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

[Prime_Number]

Vot? 1MM cars will have to drive 81,000 Miles a year per car at $1/Mile to make 81BN for the network - of which TN's cut will be 20 to 30%.

81000Miles/year/car seems high no?

A taxi driver was telling me the other day that he covers about 200 miles in an eight hour shift. 365 x 200 is 73,000 with an 8 hour shift. So the number is possible.

 

[Leo9]

There were supposed to be several support levels between 250 and here. We went through them as if they didn't exist. We broke out of a 'bowl formation' a few months ago, which would have meant much higher prices. The breakout floundered. TA-proponents only remind us of their successesful predictions, they never talk about those misses.

"Support" doesn't mean the price won't go down even more. TSLA broke down on terrible earnings, you really can't blade TA for that. The setup was neutral going into earnings.
After that, the breakdown from 225-226 was predictable from a TA standpoint too. Today drop was also suggested by Friday price action.

 

[Tslynk67]

Investor Psychology

We're aware of the confirmation bias, where someone cherry picks the data to support the position they hold dear in their mind.

There are other important psychological issues related to the stock price that investors really need to consider.

* When the stock price has proceeded substantially in the direction that earns you money, there's a tendency to enjoy this feeling of making money so much that you are unwilling to cut your holdings a bit, expecting the trend to continue indefinitely. This is part of the reasons why shorts tend to increase their interest when the stock price is low and why they so often fail to trim their holdings when they are profitable. They're suffering from this psychological illusion right now. This is also the reason why, as TSLA approached 370 several times already, TSLA longs said to themselves, "this is going to at last be the time we break 400" and they fail to capture gains by adjusting holdings.

* When the stock price has proceeded substantially in the direction that takes money out of your pocket (on paper, at least), there's a tendency in humans to think there will be no end to the continued trend. This is where TSLA longs are right now. This is one reason why we sometimes see longtime TSLA investors leave the investment when it is on the low side, but seldom when it is on the high side. There will indeed be a bottom and a bounce, but (as I have found out on numerous occasions), it's not always where you think it will be.

Bottom line is to recognize the emotions involved and keep them in mind as you make your investment decisions. TSLA is a manic-depressive stock due to media treatment, the effect of enter-low exit-high shorts, huge levels of options trading that lead to significant delta-hedging by market makers, and psychology effects.

I'm a 100% all-in bag-holder and have patience.

 

[Right_Said_Fred]

TSLA is taking a beating, but you have to feel sorry for NIO investors too. Down to 4,24 after a high of 13,80 in September and a second peak of10 only a few months (after the 60 Minutes item).

 

[SW2Fiddler]

So you want direct evidence of a scandle that involves no illgegal activity, just bias? I think you can just look at the results of what is out there. If you can’t see it, then there really is no point in arguing further.

@tinm doesn't owe me a damn thing, and I will darn sure buy the book. We're stateline neighbors after all.

But... I could be convinced that the advertisers customers aren't influencing editorial no way no how, by either one of two reasonable bits of investigative reporting:

• Someone going undercover as an intern in an actual newsroom in actual New York Actual City for oh, 6-10 weeks, and reporting back that no whiff of shenanigans was to be smelled; ~OR~
• An accounting of where the $10 Million in Koch Bro FUD Bucks actually went in 2016, and around $10 Million in 2017, and however much was spent (I'd guess greater than $10 Million, wouldn't you?) in 2018. Just the Koch "Tucker Bucks" will do. Show that $0 went to "the media" to give a police escort to FUD.

(Who's Tucker?)

A man of endless enthusiasm, Tucker publicized his model all over the country to wild acclaim. He sold stock, set up a factory…and then the auto industry launched a devastating anti-Tucker campaign.

Tucker was plagued by powerful enemies, stalled by production problems and hounded by the SEC. And it seemed his dream—like Howard Hughes’ airplane, the Spruce Goose—might never get off the ground. Yet in the dizzying world of high finance, strangling regulations and political power plays, Tucker held fast to his unique American vision. At last, fifty Tuckers rolled off his assembly line, prized by collectors and copied by competitors—bold, dynamic designs that live on in the cars America drives today.

 

[ruralectric]

Totally agree. Seems that every time I talk to someone outside the Tesla bubble their first thoughts involve lack of safety (opposite is true, of course), on verge of bankruptcy (stupid, but what the media tells you), crazy CEO on drugs. Sadly, this is largely what has gotten through to the mainstream.

Agree. You don't have to be a rocket scientist to get this. I do expect a different tone amongst shareholders at this years meeting. There have been lots of unfulfilled promises made and lots of self-inflicted wounds stemming from bad communication since the last shareholder meeting. Things could get a bit testy. I hope corporate is prepared for this and doesn't try to sweep the issue under the rug with pre-screened questions.

ps: Oh yeah. Bought another 8@~203.60. Can't seem to get this monkey off my back. I strongly support Tesla and the mission. Just hope they can slow down the rate of unforced errors.

 

[neroden]

I could be wrong... I hope they delay Semi and pickup truck. Semi takes a lot of batteries, also margin won't be good in small scale. Maybe hand build a few dozen for self use, continue to refine it.

I suspect the profit margin on the internal use of Semi is enormous. Tesla should build as many as they need themselves while they work out the bugs.

