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

[Dan Detweiler]

Why think small, hopefully the judge reverses the settlement fine and imposes
A penalty on the SEC. We shall find out soon if she can judge.

I am a legal illiterate by all admission but I doubt that would be within her power. Please correct me if I am wrong.

Dan

 

[Cosmacelf]

I argue that you do yourself a disservice, and we all do when applying a purely political litmus test to news sources.

I believe WSJ to be a credible news source with a strong conservative bias. I often disagree with their editorial position but it is important to understand that position, and I often learn a lot. Same goes for lots of credible news sources across the political spectrum, the point is to pick a variety of news sources with different political orientations (NYT, LATimes, WP, WSJ). Just avoid the clearly wacko sensationalist ones of all political stripes as a waste of time, although I suppose your argument maybe be that WSJ is in that category.

I consider the Economist to be a great source with a centrist/moderate/right, and it also has more of a global perspective, with a lot of European news. Any other votes across the political spectrum, or do most of you believe that “only left-liberal” or “only conservative” news sources can be credible and worth a regular read?

Economist endorsed the Democrat in the last 3 or 4 Presidential US elections going back to Kerry/Bush. Hardly right wing. WSJ editorial is right leaning, but their journalists most certainly are not. Sorry, OT.

Edit; I think the anti-Tesla animus in the WSJ and other media isn’t due to political bias. It is due to the freak out over automotive declining ad sales. I can almost guarantee that all the big media publishers have been told by the big automakers that their ad revenue is going to suffer due to declining auto sales as a result of surging Tesla sales. What the media companies do with that knowledge depends on their individual ethics.

 

[Dan Detweiler]

MS keeps pushing the demand problem narrative:

“The fundamental narrative around Tesla appears more clouded than we have seen in several years. Signs of weakening demand have raised long-standing questions about the company’s ability to fund itself as an independent company. At what point might strategic alternatives enter the discussion?”

What idiot said that?!

Dan

 

[larmor]

Whenever I get bummed out by FUD, it helps to remember who the FUDSTERS are working for.
View attachment 388443

The Houston chemical fire is still going strong, fed by naphtha (and other chemicals) which is used to boost octane in gasoline.

Hey its all good, because only certain chemicals known (only) to the state of California to cause cancer... prop 65. And since this fire is in texas, its all good...

 

[Causalien]

Again, We can not assume he can keep pledging shares when the current Tesla BOD bylaws suggest he can not pledge above 25% of the total value of his shares Not trying to beat a dead horse here, just trying to really understand this issue

I think it's an interpretation problem. From my understanding of the phrasing since it is the "total value" and not "25% of total number shares". It means that the Loan to value of the stock is placed at 25%. So Elon can pledge 100% of his share, but he can only get a loan amounting to 25% of the value. It is a safety net to prevent margin call situation as 75% of it will act as a buffer.

However if the language is very clear that Elon can only pledge 25% of his shares, then he can pledge those 25% at 100% of those value (if the brokerage agrees) and he'd get margin called a lot sooner. In this case I agree with you. However, this is not usually how it is done.

 

[ReflexFunds]

I think it's an interpretation problem. From my understanding of the phrasing since it is the "total value" and not "25% of total number shares". It means that the Loan to value of the stock is placed at 25%. So Elon can pledge 100% of his share, but he can only get a loan amounting to 25% of the value. It is a safety net to prevent margin call situation as 75% of it will act as a buffer.

However if the language is very clear that Elon can only pledge 25% of his shares, then he can pledge those 25% at 100% of those value (if the brokerage agrees) and he'd get margin called a lot sooner. In this case I agree with you. However, this is not usually how it is done.

The language is quite clear that it is a 25% LTV limit and no limit on % of shares that can be pledged. (In fact Elon is already over 25% of shares pledged). Hence no problems.

 

[Causalien]

unfortunately, I think the CAD is destined to go lower....

