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

[SebastianR]

You & I are old-timers here. The youngsters are forgiven, but we know that Tesla promised before that they'd smooth out the S transit cycle many moons ago. They tried one quarter and gave up pretty much right away after. If all it took is one quarter to overcome it, Elon wouldn't list it as a reason to take the company private. He knows it is going to repeat over and over and over again.

I understand you, I understand those that argue otherwise.

Firstly, there were many things that were "just the way Tesla operated" until they weren't any longer. For years it was a given that Tesla would raise capital - no matter what they said. This has changed last year. So I wouldn't be surprised if the extreme quarterly batching would end at some point, too.

However, I think there will always be a reason to create "events" that push people over the edge and into buying. I think there will always be things like "order now, otherwise prices will increase" or "order now, otherwise you will only get your car in 4 months" etc. I'm also convinced that Tesla will have more of the "all hands on deck" moments - be it for delivery or for other things. These events are important for people working in Tesla and they are important for the supporters. Shorts will always characterize these events as "desperate measures" - that's a given. I think what has changed is that the nature of these events will change: it is not about survival of the company any longer but about proving a point, achieving a goal etc.

On a different note: what do we expect for today? A pop?
Also: The Model 3 in Norway is now in the top 10 most sold EVs in the country ever (not just this month or this year).

 

[schonelucht]

Solarcity was essentially a finance company. They installed solar panels on people’s houses and financed the entire install (cost of materials, labor) over 20 years. The homeowner was charged under a power purchase agreement which effectively paid off the installation over 20 years (plus a profit for Solarcity of course). So Solarcity was a prolific borrower on the financial markets. They were growing 100% per year, so they would issue equity and bonds on a routine basis to keep financing the installs.

Also they used high pressure sales tactics that were catching up with them in the market place, sold a product that had no unique selling point in a competitive environment, the tech they developed or bought didn't amount to anything, their finance model relied on monetizing tax credits put in jeopardy as a republican wave swept the country, managed to sell no meaningful volume of a hit product handed to them on a platter by Tesla, entered into an investment and jobs deal with state that they couldn't fund and their sales overhead was astronomical compared with more nimble firms. And yes, their debt structure was about as lopsided as a minimum wage worker with a $1M mortgage making SolarCity the first target for banks and insurers taking a hard look at the quality of their loan book when shorts started indicating that this was a massive mis-allocation of capital.

The one redeeming feature of SolarCity was that it allowed a lot of people to get into Tesla very cheaply.

 

[Artful Dodger]

On a different note: what do we expect for today? A pop?

256.29

 

[vigleik]

What’s going on in premarket? TSLA is down 1.4% to $260.xx. Macros are not great, but other stocks are down a lot less.

I thought the news over the weekend was neutral/good.

 

[SebastianR]

256.29

Ouch....

 

[Tslynk67]

That's day after tomorrow -- first Tuesday to come, not next. (Precision!) But you're right.

This I find a common error with non-native English speakers, here in Belgium, the up-coming Tuesday would be referred to as "next Tuesday", where as in English this indeed refers not to 26/3, but rather 2/4.

Correct usage is: Tuesday, next Tuesday, the Tuesday after next.

Feel free to nit-pick my FR, NL, D and DK too...

 

[Artful Dodger]

Ouch....

Not really. That's just the lower BB band at Friday's close. The MMD has a target most days, and it's often whatever the lower BB is at: (read in the top-left of this chart)

I bought in last April in the 280s. This is a tempting buying opportunity, given that the Model 3 rampup has already been a spectacular success (and will soon be repeated in the world's largest car market).

Whereas last April, Elon was sleeping in the dog house tent, today he's sleeping soundly in his own bed. I'm personally excited to be a part of this story. My grandchildren are gonna get SO bored hearing about it, over and over and over...

Cheers!

 

[Tslynk67]

What are your thoughts on shipping hundreds of thousands of cars using Nvidia hardware and then scraping them just a few months later? They needed people for their neuro net or is Nvidia giving them a kickback? Seems to be millions spent on wasted hardware not to mention all that time for retrofiting.

What do you suggest, stopping all new car deliveries until the AP3 hardware is available?

 

[Fact Checking]

What’s going on in premarket? TSLA is down 1.4% to $260.xx. Macros are not great, but other stocks are down a lot less.

