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

[MC3OZ]

So far we have seen no direct evidence of Coronavirus having a direct impact of Tesla Q1 earnings or future plans..
OK I think some impact on Q2/Q3 orders and deliveries is likely. and we will learn more in time..

But Elon is still talking about opening new factories, Shanghai expansion and Berlin construction seem to be proceeding at rapid rate.
We are not seeing crazy discounts or desperate effects to move Q1 inventory, that I have noticed.

No doubt we will get an update in the next earnings report.

But no government has revoked or is likely to revoke any EV credits, no talk so far of lowering emissions standards or changing rules.

So far we haven't seen mass layoffs of staff or a spike in bankruptcies, it is still early in the cycle,,,

A Complete Timeline Of The Financial Crisis

It is interesting to look at the timeline of events for the GFC, so far I'm not seeing any businesses with a short term liquidity crisis.
We do have to wonder how airlines will fare....

 

[chrsk]

470$ in pre market... Will we soon see 3XX so that I can start buying again?

 

[Intl Professor]

In the early year(s) after WWII cigarettes became the medium of exchange since there was no currency in occupied Germany. We can already predict what will be the new medium after the covid-19 collapse. Toilet paper. The people have spoken.

How far we have fallen.

 

[LJS22]

Down 13% in pre market. It's sub 500 load up time

 

[EV Promoter]

If US and UK should go for the "herd immunity" with a 60% infected, can you imagine what could happen if the rest of advanced economies put a ban to people and goods coming from those countries? This is absolutely FOOLISH!

And you should delete any delivery of Teslas to EU and many other countries. Is it really in that direction USA is going??
Cheating with few testings to hide the numbers will not work anyway.

And today have a look at the EUR/USD change, USD is sharply going down...

 

[adiggs]

Down 13% in pre market. It's sub 500 load up time

I agree with the sentiment - I share it.

However there are enough people expressing this same sentiment in the thread that I don't think the market has found its bottom yet. And as crazy as it might sound, I think TSLA is still looking for it's local bottom along with the market.

I learned this back in 08/09. One of my half dozen conviction buys in my life - I found a company with a virtually guaranteed revenue stream (contracted services revenue for a year + in advance), a history of increasing it's dividend quarterly (not annually - every quarter) that had been going on for multiple years, and a dividend of nearly 11%. Stock should have been worth $80 (5% dividend at this price), but was on sale for $40. Took me 2 or 3 weeks of looking and trying to figure out what the catch was. Owned that company for 6 or 8 years, and they kept increasing the dividend every quarter. I learned two lessons.

The first lesson was when I have a conviction, buy an amount that will make a difference in life. I dabbled, was right, and should have invested at least 1 order of magnitude more (lesson learned for TSLA when it came along).

The other lesson was that when the whole market is going down, quality comes down with it. The theory back then was that highly levered investors had to raise cash from anywhere and everywhere, and the good stuff needed to be sold as well as the bad stuff. The good stuff could actually bring some cash, so a company paying a 5% dividend sold down until it was paying a 10% dividend. And unlike the oil companies, it wasn't a highly levered dividend.


My read on things for TSLA - the sentiment at least among this community hasn't yet reached "blood in the streets" levels. And it might never (we're too educated as a group, and if you're here, it's too easy to get educated). The larger market has clearly not yet reached that level, at least around TSLA. Over a bigger timescale, TSLA is still around 2x the previous trading range. Even at $450, that's still double $225 which was inside of the previous long term trading range.

Not saying it's going that low - I don't know what it'll go to. And if I've learned anything about trading (and I've learned very little - I'm a buy and very long term holder most of the time), when I do make a mental call on direction and timing, I make a very good contrary indicator.

I do know that if I'm adding shares, it's not at a $4xx price. And probably not at a $3xx price.

(I really need to see a low price, whatever that is, and evidence that the US has a response that convinces me we're going to get a handle on things, and evidence of the impact this will have on the economy. So far I have neither).

 

[adiggs]

If US and UK should go for the "herd immunity" with a 60% infected, can you imagine what could happen if the rest of advanced economies put a ban to people and goods coming from those countries? This is absolutely FOOLISH!

And you should delete any delivery of Teslas to EU and many other countries. Is it really in that direction USA is going??
Cheating with few testings to hide the numbers will not work anyway.

And today have a look at the EUR/USD change, USD is sharply going down...

It seems to be UK's strategy by intent, and the US strategy by default (my humble opinion).

 

[KarenRei]

So far we have seen no direct evidence of Coronavirus having a direct impact of Tesla Q1 earnings or future plans..
OK I think some impact on Q2/Q3 orders and deliveries is likely. and we will learn more in time..

