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

[SebastianR]

Alright, now we know more. I don't get why we are $50 lower than after Q3 but then again - markets are not always rationale.

Overall I think this was the most solid / carefully sandbagged ER / letter I have read from Tesla so far. Much of the info was already known so we got solid re-affirmation on many items. I hope the nonsense about "cash needed to serve debt obligations" is settled now. I don't think that the demand issue is settled for Wall St. (it is for me) and I have a hunch this is where most legacy analysts will play catch-up over the coming years. I think they still believe EVs are a slower moving transition / short-term fad that will be killed in the next recession.

Overall: with Tesla needing Wall St. no longer (which I don't think that the analysts got - see also the questions on where funds for CapEx is supposed to come from), I don't think Tesla will spend a lot of efforts to maintain TSLA. If the shorts realise this early, pack and go I think we will see TSLA rise quickly over the coming months - especially if more legacy car makers are struggling. If shorts / FUDsters don't realise this, they will have a field day for the next half year at least. This could be quite painful/ugly for us longs... I don't think it will be ugly for the coming years if Tesla keeps executing.

EDIT: the CFO transition makes sense if you believe the above is true. They don't need a big name, well connected, CFO Rockstar that knows half of Wall St. They need to have somebody who geeks out over costs, knows Tesla, can drive efficiency programmes and knows "how it is done" in the company. In fact, I would be worried with external talent in this role now. Tesla is self-funding going forward. But I doubt that is a realisation the market has made yet.

Thoughts?

 

[FirebirdAlpha]

so what?

Elon has zero experience for car manufacturing. Finance is not so hard anyway, particularly if you don't need to hide anything. There are plenty of young CFOs for big companies.

Why did they choose this guy? because tesla thinks he is qualified.

What age is Mark Zuckerberg? They have a Market Cap of $500B Go on Google it

At most companies, "qualifications" for the CFO role is connections, network, and management.

I'd just ask again: why not go out and recruit a really amazing CFO? Someone that had great relationships with tons of banks?

 

[omarsultan]

Tesla could recruit any CFO in the world. Why did they choose this guy?

Well, for one thing, he understands the company's business and how works--all the ins and outs and the things that ore not in any org chart or employee manual, so he can hit the ground running. They can always go hire some guy or gal with domain expertise to go make nice with the Chinese.

I'd argue the worst thing Tesla could do would be to go hire some marquee CFO who will spend the next 12-18 months unlearning what he/she knows and learning Tesla's business.

 

[Ellec]

At most companies, "qualifications" for the CFO role is connections, network, and management.

I'd just ask again: why not go out and recruit a really amazing CFO? Someone that had great relationships with tons of banks?

CFO is a glorified accountant. Deepak will spend the next few years handing over the reins. This is a great move.

 

[Opus BC fan]

All things continue to look good. And we have a smooth transition at the CFO position. I remember my worries when George Blankenship left. This Tesla machine is maturing. The time horizon I see will require multiple passings of the torch at all levels.

 

[Heimdallr]

Wouldn't a better CFO be someone with great relationships with Chinese banks, to help them close the factory financing?

Tesla could recruit any CFO in the world. Why did they choose this guy?

Chinese banks are bending over backwards to lend money to Tesla. Besides, they just said on the call that all they need in the beginning is a lousy $500M.

 

[reddit_tl]

At most companies, "qualifications" for the CFO role is connections, network, and management.

I'd just ask again: why not go out and recruit a really amazing CFO? Someone that had great relationships with tons of banks?

are you pretending to know what it takes to be a CFO on a big company? and further pretending to know that zach doesn't have those qualities? and why you are moving your goal post?

i'll stop responding to you. it's not worth my time.

 

[Todd Burch]

I think we see green by close tomorrow.

 

[EVNow]

Finance is not so hard anyway, particularly if you don't need to hide anything.

Yep - this is very important.

 

[StarFoxisDown!]

You guys ready for another quarter of the Model 3 production(and production rate) and delivery guessing game? Bonus is that we can do it with S/X now as well since the only guidance they gave was slightly less than Q1 2018. Ugh I don't get why it's so hard for them to give guidance at this point.....even if they low balled it. But give us something to counter all of the FUD that's about to go down. They did it before with Q3 Model 3 numbers...they gave a range for both production and deliveries. It should be easier at this point to estimate production for the quarter

 

[abasile]

Looks like the FUD machine is ramping up. Among other articles:
Tesla reportedly spent $700,000 on Elon Musk's private-jet travel in 2018, including flights to move his jet from one side of LA to another

I mean, who cares?

Seems like yet another buying opportunity! Amazing.

 

[Intl Professor]

I like Zach already... he sounded nerdy as hell.... and that's what I want in a CFO... a dedicated nerd to cost control!

Also, he's got to have been a clear protégé of Deepak having been working in the upper reaches for most of his career in finance at Tesla. Also, he has a solid engineering background and early commitment to solar, etc.

 

[Toumal]

CNBC already have their hitpiece out.

Tesla shares fall after company posts 4Q profit that misses expectations, beats on revenue

 

[Cherry Wine]

why it's so bad?

