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

[MABO]

$450 PT at Jefferies:

Tesla (TSLA) Given a $450.00 Price Target by Jefferies Financial Group Analysts

From this article:

Tesla (NASDAQ:TSLA) last announced its quarterly earnings results on Wednesday, January 30th. The electric vehicle producer reported $1.93 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $1.00 by $0.93. The company had revenue of $7.23 billion for the quarter, compared to the consensus estimate of $7.09 billion. Tesla had a negative net margin of 4.55% and a negative return on equity of 18.50%. Tesla’s revenue for the quarter was up 119.8% compared to the same quarter last year. During the same period in the previous year, the firm posted ($3.04) EPS. On average, equities analysts forecast that Tesla will post 1.64 earnings per share for the current year.

I just checked CNBC and the analyst 'consensus' is $4.374 EPS. I glad we have multiple 'consensus' numbers to choose from

At least the current (Q1) EPS is down to .196 (CNBC number). Still not matching Elon's guidance, but it has dropped materially in the last two weeks.

 

[Krugerrand]

Trials are not about "showing support". This is not a sports game. Any attempt you make to try to influence the judge by "showing support" is only going to backfire on you. Judges see themselves as impartial public servants seeking the truth, when they could instead be taking a much larger paycheck in private law practice. They don't generally take kindly to people trying to peer-pressure them.

In the same way that Cramer saying that the judge has to rule against Musk because he's making a fool of her is likely to backfire, Tesla supporters showing up in pro-Musk gear is likely to as well. Just don't.

It’s not a ‘trial’. There’s not a chance the judge will be influenced. The show of support isn’t for the judge. Some of you are just taking this way over the top. Maybe a little less television drama.

Let me know when Cramer is held accountable for his words. I won’t hold my breath.

 

[Lessmog]

The financial media is pretty annoying and I couldn't find the details of the acquisition to calculate arbitrage.

Media says $4.75 per share at $218 million total. What I want to find out is, how many shares of maxwell per tesla shares since it is an all stock transaction. Anyone?

Maybe late again, but this is from Tesla's 10-K from Feb 19 (p 138):

Note 24 – Subsequent Events
On February 3, 2019, we entered into a definitive agreement to acquire Maxwell Technologies, Inc. (“Maxwell”). Pursuant to the definitive agreement, each issued and outstanding share of Maxwell common stock will be exchanged for a fraction of a share of our common stock equal to the lesser of: (i) $4.75 divided by an average value of one share of our common stock as calculated pursuant to the definitive agreement, and (ii) 0.0193, provided that cash will be paid in lieu of any fractional shares of our common stock. The closing of the transaction is subject to the successful tender of a specified minimum number of Maxwell common stock in an exchange offer to be commenced by our wholly-owned subsidiary, certain regulatory approvals and customary closing conditions.
​

So, late as suspected. This is a more informative post.

 

[Krugerrand]

Considering my very significant investment in TSLA, I have to appeal to any would-be-attending Tesla fan to act responsibly and not give the judge any reason to think less of Tesla.

Thanks in advance.

Duh. No one has suggested otherwise.

 

[Big Blue 1011]

But scheduling an oral hearing was only half of the decision:

Order – #36 in United States Securities and Exchange Commission v. Musk (S.D.N.Y., 1:18-cv-08865) – CourtListener.com

ALISON J. NATHAN, District Judge:

Both parties have indicated that an evidentiary hearing is not required on Plaintiff's Motion for Order to Show Cause. Dkt. Nos. 34_35.

Accordingly, the Court will decide
Plaintiff's motion without an evidentiary hearing.

The Court Wili, however, hold oral argument, which is hereby scheduled for April 4, 2019 at 2:00 p.m.

SO ORDERED.​

The other half of the decision was to not hold an evidentiary hearing - which, while requested by both parties, was not just a procedural decision: the court is the "injured" party when a court order is disobeyed, so a contempt hearing could have been held with Elon testifying.

There are activist judges and non-activist judges. I have no idea where Judge Nathan falls, but if neither side requested an evidentiary hearing, I'm hardly surprised that she didn't schedule one.

 

[Fact Checking]

What you are left with is a relatively small number of tweets that fall into the gray area. May be material. May not be material. Who knows? Under the consent decree, those tweets should have been submitted for approval.

That's false.

The decision Elon took was to not send the tweets that fell into the "grey" area. Elon applied self-censorship to comply with the settlement.

Elon explained this in his sworn affidavit. The claim that the only way to comply with the settlement is to send "gray" tweets for review is basically the distorted interpretation of the SEC - it's not the full story: the other solution, which Elon used, is to not send "gray Tweets" at all.

