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

[MC3OZ]

Quite simply put demand and price are correlated. If demand is way above supply then Tesla can and should increase prices which improve margins. So if advertising can increase margins net advertising expense it may be worth it.

Possibly, but they are not doing that, and we don't know why....

Lowering prices also increases demand...... and maybe holding prices constant allows demand to grow slowly in sync with production.......

I think a lot of the "need to advertise" theory comes from Q1 2019 Model S/X demand and the price cuts...... IMO we don't know the full story there and will never know ....but I think prices for the whole range are about right now...

Higher prices can simply create an opportunity for the competition... so I would advertise to increase demand, and avoid price cuts, but never with the intention of raising prices.

 

[StealthP3D]

Elon Musk is the reason 99% of us are shareholders of TSLA.

edit: it may be closer to 85-90% now, b/c the main obstacles have been overcome, and someone like Tim Cook could probably derive value from Tesla at this point of its legacy.

There is a difference between "deriving" value from what you already have and continuing to innovate and create new value.

Tesla would completely stagnate under Tim Cook, it would not be pretty.

 

[tinm]

“Bezos announced the initiative, called the Bezos Earth Fund, in a post on Instagram Monday afternoon. The fund will support scientists, activists, non-governmental organizations and “any effort that offers a real possibility to help preserve and protect the natural world,” he said.”

If only Jeff & Elon were friends instead of competitors.

Big PBS FRONTLINE exposé on Bezos and Amazon airing this week.

Coincidence? I think not: Bezos “gets out in front of” the negative story with a positive story. Textbook crisis PR management move.

 

[Fact Checking]

No, this is chaotic:

Nissan shareholders furious at Ghosn scandal, dismal results

That article doesn't exist on Yahoo Finance anymore, but here's the AP original:

Nissan shareholders furious at Ghosn scandal, dismal results

"But hanging over the entire meeting was Nissan’s plummeting fortunes, its reputation tarnished over not only the Ghosn scandal but the shaky way it was handled at the company.

Shareholders said they saw confusion in management.

One argued no one would want to buy a car from a company that looked as disorganized as Nissan. At one point, several shareholders began shouting at each other.

Another shareholder proposed putting a bounty on Ghosn’s head so he could be brought back from Lebanon to stand trial. Japan and Lebanon do not have an extradition treaty.

Ghosn, who has insisted on his innocence, has said he was targeted with trumped up charges because of what he called a conspiracy at Nissan to block a fuller merger with Renault."​

Oh wow, I'm speechless.

Let's put this up as a reminder, Nissan's corporate debt is rated 9 full notches higher than Tesla's (!):

I'm starting to worry about the prospects of Toyota, Nissan at least attempted to transform to EVs, but Toyota is in full denial ...

This might be a Nokia/BlackBerry situation unfolding very quickly, with the difference that traditional OEMs have much lower margins and much higher capital and financing requirements to stay going concerns...

Nokia/BlackBerry was able to go on for years and had several chances to reinvent themselves from their legacy revenues, due to higher margins and much lower capital requirements.

I don't see automakers getting such second chances: once the bankwuptcy word is seriously considered by customers, new car sales might plummet: few people are willing to buy an car (second biggest purchase in the life of most families), if there's legitimate concerns about whether the manufacturer will be around in a few years to honor the warranty.

Traditional OEMs might collapse faster than even I thought, and even many bulls here doubted my "possibly by 2025" prediction.

There will be one benefit though: bigger OEMs collapsing will drive new car buyers to other OEMs, and support their falling sales. Despite that there could still be a tipping point where ICE sales collapse, like in Norway.

 

[sundaymorning]

Check out this Tesla Model 3 plate LOL

DMV: Tesla plate has G2G

DMV wants the plate back for inappropriate language. I guess 42069 is out of the question.

