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

[adiggs]

In 2 years - TSLA is up 12%. Nasdaq up 24%. S&P up 15%.

But - on 4/3/17 Tesla closed at $302. Today it closed at $305. So, nearly two years of not much gain. But, if you did swing trade, you could make some money.

I posted this earlier, last 7 ERs TSLA closed around $300 on the day of ER (i.e. just before ER). That is really extraordinarily weird for a company that is doubling sales and production every year.

And as @EVNow also knows, if you swing traded you could have lost money while definitely consuming the time and energy that would have gone into all of those buy and sell decisions.

For somebody with a few months to a few year investment horizon, then all this volatility and when-will-the-market-recognize-the-value maybe makes Tesla not a good investment. Not because it won't take off in the next few months or years, but because we all don't know when it will take off.

If your investment horizon is long enough (for me, 10+ years), buying Tesla at today's prices is sort of like going back in time to a point of my choosing to buy Microsoft, Intel, Apple, Netflix, Amazon, ... (pick your company). If only I'd a bought <blah> at <time>. Well when I look at the market, the company that stands out today as being today's "if only I'd a bought" is Tesla. And in 10 or 20 years, people are going to be saying "if only I'd of bought Tesla at $300 back in 2019. I mean sure, it'd already gone up a bunch, but it was still so cheap and by then the Model 3 was shipping bigly -- it was OBVIOUS how it was going to blow up".

That's my hypothesis anyway, and I don't have the time or energy to follow the daily movements closely enough to make frequent buy and sell decisions. So I guess I have a bunch of dead money

 

[MarcusMaximus]

If they can sell every car they make, why would you expect a price reduction?

Tesla has lots of upcoming cash demands (expanding Superchargers & Service Centers, preparing for MY/semi/pickup production) and should be building cash reserves. Why forego revenue (twice in rapid succession) unless there's a demand issue?

This whole conversation is silly. Why did they lower prices? We dont(and likely never will) know. Maybe you’re right and the price point was a tiny bit too high to bring in the demand they wanted. Or maybe they thought demand might, at some point in the future, wane, so decided to head that off.

And? Is there any evidence of a lack of demand at the current price point? The past is past. There are much better indicators of current demand than what Tesla did to the price a week ago.

 

[kbM3]

PR, to pull up lower end buyers to higher end models, to better fit in the pricing structure with the rest of their products, timing with other releases/updates/price changes.

TSLA is not just building one car anymore, they are building a portfolio of products, price changes and model changes are expected to make this portfolio well rounded and attractive to buyers and investors.

Saying the only explanation is demand is very myopic.

If they are demand constrained, lowering the price would generate even longer waiting lists. Is this what’s happening?

I would imagine since Tesla does not hold very many cars in inventory that they would have a target waitlist time, so that there is a constant queue that is not too large. If it starts to get too large they can raise prices or remove Supercharging promotions... When the queue starts getting too small, they either lower prices or add referrals, or add content. I’m imagining that they’re constantly fine-tuning it.

Do you disagree?

 

[tinm]

BREAKING NEWS FROM REUTERS:
Tesla requires fewer delivery workers in the USA while they're delivering fewer cars in the USA. Shocking.

Exclusive: Tesla's delivery team gutted in recent job cuts - sources | Reuters

This is currently the top news story on Reuters.com, complete with a breaking news banner across the top.

From the article, an ex-employee was quoted saying:

“We sold through just about every car we had on the ground and we called almost every being on the planet who had ever expressed desire to own a Tesla to let them know the tax credit was expiring,” said the other ex-employee.

Yep, and I got one or two of those calls from Las Vegas Tesla sales people, telling me exactly that, about the $7500 Federal Tax Credit ending soon (I am so sick of hearing about it frankly) and I ought to get my Model 3 and why haven't you yet I mean you've had your reservation since, let's see--"March 31, 2016"--we both said in unison. I told him I simply don't care about the tax credit, and I am sitting this Model 3 craze out until the State of New Mexico gets a Tesla store and service center, even just one, so that we don't have a two-Tesla household with the closest service center 400 miles away, the risk for us just feels too high, considering how much service my S has required over the years. So the sales guy said "well there's no point in us holding on to your $1000 reservation anymore because it's not needed" and I said "okay well how fast can I get it back" and he gave me all these different options including a gift card (!? hell no) and I said I look I just want a check and he said oh well that is the slowest method, like up to 60 days' wait. So I said well hold on to the reservation a little longer as we still wanna buy the car but we're waiting, like I said, and also, we wanna see Tesla pump out 300,000 or 400,000 3's out of the factory before we get one, just to make sure Tesla's worked out a lot of the glitches, again given the number of issues, most admittedly minor, but all requiring service (including multiple drive units and replacement of the entire DC charging system). The sales guy, his talking points exhausted, surrendered, and we said bye and that was that. I still eagerly await getting a 3 but we're sitll in waiting mode. I wonder how many other people Out There are in a similar situation--absolutely positively getting a 3 eventually, especially if they're already an S owner, but taking their sweet old time (which is driving Tesla crazy).

