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

[SageBrush]

They are going as fast as possible.

They are indeed, but it is a grave mistake to ignore public health measures today because of vaccine R&D.

Quarantine of ill people is fine and dandy, but that is to a degree late. 96 hour quarantine with facemask at home is the sensible step to take for all asymptomatic visitors returning from affected areas. Oh, and Merkins really should learn to wash their hands.

 

[WentOffGrid]

STFU and buy the dip.

Sounds like great not an advice so we went ahead and took it

 

[Chickenlittle]

According to carsonight GF1 is producing between 7k and 8k packs per week.
View attachment 504737
Last quarter Tesla produced M3s at a rate of (87k * 4 /52)= 6.7k per week.

Excluding any inventory packs or local production we shouldn't expect GF3 to produce vehicles at a rate any better than 1.3k per week (17k) on average this quarter.

When local production starts we should be able to see it from the drone videos.

Read the tweet batteries not packs mentioned. Sounds ignorant why do you trust the tweet?

 

[Tslynk67]

Nasdaq futures "recovering a bit, were at -2% earlier, now at -1.67% and slowly drifting up.

$TSLA tracking this x2, as are a range of stocks ($UBER, $LYFT, $NVDA $AMD, $SNAP, etc.), $NIO x7, as you would expect.

 

[winfield100]

Interestingly enough, the largest ETF holder of Inovio is Kathie Woods ARK Genomic Revolution, ARKG:

The largest ETF holder of INO is the ARK Genomic Revolution ETF (ARKG), with approximately 4.62M shares. Investors may also find of interest that the ETF with the largest allocation to INO stock is ARK Genomic Revolution ETF (ARKG), with a portfolio weight of 3.52%. On average, U.S. ETFs allocate 0.19% of INO to their portfolios.

In the off-chance that the recent breakthroughs in the speed of genetic sequencing result in a rapid end to the Coronavirus threat, this could supercharge the bull market in general and put another feather in the cap of the brainiacs at ARK Investments. Never under-estimate the ability of the markets to find reasons to juice to unimaginable highs. Also, the ability of the markets to carry on longer than you thought possible. I'm not naturally an irrationally bullish person but I also don't put my head in the sand and constantly claim the sky is falling. I just call it how I see it.

In any case, I see no convincing signs that the current bull market is running out of steam. This is the direct result of the combination of low interest rates, relatively low inflation and the inequality of most of the profits flowing to the top 5%. Because when profits are concentrated in the hands of those who have more than they need, they get re-invested in the economy. In other words, a lot of money is chasing productive assets and I don't believe that's about to end. The money absolutely needs a place to go that is better than current low-interest rates.

The Coronavirus is most likely just a comma in the middle of it all.

OT
@StealthP3D
Remember, the Corona virus is similar to common cold viruses.
Adults have had more exposures to cold viruses and their immune systems a chance to build up “memories” and circulating antibodies so younger folk should have fewer of those, hitting them harder, but adults should have partial <= immunities.
Edit
Also, use basic stuff, wash your hands, etc. I’m not trying to minimize stuff, just be rational

 

[gerebgraus]

Based on company behavior I am fairly certain that in Q4 gross margin (possibly with ZEV and ZEV like credit will be comfortably above 25%, valuation allowance will be at least partially released, and full year profitability will also be achieved possibly with a small help from the valuation allowance. The reasoning is a bit longer than I have time for it provide now. I will attempt to do it later.

1. Importance and motivation to reach full year profitability and valuation allowance release:
Advantage of Inclusion into S&P 500 was extensively discussed by many.
More important bond rating: If expectations from now on that Tesla will be competitive bond ratings will improve a lot. It could possibly approach investment grade very fast. Musk strongly prefers financing expansion with bonds rather than stock issuance. Tesla also could do many simple projects with 3-4 years ROI with ability to raise bonds (e.g. putting solar panels on its own buildings.). it would help financing activities if their bond ratings were not worse than that of its customers.
Even more important: They would get better terms from suppliers and it would increase demand if media stopped scare mongering about Tesla bankruptcy. Most potential customers do not follow Tesla as close as we do. They hear from friends, family that the car is great. They hear from the TV that Musk is a fraud and the company is a zero. This has already started to improve and likely that contributed to the increased demand.