Canada's economy has become way too dependent on Oil and a giant property bubble, while it's real economy has been pretty hollowed out.

Ya I agree with you. The central bank being too much of a pussy to raise rate is what is crushing the currency. Instead of choosing a recession, they backed out by choosing currency devaluation. Also, we now know that the current central bank takes orders from the prime minister as opposed to previous heads who are truly independent. So, there are no politicians who have the guts to do the right thing. But the pendulum swings back and fourth. An election is coming in October and maybe Mr. Fancy Socks will get kicked out.

 

[gene]

Hey its all good, because only certain chemicals known (only) to the state of California to cause cancer... prop 65. And since this fire is in texas, its all good...

Yesterday, I sent the link, that was suggested on this thread, to my handful of few friends that live in Texas. They all replied that they were fed up with Texas politicians being owned by the oil companies. Result was three of my friends sent the email as per the link. I hope everyone here is thinking of sending the link to any of your Texas friends.
Support TESLA in Texas - Auto manufacturer in U.S

I added Tesla's text in my email to save my friends having to look for this:

Special interests have tried to spread misinformation about Tesla in order to block the company from doing business in Texas. Here are the facts about why Tesla serves its customers’ needs directly, and why that’s a good thing for Texans and the state.

• Electric vehicles are new in the automotive industry, and as the only all-electric auto manufacturer in the U.S., Tesla is uniquely qualified to provide the service needed to ensure the safe operation of Tesla owners’ vehicles.
• Auto dealers and third-party repair shops do not have the training or technical know-how necessary to maintain Tesla vehicles and keep them running safely.
• Tesla service centers create a positive economic impact through the creation of jobs and direct investment in the communities where they operate. In fact, Tesla has made significant investments in infrastructure and by hiring and training professional, qualified Tesla service technicians across Texas.

 

[dondy]

Another longtime Ars fan/forum member here. It has been sad to see such a very negative Tesla bias in the articles there the last few years. I think it's become popular to hate on Musk in the liberal community since he's a billionaire and a "Jerk". Ars has only recently published a review of the Model 3. The main auto reviewer there Jonathan Gitlin has lamented that Tesla never returned his many emails asking for a review car. My guess is Tesla PR has flagged them as a negative news source. Notably in his review of the Model 3 he says that the iPace is the funnest car to drive (compared to P3D). Which I'll admit is subjective, but if you think that, then I can't trust any of your auto reviews.

Edit: Here's an example how the Tesla fud spreads... Gitlin retweated this post seemingly about build quality. But looking at the thread it appears to be a shorty parking lot team member (Not an owner)
ben k on Twitter

Timothy Lee wants to enter auto-media and works as a tool for IIHS or better said insurance lobby. His main task is to kill current FSD evolution. Both employers want for Tesla to die.
I remind that the appearance of properly working level 3 FSD will kill auto insurance.

 

[Nocturnal]

Oh no, more Tesla Killaz!

 

[FTMagicSquare]

I made it first principle of mine that I assume the good intentions in others. That's why I will give you an honest reply. I look at this from three perspectives:

1) History / Tesla perspective. What you worry about is what we have heard about the Model S from early 2013 - this exact concern. "what will happen with demand when the first xx number of cars are delivered". In reality, nobody buys a Tesla just like this. They see it at heir neighbor's then they buy one. Ask around. You will see. So the more Teslas are out on the road the more are being sold.

2) Competition perspective: Read this article here: Tesla Model 3 vs. US Incumbents — Gun In A Knife Fight Or Fair Fight? | CleanTechnica it quantifies the damage that the Model 3 will inflict on the competition.

3) You can see in real-life how Tesla manages demand. So far there are a lot demand levers not being pulled amongst those are:
- Model 3 not available in all markets where Model S / X are available (incl. RHD, but also some European countries)
- Model S3X are not available in all countries of this world (ref. Middle East, India, South Africa, Latin America, etc.)
- No Leasing for the Model 3
- Many options that would lend themselves to "a low monthly fee" vs. a "one-time big payment" are still on the "one-time big payment"
- No fleet deals (company cars)
etc. etc.