[I will add that it blows my mind that a brand-new 100kWh Model S, with dual motor, 2nd gen seats, all the latest whistles and bells and a 300+ mile range, now costs LESS than my ancient, pre-parking-sensors-let-alone-Autopilot-etc Model S85 did in 2013. So it is extreeeeeeeeemely tempting to finally replace my Model S which hits 95000 miles tomorrow, with a spanking new "faster, cheaper, better" S... the heck with the 3! ]

 

[RobStark]

Jaguar Land Rover takes $4.4B hit, writes down value of cars, plants

 

[Steve m]

If they can sell every car they make, why would you expect a price reduction?

Tesla has lots of upcoming cash demands (expanding Superchargers & Service Centers, preparing for MY/semi/pickup production) and should be building cash reserves. Why forego revenue (twice in rapid succession) unless there's a demand issue?

To make other car companies that don't have good margins cut their prices too which might delay the arrival of their evs.

Stop thinking short time.

 

[Cherry Wine]

Jaguar Land Rover takes $4.4B hit, writes down value of cars, plants

Oof.

 

[EVNow]

And as @EVNow also knows, if you swing traded you could have lost money while definitely consuming the time and energy that would have gone into all of those buy and sell decisions.

I don't swing trade - I prefer to lose money with options

<Not An Advice>
Purely with swing trading, I don't see how you can actually lose money - except in cases when longs also lose money. Because, what you are doing is setting a price range (say 290 and 350) and buy at the lower point and sell at the higher point. You won't lose money - but either your price points never get hit, so you end up not owning the stock at all or not selling it - or you sell / buy "too early". In either case, you are not losing money, just not making all the money you can in hindsight.

You can also get more sophisticated by having several price points to sell and buy at. This reduces the risk of not hitting the price points.

You could even do these with minimal daily time effort, by setting limits orders. The downside is this would lead to a lot of short term taxes at higher rates. And when the mythical "squeeze" happens, you could miss out. Most people avoid this by having their "trading stocks" and their long term investment stock. So, people are generally not just swing trading but also have long time horizon. In fact the swing trade could be a small portion of their Tesla portfolio.
</Not An Advice>

 

[EVNow]

A 'few' is at least 2, not 2 or less. If you bought anywhere between 2 and 4 years ago there's a 95% chance you're up significantly - probably around 30%.

OP referred to "a couple years ago" - so used 2 years.

You are right - if you bought before April 2017, you are likely significantly up. My original shares I got in 2011 are up 10x.

But, last ER I made 2.7x with options - even through all the ups and downs after the infamous tweet. This ER I'm significantly down, as of today - that would offset the gains I made between last ER and this ER. That's why my "Not an advice" would be to not play with options using money you can't lose.

 

[keydiver]

This whole conversation is silly. Why did they lower prices? We don't (and likely never will) know.

But, we actually do know why Tesla cut the price $1100 most recently: Tesla themselves announced it was primarily due to the elimination of the referral program. Personally, as an investor, I am fine with the price cuts. I'm sure that some of it is to pull forward some demand from the people waiting for the SR (worked for me, love my L3MUR), some of it is to help fulfill the Tesla Mission to get as many EV's on the road as quickly as possible, and some of it may be to get a bigger jump on "all the competition that is coming", whatever year that finally is. The more than can establish themselves as the market leader in EV's, the stronger the company will be and the more deals other manufacturers may want to make with them for batteries or drivetrains. Only Tesla knows what their margin is on a $42,900 L3MUR, but if they are happy with the margin then so am I.

 

[Singuy]

But, we actually do know why Tesla cut the price $1100 most recently: Tesla themselves announced it was primarily due to the elimination of the referral program. Personally, as an investor, I am fine with the price cuts. I'm sure that some of it is to pull forward some demand from the people waiting for the SR (worked for me, love my L3MUR), some of it is to help fulfill the Tesla Mission to get as many EV's on the road as quickly as possible, and some of it may be to get a bigger jump on "all the competition that is coming", whatever year that finally is. The more than can establish themselves as the market leader in EV's, the stronger the company will be and the more deals other manufacturers may want to make with them for batteries or drivetrains. Only Tesla knows what their margin is on a $42,900 L3MUR, but if they are happy with the margin then so am I.

