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

[MarcusMaximus]

Saw this on Apple News...
Tesla Model 3, considered to be one of the most successful electric cars in the market because of its relative affordability, is poised to have a devastating first quarter sales report. This is despite the fact that the car offers some of the best specs and engine performance compared to other electric vehicles. According to Seeking Alpha, deliveries of Tesla Model 3 sedans fell badly in January despite the supposed 450,000-strong pre-order book. The reason cited for the fall is failure from Tesla to deliver the vehicles in the U.S.

I'm not sure if that is related to the LA Times(?) person who doesn't know how to read a chart and claimed a big drop in sales because he had the years backward.

I don’t believe it would be, but they’re citing seeking alpha; not exactly a rock solid source.

That said, Model 3 sales did drop quite a bit in January. What they’re leaving out is that the sales dropped because essentially all the Model 3’s being produced were put on ships(or are currently awaiting said ships) to make the journey to Europe/China. Not exactly a ton of customers in the middle of the Atlantic.

 

[Lucky_Man]

...But you do have a point that Rivian does need to raise more money to bring it all to production, and they do have other issues they haven't figured out yet like service and support.

Is there an IPO in their future?

 

[KarenRei]

I don’t believe it would be, but they’re citing seeking alpha; not exactly a rock solid source.

That said, Model 3 sales did drop quite a bit in January. What they’re leaving out is that the sales dropped because essentially all the Model 3’s being produced were put on ships(or are currently awaiting said ships) to make the journey to Europe/China. Not exactly a ton of customers in the middle of the Atlantic.

... and the fact that sales *always* drop in January
... and the fact that Tesla *deliberately sought* to shift as many sales from January to December in order to maximize the tax credit

 

[Curt Renz]

Benzinga - this morning: Tesla Motors, Inc. (NASDAQ:TSLA), General Motors Company (NYSE:GM) - New 13G Filings From Capital World Investors Show New 7.3% Stake In General Motors, New 5% Stake In Tesla

Tesla 13G - this morning: SEC Filing | Tesla, Inc.

 

[EVNow]

I agree that Tesla is smarter with cash than they were previously, but I also agree that they have slowed the pace of growth.

Not sure what "slowed the pace of growth" means really. Depends on your starting point and what exactly you are looking at. Definitely over the last year there has been tremendous growth (unit volumes or $ revenue). Tesla ramped up 3 & X, over the years, slowly. But 3 ramped up very quickly in just a year to over 250k/year volume.

Is the point that we won't see similar growth next year ? Yes, since Tesla would be consolidating 3 and preparing for Y. When they start making Y in volume is when we can expect next step in growth. Infact there is a lot of work that is needed to be done in terms of rolling out 3 in new markets, SR 3, better customer service etc this year. Also I think when Y starts in volume is when Tesla needs to open a EU factory. Tesla does one big thing at a time - and that hasn't changed.

 

[AudubonB]

I cannot tell either from the SEC filing or from the Benzinga reference whether Capital created that stake in the 4th quarter, or whether they "merely" raised their position enough so that they passed the 5% reporting threshhold.

There are ways to do it - one can delve into the publicly-available data of Capital to see how their portfolios have changed over time. Regardless, a massive shareholder like that is good news.

Full disclosure: we had been close to the Lovelace family for decades; Dad was intimately involved with Capital. But this is now very, very old, fusty stuff and no longer relevant.

 

[EVNow]

The reason cited for the fall is failure from Tesla to deliver the vehicles in the U.S.

That's like saying when someone goes on vacation "they failed to be present at the office".

Also, either deliberately or because of ignorance, many of them don't consider seasonality. EV market has very high seasonality. Q1 is much lower than Q4 - so the comparison should be Year over Year - rather than previous quarter.

ps : For quite a long time, Tesla has been shifting sales from US to Europe in the first two months of the quarter and selling mostly in US in the 3rd month. This adds to the yearly seasonality to make Jan a particularly low month.

 

[elasalle]

IIRC, China vehicle tariff exemptions expires end of March, and not beginning of March if negotiations fail?

 

[Buckminster]

That’s actually true most of the time. Tesla is resilient like a virus. And I’m quite sure they are moving as fast as they can.

Absolutely, I realised recently that Elon has played this period to his advantage in motivating employees. Had their share options made them rich, would they be digging deep now. They realise that when they are given what looks like an impossible job that they need to achieve it for a greater reason.

Is there an IPO in their future?

Wouldn't wish it open my worst enemy if this is what they will have to endure....

 

[shlokavica22]

Benzinga - this morning: Tesla Motors, Inc. (NASDAQ:TSLA), General Motors Company (NYSE:GM) - New 13G Filings From Capital World Investors Show New 7.3% Stake In General Motors, New 5% Stake In Tesla

Tesla 13G - this morning: SEC Filing | Tesla, Inc.