So yes, there are always concerns with Tesla. Always, always. But demand for the Model 3 is not one of them

Thanks for the reply. I do have good intentions and I am trying to make sense of the recent price action.
I like your first point: yes, it happened before in a small scale, we are comparing 100k-200k cars market(s,x) with 2-5 millions though'
I agree with your second point that there is no valid competitions out there in near future.
I disagree with you on the third point: There may not be that levers in near future. Leasing or similars will cause cash burn issues, entering and expanding in other market also take time and vulnerable to logistics, cost, trade policies and tariff.
Again, thanks for the response^_^

 

[CyberDutchie]

<S>Seems to me he's pushing the 'Tesla needs a captial raise' narrative. I wonder if he has any alterior motives. </S>

This note was more about someone acquiring Tesla, or entering into a strategic relationship with Tesla, not so much capital raise:

There’s a wide range of opinions on Tesla’s value. We recently spoke with an investor who believed that the company would not attract strategic interest at any price, due to its existing financial liabilities and the NPV of future cash expenditures and obligations relative to the ability of the business to meet them. Other investors would beg to differ. Most auto OEMs, suppliers and tech enablers involved in connected cars describe Tesla as by far the most advanced automotive company in operation at scale. One highly respected auto industry veteran described Tesla’s traditional auto competition using the analogy of the dog track: “You go to the dog track and you see all the dogs chasing the mechanical white rabbit on the inside track. You know you’re never gonna catch the rabbit. You just hope you’re the fastest dog. Tesla is the rabbit.”

 

[Chop110]

Yesterday, I sent the link, that was suggested on this thread, to my handful of few friends that live in Texas. They all replied that they were fed up with Texas politicians being owned by the oil companies. Result was three of my friends sent the email as per the link. I hope everyone here is thinking of sending the link to any of your Texas friends.
Support TESLA in Texas - Auto manufacturer in U.S

I added Tesla's text in my email to save my friends having to look for this:

Special interests have tried to spread misinformation about Tesla in order to block the company from doing business in Texas. Here are the facts about why Tesla serves its customers’ needs directly, and why that’s a good thing for Texans and the state.

• Electric vehicles are new in the automotive industry, and as the only all-electric auto manufacturer in the U.S., Tesla is uniquely qualified to provide the service needed to ensure the safe operation of Tesla owners’ vehicles.
• Auto dealers and third-party repair shops do not have the training or technical know-how necessary to maintain Tesla vehicles and keep them running safely.
• Tesla service centers create a positive economic impact through the creation of jobs and direct investment in the communities where they operate. In fact, Tesla has made significant investments in infrastructure and by hiring and training professional, qualified Tesla service technicians across Texas.

Just sent my email!

 

[Silent Ludicrosy]

Yesterday, I sent the link, that was suggested on this thread, to my handful of few friends that live in Texas. They all replied that they were fed up with Texas politicians being owned by the oil companies. Result was three of my friends sent the email as per the link. I hope everyone here is thinking of sending the link to any of your Texas friends.
Support TESLA in Texas - Auto manufacturer in U.S

I added Tesla's text in my email to save my friends having to look for this:

Special interests have tried to spread misinformation about Tesla in order to block the company from doing business in Texas. Here are the facts about why Tesla serves its customers’ needs directly, and why that’s a good thing for Texans and the state.

• Electric vehicles are new in the automotive industry, and as the only all-electric auto manufacturer in the U.S., Tesla is uniquely qualified to provide the service needed to ensure the safe operation of Tesla owners’ vehicles.
• Auto dealers and third-party repair shops do not have the training or technical know-how necessary to maintain Tesla vehicles and keep them running safely.
• Tesla service centers create a positive economic impact through the creation of jobs and direct investment in the communities where they operate. In fact, Tesla has made significant investments in infrastructure and by hiring and training professional, qualified Tesla service technicians across Texas.