 

[StealthP3D]

There's a 70% chance of recession in the next six months, new study from MIT and State Street finds

You can use different metrics to try to guess the chances of a recession and come up with any number you want. Don't let the fancy sounding name of "MIT" make you think they know whether there will be a recession or not. If there isn't, they will say, "see, that was the 30% chance we said there wouldn't be one".

 

[ggr]

Quite simply put demand and price are correlated. If demand is way above supply then Tesla can and should increase prices which improve margins. So if advertising can increase margins net advertising expense it may be worth it.

Two fallacies:
1. "can and should increase prices": not if the goal is more adoption. It should favor expansion over profit, and they are currently "expansion constrained"!
2. There is no evidence that advertising increases absolute sales. It may help steal market from competitors, but Tesla has no competitors worth speaking of.

 

[UnknownSoldier]

There's a 70% chance of recession in the next six months, new study from MIT and State Street finds

This is not 2008—it's actually worse

Imagine if you sold everything in 2016 thinking the recession was imminent.

If you're deathly afraid of the next recession, buy some cheap insurance puts on SPY or something. But missing the gains for years near the top is arguably worse than being all-in when the crash begins.

 

[EV forever]

You can use different metrics to try to guess the chances of a recession and come up with any number you want. Don't let the fancy sounding name of "MIT" make you think they know whether there will be a recession or not. If there isn't, they will say, "see, that was the 30% chance we said there wouldn't be one".

Agreed
How is that any better than Mr Adam Jones saying Tesla price will be between 10 and 500 and still being wrong?
Might as well flip a coin for prediction.

 

[MC3OZ]

Agreed
How is that any better than Mr Adam Jones saying Tesla price will be between 10 and 500 and still being wrong?
Might as well flip a coin for prediction.

I think if he runs with between $1 and $5,000, he will be safe for a while...

 

[Singuy]

Thought experiment regarding the echo chamber:
Is it possible that if Elon announced tomorrow; "we're gonna start advertising - but we're going to change the advertising paradigm" - that we might all come around to advertising being a good thing in around 0.1 seconds?

I will shamelessly support Elon. If we advertise, margins should increase but we will have lost a little bit of our soul.

I'm in the camp that Tesla should advertise just to stop the media manipulations and get media outlets on the side of Tesla vs trying to destroy it. If advertisement can reduce negative headlines by 50% then it'll be a win in my book.

 

[Fact Checking]

Quite simply put demand and price are correlated. If demand is way above supply then Tesla can and should increase prices which improve margins. So if advertising can increase margins net advertising expense it may be worth it.

There's three main strategies available to Tesla to run their business:

• "Profit maximization": this maximizes income, but constrains growth.
• "Revenue maximization": this maximizes market cap by most metrics.
• "Long term growth maximization": this maximizes unit sales growth, getting as many Teslas to new owners as possible.

Tesla is clearly pursuing growth maximization, which differs significantly from revenue maximization.

To maximize unit growth, you apply the following strategies:

• Set entry prices low enough that there's enough demand to absorb production,
• Maximize the utility of the car, especially the kind of utility that is software based and doesn't increase CoGs,
• Set up a "ladder" of prices from $35k to $120k with increasingly more value offered. This allows the extraction of higher payment without pricing out budget constrained customers,
• Push all generated cash back into growing production and utility of the cars,
• Rinse, repeat: as volume goes up the entry prices keep dropping and utility of the car keeps increasing.

I.e. Tesla is a pure growth machine driven by 40,000 people who have a desire to innovate and grow, and the feedback force is the exponential network effect by new Tesla owners who get amazing new cars with more and more utility.

The viral network of Tesla owners is kept satisfied with their old purchase too, via OTA upgrades increasing the utility of their cars even years after it was bought.

THAT is the organic "marketing expense" Tesla is investing back to grow faster: the post-purchase increase in utility, worth billions.

While I can see Tesla doing some limited advertising in the future, Tesla doesn't need mass advertising to grow - they already have mass advertising, but it's voluntarily and honest.