Sean McVay is in the Super Bowl. I personally don't think there's a physics rule that 31 yo cannot be a CFO in a 50B company especially there are reasons for that?

I'm personally withholding judgment -- I don't know the guy from Adam. But it's not surprising to me that investors are skittish over the news. And that is where I agreed. I'm certainly not selling my shares based on the news. However, Tesla is just now getting on firm ground, and while the light at the end of the tunnel is visible, there are still pitfalls between here and there and investors want to be coddled.

Did you even go to his LinkedIn profile? Can't beleive you'd agree with this jusdgement without looking at his credentials. Enough of this ageism bullshit!

No I didn't. I'm merely saying that I agree with the Bird's premise that the stock price drop is predicated more on the replacement than the departure. To use a football analogy, it's perhaps akin to replacing a "Tom Brady" of the CFO world with a new guy; is the new guy Jared Goff, or (random rookie NFL quarterback)?

Announcing it early would distract from the call. Announcing it after would enable speculations and rumors.

This was the best way, we heard from everyone directly and got to hear from Zack also. As a Tesla insider it guarantees smooth no friction/drama transition.

Agreed. Announcing it early would make it the focus of the entire Q&A portion of the call, not giving them a platform to discuss more positive news. This was the best of two poor choices.

 

[EVNow]

Wouldn't a better CFO be someone with great relationships with Chinese banks, to help them close the factory financing?

Do you know an old experienced finance guy with relationship with Chinese banks you are angry they didn't hire ?

Its most important to hire someone who fits with the fast paced, high pressure culture of Tesla. Old world CFOs may not survive for long (remember that Chief Accounting Officer who quit after 2 months).

 

[Zaxxon]

Deepak retired once, then graciously came back when Jason Wheeler didn't work out. (Side note: Wheeler's short term might be one reason Tesla chose an internal guy with a long tenure with Tesla this time out.) I'm not at all surprised that Deepak decided, two years after coming out of retirement, that after 2 profitable quarters he was safe to finally actually retire.

If the dip continues, I'll be backing up the truck...

 

[Cherry Wine]

You guys ready for another quarter of the Model 3 production(and production rate) and delivery guessing game? Bonus is that we can do it with S/X now as well since the only guidance they gave was slightly less than Q1 2018. Ugh I don't get why it's so hard for them to give guidance at this point.....even if they low balled it. But give us something to counter all of the FUD that's about to go down. They did it before with Q3 Model 3 numbers...they gave a range for both production and deliveries. It should be easier at this point to estimate production for the quarter

I think they're gunshy about giving specific guidance -- they get nailed to the wall if they miss. Better to leave wiggle room.

 

[CatB]

I feel pretty good about the future thanks to the ER. I'm buying the dip tomorrow. And I have an order for 100 shares at $288 after hours. Deepak was awesome but he isn't the only financial guy out of a planet with 8 billion people.

So, you’re liking 288 as a buy price?

Just curious what others see as a good bottom to bounce off of?

Tbh, I don’t exactly understand how Bollinger Bands “work” as “support” other than by self-fulfilling prophecy - if enough people essentially want to drive their stock buy/sell action by looking in the rear view mirror and think history can be extrapolated to predict future, then those technical traders know that their lemming-tribe will buy when it hits the lower BB and sell when it hits the higher one - how badly am I oversimplifying this? Now you know why I buy and hold and wouldn’t consider options trading. It seems some of you can “see” large buy orders lurking under the current SP, and then it would make sense to layer our buy order just above those so that when shorts decide to fund our “buy low, sell high” strategy, we’re cooperating.

 

[ZsoZso]

On the short side, the deliveries report is very uplifting due to...

• No mention of profitability or cash flows
• No Q4 production or financial guidance
• No mention of the reservation list

If Tesla isn't profitable or cash flow positive in Q3, it's over.

Which is why Elon's email on Saturday was so interesting:

We are very close to achieving profitability and proving the naysayers wrong, but, to be certain, we must execute really well tomorrow (Sunday)

"Close" isn't going to cut it anymore here, especially because "close" on profitability implies a miss on cash flow positive. Considering the -2.6B working capital hole and the additional 1.2B in committed CapEx, Tesla doesn't have the wiggle room to be "close" anymore.

I suspect they aren't giving guidance because chapter 11 bankruptcy is imminent.

Pheeew! I was sooo worried that your prediction was going to be right!
Now, I am relieved that the danger of chapter 11 bankruptcy is not so imminent after 2 consecutive profitable quarters!

Yeah, lets not change the narrative and move the goal posts each time your predictions are proven to be utterly ridiculous BS. Retiring CFO is not the end of the company, it is NOT bankruptcy.

 

[Intl Professor]

Looks like the FUD machine is ramping up. Among other articles:
Tesla reportedly spent $700,000 on Elon Musk's private-jet travel in 2018, including flights to move his jet from one side of LA to another

I mean, who cares?

Seems like yet another buying opportunity! Amazing.

His time is primo, a clear case justifying moving the mountain to Mohammed. He really loves LA traffic, you know. Sounds like one trip by any one of Trump's Cabinet Secretaries, say, to witness an eclipse or spend a honeymoon in London.