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

[Unpilot]

This relentless, innovative, machine of a company!

My gawd it is a beautiful machine.

The world has never seen anything like it...and yet fools and naysayers are everywhere.

Back up the truck.

 

[capster]

Just give it a few more days. The pressure to reopen bay area is mounting, especially after Newsom easing the restrictions and LA, which has 4x higher death / capita, is going to reopen.

Bay Area health officers can keep moving the goal post until they run out of the space to move. Eventually people will get sicked of it and demand blood.

Again, I dunno. These are hard decisions and will remain so for the foreseeable future.

For example, the woman who owns the dog grooming business we used for our dogs just decided to close her business (I understand that she was under pressure from the owners of her building for some time though). In other words, the economic casualties have started for sure.

The woman who worked there who groomed our dogs is now looking for a new place to work. But she is also probably in her fifties (and, I’d say, past the dangerous 60 year mark in personal health age), is a smoker and has an adult, developmentally delayed child she still cares for. In other words, a disaster waiting to happen if she catches this thing even though she needs the work.

I have an opportunity to do something really interesting staring this fall, yet it will significantly increase my risk of exposure. At the moment I’m putting things in place to move ahead. Yet, I am getting old enough to be considered higher risk, so I’ll continue to play it by ear in deciding whether I’ll go ahead.

I get that the financial stakes are high, but so are the life-and-death stakes.

I trust Elon to navigate Tesla through this crisis. Yet, we have just entered these dangerous woods and have a ways to go before we emerge.

If the people you speak of dictate the pace of opening, IMO they’ll see plenty of blood — real blood.

 

[MC3OZ]

I've had a bit of a "Eureka Moment" about "Autobidder", it isn't just Autobidder that is powerful, it is Autobidder potentially combined with everything else Tesla is doing.

Specifically this patent:-
Tesla is working on technology to revolutionize the electrical grid with distributed solar power - Electrek

So Autobidder is the brains and the grid control patent is the nervous system...

Via that Autobidder controls a lot of controlled loads, big batteries, home batteries, EV charging, home HVAC, home hot water heaters.

Autobidder ensures all loads get electricity at the cheapest possible price.

When peak price arrives Autobidder dispatches stored energy, big batteries, home batteries. V2G EVs.

V2G now makes sense if new battery tech displayed on battery day allows regular charging to 80-100%.

For example if your daily travel requires 50% SOC, you can allow Autobidder to use the other 50% of your battery.

What is in it for the Tesla customer is Telsa would give you a cut of the Autobidder profits, so perhaps you car can make money for you just by simply being plugged in at home or work.

Individually some parts of the ecosystem don't seem to make sense, but when we look at the whole system it does.

Tesla will eventually own a fleet of Robo-taxis with million mile batteries, again an opportunity to make a bit of extra cash when plugged in after the shift.

 

[EinSV]

I;ve had a bit of a "Eureka Moment" about "Autobidder", it isn't just Autobidder that is powerful, it is Autobidder potentially combined with everything else Tesla is doing.

Specifically this patent:-
Tesla is working on technology to revolutionize the electrical grid with distributed solar power - Electrek

So Autobidder is the brains and the grid control patent is the nervous system...

Via that Autobidder control a lot of controlled loads, big batteries, home batteries, EV charging, home HVAC, home hot water.

Autobidder ensures all loads get electricity at the cheapest possible price.

When peak price arrive Autobidder dispatches stored energy, big batteries, home batteries. V2G EVs.

V2G now makes sense if new battery tech displayed on battery day allows regular charging to 80-100%.

For example if your daily travel requires 50% SOC, you can allow Autobidder to use the other 50% of your battery.

What is in it for the Tesla customer is Telsa would give you a cut of the Autobidder profits, so perhaps you car can make money for you just by simply being plugged in at home or work.

Individually some parts of the ecosystem don't seem to make sense, but when we look at the whole system it does.

Tesla will eventually own a fleet of Robo-taxis with million mile batteries, again an opportunity to make a bit of extra cash when plugged in after the shift.