 

[Causalien]

Amendment No 1
“This Schedule TO relates to the offer by the Offeror to exchange for each outstanding share of common stock of Maxwell Technologies, Inc., a Delaware corporation (“Maxwell”), par value $0.10 per share (“Maxwell common stock” and such shares of Maxwell common stock, “Maxwell shares”), validly tendered and not validly withdrawn in the offer, for a fraction of a share of Tesla common stock, par value $0.001 per share (which we refer to as “Tesla common stock” and such shares of Tesla common stock, “Tesla shares”) equal to the quotient obtained by dividing $4.75 by the volume weighted average of the daily volume weighted average of the trading price of one (1) share of Tesla common stock as reported on the Nasdaq Global Select Market for the five (5) consecutive trading days immediately preceding the second trading day prior to the date of the expiration of the offer, subject to the minimum, together with cash in lieu of any fractional shares of Tesla common stock, without interest and less any applicable withholding taxes. In the event that the Tesla common stock price is equal to or less than $245.90, the minimum will apply and each share of Maxwell common stock validly tendered and not validly withdrawn in the offer will be exchanged for 0.0193 of a share of Tesla common stock. “

Oh. I see. Thanks.

Regarding above Elon "not a CEO" discussion. I also state Elon isn't going anywhere. First of all, I think he will not be held in contempt, but will be reminded by the judge to comply carefully, the judge may well admonish the SEC and consider clarification to the wording of the settlement - if such thing is allowed?

If, heavens forbid, the judge was to rule against and impose some draconian conditions, then Tesla could hire him as a janitor for the same compensation package. He could operate the same as he does today, just needs to carry a broom with him everywhere...

Now, I'm coming back to this option I bought, it was up 127% today at one point. Obviously at this moment, this is on speculation that the value of $TSLA may rise above the strike price by next Friday. This means, if I'm correct that if the SP doesn't continue to rise, the value will start to fall - this is what people refer to as "time value", is that correct?

I still see a lot of potential upside in the coming days and potential for a big pop with Q1 deliveries, but the potential to offload it with 100% profit is tempting:

View attachment 390972

I'd sell half. But since you only bought 1 and this is a lottery ticket...

 

[Silent Ludicrosy]

Regarding above Elon "not a CEO" discussion. I also state Elon isn't going anywhere. First of all, I think he will not be held in contempt, but will be reminded by the judge to comply carefully, the judge may well admonish the SEC and consider clarification to the wording of the settlement - if such thing is allowed?
View attachment 390972

Worst case is the judge forces Elon and the SEC to sit and hold hands until they stop fighting Westwood High School Students In Arizona Forced To Hold Hands As Punishment For Fighting | HuffPost

 

[Curt Renz]

Today's closing:

-1.60% F
-0.71% GM
+1.82% FCAU
+2.64% TSLA

 

[Big Blue 1011]

But scheduling an oral hearing was only half of the decision:


Elon never sought pre-approval because he consciously avoided all topics with material information. He effectively applied self-censorship in an attempt to avoid conflict with the SEC.

Here is Elon's sworn affidavit:

"7. I have taken my obligation to comply with the Order and the Policy seriously. Among other things, I have dramatically decreased the amount that I tweet about Tesla. Compared to the months of May, June, and July 2018, during the three months following the entry of the Order (November and December 2018 and January 2019), I have cut my average monthly Tesla-related tweets nearly in half. This is not because I am concerned about non-compliance, but rather because I want to err on the side of caution to avoid unnecessary disputes with the SEC. I have also taken steps to ensure that, when I do tweet information, I am compliant with the Order and the Policy. The Disclosure Counsel and other members of Tesla’s legal department have reviewed the updated controls and procedures with me on multiple occasions. With my knowledge and approval, Tesla’s General Counsel and Disclosure Counsel have been reviewing all tweets promptly in real time upon publication to double-check compliance with the Policy and to ensure that any errors are caught and rectified quickly. Additionally, since the entry of the Order and the enactment of the Policy, I have not tweeted information that I believe is, or could reasonably be, material."​

The suggestion that Elon didn't strive to maximally comply with the settlement is absurd.

But yeah, I can already see shorts pivoting to a new "if Elon wins the case no big deal" talking point, downplaying the significance of an eventual win over the SEC in the lawsuit.

I thought I had read all of the pleadings, but obviously not. That's my bad for not reading his affidavit. That could easily have persuaded the SEC not to request the evidentiary hearing. So, I apologize for that.

 

[Krugerrand]

To over-simplify what might be a very long post to explain why one might misunderstand my post, here's the wiki, which even mentions the Tesla Tilberg operation:
Knock-down_kit
For what it is worth I have owned a ckd built vehicle and driven a number of others:
A ChevIran, which was a CKD Opel Commodore assembled in Iran, as the name implies.
A Range Rover Evoque, assembed in Brazil right now.
and quite a few more.

The technique is nearly always employed to avoid some kind of taxation. Some significant parts ships, including body panels are shipped internationally for a wide variety of reasons, including concentration of capital intensive and/or labor intensive pieces.

