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

[madodel]

Doubling ?
I will be severely disappointed if it doesn't quintuple !

Why not Decuple? Make it a 10 bagger! But then I'm just decoupled from reality so this not an advise.

 

[Right_Said_Fred]

FYI I asked Third Row Tesla if they needed approval from Tesla before releasing their video and they said "no". The delay is all in editing.

I remember reading - I don't remember where - that they had long finished editing and were now waiting for the green light from Tesla. It makes sense: who would need 2 weeks for editing an interview that you want to publish asap?!

 

[JRP3]

I think they had more than 3 hours of video and multiple cameras. My understanding is that takes a lot of time to edit together.

 

[generalenthu]

FWIW, my take on the hedges and valuation allowance is a follows:

• Hedges are very unlikely to be unwound before expiration. Their stated purpose is to limit dilution, and Tesla will stick with it. There's less than 5% chance they'll unwind, and less than 20% chance it'll go thru the p&l if they unwind. So less than 1% chance it's going to amount to anything, for q4
• The impact from valuation allowance is significantly more likely in my opinion. I'd say close to 50/50 for eliminating a good portion of this allowance, which can get us to GAAP profitability

Edit: I'd like to take Elon at face value when he says he is not looking explicitly at S&P inclusion, and that's not a goal by itself.

 

[Beltsbear]

I think they had more than 3 hours of video and multiple cameras. My understanding is that takes a lot of time to edit together.

Depends. Are you going for Janusz Kamiński - Wikipedia level cinematography or just making it work. Should be 6-9 hours work for a traditional interview.

 

[ByeByeJohnny]

Me being that cat trying to follow this deferred tax situation I still gotta ask.

Maybe I'm missing the important part but even I know that in my country a company can deduct (some) previous losses against current/future profits. This part can't have been news to anyone so this 'discovery' can't really have changed how anyone doing this professionally values the company in the long run?

So is the discovery that it could be used in moving paper profits up in bookkeeping if that over or under 50% profitability likelihood changes? And this could be a way to get us to SP500 faster?

So this may or may not be possible/legal, and if it is may or may not be something Tesla wants to do anyway? Or need to do for anything to change, and if they do it's only to get to SP500 a quarter earlier because are not really cash strapped at the moment anyway?

Or what am I missing?

 

[Krugerrand]

I never use sarcastic inflection in my voice in real life either when I make an insanely stupid statement to illustrate a point.
Unfortunately in real life I also often fail to convey the important point I want by the joke. (Even when they like the joke.) I apologize for that.

Two options:

A) I can give you lessons but not for free and certainly not on my island, or
B) Just read my posts and learn via osmosis

 

[lklundin]

What part of "multi-click" or "to weird screens" wasn't clear? Sometimes it's found its way into screens inside apps that I didn't even know existed

On that note (and since the markets are closed), yesterday I actually managed a butt-dial uninstall of my Tesla app, while unloading my car away from home.

The car wasn't locked, so I got in the seat and could not put the car in drive - and the pop-up about placing my Tesla car near the cup-holder was at first obscured behind another window.

After that I was happy that I always keep my Tesla card together with my driver's license...

It is maybe of more relevance to note that my EU version of the Tesla app does not offer payment for upgrades. I would guess this has to do with the EU's consumer protection laws, that such an online purchase legally comes with a 14-day right to cancel.

 

[Green Pete]

This is mostly just interesting and could be the result of multiple different things, but today it has been 19 days since the last teslafi reported new software update. Since TeslaFi started reporting updates on twitter this is the longest period between updates, tied with 2019.12.1 released on April 25 after 19 days with 2019.12 being the latest version. Prior to October 2018 TeslaFi was not tweeting when a new update was pushed so I don't have a good way of looking back further.

The median number of days between releases on TeslaFi's tweet history was 2, and the average was 3.6 days.

In that same time period there was a total of 3 times it was more than 13 days between releases and 8 times when there were more than 10 days.

Obviously this could just be the result of Tesla making sure that nobody on the small batch releases would get reported on TeslaFi via either software or some early access NDA. But it is curious. One could imagine that Elon is waiting for the opportune time to push something significant?

Edit, for reference here are the crib notes from the 2019.12 release:
```

April 2019 Software Updates
2019.12.x a significant software update that brings some big new features including:

• Chromium-based web browser
• On-route battery warm-up for Supercharging
• Supercharging rate up to 150 kw for S and X (US)
• Sentry Mode without USB
• New TeslAtari games
• Software updates tab in Settings

The first release was 2019.12.1, followed quickly by several patches, including 2019.12.1.1, 2019.12.1.2 and 2019.12.1.3.
```

 

[The Accountant]

Me being that cat trying to follow this deferred tax situation I still gotta ask.

