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

[SMAlset]

Have to say after coronavirus news everywhere it's nice to hop over to the vehicle forum area and see people getting their new cars, Model Ys too.

 

[StealthP3D]

Not yet but our country has a history of breaking monopolies. It generally is thought to protect consumers.

Monopolies are broken up if they use their superior profits and market position to fend off potential competition. Monopolies that exist simply because they provide more for less are never broken up.

So far, Tesla has shown no sign of strong-arming competitors. On the contrary, Tesla has open-sourced its EV patent portfolio for competitors to use free of charge. They have also invited other EV manufacturers to join their Supercharger network for nothing more than paying their fair share of the cost of the network (proportional to usage). This is the opposite behavior of monopolies the government seeks to break up.

 

[Evoforce]

The U.S. last broke a monopoly in 1981, i.e. almost 40 years ago. It's both legally and politically difficult, under the Sherman Act and its precedence a conviction and breakup requires the finding of a "predatory monopoly", which only the most arrogant monopolies do and leave evidence of doing. Clever corporate messaging and lobbying re-phrased breakups as "corporate death sentence" which couldn't be farther from the truth. (The Baby Bells thrived after the breakup.)

To suggest that the US has a "history" of breaking monopolies is like suggesting that Mark B. Spiegel has a history of telling the truth: it does happen occasionally, but it is not the typical pattern at all and takes a lot of effort.

Yes but you can look at the big 3 and they were all split. Don't get me wrong, it is not (based on today) what I would want for Tesla.

 

[adiggs]

Diversification! I love it.

So you will be showing us how to reduce the volatility of our portfolio with a blend of Tesla bonds, convertible bonds, direct TSLA shares, TSLA Calls, Leaps and writing (selling) TSLA puts?

Hey! i've diversified from TSLA shares, to add the selling of TSLA puts. Now I have an income stream alongside of the opportunity for long term capital gains. What more could one ask?

 

[Buckminster]

Papafox states that for the last two days of trading - Percent of TSLA selling tagged to shorts: = >60%.

The already crazy norm is 30-40%.

You would have thought that after the run up to 900+ they would have got out by now. They have had their chance. They truly are a different species.

 

[Right_Said_Fred]

I hate to say this as a bull and as someone who got back in at 358, but over the last two days I’ve been getting stronger doubts about a quick recovery for Tesla:

• If the economies of the US and Europe take a 20% hit in the second quarter new car sales will drop by 50% or more. People have other things on their mind, other concerns. This will hit Tesla sales too, despite pent up demand for Model Y. I don’t expect many Model S and X sales, and Model 3 sales will probably be lackluster.
• Such a huge GDP drop will have lasting effects for the rest of the year and maybe beyond. Some sectors of the economy, like tourism, travel and leisure, will need 1-2 years to recover. The economy as a whole will suffer. Handing out checks of a few thousand dollars to everyone is unlikely to stimulate car sales.
• The stock market crash destroyed a lot of wealth, which will have a lasting effect on the sale of luxury cars.
• China may be recovering from the corona crisis, but if demand for products from the US, Europe and the rest of the world dries up the export sector will not get back on its feet. This is such an important part of the Chinese economy that new car sales will suffer.
• Climate change will be taking a back seat for a while now that the pandemic has become concern #1. Going electric may not be high on people’s priority list when they have other concerns.
• Governments all around the world will have to spend trillions to keep their economies from totally collapsing (as an example: the Dutch government said it would need 45 to 65 billion euro just for the second quarter to prop up companies. And we are a small country of just 17 million people). In many countries there will be no money left to subsidize the switch to electric.
• In order to save the European car industry the mandatory changes to fuel economy will likely be relaxed, and fines postponed (which would effectively kill the Tesla-FCA deal).
• The low oil price, which is unlikely to recover during a recession or depression, doesn’t stimulate switching to electric.

I fear this chain of events will set back Tesla for at least 1-2 years. Which is a terrible shame because the path to domination was so clear. Tesla will eventually get back on that path again and it will be in an even stronger position than before compared to the competition, but it will have to go through the ‘valley of the shadow of death’ first, for the third time in its history.

