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

[theschnell]

I think that GAAP profitability is referring to Q3 and Q4. In other words, they are now currently running profitably.

I do NOT think it means Full Year GAAP profit. I do think there is some slim chance of that, but it will be close enough there’s no way the truck team would be knowledgeable of that, or if they were, no way they would be authorized (or stupid enough) to disclose it.

 

[avoigt]

 

[Prunesquallor]

...
Of course, lower-priced vehicles do have to come eventually.

They have to come from someone eventually. I'm not necessarily convinced that Tesla has to replace every ICE on the planet. I would be OK with VW ID.whatever filling the small, urban, low-price, low-performance niche if they can actually freaking build the things (including installing the s/w). I’d be OK with Rivian doing conventional EV pickups and Amazonmobiles if they would ever execute.

With S, 3, X and Y in the bag and Cybertruck in the pipeline, I would rather see Tesla resources and growth poured into Semi and grid storage. If we can start up the S-Curve with those two - more disruption, profits, Mission accomplishment.

 

[Krugerrand]

We have a tight garage. If we had a baby the MX would have been a non-starter for us.

The point being made is that your reality, your wife’s reality, are not in fact the reality of the world. So to extrapolate, ‘I have no use for barrettes - being bald, therefore there’s no way anyone else has a use for barrettes.’ is a false assumption. (Feel free to exchange the word barrettes for kale, cats or Model X.)

 

[jhm]

Opricot says max pain is 470, BTW.

Hey, that's my number.

 

[ggr]

Opricot says max pain is 470, BTW.

When the daily volume is around 30m shares, I don't think max pain is in play.

 

[Zaxxon]

A sincere thank you @Fact Checking - Your reading of the tea leaves for expiry for both this week and for next week is very helpful. With Max Pain around 500 at the end of next week TSLA could very likely be boxed in to a fairly narrow band until next Friday when the massive house cleaning of Bankwuptcy positions happens. I do like the idea of TSLA ending this week between 490 and 500 and staying in that range for while. With that stock price going through the weekend and a few gentle tests of 500 next week it would really help load up the spring on the longer charts for big break out afterwards. And the timing of 'afterwards' serendipitously coincides with Q4 earnings and opportunities for some additional news along the way. Thus any good news could really fuel a rocket

I agree with this, and sold a short-term a bit OTM covered call yesterday against a portion of our shares because of it. You can therefore expect another major breakout starting today. You're welcome!

Also, for those not in on the geek culture reference our dear Buff Mage made overnight...

 

[KarenRei]

They have to come from someone eventually. I'm not necessarily convinced that Tesla has to replace every ICE on the planet. I would be OK with VW ID.whatever filling the small, urban, low-price, low-performance niche if they can actually freaking build the things (including installing the s/w). I’d be OK with Rivian doing conventional EV pickups and Amazonmobiles if they would ever execute.

With S, 3, X and Y in the bag and Cybertruck in the pipeline, I would rather see Tesla resources and growth poured into Semi and grid storage. If we can start up the S-Curve with those two - more disruption, profits, Mission accomplishment.

I want to see Tesla peak at around ~20% global automotive market share; I think that's achievable (more than that, I'm skeptical about, even with as much of a lead and pace as they have). Gotta be more downmarket than they are today for a 20% market share. But there's plenty of time.

 

[jerry33]

They have to come from someone eventually. I'm not necessarily convinced that Tesla has to replace every ICE on the planet. I would be OK with VW ID.whatever filling the small, urban, low-price, low-performance niche if they can actually freaking build the things (including installing the s/w). I’d be OK with Rivian doing conventional EV pickups and Amazonmobiles if they would ever execute.

First they have to show that they can make a decent product. That hasn't happened so far. I also think that the conventional truck design will go away once the Cybertruck starts shipping as the other truck manufacturers change their designs to mimic the look. Rivian being forced to change their design in a major way within a couple of years of shipping their first truck doesn't bode well. I agree that Semi and grid storage are very important but if Tesla doesn't keep up the pace with new cars, it will just give ammunition to the shorts. (No new products from Tesla, mature company, downward spiral.)

 

[The Accountant]

In a leaked letter from the Tesla Semi team they talk about achieved GAAP profitability.

Wow, if that is true then it's huge and breaking news. In this leaked letter that sounds credible, Tesla confirms achieved GAAP profitability.
Q4 profit.... S&P inclusion ... a full year profit.

Its still a rumor and of course there is not confirmation but may explain why we have all of a sudden this huge long buyer behavior while shorts did not concerting in a significant way. Some institutional may have got a wink and started to accumulate knowing the positive implications such news would have.

The Tesladorian on Twitter

P.S. may have discussed here already

As you can see from some of the replies to your post and a previous post on the Tesla Truck Team letter, there is much doubt here that the meaning was full year GAAP profit. The meaning was likely referring to the recent Q3 achievement.

