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

[MartinAustin]

How is Tesla going to keep the SP over $360 for twenty days straight? Not trolling, but it doesn’t seem possible at this point? Unless Elon has something up his sleeve?

Your posts this morning all seem like the kind of things a troll would post. Sorry for the confusion.

Tesla have undoubtedly considered the order of releasing news. Including but not limited to, 7% workforce reduction, new product releases, Q4/2018 financial results. If there is anyone who understands how to release information for maximum gain (or minimum loss), it's Elon. I would just wait and see.

Unbelievable buying opportunity for long term investors... wish I had some dry powder.

 

[shlokavica22]

Yeah - in fact a 7 trillion dollars revenue industry by 2050 according to this study:

"A $7 trillion annual revenue stream, according to a study released Thursday by Intel. The companies that don’t prepare for self-driving risk failure or extinction, Intel says. The report also finds that over half a million lives could be saved by self-driving over just one decade"
​

It crosses the trillion dollars boundary around 2035 according to them.

Which is why Intel bought MobilEye I suspect.

It will get over the trillion mark much faster than that imho. Just the Auto Insurance industry is valued more than that ($1.2t). If the FSD works well it will start streaming revenue before regulatory actions are in place. All FSD cars can come with included insurance for example (with reasonable premium).

Btw- many of us assume that what "delays" TSLA's FSD advancement is the software, but is it possible that they are actually delayed by the new hardware they plan to introduce shortly? That will be a hell of a surprise.

 

[KarenRei]

Unbelievable buying opportunity for long term investors... wish I had some dry powder.

You could always increase leverage. It has the same effect (although you do "pay" for doing so with risk).

 

[Fact Checking]

There may also be some Q1 severance costs. The big savings would start in Q2.

I believe they might be one-time restructuring charges, and as such exempted from GAAP EPS? (@ReflexFunds might know for sure.)

 

[jbih]

• Q4 profit will be less than Q3, but could still be $310 million. Musk is dramatizing to justify the job cuts.
  
• Q1 profit will be "tiny" with effort, but that's due to the cars still in transit to Europe and China, nothing else I believe. Like Q3, margin will be better than in Q4 due to high margin models being sold.
  
• Must might want the stock to be less than $360 in February in order not to dilute the stock when the March bonds are paid.
• The price might just rise above 340 today because market makers don't want the $340 puts to expire in the money. So the timing of this internal mail might such that the least possible damage done. I wouldn't bet the stock to be below $340 today.

 

[SR22pilot]

When I ran an engineering operation my loaded cost was over $200K/year. Benefits, software costs, associated equipment etc. add up. Some of those items (floor space) don't get reduced but a lot (benefits, stock) do.

 

[Fact Checking]

Btw- many of us assume that what "delays" TSLA's FSD advancement is the software, but is it possible that they are actually delayed by the new hardware they plan to introduce shortly? That will be a hell of a surprise.

Yes, that's my working hypothesis. At the end of Q3 they already had the HW 3.0 module production lines up at Fremont and doing test-runs. I believe they have ramped them up meanwhile and can match the current vehicle production output of ~7k units/week.

 

[Tslynk67]

I feel very sorry for those losing their jobs, but when this happens I always imagine that having Tesla on your CV is a real asset and should help them getting new employment ASAP.

As to the nature of the lay-off, I'm wondering if Tesla didn't hire rapidly to facilitate the M3 ramp, but in the meantime they've found a lot of efficiency and many of these extra hands just aren't needed any more?

 

[defc0n]

I now wonder if an unprofitable Q1 is in play, as well as upcoming S&P 500 addition. Reduced headcount now won’t help Q1. Hopefully all those high margin European sales are enough. Q2+ is definitely worrisome to me. I hope those S and X improvements come out real soon now.

 

[avoigt]

I didn't want to interrupt the gloom-and-doom party so I haven't mentioned this before - but have you guys noticed the following small detail in Elon's announcement?