Having said that, I will be buying more shares in case we go under 350. I might not see a quick appreciation of those shares but that’s ok. It may take a few years longer than we expected but Tesla will still become that 1 trillion dollar company.

 

[StealthP3D]

Yes but you can look at the big 3 and they were all split. Don't get me wrong, it is not (based on today) what I would want for Tesla.

What do you mean "the big 3 were all split"? The automakers were never split up. In fact, Ford, who brought affordable autos to millions, was hailed as a popular hero. The Model T had 60% market share at one point (and would have had more share but they were making them as fast as they could make them).

 

[JBRR]

F, GM, FCAU, DAI, BMW, VOW credit default swaps all implying higher 1y risk of default than TSLA.
Guess who has the lowest credit rating. I'll wait.

 

[Prunesquallor]

Elon Musk: Should Have 1000 Ventilators Next Week, + 250,000 N95 Masks For Hospitals Tomorrow — CleanTechnica Exclusive | CleanTechnica

By Zack Shahan

'I reached out to Musk for clarification on that topic and he replied that, “We have 250k N95 masks. Aiming to start distributing those to hospitals tomorrow night. Should have over 1000 ventilators by next week.”'

Looks like he’s really doing it.

edit: "We have" != "We made". But where's he getting them from?

 

[CorneliusXX]

I have had 5 beers already. You have to stop posting these things!

you have to do what you can for the manufacturers at times like this.

I agree with most of what you say but give the Tesla network some chance, how long it will take is hard to know, but I think Tesla will be first or second. If they are second there will not be far behind first and with the advantage of a lower cost base will dominate the market.

I think Elon, Karpathy and co know what they are doing and know a lot more about it that we do, yes they are probably optimistic but my bet is 6-24 months worth of optimism, not 5 years.

This is an area where I think past progress is no indicator at all of future progress...

The thing that bothers me the most is low sun blinding the cameras, or some other camera obstruction, I think there is a software solution, but the physics of that start out as a big disadvantage...

One lucky thing Tesla has going for it is that the virus is unlikely to slow down FSD development too much. It's pretty easy to code and test while practising social distancing. My only doubt would be if the development code is on fully isolated computers to prevent hacking.

 

[CorneliusXX]

Epidemiologists think it will be a roller coaster. Anyone who hasn’t yet read the report, pls read the Imperial College study.

We lock down, bring hospitalization to manageable levels. Then everyone wants to lift restrictions and then the cases go up again - forcing us to lock down. No idea how the market will react to this.

We’ll see how Wuhan handles lifting of lockdown and the resulting cases.

We may well see a phased return to work, with certain critical sectors allowed to return to normal and allow the virus to spread at a manageable level. Then gradually allow other sectors to restart as herd immunity takes hold.

 

[MC3OZ]

I hate to say this as a bull and as someone who got back in at 358, but over the last two days I’ve been getting stronger doubts about a quick recovery for Tesla:

• If the economies of the US and Europe take a 20% hit in the second quarter new car sales will drop by 50% or more. People have other things on their mind, other concerns. This will hit Tesla sales too, despite pent up demand for Model Y. I don’t expect many Model S and X sales, and Model 3 sales will probably be lackluster.
• Such a huge GDP drop will have lasting effects for the rest of the year and maybe beyond. Some sectors of the economy, like tourism, travel and leisure, will need 1-2 years to recover. The economy as a whole will suffer. Handing out checks of a few thousand dollars to everyone is unlikely to stimulate car sales.
• The stock market crash destroyed a lot of wealth, which will have a lasting effect on the sale of luxury cars.
• China may be recovering from the corona crisis, but if demand for products from the US, Europe and the rest of the world dries up the export sector will not get back on its feet. This is such an important part of the Chinese economy that new car sales will suffer.
• Climate change will be taking a back seat for a while now that the pandemic has become concern #1. Going electric may not be high on people’s priority list when they have other concerns.
• Governments all around the world will have to spend trillions to keep their economies from totally collapsing (as an example: the Dutch government said it would need 45 to 65 billion euro just for the second quarter to prop up companies. And we are a small country of just 17 million people). In many countries there will be no money left to subsidize the switch to electric.
• In order to save the European car industry the mandatory changes to fuel economy will likely be relaxed, and fines postponed (which would effectively kill the Tesla-FCA deal).
• The low oil price, which is unlikely to recover during a recession or depression, doesn’t stimulate switching to electric.