Of course anything is possible but the reason why the Tesla Truck Team did not mean Full Year GAAP profit is because there is no way for them to know this as of Jan 9th. It takes time to close the year end books in several entities around the world. Fremont, Buffalo, Europe, China, Etc. Those numbers are sent to US Corporate for consolidation, consolidating entries, tax entries, accruals, etc have to be computed, etc. Tesla will not have a full grasp of Q4 GAAP numbers until next week at best.
And that at that point, only about 30 Tesla employees will have full knowledge of the Q4 Consolidated GAAP profit number.
The Q4 results are obviously sensitive as they can/will impact the Share Price once announced. As such, this information his highly guarded and not likely to be available to the "Tesla Truck Team" (who ever they are).

At least that's how it works at most large public companies.
A Full Year Profit?...slim chance; however.....one can dream...right?

 

[Zaxxon]

As you can see from some of the replies to your post and a previous post on the Telsa Truck Team letter, there is much doubt here that the meaning was full year GAAP profit. The meaning was likely referring to the recent Q3 achievement.

Of course anything is possible but the reason why the Tesla Truck Team did not mean Full Year GAAP profit is because there is no way for them to know this as of Jan 9th.

Also, that email originated in 2019.

 

[Krugerrand]

As you can see from some of the replies to your post and a previous post on the Telsa Truck Team letter, there is much doubt here that the meaning was full year GAAP profit. The meaning was likely referring to the recent Q3 achievement.

Of course anything is possible but the reason why the Tesla Truck Team did not mean Full Year GAAP profit is because there is no way for them to know this as of Jan 9th. It takes time to close the year end books in several entities around the world. Fremont, Buffalo, Europe, China, Etc. Those numbers are sent to US Corporate for consolidation, consolidating entries, tax entries, accruals, etc have to be computed, etc. Telsa will not have a full grasp of Q4 GAAP numbers until next week at best.
And that at that point, only about 30 Telsa employees will have full knowledge of the Q4 Consolidated GAAP profit number.
The Q4 results are obviously sensitive as they can/will impact the Share Price once announced. As such, this information his highly guarded and not likely to be available to the "Tesla Truck Team" (who ever they are).

At least that's how it works at most large public companies.
A Full Year Profit?...slim chance; however.....one can dream...right?

It’s your fault. He’s just embracing interpretive accounting.

 

[Aeon]

As you can see from some of the replies to your post and a previous post on the Telsa Truck Team letter, there is much doubt here that the meaning was full year GAAP profit. The meaning was likely referring to the recent Q3 achievement.

Of course anything is possible but the reason why the Tesla Truck Team did not mean Full Year GAAP profit is because there is no way for them to know this as of Jan 9th. It takes time to close the year end books in several entities around the world. Fremont, Buffalo, Europe, China, Etc. Those numbers are sent to US Corporate for consolidation, consolidating entries, tax entries, accruals, etc have to be computed, etc. Telsa will not have a full grasp of Q4 GAAP numbers until next week at best.
And that at that point, only about 30 Telsa employees will have full knowledge of the Q4 Consolidated GAAP profit number.
The Q4 results are obviously sensitive as they can/will impact the Share Price once announced. As such, this information his highly guarded and not likely to be available to the "Tesla Truck Team" (who ever they are).

At least that's how it works at most large public companies.
A Full Year Profit?...slim chance; however.....one can dream...right?

Exactly! And why I asked:

Anybody buying this?
View attachment 498395

The Tesladorian on Twitter

Yet:

 

[Lessmog]

Maybe it's just me, but when I see "Freemont" I just skip to the next post.

Yep. It's a Flippin' Fiat.

 

[Bobfitz1]

While you are right that they didn't share any specifics, it doesn't take a great leap of faith to come to the obvious conclusion:

• China is IMO the natural market to prototype the Model 4 in. They might even end up exporting it to Europe and to the U.S. - just like "Made in Japan" became a seal of quality, an "iPhone made in China" was accepted by consumers and a "Tesla made in China" will be accepted as well IMO.

All the points you made in post seem sound. My only quibble is with exporting the lower price Model 4 to the U.S. and Europe when it's MIC price unlocks such a huge segment of new China demand. Why export from additional Gigafactories in China rather than build those in U.S. and Europe? There is little doubt that a MIC M4 will cost less to produce than ones built in new U.S. or Europe factories. However there is going to be even more automation and less manual labor to build new models in five years (around the time when M4 has been mass produced for a year or more and is ready to be the template for production in follow on GFs). The amount of new demand 20 - 25K M4 would unlock in U.S. and Europe (a few more years out when understanding of EVs and Tesla is fully developed) will be massive. Just not as massive as in China. Given where we think Tesla's financial situation should be in 3+ more years I can't think of any good reasons why it should not also build M4 GFs to meet western demand. Lastly, building locally saves shipping costs, which won't decline much over next few years, and maintain Tesla's positive image as a company building its cars world wide and employing people in the countries where the demand exists.
Another point in favor of moving down market is that pretty much everyone working for Tesla will be able to afford one or more Tesla models. Like at Ford a century or more ago.