Use case number 2 for Tesla AI (after FSD) -- maximizing returns in a very complex, multi-factor energy trading environment.

 

[vikings123]

When I was 6 years old my dad was busy harvesting some vegetables from our family's garden for dinner. I will never forget this as it made a lasting impression on me. I had recently been granted a small allowance and was learning about money and what it was and wanted to know more. I was asking my dad how much different items were worth. He gave me approximate dollars/cents answers on the first couple of things I asked him about. Then I asked him how much a cow was worth. He stopped working, thought a minute and then looked me right in the eye as he said "Son, it's just like anything, it's worth exactly as much as someone is willing to sell it for and someone is willing to pay for it."

Now here was a smart answer I thought. It even allowed for the value of the same item to change over time depending upon how badly someone needed the money or how much someone wanted the item. All of a sudden the world of dollars and cents made a lot more sense.

And understanding this one principle that stuck with me over the years is what I attribute the fact that I became a millionaire at age 36. Because if the answer to that question didn't stick with me, if I didn't understand that reality, I would have sold my stock when I thought it was over-valued (but before it appreciated another 10 fold).

Elon doesn't value TSLA stock, investors with real money do. And there's a lot of money out there looking for the most productive place to be.

Cool story. Pretty much everything in life is about supply and demand. And for Tesla, demand is strong for both its products and the underlying financial instrument.

 

[ruralectric]

I would expect some communication from Tesla to workforce regarding a back to work date. As yet we've seen none, correct?

 

[feigen66]

Again, I dunno. These are hard decisions and will remain so for the foreseeable future.

For example, the woman who owns the dog grooming business we used for our dogs just decided to close her business (I understand that she was under pressure from the owners of her building for some time though). In other words, the economic casualties have started for sure.

The woman who worked there who groomed our dogs is now looking for a new place to work. But she is also probably in her fifties (and, I’d say, past the dangerous 60 year mark in personal health age), is a smoker and has an adult, developmentally delayed child she still cares for. In other words, a disaster waiting to happen if she catches this thing even though she needs the work.

I have an opportunity to do something really interesting staring this fall, yet it will significantly increase my risk of exposure. At the moment I’m putting things in place to move ahead. Yet, I am getting old enough to be considered higher risk, so I’ll continue to play it by ear in deciding whether I’ll go ahead.

I get that the financial stakes are high, but so are the life-and-death stakes.

I trust Elon to navigate Tesla through this crisis. Yet, we have just entered these dangerous woods and have a ways to go before we emerge.

If the people you speak of dictate the pace of opening, IMO they’ll see plenty of blood — real blood.

If we saw financial risk purely from corporate point of view, I agree, it won't gain momentum.

There are many people struggling to pay rent vs. food. These people won't have time to fill in survey. They spent most of time fighting with SBA loan and EDD.

When the financial risk means people will get displaced, that's not the same as staying home to avoid "death" anymore, especially when "death" is not 100% but starvation & homeless is 100% certain.

 

[jhm]

Apple just released earnings of 58 billion revenue, which equates to 6X revenue multiple on their 1.37 trillion market cap. Yes Apple's margins are better than Tesla's, but Q1 for Tesla showed us that 30% margin is likely sometime in Q3/Q4. Now compare Apple's growth rate to Tesla's this year and for the next 3-5 years. If Apple is fairly valued, Tesla is dramatically undervalued.

It really comes down to if believe in Tesla's growth for the next 3-5 years. I see 50% growth each year for the next 4-5 years. Maybe it drops to 35-40% growth in year 4 and 5. But even then, in 5 years we're talking about annual revenue of 151 billion. Even if growth slows to 25% in Year 6 and 7, we're talking 235 billion in annual revenue. So equal to Apple's current annual revenue.

Nice points. Apple is not growing revenue all that much.

In 2015, revenue was $234B, EPS = $9.22, and div = $2.03 for a year-end price of $105.26.
Four years later, 2019, revenue was $260B, EPS = $11.89, and div = $3.04 for a year-end price of $293.65.