But Elon is still talking about opening new factories, Shanghai expansion and Berlin construction seem to be proceeding at rapid rate.
We are not seeing crazy discounts or desperate effects to move Q1 inventory, that I have noticed.

No doubt we will get an update in the next earnings report.

But no government has revoked or is likely to revoke any EV credits, no talk so far of lowering emissions standards or changing rules.

So far we haven't seen mass layoffs of staff or a spike in bankruptcies, it is still early in the cycle,,,

A Complete Timeline Of The Financial Crisis

It is interesting to look at the timeline of events for the GFC, so far I'm not seeing any businesses with a short term liquidity crisis.
We do have to wonder how airlines will fare....

Possible Q1 impacts:

• Fremont, GF1, or critical supplier with no stock forced into shutdown. Only affects North America, primarily the US. To the extent possible, Tesla would react by burning through showroom, test drive, loaner, etc inventory. There's significant inventory in transit right now in many markets.
• Local prevention of deliveries (US, EU, other... unlikely China). I'd expect Tesla to respond by moving forward Q2 deliveries in areas where they're not restricted (if enough of such areas remain) and allocating inventory to those areas.
  • Note that for the US, "local prevention of deliveries" and "forced production shutdowns" are mutually exclusive; either one is the limiting factor or the other
• Employee disruptions. In Europe a number of countries are closing their borders (to people, not goods), and encouraging their citizens to come home. This could have an impact on Tesla employees working in other countries than their native lands (a lot of our employees here are Norwegian, for example). One can expect Tesla to respond by shutting down non-urgent services (stores, service, etc) to reallocate staff to deliveries, and to encourage overtime by employees to the maximum extent legally possible.
• Cancellations. I don't expect this to be a big factor, but it could occur in some cases. Note that like "local prevention of deliveries", it's a countercurrent to "supply disruptions"; both cannot limit at the same time.

12 business days left, out of 65 (18,4%). Disruption is limited so far, but could accelerate over the next two weeks. There Chinese operations at least look likely to keep surging; it's other locations that are more of an open question.

 

[flabellina]

If US and UK should go for the "herd immunity" with a 60% infected, can you imagine what could happen if the rest of advanced economies put a ban to people and goods coming from those countries? This is absolutely FOOLISH!

And you should delete any delivery of Teslas to EU and many other countries. Is it really in that direction USA is going??
Cheating with few testings to hide the numbers will not work anyway.

And today have a look at the EUR/USD change, USD is sharply going down...

Traveling of people and traveling of goods are two different things. A quarantine lasts two weeks, how much time does a ro-ro ship need to get from SF to Europe? Exactly.
I see problems for tesla in Europe not being able to deliver the cars once a country goes on lockdown. Depends on each country's rules, in some cases they might be able to do home delivery. Also, demand could take a big hit short term because people are not in the mood of spending right now and also long term if we get into a recession.
Supply of parts from europe also can have problems.

 

[FrankSG]

Tesla is somewhat lucky that they don't sell "cheap" cars and the richer people are more likely to be able to continue to afford cars during the upcoming recession. GM, Ford, etc. are completely sucralosed and will need government bailouts again soonish, but Tesla will likely be able to weather the storm and continue operating though short and medium term economic outlook will be rocky. But the short and medium term outlook for the entire planet's economies is going to be rocky so it's not like Tesla is alone here.

I agree with you that Tesla is somewhat lucky and will be affected less, but I disagree with you about the reason.

Most of the trade-ins for the Model 3, and presumably soon also the Model Y, are non-premium cars, so this demand will be affected by this crisis. However, Tesla has been significantly supply constrained for a while now, so it's going to take a big drop in demand before Tesla's actual business will be affected. How big a drop it will take nobody knows. The first signs to look for are Tesla pulling demand levers, such as EoQ incentives/discounts, and price-cuts.

 

[FrankSG]

TSLA @ $475 in pre-market. I'm self-employed, so this is going to be all the motivation I need in the coming weeks to put in more hours working.

More hours spent working -> More money -> More TSLA stock -> Profit

 

[Fact Checking]

Down 13% in pre market. It's sub 500 load up time

Careful, and I'd strongly advise against investing on margin.

 

[avoigt]

470$ in pre market... Will we soon see 3XX so that I can start buying again?

Don't try to time the bottom as you usually don't win but rather lose. While people may feel there is only one way the stock market can go its actually an illusion as there are many directions it can take. If I hear people believe it only can go down short term I consider it as an interesting indicator that thinks may change soon.

I'm not saying we'll have a rebound but say its pretty unclear and everything right now driven by a strong irrationality. While we all know that the economy is and will be impacted its also clear that all the money thats pumped in the market will go somewhere. Sure, many will try to sit on a pile of cash but history has shown thats never been wise and those are often the ones you realize their mistake too late.