I fear this chain of events will set back Tesla for at least 1-2 years. Which is a terrible shame because the path to domination was so clear. Tesla will eventually get back on that path again and it will be in an even stronger position than before compared to the competition, but it will have to go through the ‘valley of the shadow of death’ first, for the third time in its history.

Having said that, I will be buying more shares if we would go under 350. I might not see a quick appreciation of those shares but that’s ok. It may take a few years longer than we expected but Tesla will still become that 1 trillion dollar company.

I think we need to distinguish between car sales and financials and the share price, these can decouple and move in opposite directions.

For the share price, I think if Tesla is seen as performing significantly better than other car companies that is a big plus.
IMO that is possible with Q1/Q2/Q3 earnings even if the earnings themselves are far from stellar.

The flip side is S&P 500 inclusion looks like a long shot...

The business itself is harder to predict at this stage I see a definite hit Q1/Q2/Q3 beyond that is is hard to call, it depends on when the virus is resolved and how markets and governments respond after that...

How I think (and hope) they will respond is quality and value will be rewarded, companies that were in good shape before the downturn and/or handled the downturn well will appreciate. So companies that were overvalued before the downturn and were trending in the wrong direction will not appreciate.

Seems to me a lot of unlucky people who trusted the wrong financial advisers and hedge funds will lose a lot of their retirement savings.
Also seems likely the travel industry, and in particular cruise companies and airlines will struggle for a while.

The perfect storm is retired couples who used to take cruise holidays, there are 2-3 reasons I can think of why they will not be doing that.,

Even in this environment I think the business for Tesla will track better than others, Battery Investor Day will reveal how Tesla can scale battery volumes and lower prices. That is the key for EVs and energy storage...

From the point of view of my understanding of the electricity market in Australia and to a lesser extent world wide, battery energy storage at the right price will cause a seismic shift.

Finally that $8B in the bank is a great insurance policy and may be needed.

I'll add Elon and Tesla are good at picking a path through a tricky set of challenges and when needed just hanging on and surviving by sheer effort and will.

In terms of the path to domination, only massive bailouts will allow other automakers to mount a serious challenge.

Only massive bailouts will keep US Shale Oil viable, and something has to pay for that, in the long run it may increase the pump price.
Or if Shale Oil closes, perhaps the price spikes high...

Oil prices certainly have the potential to go through wild price swings, because lower prices always make some form of production nonviable.

There are no sure bets,but IMO Tesla is one of the better bets.

 

[X Fan]

Tim Higgins/WSJ editors with a front page article titled to scar Musk:
“Elon Musk’s Defiance in the Time of Coronavirus”

Elon Musk’s Defiance in the Time of Coronavirus

Journalism continues to disappoint.

 

[RobStark]

If Tesla has 80% US market share and making money hand over fist with robotaxi it will be broken up and it won't be politically difficult.

SpaceX is dominating mostly foreign competition. US politicians are happy about that and SpaceX doesn't operate on foreign territory.

Historically, space/NASA is only about ~15% of Boeing's revenue. SpaceX isn't killing Boeing. Boeing is committing suicide.

 

[MC3OZ]

If Tesla has 80% US market share and making money hand over fist with robotaxi it will be broken up and it won't be politically difficult.

SpaceX is dominating mostly foreign competition. US politicians are happy about that and SpaceX doesn't operate on foreign territory.

Historically, space/NASA is only about ~15% of Boeing's revenue. SpaceX isn't killing Boeing. Boeing is committing suicide.

So all we need to do is sell when Tesla gets to 79% US Market Share?

I always compare Tesla to GE and people misunderstand that to be GE now, I mean GE on the way up...

There are lots of untapped opportunities that Elon and Tesla are too busy to even think about now.

If a company is broken up, that means it is very successful...

