Advertising is the lifeblood of the media. Tesla doesn't advertise. The other automakers do so quite heavily along with the oil companies. Follow the money.
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Advertising is the lifeblood of the media. Tesla doesn't advertise. The other automakers do so quite heavily along with the oil companies. Follow the money.
I recognize him. Wasn't he on the tv show "life goes on"?
My brother texted me the blog below by Bill Cunningham posted on Seeking Alpha.
I generally don't pay any attention to Seeking Alpha, and I'm extremely confident there's no such day of reckoning coming.
That said, given my brother specifically asked about whether there's anything concerning with this one, and given that quickly scanning Cunningham's previous SA blogs it doesn't seem like he just posts blatant obvious nonsense, I don't want to simply dismiss this blog... no day of reckoning I'm confident of, but, some considerable liability I've not been aware of, not impossible.
For me what he writes about gets into quite technical accounting details heavily involving Solar City financial arrangements ("Variable Interest Entitiies" according to Cunningham). To be honest, it would take me many hours to study up and try to answer my brother's question... and it might turn out that all that time was spent just to discover a more jargon filled version of typical Seeking Alpha gibberish bearish false narratives.
If there's anyone here who already has the knowledge base to just read this blog in a few minutes to determine if there's anything uncovered of substance in it, I'd really appreciate your opinion on it.
Tesla's Day Of VIE Reckoning Approaches - Tesla, Inc. (NASDAQ:TSLA) | Seeking Alpha
I generally don't pay any attention to Seeking Alpha, and I'm extremely confident there's no such day of reckoning coming.
That said, given my brother specifically asked about whether there's anything concerning with this one, and given that quickly scanning Cunningham's previous SA blogs it doesn't seem like he just posts blatant obvious nonsense, I don't want to simply dismiss this blog... no day of reckoning I'm confident of, but, some considerable liability I've not been aware of, not impossible.
For me what he writes about gets into quite technical accounting details heavily involving Solar City financial arrangements ("Variable Interest Entitiies" according to Cunningham). To be honest, it would take me many hours to study up and try to answer my brother's question... and it might turn out that all that time was spent just to discover a more jargon filled version of typical Seeking Alpha gibberish bearish false narratives.
If there's anyone here who already has the knowledge base to just read this blog in a few minutes to determine if there's anything uncovered of substance in it, I'd really appreciate your opinion on it.
Tesla's Day Of VIE Reckoning Approaches - Tesla, Inc. (NASDAQ:TSLA) | Seeking Alpha
EVNow
Well-Known Member
Today Nasdaq went down by 0.94% and Tesla by 3.7%.
Looking at readily available spreadsheet I have (11/27 to 12/28) - the last 4 times Nasdaq went down by over 2%, Tesla went down by 7.6%, 5.3%, 3.3%, 4.7%. The first two of these took Tesla from $332 to $295 over the Holidays.
PS : BTW, @tivoboy, you were telling us last time when the SP went down to 29x that it may go further down. What changed ?
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EVNow
Well-Known Member
No - only when your livelihood depends on being wrong.
Yup.
In addition, I also suspect a sort of social affinity empathy among a good number of the people living in the ~social circles~ of enormous concentrated wealth. Not a conspiracy, but, an unspoken, sort of,
"those of us piling up the cash with how the playing field is currently set (whether as running/owning media companies, fossil fuel companies, auto companies, financial industry behemoths, etc.) all have a vested interest in the playing field staying as is, unless, we've decided it's a good thing to change it. To 'h' with this 'outsider', too smart for his own good, 'oddball' Musk."
Finally, with about 10% of the world's economy quite possibly being disrupted by Tesla's mission, I don't doubt that there are instances of straight up paid insertions of various false narratives into mass media programming.
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EVNow
Well-Known Member
There are a number of issues - that have nothing to do with geofencing. We don't know how Tesla will handle issues described here where Waymo failed.
Waymo One Experience (Part 2) : SelfDrivingCars
EVNow
Well-Known Member
Too simplistic.
When Musk & Tesla were the darling of MSM a few years back, Tesla wasn't advertising either.
I agree that there's more than ad dollars to this. As a clarification, and I'm not trying to be snarky, as I remember it, that (some amount of darling of MSM treatment) was all of about a 2 month period in the spring of 2013 (roughly the timeframe of Elon's "5 part trilogy"). I think the misinformation campaign has become quite emboldened with time, but, I think it's been very long standing.
