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

[Remus]

They must be surprised how everyone that has bought a Tesla must also be in on the fraud. And now it is global in scale. A true world wide conspiracy.

Nobody bought any. Those are paid actors /s

 

[Curt Renz]

Today's closing:

--0.80% GM
--0.23% F
+0.15% FCAU
+10.30% TSLA (all-time closing high - following all-time intraday high)

 

[Tim S]

The 2nd question isn’t totally 100% stupid. Tesla certainly does not have any need to raise any more cash through a new share issuance, BUT one could make the case that it would benefit investors to some extent to raise enough cash to pay off all debt - thereby erasing the ~$700 million in interest costs Tesla is currently paying annually and improving EPS. However Tesla management likely (and rightly) thinks that the share dilution of ~7% or more that this would have is a worse outcome for shareholders, especially when the amount of debt is becoming increasingly inconsequential given the profitability trajectory the company is now on.

Sure $700 million less in interest costs would be great for 2020 results (eliminating $175 million in cost per quarter), but in the next couple of years when profits reach the mid single billions, increasing to tens of billions by decade end, that one time 7% share dilution will be the equivalent of tens of billions dollars worth in extra shares outstanding, the value of which would have otherwise been held by existing pre-dilution shareholders.

So not entirely stupid, but still not a good question, as it is one that is focused on short term benefit at the sacrifice of much larger long term value.

Tesla pays $700 million in interest annually? That does not sound right. Can someone with more knowledge than me correct or clarify this?

 

[Dan Detweiler]

Today's closing:

--0.80% GM
--0.23% F
+0.15% FCAU
+10.30% TSLA (all-time closing high - following all-time intraday high)

Sir, every time you post one of these polka replies you make me laugh, and I value humor higher than just about any other human quality. Thank you!

Dan

 

[wipster]

Boy, Wahlman is reallllly struggling... SA now won't even print my comments refuting his abstractions... LOL!

 

[Cherry Wine]

After sleeping on it a night and re-reading the report, I don't feel Q1 will be all that good for Tesla. They cautioned with ramps there is a chance they won't be profitable, and they seem to be timing the battery event around Q1. It might just be too much reading of the tea leaves, but I think we could see the shorts preparing for that last battle in late March/early April. I'm feeling more confident in the company long-term though. It will only be a blip in the long term.

I too agree that the shorts will hang on for Q1 results (it fits their psychology). No one knows what the results will be of course, but I caution you not to disregard the possibility that Tesla are sandbagging expectations.

During these years, expect VW, Ford and GM and the others to start shutting down factories. I wonder if Tesla will start acquiring entire car companies? Probably not, it isn’t Elon’s MO. That’s one reason he needs to stay as CEO, another CEO could easily make that kind of strategic blunder of buying a car company.

Reading this made me realize: I can't think of a single CEO that would have had the guts to unveil the Cybertruck besides Elon Musk. Truly a visionary.

And with that, I want to leave everyone with my new favorite chart. Not the craziest one on here by far I'm sure, but it's near and dear to my heart. Those quaint little peaks and valleys look so small from up here. ;-)

 

[Nocturnal]

Reading this made me realize: I can't think of a single CEO that would have had the guts to unveil the Cybertruck besides Elon Musk. Truly a visionary.

And with that, I want to leave everyone with my new favorite chart. Not the craziest one on here by far I'm sure, but it's near and dear to my heart. Those quaint little peaks and valleys look so small from up here. ;-)

View attachment 506131

That was my comment when they wheeled it out, before I realized that I liked it. "The balls on these F-ing guys!" At first I thought, ok, not for me but that's different all right. When they showed the specs I was pretty excited and ran to order one when Elon said reservations were live.

Also, this.

 

[wipster]

Tesla pays $700 million in interest annually? That does not sound right. Can someone with more knowledge than me correct or clarify this?

Just read the financials issued yesterday, $685 million in FY19.

 

[avoigt]

That article contains this quote:-



I'm curious what the peak rate of casting would be, and the initial ramp on Model Y might partially be dependent on tuning this casting process.