All who sold and many more who sell may feel well for a moment and somehow save but the trick is they didn't win anything. I know that it does feel like but at a later point in time it may look different. Ark Invest predicted a V shape recovery because of all the money pump and listed industries that are actually benefitting from the situation and there are many of those. I recommend to listen to their latest podcast.

Its for many a sort of relief to follow an emotion and maybe start selling but the miss the most important part of investing which is analyzing fundamentals and look for the mid or long run.

I do believe that we will see over time a massive readjustment of assets in the market and although car sales will suffer, BEV sales will over time actually benefit from the crisis.

I am so happy that I have a vehicle I don't pay any taxes for and have zero maintenance and service costs with in 2020 €0 spend for fuel or energy while driving 100% on renewables. Yes, you heard that right that my car cost me beside insurance, nothing.

Thats the vehicle you want to have if a recession! Why should anybody buy a vehicle with high recurring costs. Does not make any sense to me. So its logic that people will rather turn BEV I a downturn and with cost on the supply side rather falling and cost of capital decreasing there are many positives for Tesla. If they feel demand is lacking Tesla would have the option to reduce prices or start offering e.g. free Supercharging again, there is a well filled toolbox available for Tesla to outpace competition. We have all reasons to be extra bullish on the company.

True is that people will buy not as many cars as before but they still will and having an established online sales model including experienced how to deliver a virus free vehicle (no kidding) from China may be helpful for some uncertain buyers too.

Its always some sort of work to get rid of all the negative headlines we hear every day but as I posted on Twitter the death rate in Germany is falling since a while and today at 0.22% but likely lower as new cases are not in yet (yesterday at 0.18%). The 2 latest deaths are again over 80 years old with implications they had before while most have mild outcome. That # will likely increase because cases increase but the severe cases are just 2 which is also very low since a while.

What is left if you have a highly infection virus with a death rate for the elderly maybe twice as high as a normal flue and mild outcome for most?

Fear and the current measures that temper all activities in Germany for at least a month will have a huge negative impact on GDP thats clear but the measures that worked in China as well as South Korea have shown us what needs to be done so there is a plan.

Its not pretty and there are possibly straighter measures in many countries to be expected but there is hope as well. Still a long way to go but people will adjust to the new situation quicker than most believe.

 

[EV Promoter]

Traveling of people and traveling of goods are two different things. A quarantine lasts two weeks, how much time does a ro-ro ship need to get from SF to Europe? Exactly.
I see problems for tesla in Europe not being able to deliver the cars once a country goes on lockdown. Depends on each country's rules, in some cases they might be able to do home delivery. Also, demand could take a big hit short term because people are not in the mood of spending right now and also long term if we get into a recession.
Supply of parts from europe also can have problems.

Difficult to be technical for such a complex issues.
For sure will not be items from safe countries to have problems, but items from US, problem will be yours for that sake.

Anyway, RORO ship sailors, and anybody else coming from "herd" countries, could still be positive and vehicle of infection after long time:

A study published in the Journal of the American Medical Association followed the illness’ progression in four medical providers in January and February in Wuhan, China, the epicenter of the pandemic. The study found that 12 to 32 days passed from the time they first showed symptoms to when they were deemed recovered.

According to the World Health Organization, people with mild illness typically recover in about two weeks, and it can be up to six weeks for people with severe illness.

Anecdotally, we know that a Forest Grove woman, Rebecca Frasure, was isolated in a Tokyo hospital room for 28 days. She had been plucked from the Diamond Princess cruise ship in Japan in early February.

She said that long after her light cough and slight fever dissipated, she remained quarantined because she kept testing positive for the virus. She was released after two consecutive negative test results.

 

[saniflash]

I do believe that we will see over time a massive readjustment of assets in the market and although car sales will suffer, BEV sales will over time actually benefit from the crisis.

I am so happy that I have a vehicle I don't pay any taxes for and have zero maintenance and service costs with in 2020 €0 spend for fuel or energy while driving 100% on renewables. Yes, you heard that right that my car cost me beside insurance, nothing.

Thats the vehicle you want to have if a recession! Why should anybody buy a vehicle with high recurring costs. Does not make any sense to me. So its logic that people will rather turn BEV I a downturn and with cost on the supply side rather falling and cost of capital decreasing there are many positives for Tesla.

That's a thought that has been in my mind since a longer period of time, and in a bigger context.