I thought the news over the weekend was neutral/good.

Not much TSLA related news today, so far:

JMP Securities reiterated their 'Market Outperform' rating with a bit lower price target: from $406 to $394.

Their comments were:

"We are still buyers of the stock – current challenges do not change the underlying competitive story, in our opinion. It is worth reiterating that our investment stance on Tesla has always been based on the potential the company has to make competitive gains over time. The undeniably challenging environment that Tesla faces at the moment is not enough to impact our fundamental stance on the company and its prospects. Our methodology continues to be based on 2020 target multiples of 2.5x EV/Revenue, 15x EV/EBITDA, and 35x price/free cash flow, discounted back to the present at 10% per year. We note that 10% is higher than the 8% discount rate we normally use, which reflects the relatively greater level of risk that we associate with an investment in Tesla."​

For finance geeks here's the underlying calculations I can see:

• Revenue multiples: 2.5x revenue multiple makes $29b in 2019 map to $72.5b Enterprise Value:
  • which with 172.72m shares outstanding is $420/share, I'm sure they didn't want to mention that outcome,
  • fortunately GAAP-diluted shares are at around 178m, which gives a more politically correct $407/share valuation.
• EBITDA multiples: Taking @ReflexFunds's Q4 EBITDA of $1.48b and JMP Securities's 15x multiple we TTM EBITDA of $5.92b and Enterprise Value of $88.8b: around $514/share valuation.
• Cash multiples: They are using a 35x price/FCF multiple, which with @ReflexFunds's adjusted FCF of $0.66b makes $93b of Enterprise Value, or about $539/share.

How did JMP Securities get to around $400? They either took the lowest one (the revenue multiple), which is conservative without adding a growth premium, or they are assuming a weaker Q1 than Q4 which I don't think is going to happen, and this is dragging their valuation numbers down a bit by about 10-20%.

Anyway, bullish AF just based on financials, without having to assume much about the "Tesla Story", which is a new thing after Q3 and Q4.

(Another piece of recent news is that yesterday Ars Technica's Timothy B. Lee managed to spin Elon's sur-reply in a negative light - which his readers were, unsurprisingly, lapping up. Took him two days to come up with the twisted logic to present the sur-reply in a negative light while technically not lying about it overly obviously, so he was late to the party and there's no need to link to the article. I'm wondering how he's going to spin Elon's eventual court win negatively - but he seems very eager when it comes to Tesla FUD so I'm sure he'll find a way. )

 

[Artful Dodger]

What’s going on in premarket? TSLA is down 1.4% to $260.xx. Macros are not great, but other stocks are down a lot less.

I thought the news over the weekend was neutral/good.

Ahaha, the shortz DO NOT CARE about the news: if there isn't any, they make *sugar* up. They're gonna do what they wanna do, no matter what. And it doesn't matter. Tesla does not need any $$$ from Wall St.

All this hand-wringing about demand, tweets, sec nannies, yada yadya is just Kabuki theatre. The show ends when the curtain comes up on the 2019Q1 earnings report. But its good buying opportunity right now, IMHO. How many bulls here on this board wish they had come in bigly last year with the SP in the $250s range? Be honest now, show of hands please.

And that was BEFORE we knew if Tesla would succeed in ramping Model 3 production. Now the only risk is whether we rake in all that sweet cash before Apr 1st so we can all count it all in Q1. Good problem to have, IMHO.

Well, I DO think MOST of that cash will be raked in this week, and the final total is gonna be a big surprise to some shorties. The really smart ones know that too, and play both sides of the game, with whip-saw results.

So, we either hold long, or play the game. Always your choice, and GLTA.

Cheers!

 

[WarpedOne]

What’s going on in premarket? TSLA is down 1.4% to $260.xx. Macros are not great, but other stocks are down a lot less.
I thought the news over the weekend was neutral/good.

Good/neutral news do not affect TSLA since 2015 or so...

This is not a stock based on business performance / fundamentals - this is a battlefield of world views and killing off 20th century industries.

Things will change when buyback ensues and opponents are declawed of their SP-manipulation claws.
They will then turn to other means .. even more legal actions, even more legislation, sabotage and similar strategies.
They will not go down without a serious fight.
SP will not see a significant rise for another 5 years at least. Prepare to see P/E ratio well below 1 ...