Looking at the picture of the machine, the top is unobstructed hence a robot arm could pick up the mould containing the cast metal and place that elsewhere, then another mould can be dropped its place, so higher throughput via multiple moulds might be possible, if that was necessary...

I am sure Tesla has a good solution, I would love to see a video of this machine in action, but I suspect we will not see that for sometime.. they don't want to give the competition too many clues.

That technology is the holy grail the automotive industry tried many times but never solved and always gave up. I can't express loud enough what a difference it would make if Tesla really solved it.

Frankly when I see the drawing a while ago I thought its a nice concept but many tried so why should Tesla be able to solve it with not theist the best (?) track record in manufacturing.

If they did its more than just a manufacturing improvement but likely another multiyear lead in innovation of automotive production something all Analysts called Tesla to be weak at.

I assume WallStreet and Analysts will never understand the underlying implications as they are very technical and this guy only and if at all understand numbers but they all be surprised if the see the results in the balance sheets quarters ahead - they can't explain.

Mod-edited an intriguing typo to the best of Mod's guessing ability

 

[Driver Dave]

That was my comment when they wheeled it out, before I realized that I liked it. "The balls on these F-ing guys!" At first I thought, ok, not for me but that's different all right. When they showed the specs I was pretty excited and ran to order one when Elon said reservations were live.

Also, this.

View attachment 506135

I believe the technical term for that stock movement is called...

The El Capitan.

 

[Rashomon]

That article contains this quote:-



I'm curious what the peak rate of casting would be, and the initial ramp on Model Y might partially be dependent on tuning this casting process.

Looking at the picture of the machine, the top is unobstructed hence a robot arm could pick up the mould containing the cast metal and place that elsewhere, then another mould can be dropped its place, so higher throughput via multiple moulds might be possible, if that was necessary...

I am sure Tesla has a good solution, I would love to see a video of this machine in action, but I suspect we will not see that for sometime.. they don't want to give the competition too many clues.

High-pressure die-casting is a very high run-rate process (40 per hour per machine for a larger casting is not unusual) and is frequently used in automotive production: transmission case castings, instrument panel beams, etc. Unless you use the high-vacuum variant of the process, though, you end up squirting molten aluminum at 10,000 psi into the air trapped in the mold, and you end up with oxides and well-distributed porosity. It's the latter that makes the part non-weldable and non-heat-treatable. The parts typically would be made offline, either in a separate building or at a supplier, and trimmed and cleaned before they were brought in for body assembly in this case.

 

[ggr]

I remember @AudubonB telling everybody to stop buying @420 because it's not funny.

Mod: No, he told everybody to stop talking about it. And I can warn you all now that any mention of the Number of the Breast as a stock price will be instantly discorporated. --ggr

