That's why anybody who can, should add.

 

[Crowded Mind]

I once had a discussion with a friend who used to be a broker as to why short selling was even legal. I didn't really see it, because the only purpose of short selling is betting on price, and its a form of betting which doesn't seem to add anything to the actual market, but may in fact distort it.

He told me (he's not a short himself) that it does help the market, but maybe I am still missing something because its not the gambling part of it which is odd, its that there is no equivalent on the buy side, so its not like short selling balances out anything.

What am I missing? There seem to be many informed folks on this thread.

In theory, allowing the practice allows for some incentive to expose fraud or bad investments, which would be a helpful market dynamic. In practice, meh. Doesn't really work that way from my point of view.

 

[hobbes]

Order rate is even stronger so far, and they said they'll be production constrained in Q4: 100k deliveries secured IMO.

IIRC they have to go past 100,000 deliveries already to make the 360,000 for the year which Elon just confirmed. Does someone have the numbers handy?

 

[StarFoxisDown!]

In theory, allowing the practice allows for some incentive to expose fraud or bad investments, which would be a helpful market dynamic. In practice, meh. Doesn't really work that way from my point of view.

The basic idea of short selling is fine. It's the fact that it's not regulated at all and easily corruptible with no way of tracing who's shorting what which is the issue.