Imagine this... this macro event happening to the entire market provides a great backdrop for
a) all the vocal TSLA bears to adjust their opinion once TSLA comes out ahead ("well now the situation has completely changed due to coronavirus... that's why I see TSLA strong")
b) pull money out of legacy energy companies and into renewable co's ("well now the situation has completely changed due to the oil price war ....")

it's an inflection point from a story point of view that allows for change in one's opinions without losing face ("the fundamental arguments have changed...." yadda yadda)

 

[flabellina]

Difficult to be technical for such a complex issues.
For sure will not be items from safe countries to have problems, but items from US, problem will be yours for that sake.

Anyway, RORO ship sailors, and anybody else coming from "herd" countries, could still be positive and vehicle of infection after long time:

You are confusing incubation time and time to recovery for those that get sick. After two weeks of quarantine either you are ok, which means you don't have the virus (incubation time is shorter than two weeks), or you got sick, which means you have to be kept isolated until you are no longer sick (or you die).
The problem of delivery is much more immediate than getting the cars there.

 

[Singer3000]

On investing...which is after all the purpose of this forum.

A couple of strips of Macro puts (Apr/May) have served me well in the last month, providing some extra personal financial buffer through this crisis. A pivot out of equities into sovereign bonds and USD late 2019 and quite aggressively again last month have also proved useful defensively.

The question now is what’s the best move next. This depends on whether you think the world can achieve what China appears to have done and the crisis will soon blow over. Or if you believe what an increasing share of world governments are saying. Which is that the virus is essentially now unstoppable and we face a longish period of economic and social upheaval unprecedented in peace time. Lots of you will say that’s a false binary choice, but I haven’t yet heard a plausible centre case.

From a markets perspective, personally I do not think we are close to the bottom and before this is out, we’ll need to see global adoption of helicopter money, rather than completely ineffectual traditional QE and rates cuts. Many of us will be getting used to seeing soldiers on our streets. And rationing of some basic goods. GDP in some places could well fall by [a fifth / a third / pick your own ludicrously high sounding number].

I will judge when we are approaching the bottom when posts such as these stop receiving mountains of dislikes. Bear in mind I forewarned many weeks ago that we would get to where we are today and was roundly mocked by people that could not place Wuhan on a map and thought TSLA at $750 was a bargain.

June index puts seem a reasonable play for now. Depending on where the premiums are settling at, possibly some Nov/Dec ones too.

And TSLA? I’m not sure this changes the long term story so I’m still keeping my 20-year timeline shares. But I would be more comfortable if the recent raise had been bigger. I would also be more comfortable if I got the impression the CEO (who is relatively all powerful at Tesla) was taking the threat more seriously. Either way I’m expecting cheaper re-entry prices in the coming months than today. Circumstances are changing fast so it’s hard to say with certainty my buy trigger price. Below $450 is maybe a drip in. When it starts with a 3 then probably buy back in fully. Below that I’d be substantially increasing my holding from where it was pre crisis. But I’d do so from the perspective that I may not get that money back at a profit for a couple of years.

Feel free to judge my scorecard on 31 Dec.

 

[Thekiwi]

Tesla is trading in premarket at less than half it’s all time high.

 

[DrMazeppa]

Snowflake economy.

/s

 

[Fact Checking]

A couple of strips of Macro puts (Apr/May) have served me well in the last month, providing some extra personal financial buffer through this crisis. A pivot out of equities into sovereign bonds and USD late 2019 and quite aggressively again last month have also proved useful defensively.

Congratulations.

The question now is what’s the best move next. This depends on whether you think the world can achieve what China appears to have done and the crisis will soon blow over. Or if you believe what an increasing share of world governments are saying. Which is that the virus is essentially now unstoppable and we face a longish period of economic and social upheaval unprecedented in peace time. Lots of you will say that’s a false binary choice, but I haven’t yet heard a plausible centre case.

I believe the 'centre case' is the mortality data from the Diamond Princess and from Germany: in Germany there are 5,813 infected patients, with 13 dead and 2 in critical condition - that's a mortality rate if both critical patients succumb of 0.25% - comparable to a flu season.

(Italy is so high primarily because I think the true number of infected is hundreds of thousands of people - so the 1,800 deaths and 1,600 critical patients, if we back-calculate with a 0.25% mortality rate gives an infected population size of about a million people.)

If this is true, and the virus spreads unstoppable, it might in the end be declared a relatively mild 'flu'.

The Chinese and South Korean data also seems to support this - although they are showing higher, 0.9% mortality rate, but there might still be significant under-reporting there.

From a markets perspective, personally I do not think we are close to the bottom and before this is out, we’ll need to see global adoption of helicopter money, rather than completely ineffectual traditional QE and rates cuts. Many of us will be getting used to seeing soldiers on our streets. And rationing of some basic goods. GDP in some places could well fall by [a fifth / a third / pick your own ludicrously high sounding number].

Yes, I agree that direct financial stimulus will be the answer in many places.