Sadly, I think the hundreds of thousands in campaign contributions will continue to sway his opinion. Lots of oil companies and auto dealers on the list. The Voter's Self Defense System

 

[MP3Mike]

It is possible the incentive will apply to all vehicles (even up to the fully optioned USD$69.5k LR P) as long as the base model has a price less CAD$45k. I haven't seen full details of the policy yet though to know how the price limit it is defined.

Unlikely. What would be possible is for it to be based on the Model/variant. Such that if the base Model 3 SR qualified that it would still qualify if you added wheels, paint, white interior, AP, FSD, etc. But Tesla lists each variant with a different base price; they don't show you buying a Model 3 SR and adding the LR battery, front motor, and performance package to it.

 

[Cosmacelf]

The language is quite clear that it is a 25% LTV limit and no limit on % of shares that can be pledged. (In fact Elon is already over 25% of shares pledged). Hence no problems.

Quite right. The board isn’t likely to place a restriction on what Elon can do with his shares. He can sell them all if he wants, or pledge them all. What the Board doesn’t want is panic margin call selling.

My understanding is that a margin call wouldn’t happen until the loan hit something like 50% or even 80% of the share value. Let’s use the conservative 50% (since it is a big stake). So $800M / 13M shares x 2 = $120/share more or less. However, the stock market is going to freak out long before the share price hit the magic margin call number. Maybe $200/share.

BUT, as others have pointed out, long before even that scenario, Elon would have switched out his Tesla shares as collateral and replaced them with SpaceX shares.

A Tesla margin call just isn’t going to happen...

 

[pnungesser]

Yeah, Tesla kind of messed up how they presented this. 'Midnight Wednesday' typically means 'the point at which Tuesday night transitions into Wednesday morning.' Lots of people use it incorrectly, but there's a reason that contracts generally specify 12:01 AM or 11:59 PM rather than midnight--to avoid ambiguity. They should have said 'Midnight Wednesday evening' if they meant tonight. Not a big deal, but another pet peeve of mine.

In other news, Norway continues its tear today, now standing at 3881 Teslas registered in Q1--3.4% above the prior best quarter ever, Q4 2017, with 9 more registration days left. And Q1 is seasonally a low Q vs the seasonally-high Q4. Obviously the intro of the Model 3 far overshadows seasonality, but it's one more angle by which this crazy quarter is all the more impressive.

With one ship just arrived and not yet unloading, and another scheduled to arrive on the 24th.

 

[RobStark]

Interactive map: Correlation between uptake of electric cars and GDP in the EU | European Automobile Manufacturers’ Association (ACEA)

Why is Ireland such an outlier?

GDP per capita behind only Switzerland,Norway and Iceland but EV market share of just .7%

Tesla currently doesn't have a presence in Iceland but does so in Ireland.

 

[SebastianR]

I disagree with you on the third point: There may not be that levers in near future. Leasing or similars will cause cash burn issues, entering and expanding in other market also take time and vulnerable to logistics, cost, trade policies and tariff.

Tesla has a knack for finding demand levers in the right time/right size. Some of them become part of the portfolio, some of them disappear. And only they know which will have what kind of cash-impact.
So maybe Leasing is a bit difficult this very moment. But what about a SpaceX special edition of the Performance Model 3? In all white / black outside, white interior with some SpaceX signets?

It worked for the Corvette, it would work again:

It is not expensive at all and would be an instant success...

Fact is, there are a million opportunities to tweak, nudge, nurture, amplify demand and while Tesla is doing some of that ("Sale until Monday, I mean Wednesday; there is a whole lot more they could do to stimulate demand and they don't. So there is that

 

[Zaxxon]

Whelp, I'm about to head out on a road trip through Sparks to Fremont for a Friday factory tour. If I'm not back by Monday, send out the dogs.