On an annualized basis, revenue grew 2.67%, EPS 6.56%, and div 10.62%, while the share price grew 29.24%.

So none of these metrics by themselves seem to explain why the share price tripled in 4 years. Someone more knowledgeable about Apple may be able to explain how shareholders gained so much value, but the high P/S valuation does seem to be motivated by more than just growth in revenue. Dividend growth and stock buybacks may be the most compelling driver.

Getting back to Tesla, I also expect Tesla to grow revenue about 50% per year. But I also expect cash generation, profitability, market share and cost of debt to improve. I also expect the public reception of EV generally and Tesla in particular to improve. This is not just a demand issue, but rather it is cost of capital issue. When all these metrics are improving, Tesla gets to a much more defensible valuation. Right now, however, the stock price is largely driven by all these expectations of future improvements. This is why Tesla is volatile, so susceptible to mood swings in the market between bullish and bearish sentiment. Longer-term, all these improving fundamentals will undergird higher valuations, but in the shorter term traders are trying to predict (or provoke) market mood swings.

This is why I am a long-term bull. I can't predict the mood swings, but I can use them opportunistically. I have become proficient at accumulating when market sentiment is sour. Now with covered call, I'm attempting to harvest some of the excess when sentiment is sweet. Through it all I am hold or accumulating shares for the long-term. Good luck.

 

[feigen66]

Here is the Bay Area jobless tracker:
Bay Area Layoff Tracker: Database shows job cuts during coronavirus crisis

The reporting is from April and we are at 92K. The end of May the number will probably be at least double.
There are some tech worker jobs too so this will put more pressure on county elected officials.

On the other hand, if shutdown continue, it hurts GM/F more than Tesla, while Shanghai Factory is printing Model 3 as we speak.

Do you know Sequoia needs wildfire to grow because wildfire eliminates competition?
Yosemite | Why the Giant Sequoia Needs Fire to Grow | Nature | PBS

The silver lining of COVID fire is that it pretty much eliminates or made Tesla's competitor much weaker: traditional auto makers, car dealer inventory models, rental car company and fossil fuels.

When the Q2 fire stopped, Tesla will still stand still while the rest laid bare.

 

[JRP3]

Gali and Sandy

 

[RobStark]

Newsom: California can reopen shops starting Friday | CalMatters
"California companies that make clothing, furniture, toys, and other goods those retailers sell can also resume operations, with appropriate worker protections."
I myself think it's weird that these manufacturers are singled out but it seems the key word here is low traffic retailers and those who support them.

Conspiracy!

That means Ford,Chevrolet,Nissan,BMW,and Audi dealers can open and the manufacturing that supports them but not Tesla.

BTW 1 new CV death today in Alameda County and 54 new reported cases in the jurisdiction of 1.6M

 

[mblakele]

I would expect some communication from Tesla to workforce regarding a back to work date. As yet we've seen none, correct?

Only the story yesterday, in which an anonymous source suggested that a small number of workers are returning to prepare Fremont for startup.

Just possibly Tesla is keeping things very quiet. More likely they’re still trying to coordinate with Alameda County.

 

[jhm]

How does $800 is too high today square with higher prices in the near future?

That's an easy one. Elon is not the final arbiter of the value of Tesla - the market is. If anything, he's too close to the daily grind of churning out cars and too far away from the body of investors looking for productive assets to buy for him to be able to fairly value it. Only people with money to invest can properly value an asset. Everything else is just an approximation.

Having thought about the possible reasons for Elon's tweet that TSLA was high, I've concluded we'll never know for sure because the reason likely has to do with wanting to temporarily lower the share price and that would be frowned upon by the SEC. You might ask why Elon might want to temporarily lower the share price? Well, here's one plausible reason that had a deadline fast approaching when he made the tweet:

Tesla hits target to qualify CEO Elon Musk for big payday

Based on the timing of these two events I conclude the following:

1) The tweet was the direct result of him not wanting to be awarded the compensation package yet.
2) It failed to have the desired effect (unless he only needed another couple of days).