 

[StealthP3D]

Tim Higgins/WSJ editors with a front page article titled to scar Musk:
“Elon Musk’s Defiance in the Time of Coronavirus”

Elon Musk’s Defiance in the Time of Coronavirus

Journalism continues to disappoint.

Yes, it's a sad state of affairs when the Governor of New York declares liquor stores as "essential businesses" but California is actively working to stop production of cars that don't emit toxic fumes that make people more susceptible to succumbing to Coronavirus:

New York liquor stores are considered 'essential' businesses, will stay open

 

[Fact Checking]

In order to save the European car industry the mandatory changes to fuel economy will likely be relaxed, and fines postponed (which would effectively kill the Tesla-FCA deal).

While I agree about many of your other points, I don't think this is necessarily going to happen: ICE sales are suffering just as much, and EV sales are already up from many manufacturers this year. Most European car companies are on track to meet the stricter emissions standards and don't need a relaxation of the penalties.

Some of them, like Volkswagen, might even be lobbying to keep the penalties in place, because it gives them a competitive advantage over laggards. They absolutely want to sell those ID.3's with the sweet ~€20k per unit advantage it gives them over their slower moving competitors.

 

[KarenRei]

I have a question for everyone her. I know this is pretty much uncharted waters so it will all be speculation but...

When this all runs it's course and things start to return to "normal", whatever that is, how do you think the market will recover? Slow steady rise, roller coaster fluctuations or quick rise?

Dan

It depends on how quickly "run its course" is. I'm increasingly being convinced (by the Iceland deCODE and Italian Vó random sampling studies) that those who've said that the disease is widespread but with a low IFR are correct, and those who've said that it's not yet widespread but has a high IFR are wrong. It's a critical distinction; the former burns out much sooner than the latter (a recent study arguing for the former for example suggested that at its peak, 19% of Wuhan already had the disease). I'm also of the view that it's a nonsense that there's a "flat line" for medical capacity that we must hold ourselves under for the next X weeks, months, years. In reality, medical capacity is being expanded at war-footing rates, and production of medical supplies (personal protective gear, ventilators, etc) is growing exponentially. I also am of the view that any concept that expects zero improvement in treatment outcomes over the next X weeks, months, years is nonsense.

What impacts this has on the economy depends entirely on how severely things are shut down for, and how long. A China-style "couple weeks and then back to work under disease control measures"? Just a blip. This thing some people are talking about of shutting the planet down for the next year and a half? That's a Mad Max-level outcome.

I don't think there's a consensus. Elon first announced "Battery Investor Day", then in a tweet he announced:

Elon Musk on Twitter

"Tesla April company talk will be from our Giga New York factory, where we make SolarGlass & several other products. Will also offer customer & media tours."​

There has been no clarification on whether this is the Battery Investor Day - I initially assumed it was, because Elon references this as something already mentioned - and Battery Day was the only previous announcement.

I don't agree with those who say that there will definitely be two events. We don't know.

I recall seeing a tweet from Elon where he was asked about whether they were one or two events, and he said they were separate.

 

[Fact Checking]

The low oil price, which is unlikely to recover during a recession or depression, doesn’t stimulate switching to electric.

The price of oil recovered super fast in 2008, despite a deep recession and not nearly enough of a stimulus:

Note how the price of oil doubled from the lows of $30 to beyond $60 within 2-3 months - and oil was arguably in a bubble in early 2008.

 

[KarenRei]

Yes, it's a sad state of affairs when the Governor of New York declares liquor stores as "essential businesses" but California is actively working to stop production of cars that don't emit toxic fumes that make people more susceptible to succumbing to Coronavirus:

New York liquor stores are considered 'essential' businesses, will stay open

All I can do is shake my head at how many places are reacting to this disease. Shutting down the least likely means of transmission while keeping the most likely ones open. NYC doesn't even plan to crack down on parties, for god's sake.

Here's the upside: they're going to find themselves in increasingly untenable situations shortly. Their local businesses will be warning officials of - and then implementing - mass layoffs. Paychecks will stop. Local governments will not be able to make up for it. The dam will break at some point, no matter how much they may not want it to. They're simply not going to be able to hold the economy down indefinitely.