Maybe I'm missing the important part but even I know that in my country a company can deduct (some) previous losses against current/future profits. This part can't have been news to anyone so this 'discovery' can't really have changed how anyone doing this professionally values the company in the long run?

So is the discovery that it could be used in moving paper profits up in bookkeeping if that over or under 50% profitability likelihood changes? And this could be a way to get us to SP500 faster?

So this may or may not be possible/legal, and if it is may or may not be something Tesla wants to do anyway? Or need to do for anything to change, and if they do it's only to get to SP500 a quarter earlier because are not really cash strapped at the moment anyway?

Or what am I missing?

I think you're using questions to make a few statements. And if I understood you correctly, your statements are valid.
The potential Deferred Tax upside does not (in my opinion) change Tesla's "value" as you state. It only allows Tesla to recognize a tax benefit today rather than tomorrow ....and since there is no cash involved - there is not even the "time value of money".

The only benefit would be as you stated, an early inclusion into the S&P. It would allow Tesla to recognize a tax benefit in Q4 2019 rather than waiting until 2020 and 2021, etc.

However, a 2019 full year profit and inclusion into the S&P by late February would really stun investors. It would be a wake up call to the investing public who have been fence sitting for many years... and now seeing that Tesla has arrived ... a solid stable growth company worthy of investment. If S&P inclusion does not come now....no worries...it's arriving sometime in 2020.

 

[Artful Dodger]

How these relate to Tesla and S&P 500 inclusion:

1. The fact that nowhere near all of Amazon's $1.5B valuation allowance was recognized on the P&L, does not bode well for Tesla's chances of recognizing enough for S&P 500 inclusion.

Your research was very helpful, thank-you, but I think there IS a path to profitability.

You showed that Amazon claimed about $350M of the VA assets as Income in the year they became profitable. Applying similar percentages to Tesla's current VA assets, we can estimate they could be able to claim about $420M as Income in 2019.

Given results for the first 3 qtrs of 2019, Tesla needs about $547M profits in 2019Q4 to become net profitable for the whole of FY2019.

That $547M is just $434M more profits than 2019Q3. We know Q3 was profitable with 15k fewer auto deliveries. Since all fixed costs and production labor were already covered at Q3 production levels, addtional deliveries in Q4 go straight to Profit, less the costs of materials for those cars.

Let's assume COGS (less labor) is 50% (similar to Sandy Monroe's est'd costs). For an ASP of $50K/unit, that's $25K addtional profit per unit. That sums to $375M addtional profit for the 15k additional units delivered in 2019Q4.

That leaves just about $60M in profits still needed to make Tesla net profitable for the whole of 2019. Can we find $60M?

• December's $2K "Performance Boost" software upgrade for the existing fleet of all Model 3 AWDs could easily bring in $20M in profits (software == high margin)
• Carbon credits are VARIABLE and DISCRETIONARY for Tesla. It seems certain they would claim these credits to push them across the line to profitability

So there you have it. A few wild-ass assumptions, and POOF! PROFITS! Cartman would be proud!

Cheers!

 

[ByeByeJohnny]

I'm sure if private owners rent out their cars to the fleet they can also subscribe to services that for a flat fee cleans it when necessary, and after last user before it's sent back to you. There would probably be the choice of what charge level it should be at before sending it back as well.

As for kiddie seats, dog cages etc every car would just be rated for what it has and even if only 1/20 cars lets you bring your animal that should be more than enough.

What number of households actually have kids 0-10 years old anyway? 20%

There's been some speculation about FSD prices going to be $200k or something since it'll be so valuable for renting. I'm sure if the production is big enough to actually have cars available to sell to non-renters there will be a FSD version not allowed to join the fleet that cost something similar to now. So commercial FSD $200k, personal FSD $7k

Actually I'm pretty sure soon after FSD is released you will only be able to subscribe to FSD anyway. Again, very different prices for commercial/private.

All of those things will be quickly figured out once FSD actually works. So we'll be debating this for awhile

 

[Rammstein]

All this talk of being profitable for 2019 and the S&P inclusion is getting me pretty f-ing excited. If it doesn’t happen then I’ll be disappointed even though it’s been a great quarter. I really shouldn’t get my hopes up too much.

 

[CorneliusXX]

Does anyone know if the new foundations behind phase 1 look accurate for a press? To my very untrained eye, it looks too large. Could it be for the moulding machine? Although that would probable be near the foundry.