I don't think that Musk was trying to manipulate the price. I think he genuinely believes that the price is too high. The issues around his compensation package are complex. But I think he gets concerned when expectations run too. He does not like to disappoint and feels a need to warn people.

It's true that the market, not Musk, sets the price. But I'll take him at face value in expressing his humble opinion. I also respect that he wears a heavy burden when market expectations run too high.

There's another little thing he likes to do when he thinks the stock price is to high: issue stock opportunistically. This, of course, is a very adaptive response. The finances are always a little better positioned with an extra couple billion in cash. I'm very glad for the extra cash goin into the Covid-19 lockdown. If the stock price got too crazy high, Tesla could issue more stock and deleverage.

 

[Krugerrand]

It doesn't say Alameda explicitly but the 6 counties formed an alliance and the article does read
"Health officers in six Bay Area counties and the city of Berkeley warned residents Thursday that the regional COVID-19 coronavirus shelter-in-place guidelines will remain in place through at least May 31 despite Gov. Gavin Newsom’s announced changes to the state’s order. The joint announcement by health officers stated that Berkeley and Alameda, Contra Costa, Marin, San Francisco, Santa Clara and San Mateo counties will continue to prohibit curbside pick-up at non-essential, non-outdoor businesses."
Curbside pick up is a direct reference to the retailers that would be allowed in phase 2.

Per my earlier post today; people aren’t following the orders. What people are following is individual business guidelines and protocols. So if a business stipulates you can’t enter without a mask, people are respecting that. If a business is allowing no masks and no social distancing, that’s what people are doing. I’m seeing it with my own eyes.

Since when is a cake only store essential? The store has been open the whole time and has curbside pickup.

At this point I support Tesla reopening first thing on Monday with whatever protocols they deem are necessary to keep their employees safe. I imagine as well, that Elon would not force anyone to return who was afraid to.

 

[MC3OZ]

I don't think that Musk was trying to manipulate the price. I think he genuinely believes that the price is too high. The issues around his compensation package are complex. But I think he gets concerned when expectations run too. He does not like to disappoint and feels a need to warn people.

It's true that the market, not Musk, sets the price. But I'll take him at face value in expressing his humble opinion. I also respect that he wears a heavy burden when market expectations run too high.

There's another little thing he likes to do when he thinks the stock price is to high: issue stock opportunistically. This, of course, is a very adaptive response. The finances are always a little better positioned with an extra couple billion in cash. I'm very glad for the extra cash goin into the Covid-19 lockdown. If the stock price got too crazy high, Tesla could issue more stock and deleverage.

If the stock price remains high and takes off after Battery Day I would like to see a capital raise specifically to fund investments in new GFs and battery production...

Tesla has the product pipeline, and the technology, they may need funds to invest in growth.

IMO debt will naturally retire as convertible notes convert... I prefer dilution to to more debt, we will get any dilution back plus interest IMO.

 

[jhm]

It will be a bad look, and it doesn't look like there's any way to avoid it. He's got thousands of employees furloughed, a shut down factory, and he's getting a big payday.

There is nothing to prevent Musk from sharing his shares with impacted employees. Just a thought.

 

[JRP3]

Sandy really hates Tesla paint, even on the Y.

 

[MC3OZ]

At this point I support Tesla reopening first thing on Monday with whatever protocols they deem are necessary to keep their employees safe. I imagine as well, that Elon would not force anyone to return who was afraid to.

This is the key IMO, executing well on any decisions that are made.

Good execution and sensible risk management is often more important than the precise timing of a decision.

 

[MP3Mike]

Conspiracy!

That means Ford,Chevrolet,Nissan,BMW,and Audi dealers can open and the manufacturing that supports them but not Tesla.

Are you saying that Tesla doesn't have any "low volume retail stores" in any of the 6 counties?

 

[RobStark]

Are you saying that Tesla doesn't have any "low volume retail stores" in any of the 6 counties?

I never let the facts get in the way of a good joke but now that you mention it......

The closest store that was on the hit list when Tesla was reducing store count was Sacramento(Rocklin). And that one is still on the map according tesla.com