Just a side note- for the last 2 years or so they constantly accumulated stock and didn't swing trade. Or to put it in other way:

 

[Curt Renz]

I cannot tell either from the SEC filing or from the Benzinga reference whether Capital created that 7.3% stake in the 4th quarter, or whether they "merely" raised their position enough so that they passed the 5% reporting threshhold.

There are ways to do it - one can delve into the publicly-available data of Capital to see how their portfolios have changed over time. Regardless, a massive shareholder like that is good news.

Full disclosure: we had been close to the Lovelace family for decades; Dad was intimately involved with Capital. But this is now very, very old, fusty stuff and no longer relevant.

That's currently 7.3% in GM and 5.0% in Tesla.
At the end of the third quarter Capitol World Investors owned 5.95% of GM and 4.00% of Tesla:
GM Major Holders | GENERAL MOTORS CO Stock - Yahoo Finance
TSLA Major Holders | TESLA INC Stock - Yahoo Finance

 

[schonelucht]

Only if you ignore absolutely every piece of evidence I cited:

• The SEC filing where Tesla registered 2.55 million new dilutive shares,
• the 10-Q wording where Tesla carefully only characterizes the notes as non-dilutive with an "if settled in cash" qualifier,
• Tesla's track record of settling previous convertible notes in new shares, not in shares repurchased from the float. How do you think Tesla diluted from 125 million common shares 6 years ago to the 171 million shares today?
• the Bloomberg report I cited, which reported that Tesla notified note holders to settle 50% of the notes in shares if possible

• The dilutive shares registered are for the warrants that Tesla sold.
• You'll have to point out again exactly which wording you mean then, the ones I saw so far didn't say that
• Tesla's track record is irrelevant because that previous convertible ended up being priced ABOVE THE WARRANT PRICE. The majority of dilution is due to stock options and SolarCity being bought, not convertibles. I know of only one Tesla convertible that converted so far. What are the others that you refer to? And that one was mostly settled in cash, not shares. (see quote below)
  
• The bloomberg report just says that in the event of conversion, Tesla would deliver cash in lieu of shares for 50% of the principal. Tesla has enough options to acquire 100% of the shares it needs to deliver as long as the price stays below $512 so whatever split it choses, it does not need to issue shares.

During the three and nine months ended September 30, 2016, we repaid $421.8 million and $435.5 million in aggregate principal amount of our 2018 Notes pursuant to conversions by their holders. As of September 30, 2016, we had remaining outstanding $224.3 million in aggregate principal amount of the 2018 Notes. As of September 30, 2016, there were also outstanding a corresponding amount of convertible note hedge transactions, as well as warrants to issue up to 2.2 million shares at $184.48 per share as of September 30, 2016, in each case issued in connection with the offering of the 2018 Notes.

Before accusing me of being out of element, please explain in clear terms why Tesla IR says this

In May 2013, we issued 1.5% convertible senior notes due 2018, and in March/April 2014, we issued 0.25% convertible senior notes due 2019 and 1.25% convertible senior notes due 2021 (collectively the Notes). These Notes have a dilutive effect on EPS while the Notes are outstanding, but once converted or settled, there is anticipated to be no actual dilution as we entered into bond hedges in May 2013 and March/April 2014 that are intended to offset the actual dilution related to these Notes

(And stop saying def. nonsens like that 125M to 171M dilution was due to convertibles.)

 

[shlokavica22]

I cannot tell either from the SEC filing or from the Benzinga reference whether Capital created that stake in the 4th quarter, or whether they "merely" raised their position enough so that they passed the 5% reporting threshhold.

In the Q4 they added ~2M shares and passed the 5% threshold.

 

[BenPrice]

I think this is the part of the story where Berkshire begins to accumulate prior to S&P inclusion.

 

[Artful Dodger]

...the Bloomberg report I cited, which reported that Tesla notified note holders to settle 50% of the notes in shares if possible.

Why is it that Bloomberg is the single source of this note from Tesla? There must be literally thousands of individual bond holders that received this notification (I suspect some are even here on TMC), yet literally no one else has verified the content, or even the existence, of this note.

Further, this Bloomberg article says the (private?) note directly contracts Tesla's public filings on their bond repayment plans. This comes down to credibility of sources. Bloomberg has not reached that threshold.

 

[kelly]

I cannot tell either from the SEC filing or from the Benzinga reference whether Capital created that stake in the 4th quarter, or whether they "merely" raised their position enough so that they passed the 5% reporting threshhold.

According to this, as of 9/30/2018 Capital World owned 2,100,884 shares of Tesla.

 

[KarenRei]

A reminder from TSLAQ...

 

[shlokavica22]

I think this is the part of the story where Berkshire begins to accumulate prior to S&P inclusion.

Them, or anyone of the other institutions waiting in the sidelines for TSLA to meet certain criteria (debt/value or whatever they use).
From risk perspective, being on the short side seems like a disaster waiting to happen.

 

[anthonyj]

I’ll only sell my core shares if Ellison leaves. That would signal something very wrong.

 

[shlokavica22]

According to this, as of 9/30/2018 Capital World owned 2,100,884 shares of Tesla.

Check again