For reference, here's the foundations for the original press

Heavy foundations appear to be getting laid under the road next to this structure too

I don't want to alarm anyone but it appears we have Oil leaks!

Vehicles seem to be getting shipped out as quickly as they are being made. It's difficult to see, but there are around 15 loading bays painted on the ground for truck loading. That's some serious volume.

Probably unrelated, but there's a factory going up across the road. Has Tesla mentioned having parts warehouses in China?

 

[The Accountant]

All this talk of being profitable for 2019 and the S&P inclusion is getting me pretty f-ing excited. If it doesn’t happen then I’ll be disappointed even though it’s been a great quarter.

It was one of the reasons I hesitated on sharing my thoughts regarding Deferred Taxes.
I did not want to get people's expectations up prior to earnings only to have a let down.
As I mentioned, it could be a Big Nothing Burger.
I finally decided to share it because a similar topic on early S&P inclusion was posted this weekend...
.... and I thought, even if the upside has low probability, the impact could be material. I did not want to keep potential
material information quiet from our members even if likelihood is low.

My recommendation to all is to stop the discussion on Deferred Taxes.
We covered all that there is to cover.
Let's stay quiet and see what's reported on Jan 29th.

 

[ByeByeJohnny]

I think you're using questions to make a few statements. And if I understood you correctly, your statements are valid.
The potential Deferred Tax upside does not (in my opinion) change Tesla's "value" as you state. It only allows Tesla to recognize a tax benefit today rather than tomorrow ....and since there is no cash involved - there is not even the "time value of money".

The only benefit would be as you stated, an early inclusion into the S&P. It would allow Tesla to recognize a tax benefit in Q4 2019 rather than waiting until 2020 and 2021, etc.

However, a 2019 full year profit and inclusion into the S&P by late February would really stun investors. It would be a wake up call to the investing public who have been fence sitting for many years... and now seeing that Tesla has arrived ... a solid stable growth company worthy of investment. If S&P inclusion does not come now....no worries...it's arriving sometime in 2020.

Yes, you understood me perfectly. Thanks for answering. Glad I had it mostly figured out.

I absolutely agree there can be a shock value to the market if they did it now. I still question how much Elon really cares though. Wasn't it in the last earnings call that he to a direct question regarding what influence a potential SP500 inclusion had on anything they did he answered 'none' or something similar.

For us smaller investors with little to no inside info there is a 'need' for the stock to do somewhat well. It helps us mentally, and it helps most of us financially. So for us it would feel a whole lot better if it just goes up 50% every year for a long time. For Elon at this point it probably no longer matters if it stays at $500 for years and then jumps to $2000 within in a few months. So for him SP500 now or when it comes anyway in 3 or 6 months mean nothing.

 

[Beltsbear]

Does anyone know if the new foundations behind phase 1 look accurate for a press? To my very untrained eye, it looks too large. Could it be for the moulding machine? Although that would probable be near the foundry.

If you mean stamping press, no, they are not making a second one just yet. The old and new production lines will share the same original stamping press. It should have enough capacity for both lines running at full speed.

 

[Artful Dodger]

so our superbulls weekend off topic hype gives us additional 2.7B$ of profit for Q4!?! 1.8 tax and 0.9 of sold calls.
we just need one of both to become true...

why did these topics came up just now and why are they on noones radar since months?

$1.8B tax is a pool of deferred credits. Maybe $420M aer useable as Income in 2019.

$0.9B Calls (if sold, we don't know) would go into Shareholder Equity on the Balance Sheet (not Income on the P&L Statement) UNLESS Tesla restates their 2019Q2 Financials to count the hedges as an Expense.

Simple, wot?

 

[ggr]

Many interpreted that, poorly worded, statement as saying that profitability was obtained during the year, ie in one or more quarters, not that the year as a whole was profitable.

Writing non-ambiguous statements is harder than one might think, so I like to give some 'benefit of doubt' to them.

Also bear in mind the audience for that leaked letter: it was an "attaboy" to the truck team. The audience probably knew exactly what it meant, weren't going to speculate, and it sort of loses its cheer when written in unambiguous legalese.

 

[Rarity]

Does anyone know if the new foundations behind phase 1 look accurate for a press? To my very untrained eye, it looks too large. Could it be for the moulding machine? Although that would probable be near the foundry.

Had that same question. That's a beefy foundation. The foundry for GF4 is situated at that point on the line. And it does seem to make obvious sense.

#Gf4 #Gigafactory4 on Twitter

I have not seen evidence of such a foundry at Fremont, in counterpoint.