As much as I hate the short thesis about demand, but trying to explain the price cut away by saying "pull forward some demand from people waiting for SR" is another way of saying there's not enough demand at it's current price point.

I for one just think Tesla cut prices so they can market this car as a 35k car after "savings". Elon is trying to make promise on his product and he genuinely don't want the general population to miss out on his product. He believed that the Model 3 is the car for the masses, and is doing everything he can make this come true. I think price drop is not tied to demand, but tied to his mission. We all know Elon is known to do things just to hit target regardless how much it makes sense or not.

 

[MarcusMaximus]

trying to explain the price cut away by saying "pull forward some demand from people waiting for SR" is another way of saying there's not enough demand at it's current price point.

Note that, in this case, it’s not. It’s saying there was not enough(or expectations of there someday not being enough) demand at that previous price point. It says nothing about demand at the current price point, other than that it’s likely higher.

 

[Carl Raymond]

Ao


Not if you bought in about the last 2 years. It's been a flat range between $220 to $380.

Flat like the Swiss Alps.

 

[gene]

That’s why I think TSLA is a stock to be traded, not held. It’s one of my favorite trading issues because it’s so volatile. Good news one week and the price spikes upward. Bad news that follows drives it back down.

People who bought a couple years ago have been sitting on dead money while traders have been watching their portfolios grow. I understand the “fear of missing out”, but buy-and-holders have missed out on a lot of trading profits over the last couple years. I don’t expect this situation to change any time soon.

As I never know what to do, I do both: 1600 shares holding since 2012. Zero to 1000 shares for tax free trading in my SEP IRA.

 

[EVNow]

As much as I hate the short thesis about demand, but trying to explain the price cut away by saying "pull forward some demand from people waiting for SR" is another way of saying there's not enough demand at it's current price point.

As I wrote earlier - "Moreover, they need to upsell as much of the SR demand as possible - before the SR becomes available. So, if SR will be available by Q3, they had to lower the price now to entice those guys to buy MR in Q1 & Q2".

Let us say there are 2 people waiting for SR and 2 people willing to buy MR. In this case, I can either not cut price and sell the 2 cars I have to the 2 people willing to buy MR at the current price (but might need some follow up and persuasion etc). Or I can cut the price a little and sell the 2 cars to the two waiting for SR this month and 2 to the other 2 next month - who because of price cut may spring for higher options, anyway. Tesla will make more money by cutting the price and upselling to the SR waiters - than by not price cutting and just selling to the MR buyers.

Timing is crucial, if it comes after SR is released, it is not useful and will not upsell most people. That is why I think, once SR is released, MR prices are going up.

The more SR people they can upsell, the later they can introduce SR.

 

[EVNow]

If they can sell every car they make, why would you expect a price reduction?

Tesla has lots of upcoming cash demands (expanding Superchargers & Service Centers, preparing for MY/semi/pickup production) and should be building cash reserves. Why forego revenue (twice in rapid succession) unless there's a demand issue?

Because they want to maximize the revenue and delay introduction of SR as long as possible.

 

[PhaseWhite]

IMHO, nothing that they wrote sounds realistic. You don't lighten a car meaningfully by removing the stereo and charge cable. SR was never supposed to be 240 miles. And who would buy a SR non-PUP for $40k vs. a MR PUP for $41,9k? I think the employee has some things confused.

Perhaps the new target will be 38,900 with Premium-ish package. I don't expect the MR to be produced once the new (cheaper) battery pack design is in production in required quantity. Tesla will want to simplify production.

This may not be a popular opinion here but I don't see a realistic path to the 35k base model (Atleast not without a different business model. The true cost of the Premium package is probably < $2k . If they can't offer that base price then it seems conceivable that Tesla will sweeten the offer with a slightly larger battery at a slightly higher price.

IMHO To make the 35k base model profitable Tesla should/could offer additional unlockable software features and services. Acceleration profiles is one that would be easy. The MR and AWD non P Model 3s are likely being nerfed in performance for segmentation reasons, Tesla could unlock more revenue by monetizing these along with other features and services (Video streaming, premium music etc) just like they did by breaking out Ludicrous now on the S/X P model again.

 

[KD2018]

What is PUP?

 

[gene]

What is PUP?

It is the $5000 package that gets you vegan leather, upgraded audio, electric seats, rear seat heaters and glass roof.

 

[Singer3000]

Don’t know how I feel about these rumours of Tesla partnering up with other Auto companies to provide the drivetrain for vans and trucks.

As a human being, this is great news. As an investor, it seems a shame to forfeit such a huge market in exchange for only a couple of grand of profit per vehicle.