-----
Q4 profits: I believe that the profits would have been substantially higher in Q4 than any calculations I have seen either from analysts or our forum even if the company had not pull out all stops.
1. Radical reduction in inventory.
2. Increased productivity, cost improvement and quality improvement: Apparently the company increased production with minimal additional capital or labor cost. I have seen a lof of rumors about various improvement in Model 3 that reduce costs. Quality improvement means for example radical decrease in the labor and part intensive rework. It also meant very smooth delivery process with very little service work involved. TSLAQ will be upset, but warranty reserves can be reduced justifiably.
3. My guess that sales force has not increased substantially. In December most locations have not offered test drives. Most sales stuff was redirected to deliveries. Also because of the very high quality Tesla was able to set up temporary delivery centers in Amsterdam, e.g. where they delivered the cars in the port after the cars rolled out from the ship. That is huge cost saving.
4. There was substantantial supply constrain in the quarter. Tesla has raised prices multiple times and prioritized the much higher profit margin premium and long range cars.

But my thesis rests on the fact that Tesla has pulled out all stops in the last 10 days and early January:
1. They introducted the $2000 software power boost. (All previous software performance, range improvements were free.)
2. Introduced connectivity charge. (They have indicated it would happen, but timing is peculiar in the last days of December)
3. Increased supercharger rates. (2 and 3 had no effect on revenue in 2019, but it could have impacted reserve calculation and also guidance for future profits.)
4. Many SR+ buyers with delivery appointment in Fremont on December 31 were told in the last minute that their cars are not ready but they can get a performance car. This could have been some error, but my guess it was deliberate decision to maximize profits for the quarter. The decision is bad long term, as it pissed off customers, but it made sense if the most overwhelming goal was to squeeze out the last drop of profit to be able to declare full year profit.
---
Admittedly all points are fuzzy logic from incomplete information without detailed spread sheet calculations. I have merely concluded spreadsheets of others are way too conservative. Also, all the 4 points of my pulling out all stops can have different explanations. I have no insider knowledge about how these decisions were made.

I have made my bets accordingly. I remember still because in spite of all false allegations of my advanced Alzheimer (that clearly should not impact my credibility) I made a similar bet about the Q4 delivery number that turned out to be less wrong than the market expectations were. Then Trump took out the Iranian general decreasing the profit on the bet. This time it is the corona virus scare. Short term company related options not hedged against systemic risks is a dangerous game.

 

[Kortsun]

Here's a (very) fresh summary of all scientific Wuhan coronavirus R0 estimates:

View attachment 504645​

The freshest estimate is the highest, by Chinese authors - presumably based on very fresh data.

Here's a specific infection case study from The Lancet:

View attachment 504647​

The important takeaway is that infection in most cases seems flu-alike, and that Patient 6, a young child of the family, remained uninfected due to the use of facemasks.

I dont know if this was posted before, but for anyone wanna read more about this here is source.
https://www.thelancet.com/pdfs/journals/lancet/PIIS0140-6736(20)30154-9.pdf

 

[mongo]

Excluding any inventory packs or local production we shouldn't expect GF3 to produce vehicles at a rate any better than 1.3k per week (17k) on average this quarter.

When local production starts we should be able to see it from the drone videos.

Local pack production already started:

Q4 P&D report: Tesla Q4 2019 Vehicle Production & Deliveries | Tesla, Inc.

We continue to focus on expanding production in both the US as well as our newly launched facility in Shanghai. Despite breaking ground at Gigafactory Shanghai less than 12 months ago, we have already produced just under 1,000 customer salable cars and have begun deliveries. We have also demonstrated production run-rate capability of greater than 3,000 units per week, excluding local battery pack production which began in late December.

 

[Krugerrand]

Opening is going to be a bloodbath...

Try and be reasonable and sensible, and avoid using hyperbolic wording. It’s not helpful unless your point is to raise panic.

 

[Krugerrand]

100% agree. It may turn into a big nothing burger, but it is not very helpful to compare this to SARS. China had barely joined the WTO then. It was a much smaller economy, it's grown by over 6% annually for 17 years since then.

China is a completely different country than it was in 2003. In 2003 there were 3 subway lines in Beijing. Now there are 25.

Beijing's Incredible Subway Expansion In One GIF | HuffPost

Then feel free to take your own advice and admit China is a very different country today, therefore taking a different approach today concerning this new virus would be expected compared to SARS.

 

[LN1_Casey]

Try and be reasonable and sensible, and avoid using hyperbolic wording. It’s not helpful unless your point is to raise panic.

You only disagree with that term because it has the word “Bath” in it.