As for OMG is response, I fear you might well have been thinking mostly about the paint line, maybe even stamping. I personally know of no CKD automotive operation that uses pre-painted major components, although I would not be shocked to find some.. They even do that sometimes with aircraft, where gigantic components are sometimes moved very long distances.

If you were thinking of something different please say.

Several comments from various people, including the Shanghai mayor IIRC (I did not look it up) implied some production might begin in late 3Q 2019. Such a schedule, even considering the speed with which they are working, is not likely to allow for stamping operations to be prepared, nor battery or pack production. Of course, I am very reluctant to underestimate what might happen.

After all, I once resided in a Chinese-built building that was sandy soil five months before I lived there.

Yes. I know how they do it for Tillburg. Not what the conversation was about, thus context and OMG.

Let’s move on.

 

[dc_h]

End of 2018 and beginning of 2019 storm clouds were gathering and Tesla was boarding up the windows to prepare for a Category 5 macroeconomic storm: the Federal reserve was increasing rates, NASDAQ crash, China tariffs of up to 65%, 25% European tariff threat, Canadian tariffs, Brexsh1t threat, plus post tax credit cliff in their home market and seasonally weak Q1 expectations.

This is what the layoffs and the conservative guidance was about most I believe and Tesla would have done just fine in a recession too.

It takes time to install new cell supply on the Panasonic side: it took about 5 months after Tesla hit 5k/week end of June 2018, and they already had the factory space waiting for the new lines. The next round of expansions in the GF1 will have to provide enough space for Semi and Model Y production, Panasonic expansion, Tesla battery pack assembly line expansion and I'm sure Tesla's powertrain side would want to expand a bit as well. Deep foundations take time to pour and set, multi-story buildings take time to be raised - I'd guess at least another 5 months before lines can be moved in.

Maybe Tesla has a trick up their sleeves, but normally I'd guess GF1 would be expanded by early next year, and more capital wouldn't really speed up this process. (The European Gigafactory could perhaps be sped up with more capital.)

I think they poured concrete pylons for the completed factory and only have to pour foundations. I think as soon as GF3 phase one is complete, they’ll start building out at GF1. Once Shanghai is producing cars local cash flow will support future expansion. What will be interesting is if they start GF4 right after GF3 starts production, wait to get GF1 ready for the Y or do both at the same time. Cash flow could be closer to 2 billion per quarter then 1 billion once Shanghai is producing 3000 3’s a week.

Hopefully 2021 is the year Fremont becomes Tesla 4th largest plant.

 

[Krugerrand]

While it is very exciting to see all the records broken in the last week of the Q (such as in Norway now), this whole end-of-quarter delivery madness is bothering me.

We all know (unlike analysts and journalists) it is standard operating procedure for Tesla to focus on making cars for overseas delivery early in the Q, put them on ships, then shift focus to NA cars and there is a huge push to deliver everything in the last weeks of the Q. This is all to reduce cars-in-transit for the quarterly report, so financials look better.

I get that this made a lot of sense earlier when Tesla was in need of capital raise. However, Elon has stated about a year ago that they do not intend to raise more capital from WS as they have shifted from investment (money "burning") stage to money generation stage, so they are now able to self-finance the growth. Indeed, Q3 and Q4 last year has proven that.

Yet, they continue to replay delivery hell each quarter end, which makes no sense to me. Trust me, I know from first-hand experience how bad it feels to the customers. I can imagine it is just as bad or worse for Tesla employees involved. Why don't they finally bite the bullet and take the hit in quarter-end optics for having a large number of vehicles in-transit and simply spread deliveries evenly ?

The removal of the hectic end-of-Q madness would improve customer experience, it would lower pressure on employees, make logistics simpler, ultimately cheaper: instead of peak usage and payment of extra carriers, they could spread the work evenly and have less idle time.

So why continue this bad practice for financial "optics" that no longer matter, when the alternative would actually save money in the long term ???

Because media FUD. Because SP, which IS affecting a lot of people like employees, like some here. Because self funding going forward requires financial discipline, including finding a way to be consistently CFP and profitable. Because it matters.

 

[Big Blue 1011]

That's false.

The decision Elon took was to not send the tweets that fell into the "grey" area. Elon applied self-censorship to comply with the settlement.

This is not a difficult concept to understand.

Elon explained this in his sworn affidavit, you need to read it to make a contribution to this discussion. Right now you are only repeating the distorted interpretations of the SEC...

I think our posts may have crossed over each other. I acknowledged somehow missing the affidavit. It was not intentional. One thing I can assure you, however, is that there is more than one lawyer in the Enforcement Division of the SEC who would find it amusing that I would be accused of carrying their water.