From the Office of Lord Vetinari -

Best recollection is that Vetinari expressed the view that leaving such inanitous a number forever far behind was an Outcome Devoutly To Be Wished

~~~Vetinari~~~

 

[goinfraftw]

Here's a look-see at Google Trends for the worldwide searches for the coronavirus v. flu/cold/pneumonia. Link

View attachment 504879

The searches just don't add up for this being a widespread, global pandemic. There should be a/an correlative/association back to other illnesses that mimic the symptoms as the coronavirus if this was getting bad, but it hasn't been that way over the past 7 days.

Google Trends.

30-day:

7-day:

 

[M3Rider]

Mod: No, he told everybody to stop talking about it. And I can warn you all now that any mention of the Number of the Breast as a stock price will be instantly discorporated. --ggr

Omg, do I really need to add /s everywhere

 

[wipster]

OK in that case it is probably only a good option for 5G in sparsely populated remote areas, those areas would also correspond to long fibre runs,,,, 100s of miles in some cases.. so they probably already use wireless or satellite internet.

Man, running that fiber all the way to space and back is gonna be a bitch...

 

[Prunesquallor]

....
And with that, I want to leave everyone with my new favorite chart. Not the craziest one on here by far I'm sure, but it's near and dear to my heart. Those quaint little peaks and valleys look so small from up here. ;-)

View attachment 506131

Jeebus, that’s actually getting a little scary. That looks like a Chernobyl gamma-ray plot. WTF?

 

[EinSV]

Here is his blog post for those that prefer to read it in 2 minutes (rather than a 17 minute video).

Musings on Markets: An Ode to Luck: Revisiting my Tesla Valuation

Aswath Damodaran has a large following amongst value investors, and he himself says he uses very conservative assumptions in his models. I think this post from him where he uses a mid-level price target $427, and his reasonings for it, is actually fairly good news for someone with such conservative assumptions, and it also is a good basis to completely demolish most of the bears arguments from someone who isn’t perceived as a Tesla Bull. He notes positive points that many analysts miss (such as the convertible debt situation), and notes that he reluctantly sold today. He even goes out of his way to say he could tweak his assumptions and get a $1,168 price target, but it would seem to be outside his conservative nature.

Prof. Damodaran has a very nice downloadable Excel spreadsheet that lets you play with different assumptions. When I plugged in my assumptions the valuation came out to $3,671 per share (net present value), not including FSD. Main changes were 50% growth instead of 25%, more efficient use of capital, slightly lower cost of capital and most importantly no artificial cap on revenues (he caps revenue at $125B/Y, or 2 million cars/year -- Elon says the goal is 20 million/year). I think I'll continue holding.

 

[ReflexFunds]

Tesla pays $700 million in interest annually? That does not sound right. Can someone with more knowledge than me correct or clarify this?

$685m P&L interest but real cash interest is only $440-480m. The rest is mostly non cash accounting related to the convertible bonds.

 

[heltok]

Elon Musk: "There’s quite a significant foundational re-write in the Tesla Autopilot system that’s almost complete.
Instead of having planning, perception, image recognition all being separate, they are all being combined.
Effectively the neural net is absorbing more and more of the problem.
Beyond if you see an image, is this a car or not, its what do you do from that information.
3D labelling is the next thing when a car can go through a scene with 8 cameras and paint a path and label the path in 3D.
This is probably a 2-3 orders of magnitude improvement in labelling efficiency and labelling accuracy. "

I assume it is this one Elon is referring to, 5.30 into this, but watch all of it:

Where the RNN at the top is also doing planning. See my old post about this video:

Thanks! Super interested in these videos, watched all of AKs videos! =)

Guess the new information was the EKF-SLAM style occupancy grid which I will try to analyze more, the sonar and camera road edge visualization was cute, but felt a bit dated compared with the rest. The neural network deconvoluted map was really cool, felt very modern and interesting! But my main takeaway is that they use the multitask CNN to do a lot of object detection etc and use the high level features of this neural network as input to train and to run a RNN. Which feels a bit similar to OpenAI-five:

Note the LTSM 1024 units to the left, which would be the equivalent of this RNN and the input to this network would be high level features of the AKNET_V9 style multitask network.

This was new information. Pretty cool, but not super happy that Tesla are telling the rest of the industry the correct answer. Imo it seems like a really good solution.

Also liked the go on holiday and come back to improved performance quote. Imo that is something awesome with Tesla’s software 2.0 solution, once it is up and running it can only be improved and there are so many ways to work to improve it and the effects will ripple out to all parts of their software 2.0 stack.

Project Dojo seems to be a custom system for training Tesla’s neural networks. I wonder how much own hardware they have developed for this, I assume that Elon Musk gave Pete Bannon two task:
1. Develop HW3
2. Develop hardware for Project Dojo

We know how well he did 1 from the Autonomy day. I would guess he did 2 equally well.

I wonder how much these cost, would not be surprised if Elon gave a green light to split the budget 50/50 for these and that Pete Bannon has built some pretty massive amount of very specific hardware to train Tesla’s neural network. Don’t think that these will compete with Alphabet’s TPU 3.0, but maybe they will perform better for Tesla’s specific needs. If so Tesla’s moat might just have gotten wider. Maybe they could compete, if so maybe Amazon/Microsoft/Google could be customers/competition. Would be pretty crazy if Tesla decides to enter the cloud compute market at some point. Hyperchange should make a video about this! =)

To be followed!

I guess they decided to also add the control to the RNN.

 

[Opus BC fan]

OT (& esoteric & hypothetical & unlikely)

If TSLA split prior to, or after, S&P inclusion would that have any direct effect on how much TSLA the index funds have to buy?