Company Update

"For those remaining, although there are many challenges ahead, I believe we have the most exciting product roadmap of any consumer product company in the world. Full self-driving, Model Y, Semi, Truck and Roadster on the vehicle side and Powerwall/pack and Solar Roof on the energy side are only the start.

I am honored to work alongside you.

Thanks for everything,
Elon"​

(emphasis added.)

Note how "Full self-driving" was added as the first entry of an otherwise chronological list of products, sorted by expected product introduction date?

Model Y, expected to be unveiled on March 15, is second in the list.

This raises the possibility that there potentially going to be a "Full self-driving" product introduction between now and March 15 - within less than two months.

Maybe it's just coincidence - but I think it at minimum suggests that FSD is in the center of Elon's focus of attention.

That one jumped in my face as well...

We all should be aware that this letters are reviewed and approved by a ton of people questioning and twisting the message before its approved and released. The sequence of products listed is not a coincidence and will have been tested by other people before.

Lets also keep in mind that Elon said lately that some of the +summon features may be not approved by all regional authorities yet. That gives us an indication that they are trying to get authorization. It would be a big surprise to the market if FSD would be released in 2019 even if its only a part.The FSD coast to coast trip is overdue too.

Still its reading tea leaves and I expect it to improve in steps over the course of the year and beyond.

However whenever that step happens there is a +$100bn market cap waiting to be added.

 

[EVNow]

As automation improves, a lot of employees are going to be let go.

Basically 3 months ago they needed those 130 employee to produce X amount of cars. Now they only need 121 employees to produce that same amount because of improvement in automation.And still grow.

It will be interesting to see how many from the factory are let go vs engineers.

 

[shlokavica22]

If they were January expiries, yes. They're not

For the two strikes I'd like to roll back a week, there's still good odds (but far from certain) that they'll expire post-ER. And regardless, there's still a month to expiry. Lots can happen in a month.

A temporary dip will cost me theta on the possibility of rolling them. But the fact that their value will be "down" today is otherwise meaningless. You only realize a loss when you sell, and I have no interest in selling today.

Exactly. The further it fails, the harder will take for it to recover (especially if the Q4 call is somewhat disappointing).
I feel you make dangerous assumption that there will be fast recovery before your calls expire. That's quite a risky game, especially when the macro is great unknown as well.

 

[Analyst007]

To me honestly, with that new information I do not see Tesla over 350$ before June 30th again.

The next 2 quarters get rough.

 

[EVNow]

Why is Q4 profit less than Q3. IIRC, most were predicting higher profit.

 

[Pezpunk]

To me honestly, with that new information I do not see Tesla over 350$ before June 30th again.

The next 2 quarters get rough.

well, considering your price target was $250 like half an hour ago, things are apparently looking up.

 

[EVNow]

To me honestly, with that new information I do not see Tesla over 350$ before June 30th again.

The next 2 quarters get rough.

Wall St usually loves layoffs.

 

[shlokavica22]

To me honestly, with that new information I do not see Tesla over 350$ before June 30th again.

The next 2 quarters get rough.

You repeat yourself

 

[jbih]

I think the current lay offs are still because of the excess fat due to the difficult Model 3 ramp up. The streamlined production needs less people, even with increased output. That's a good sign and means better margins (relative, per model trim) in the future.

 

[shlokavica22]

Yes, that's my working hypothesis. At the end of Q3 they already had the HW 3.0 module production lines up at Fremont and doing test-runs. I believe they have ramped them up meanwhile and can match the current vehicle production output of ~7k units/week.

Just to clarify- your working hypothesis is that TSLA has FSD ready and waiting?

 

[Analyst007]

Wall St usually loves layoffs.

You are thinking one sided. Lay offs can be a huge positive OR negative, depending the company announcing it and the reason for the cut. Here, as you can read in the statement, the reason is very negative.