 

[Lessmog]

This I find a common error with non-native English speakers, here in Belgium, the up-coming Tuesday would be referred to as "next Tuesday", where as in English this indeed refers not to 26/3, but rather 2/4.

Correct usage is: Tuesday, next Tuesday, the Tuesday after next.

Feel free to nit-pick my FR, NL, D and DK too...

Second that for Swedish. But all over people are getting more and more sloppy with proper word usage. Grump!

 

[Lessmog]

I think people were coaching him to give more pessimistic estimates (overpromise and underdeliver), something he's been very bad at doing... but seems to be getting better at doing lately.

Disagree because I strongly suspect you actually mean the opposite!

 

[Tslynk67]

Small data point. Looks like wife is more interested in MY than M3 and in any case, we won't be getting until my MX lease ends in September 2021 - which just happens to be perfect timing for the MY.

So I decided to request refund of my M3 €1000 reservation, which was done last Monday from my Tesla management page. Refund appeared in the account this morning.

Now, with a little extra, has been transferred to my trading account, hoping to grab a handful of shares while the sale is on. Probably won't arrive until tomorrow though.

 

[Dan Detweiler]

What’s going on in premarket? TSLA is down 1.4% to $260.xx. Macros are not great, but other stocks are down a lot less.

I thought the news over the weekend was neutral/good.

The beginning of the end of quarter push by the shorts to drive the stock as low as possible so that when the Q1 report comes out, if it is positive, the rebound will only be back to where it was and no higher. These people know how to manipulate the stock. They have been doing it for decades and they know they can get away with it. When the SEC is in your back pocket you can pretty much do whatever you want.

It's only going to get worse folks, so buckle up and hunker down. It's going to be a long bumpy ride.

Dan

 

[KarenRei]

What’s going on in premarket? TSLA is down 1.4% to $260.xx. Macros are not great, but other stocks are down a lot less.

I thought the news over the weekend was neutral/good.

Not all stocks react equally to all macro news. The news in the US over the weekend (Barr's summary of the Mueller report) was considered good for domestic macros, but European and Asian markets had bad days. Tesla has strong international exposure, and additionally is seen as more vulnerable to downturns than the broader market.

That said... these figures are premarket, so take them with a grain of salt.

 

[Dan Detweiler]

Ahaha, the shortz DO NOT CARE about the news: if there isn't any, they make *sugar* up. They're gonna do what they wanna do, no matter what. And it doesn't matter. Tesla does not need any $$$ from Wall St.

All this hand-wringing about demand, tweets, sec nannies, yada yadya is just Kabuki theatre. The show ends when the curtain comes up on the 2019Q1 earnings report. But its good buying opportunity right now, IMHO. How many bulls here on this board wish they had come in bigly last year with the SP in the $250s range? Be honest now, show of hands please.

And that was BEFORE we knew if Tesla would succeed in ramping Model 3 production. Now the only risk is whether we rake in all that sweet cash before Apr 1st so we can all count it all in Q1. Good problem to have, IMHO.

Well, I DO think MOST of that cash will be raked in this week, and the final total is gonna be a big surprise to some shorties. The really smart ones know that too, and play both sides of the game, with whip-saw results.

So, we either hold long, or play the game. Always your choice, and GLTA.

Cheers!

All I can say is that I wish I had some powder, dry or not! God I would love to be able to get in on this opportunity.

Dan

 

[WarpedOne]

I made up a new acronym: GLAP .. go long and prosper!

 

[shlokavica22]

Small data point. Looks like wife is more interested in MY than M3 and in any case, we won't be getting until my MX lease ends in September 2021 - which just happens to be perfect timing for the MY.

So I decided to request refund of my M3 €1000 reservation, which was done last Monday from my Tesla management page. Refund appeared in the account this morning.

Now, with a little extra, has been transferred to my trading account, hoping to grab a handful of shares while the sale is on. Probably won't arrive until tomorrow though.

And people were complaining Model Y unveil was bad and unprofessional. Like TSLA didn't know what they are doing

 

[HG Wells]

Has any one heard of a SR (not plus) being delivered yet ?