 

[Green Pete]

I'm in the camp that Tesla should advertise just to stop the media manipulations and get media outlets on the side of Tesla vs trying to destroy it. If advertisement can reduce negative headlines by 50% then it'll be a win in my book.

If ending the stock manipulations is the goal having Tesla pay out a dividend to increase the cost of shorting seems like a more efficient use of money to end manipulations

 

[mrdoubleb]

Thought experiment regarding the echo chamber:
Is it possible that if Elon announced tomorrow; "we're gonna start advertising - but we're going to change the advertising paradigm" - that we might all come around to advertising being a good thing in around 0.1 seconds?

I will shamelessly support Elon. If we advertise, margins should increase but we will have lost a little bit of our soul.

You are assuming, that we all agree with Elon, that advertising is inherently bad, right there with the other 7 deadly sins. I for one do not.

Sure, most advertising you see on TV is deceptive, one sided (naturally... this i not a 3rd party review) and sometimes morally questionable like medicine ads which encourage you to buy certain products vs. your doctor deciding which is best for you. However, this does not mean advertising cannot be done right. I am sure Tesla could. And it has its place, especially with a new product category, one that is fighting a lot of FUD and misconceptions.

Still, as long as Tesla is production capacity limited, there is no need for running expensive ads. Maybe for S/X they could consider, but most probably the extra ~15-20% capacity they could have for that before the need for extra shifts does not justify the cost.

 

[Zhelko Dimic]

Just remember the market can stay irrational longer than you can stay solvent.

Deep out of the money LEAPS are in no way a ‘safe’ investment. Lucrative, Potentially. Reasonable for your financial goals, possibly. But not safe. Many investors on this forum value options not in $ but in potential shares. January 2022 calls for $1200 are selling for $12k. $12k gets you 15 shares. Break even price compared to shares is thus $1400ish. Downside on LEAPS is ugly. If stock price is at 1205 at expiration shares are worth 18k. Calls are worth $500. Upside above $1400 is similarly amplified.

Absolutely. Here is how safe my $280 leaps were.
I was sure TSLA is worth more than $280, and I was right... eventually

 

[Tslynk67]

The fascinating thing is that when I search for "porsche taycan fire" the ONLY news result I get is Electrek (on google, I get zero hits on duckduckgo). It's almost as if news organizations protect advertisers or something.

Or could it just be that nobody cares about the Porsche Taycan any more?

 

[Mobius484]

Or could it just be that nobody cares about the Porsche Taycan any more?

I am anxious to find out the best guess at the fire, for EV’s sake(toucan ribbing aside)... charging infrastructure problem vs pack fire is big difference...

 

[Artful Dodger]

Tesla Grid Controller Patent Reveals Direction Of Company's Energy Sector

Tesla’s grid controller patent may have revealed the direction the company’s energy sector will be taking. Tesla has always been the kind of company that keeps pushing to be better. The EV automaker and tech innovator published documents of a patent for a grid controller, which could be another component to Tesla Energy.

“The present disclosure relates generally to energy systems, and more specifically, to a scalable hierarchical energy distribution grid utilizing homogeneous control logic. Techniques are disclosed that allow for distributed, autonomous control of a multitude of sites in an energy system using abstraction and aggregation techniques for simplified yet powerful system control to achieve energy goals,” stated the first paragraph of the grid controller’s patent summary.​

 

[StealthP3D]

I am anxious to find out the best guess at the fire, for EV’s sake(toucan ribbing aside)... charging infrastructure problem vs pack fire is big difference...

I think if the fire started in the garage (charging infrastructure) the garage would have been mostly consumed before the car even caught on fire. But the car is a melted lump and most of the wood-framed garage is still intact. So it's pretty obvious to me that the fire started in the car and the fire-fighters arrived in time to put the garage out. This is unfortunate because it will harm the perception of EV safety but I have to call it how I see it.

 

[JBRR]