 

[KarenRei]

Sounds like great not an advice so we went ahead and took it

View attachment 504744

Planning to up leverage today as well. I've been slowly accumulating a (minor) lotto ticket position before the ER ($750-800 21 Feb spreads), and they should be on quite the sale today

I generally try to do trades slowly because you never know when a day like today will come along. If I'd just bought all last week, I would have missed this. On the other hand, if I'd waited for this week, and then the stock had shot up, I'd have missed out. Best to average things over a period of time IMHO.

 

[CorneliusXX]

Read the tweet batteries not packs mentioned. Sounds ignorant why do you trust the tweet?

Like any third party leak it should be treated with skepticism, however carsonight has been one of the most accurate leakers regarding GF1 info. He has family working there.

 

[JRP3]

Read the tweet batteries not packs mentioned. Sounds ignorant why do you trust the tweet?

That's proper terminology. Batteries are a collection of cells, i.e. packs.

 

[CorneliusXX]

Local pack production already started:

Q4 P&D report: Tesla Q4 2019 Vehicle Production & Deliveries | Tesla, Inc.

Thanks for the reminder.

There is no activity in the "phase 2" building at GF3, which suggests that either the Ghromman production line is in a temporary position in the Phase 1 building or that pack production in being done manually.

Have you heard if LG has started supplying cells? Tesla may only be turning modules from GF1 into packs at GF3. If that's the case then additional modules may not be part of carsonights numbers.

 

[mongo]

Thanks for the reminder.

There is no activity in the "phase 2" building at GF3, which suggests that either the Ghromman production line is in a temporary position in the Phase 1 building or that pack production in being done manually.

Have you heard if LG has started supplying cells? Tesla may only be turning modules from GF1 into packs at GF3. If that's the case then additional modules may not be part of carsonights numbers.

Given the timing of the reports of moving the first gen Model 3 pack equipment to GF3, I expect it was initially set up in the main building.

No reason to only ship the modules from GF1. Final assembly would not be the bottleneck.

 

[FrankSG]

Q4 profits: I believe that the profits would have been substantially higher in Q4 than any calculations I have seen either from analysts or our forum even if the company had not pull out all stops.
1. Radical reduction in inventory.

I like most of your post, but this part is incorrect. A reduction in inventory means strong cash flows, but does not impact profits in the same way.

If anything, the reduction in inventory in Q4 could hurt profit (margins). The CoGS of a vehicle are determined when it is produced. The inventory vehicles sold in Q4 might've been produced earlier in the year, and therefore might've been produced with higher CoGs than the others sold in Q3/Q4. Maybe somebody who has knowledge about how long Tesla usually keeps inventory vehicles could weigh in on this.

We saw something similar happen in Q2 when margins for S+X were much worse than some people expected. This was because most of the vehicles sold were pre-Raven inventory vehicles that had much worse margins.

I don't expect this to impact Q4 financials hugely, and I'm still expecting Q4'19 to be above Wall Street expectations, but it's a (very small) potential downside.

 

[AlexS]

if someone instead of NIO bought accidentally INO during last weeks, had a really lucky mistake. I have never touched neither.

 

[Pezpunk]

looking forward to converting a pile of cash into discounted TSLA shares this morning.

 

[gerebgraus]

I like most of your post, but this part is incorrect. A reduction in inventory means strong cash flows, but does not impact profits in the same way.

If anything, the reduction in inventory in Q4 could hurt profit (margins). The CoGS of a vehicle are determined when it is produced. The inventory vehicles sold in Q4 might've been produced earlier in the year, and therefore might've been produced with higher CoGs than the others sold in Q3/Q4. Maybe somebody who has knowledge about how long Tesla usually keeps inventory vehicles could weigh in on this.

We saw something similar happen in Q2 when margins for S+X were much worse than some people expected. This was because most of the vehicles sold were pre-Raven inventory vehicles that had much worse margins.

I don't expect this to impact Q4 financials hugely, and I'm still expecting Q4'19 to be above Wall Street expectations, but it's a (very small) potential downside.

I agree that gross margin on cars produced earlier is less than on the cars produced in Q4 as production costs declined. My consideration was the absolute profit on these cars. I assume that these cars were mostly produced in Q3. As sales price have not decreased, in fact in some cases they increased the gross margins should be comparable to the Q3 gross margins. So the profit on these cars could be in the order of magnitude of $100B.
I think it is an absolute fact that Q4 gross profit will be much higher probably well over 25% and you are right that the gross margin will be lowered by the inventory reduction.