Unbelievable. I needed a close under 335 last Friday. I had to buy back 35 covered calls at a loss of over $35k. I swear the market knows what my option positions are, and moves the SP just to hurt me! Warning to everyone - I sold a lot of puts for 2/15 with 320 SP, so expect the SB to be just under 320 on that day.... 
How does your assessment affect a Tesla owner's premiums for i) Auto Liability Insurance; ii) Auto Property Damage (Collision & Comprehension) insurance: and iii) Medical Payments insurance?
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EVNow
Well-Known Member
No its not - for day trading. May be for swing. You can easily get caught the wrong way. I wrote some calls on 1/4 - and the SP just went up after that. Fortunately it expires on 1/18 - so I've some time. If I had guess right and bought some weeklies on 1/4, it would have been great.
In the old days when there was a regular MMD, it was a fairly safe for day trading. Not in the last few weeks.
Apart from the article being assumptions built on assumptions built on assumptions so on down the chain? Let's jump straight to the "Implications" section:
This person has no clue how a growth company works. Tesla, like any rapidly growing company, sells future cash flows to get money up front, which it then invests into new production that earns them far more money than they lose due to selling future cash flows. The author talks about VIE investors expecting 10% returns. How much (amortized) returns do you think Tesla gets on a Gigafactory, relative to the investment? I guarantee you, it's a lot more than 10%.
A growth company needs to get as much money up front as they can, to maximize their rate of growth. Debts and obligations accrued early on become overwhelmed by revenue and profit that the company earns from that investment.
Tesla didn't become this world-conquering giant by sitting around and waiting for all of its future revenues to add up over decades. It did so by grabbing every last penny from every source they could get (without excessive stock dilution) and continuously outgrowing its past obligations with its new capital projects funded by said money. Tesla would be a historical footnote if they hadn't. The fact that Tesla might not do this to as great of an extent in the future becomes decreasingly relevant with every quarter.
Lastly: the author's repeated suggestion that institutional investors who (along with Musk) own the lion's share of the company didn't already know about Tesla's obligations is just silly.
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sundaymorning
Active Member
They all thought Tesla would start advertising. nope.
Karen, thanks for taking the time to look at this.
I think anyone doing real valuation work on Tesla was already aware that Solar City had raised money by selling off future payments from their customers via financial products- I know I was. Would it be accurate to say that this is all that the article is referring to (despite using a term, "variable interest entities" I'd not been familiar with before), and that the billion dollar figures Cunningham mentions are not coming out of revenues from products Tesla will be selling in the future, but, rather these already known agreements to sell future revenues from Solar City products sold in the past? More to the point, basically zero impact on my estimates of Tesla earnings based on future sales of products?
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EVNow
Well-Known Member
No, again too simplistic. Infact many were saying how great it is that Tesla is not advertising. That is simply not how MSM works (not talking about shady places like seekingalpha).
Could you elaborate on your thoughts here?
Edit: My apologies if you elaborated previously and I missed it in the thread volume.
Yes, they're calling the fact that Tesla is slowing down the new establishment of such arrangements means that they still have to pay off past obligations but they're not getting money from new ones, which equals a negative. But it's not a huge negative, and more to the point, it's an increasingly insignificant negative with each successive quarter.
It basically just means - just like the convertible debt - Tesla is entering a phase of paying off its past obligations with present revenue. Which is the whole bloody plan when building a large capital project. They now have their cash cow (Model 3), which becomes a bigger cash cow every quarter (larger volumes and/or improved margins). That money goes in part to paying off past obligations, part to new capital spending, and the remainder as profit. Said new capital spending (along with any newly accrued obligations to help finance said projects) in turn becomes Tesla's next cash cow, and so forth.
I see. To clarify, sounds like these Solar City instruments are included in the roughly $5 billion or so of debt figure (don't remember the exact number) already widely referenced to as debt Tesla took on when they bought Solar City.
My impression is the guy blogging on SA is trying to confuse people into thinking he's found billion(s) of future Tesla liability virtually nobody was aware of, when in reality, nearly every article that has ever talked about Tesla's purchase of Solar City has noted this liability as it is part of the ~$5 billion in Solar City debt these articles so reliably mention.
fwiw, this paragraph from the SA blog apparently tricked me into thinking it might be some sort of buried liability, balance sheet gamesmanship, so I appreciate you're helping me shake off that misimpression.
"These transactions fall into a bit of a netherworld. Although they appear on Tesla's balance sheet, they are classified neither as debt nor as stockholders' equity. Instead, they are listed as "non-controlling interests" or "redeemable non-controlling interests" and are reported below the liability line in the equity section of the balance sheet."
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