 

[ggr]

Yesterday there were two downgrades of TSLA, one of them Ben Kallo who raised his price target significantly but went from buy to hold.
Today there are two upgrades is an upgrade and a positive article from Barbara Corcoran (I've never heard of her but apparently she has a following).
Barbara Corcoran on Tesla CEO Elon Musk: ‘That guy is a winner’
Tesla Target Hiked 30% by Piper Sandler Based on China Potential $423 -> $553

Hmmm... earlier I saw an article about Piper Jaffray, but now it's gone. I think someone must have confused Piper Sandler and Piper Jaffray (which to me would be bigger news). Up in pre-market. Looking good, to me.

edit: corrected price to $553.

 

[ZeApelido]

Hypothetically, where would stock price head to if GAAP profit for the full FY2019 was achieved?

 

[JusRelax]

Yesterday there were two downgrades of TSLA, one of them Ben Kallo who raised his price target significantly but went from buy to hold.
Today there are two upgrades is an upgrade and a positive article from Barbara Corcoran (I've never heard of her but apparently she has a following).
Barbara Corcoran on Tesla CEO Elon Musk: ‘That guy is a winner’
Tesla Target Hiked 30% by Piper Sandler Based on China Potential $423 -> $533

Hmmm... earlier I saw an article about Piper Jaffray, but now it's gone. I think someone must have confused Piper Sandler and Piper Jaffray (which to me would be bigger news). Up in pre-market. Looking good, to me.

Barbara Corcoran is one of the hosts on the show Shark Tank, which Kevin O'Leary and Mark Cuban also are hosts of.

 

[Cherry Wine]

Hypothetically, where would stock price head to if GAAP profit for the full FY2019 was achieved?

No one here could say with certainty. It would be an earthshaking development though, not the least reason for which would be eligibility for S&P inclusion even earlier than anticipated.

 

[gerebgraus]

While you are right that they didn't share any specifics, it doesn't take a great leap of faith to come to the obvious conclusion:

• "Model 2" is thought to be Tesla's lower end car, although I think they'll call it the "Model 4".
• China EV policies are shaping up to be like Norway was 10 years ago: exceedingly advantageous EV-friendly policies pushed by the government. Only that Norway's annual car sales are 0.15m, while China's is 25.7m, or 170 times larger (in units).
• The main problem with China is that due to the lower purchase power of Chinese citizens the average new car price is a fraction of that of western car ASPs.
• A smaller Tesla in the $20k-$30k price range (below 150,000¥ is ~$21k USD, 200,000¥ is ~$29k) would address a far larger portion of the Chinese market: with a "Tesla stretch" about a third of all Chinese car buyers could afford a Tesla Model 4, and in 5 years that might be 50% of the market or higher if China continues to increase in the purchase power of their citizens.
• The numbers: average Chinese worker income was around 90,000¥ in 2019, but there was an about 10% growth in recent years - so annual income might be above 200,000¥ for families by the time the Model 4 arrives. Most middle class people buy cars where the ASP is about equal to their annual family income - that's a big psychological barrier to cross. So an entry price for the Model 4 of 150,000¥ would be able to capture close to half of all Chinese consumers, in about 3 years from now.
  
• China is IMO the natural market to prototype the Model 4 in. They might even end up exporting it to Europe and to the U.S. - just like "Made in Japan" became a seal of quality, an "iPhone made in China" was accepted by consumers and a "Tesla made in China" will be accepted as well IMO.
• Elon wanted to signal it to China that Tesla is treating their China factory not as a carbon-copy, work-for-hire assembly factory location like most of the German carmakers are doing, but as a prime location that is a peer of Fremont and GF4, with R&D and original product development as well. This attracts talent and helps China's long term policy goals.
  
• Finally, this is exactly what the Chinese political leadership wanted to see happen when they invited Tesla to China: to create an Apple-alike phenomenon and to pull up their automotive sector. The "Tesla Effect", imported into China. Cleaner air, dominance in yet another industry and detaching themselves from crude oil suppliers are the icing on the cake.

So yes, I think Model 4 development will be done in China and for China, but the 3 years time frame Elon mentioned is probably true as well. You are also right that much of this is conjecture - but IMO it's pretty much the only conclusion one can arrive at.

My impression from various comments of Musk was that the Chinese Tesla team not merely executed well the Tesla USA plans but they improved on it as well. E.g Musk said that GF4 will be modeled after GF3, and probably the Chinese contributions improve Fremont as well. Now China has lot of software and specifically AI talent as well, but my feeling that Tesla will not use those too extensively. Sharing manufacturing technology is unavoidable if you have a plant there, but software is a different animal.