 

[SO16]

I disagreed because I bought my Model 3 because it is BY FAR the best sedan for sale in the world, for me and for the planet. It had nothing to do with Elon's marketing or SpaceX. Tesla will continue selling every car they can make for years to come, with or without Elon. Any hit to the stock price would be temporary.

Don't get me wrong, I love Elon and SpaceX, but Tesla doesn't need them at this point to continue to succeed.

Some people seem to forget that the Tesla vehicles are great in large part BECAUSE of Elon. Hopefully that would now continue even without him.

 

[KarenRei]

The show of support isn’t for the judge. Some of you are just taking this way over the top. Maybe a little less television drama.

Okay, lets just put this very simply:

If you go there dressed like a "Tesla Fan", or worse acting like a "Tesla Fan", as though this were some sort of sports game and you're there to cheer for the home team.... most people here will hate you for doing so. For threatening our investments because you want to insert yourself into the middle of important legal proceedings as something other than a passive observer.

Mod: I agree, but surely this message has been sent and received by now. --ggr.

 

[BioSehnsucht]

• HW3 board factory: this too is probably better done in the U.S., although they might eventually bring this to China too.

Most likely the boards are laid up, populated, soldered, etc in either China or Taiwan (or somewhere else nearby) currently anyways. Almost nobody gets their PCBs made in the USA unless they need overnight turnaround for prototyping, or perhaps it's a DOD or similar contract. Mass production even with shipping is much cheaper from Asia.

This of course doesn't rule out that some components are shipping to Asia from the US (such as the new HW3 processors, which IIRC are being fabbed in Samsung's Austin, TX facility) to supply HW3 board production, but the final board assembly is likely to occur in Asia regardless.

 

[Artful Dodger]

Hmm, not the same as what I recalled. In Maxwell's conference call (q3?), they said they had a pilot line running with a "partner" to validate the tech. Other than Tesla, who else could've validated the process?

Since the process was already validated, then it should only be a matter of building up the cell production line to make dry-electrodes. A year might be too long.

It's even better than that. The dry electrode process replaces just 1 of 7 steps required to build the cell. There's no reason at all Tesla wouldn't licence that to Panasonic, and then integrate it into the existing production process at GF1 (and build into 1st construciton at GF3/Shanghai).

It's a Win-Win that leverages existing bty cell lines, all while cutting costs, speeding production, reducing factory space required, and eliminating use of toxic solvents. Oh, did I mention uses less energy to manufacture, but results in a 30% greater energy density product?

Cheers!

 

[Fact Checking]

I think our posts may have crossed over each other. I acknowledged somehow missing the affidavit. It was not intentional. One thing I can assure you, however, is that there is more than one lawyer in the Enforcement Division of the SEC who would find it amusing that I would be accused of carrying their water.

Sorry - our replies indeed crossed, and when I saw yours I edited my harsh response - and for the unjustified harshness I apologize! The harsh text you quoted doesn't exist anymore.

Regarding Elon's affidavit, what amazes me is that the SEC didn't drop their lawsuit on reading it.

They might genuinely have missed the fact that Elon not sending half of his tweets is an honest to God attempt at compliance.

Instead they doubled down, changed the argument halfway through and increased the volume of their shouting - further twisting the knife and harming the shareholders they are supposed to protect.

 

[Krugerrand]

Also, Elon did not suggest that all stamping would be at GF-3 before the end of 2019. 'stamping' could include some small, light parts as well as the major body/chassis panels. It would not be a stretch to see them import things like the body pan and difficult body panels while initially stamping other parts.

Frankly I know I have no knowledge any more than anyone else. I do know Tesla regularly does things faster than others, more innovatively than most and vastly faster than most. I am also quite confident that everyone involved wants some Model 3's leave GF-3 factory does and be delivered before 2019 ends. All of our debate is about how in the world they can achieve that feat.

OTOH, just imagine if one of those gigantic presses was ordered the day they knew there would be a new factory. Imagine a major paint line was ordered at the same time. Imagine Grohmann has been building even more of those speedy lines than we know. Imagine both the major robotics suppliers had been in the mix. If all that had happened they just might do the entire thing before year end. That is imagining on the order of John Lennon, probably...but it might be possible.

It would be expensive to ship body panels. That was the whole point. Bad idea. Not logical. Might as well just send a whole car or do what they do to for Tillburg.

What parts does Tesla stamp? Body panels we know for sure and battery casing. They’d want to make ALL of those in China from the get go.

Smaller parts, we’ve no idea what they stamp or outsource but those are a non-issue. They don’t require the same kind of handling care and will be significantly less expensive to ship. Have at it.

We’ll have to wait and see how it works out. As I mentioned before, Tesla never talks about stamping but for one time when Elon thought it might be a hold up for Model 3 production. It wasn’t. When you consistently don’t talk about an entire department of your company it’s because it isn’t a problem.