2. Build Model Y when they are ready. Model Y will likely to have better margin than Model 3, also the cost to bring Y to the market is relatively small. If the total demand for Y and 3 is much higher than 3 alone (I assume that's the case), it will bring down both Model Y and Model 3's cost.

My models are currently saying that Model Y is pretty important to justify Tesla having a high stock price. I'm glad that model Y appears to be on schedule for 2020.

3. Take care of service and parts supply.

Well, yes.

 

[ZachShahan]

I'm no stock/trading expert, but my hunch (and summary thoughts from picking up bits of info here and there) is this:

1. Institutional investors got out of TSLA in large volumes in the past 6+ months, which has been slowly (and sometimes quickly) driving the stock price down.

2. It's getting to the point where these big investors will again see it as a good buying opportunity and start piling money in again. (Not an advice.)

3. One key factor holding things up is no one really knows what Tesla's short- to mid-term demand is. People are concerned about more missed targets, but also curious to see if the Tesla delivery chart starts rising again.

4. No one is really putting faith (money) into FSD until Tesla turns it on and a regulatory lets them start running around the state/country with it.

5. Long term, you've got to be out of your mind to not have faith in Tesla growing strongly, since it has far better products than the rest of the market and multi-year leads in software, batteries, other aspects of electric drivetrains, EV brand strength, and more. (Not an advice.)

The question, in my mind, is simply when and where the market turns on TSLA again. Or, put another way, how long we're in this painful limbo.

 

[neroden]

Deffinatly build a bunch for internal use/ testing.
At 2kWh/mile ($0.10/kWh solar) vs 10 MPG ($4 a gallon diesel) , they save $0.20 a mile. Fremont to GF1 is 520 round trip, so $104 savings per trip. Two trips per day, $204 saving a day, $70k a year. With no traffic, you can hit 3 trips per day for $100k savings a year per truck.

Comparable savings are probably available for trucks delivering cars from the factory to the delivery centers. Even if they have to start slow with Giga-Fremont runs first, then California car deliveries, if Tesla saves $100K/year for each truck they build, that's pretty close to being a one-year payback period; it is well worth spending the money on. If they then have to build a couple of Megachargers costing a few milion each to support the longer delivery routes, as long as there are a lot of trucks running each route, it'll still be worth it. Extension to the Seattle/Portland/Vancouver route would come next, or the Phoenix. One car delivery route at a time.

 

[Zero CO2]

That is the main source of my stress! She is breathing down my neck because I keep having to transfer more money into my account to avoid a Margin Call. She asks if I'm going to hold to 0?!? She doesn't understand this is not Sears. TSLA is growing at a ridiculous rate and therefore the stock price has to bounce if the growth continues (and there is NO reason to think it won't).

you better prepare for a potentially long ride before the bounce ... this could take a while ... it will eventually bounce and when it does look out .....

Point is, Elon didn’t even have to write that email or include such details. Also a CEO running two company’s should not be revieweing expenses individually. It signals red flags to the market

Elon just dropped $$$$millions on TSLA... I would be more concerned if he did not want to see where his investment is going

 

[NicoV]

Comparable savings are probably available for trucks delivering cars from the factory to the delivery centers. Even if they have to start slow with Giga-Fremont runs first, then California car deliveries, if Tesla saves $100K/year for each truck they build, that's pretty close to being a one-year payback period; it is well worth spending the money on. If they then have to build a couple of Megachargers costing a few milion each to support the longer delivery routes, as long as there are a lot of trucks running each route, it'll still be worth it. Extension to the Seattle/Portland/Vancouver route would come next, or the Phoenix. One car delivery route at a time.

You forgot moving cars from the factory to Pier 80.

 

[ChrisA]

I'm really surprised there are not more posts about demand right now on this forum (or if I've missed current ones, please provide some links). I'd love to hear more educated guesses about demand and shipment forecasts for this quarter and the next few quarters (particularly some of the educated guesses that stem from country registrations where we do have some knowledge).

To me, softness in near-term demand is the biggest change in terms of the Tesla investment picture in the past year -- and its absolutely critical. It seems obvious to me that the cost cutting and erratic actions on pricing in the past three months were directly related to softer demand than Tesla anticipated. Musk basically conceded as much when he said that "people want to buy the Model 3, but the price is just too high" (I'm paraphrasing). That's an admission that demand is not where they thought it would be for the Model 3. Also, I think Tesla has been surprised about the softer than expected demand for S and for X. Here are some issues.

1) Going back to 2013 or so and the company's estimate for combined S and X global demand was 40k units annually. Initially, demand proved to be much higher than Musk or anyone else had assumed. Expectations soon ramped up to 100k units annually. At this point, it's always hard to re-calibrate expectations, but if steady state demand for S and X is actually 60k-70k annually, would that be so surprising? Relative to initial expectations, the products would still be home runs. And there are some reasons why a new steady state of demand might be falling into place.

2) With the model 3 production delayed, perhaps Tesla was forced into a situation of goosing demand as best it could for S and X for a couple of years by way of unsustainable referral programs. They also had the benefit of people buying the S since the 3 was not available. So, perhaps the 100k annual target looked much more solid than it was.

3) This dynamic may have now have reversed. The overly sweet referral program has ended. Moreover, some people are surely buying the 3 in lieu of the S. Comparisons with the 3 also really hurt S and X in the seasonally slow Q1 as people realized the battery and drive train in the 3 were simply better. It's logical to think that some people waited on S and X purchases in Q1 until Tesla updated the guts of those cars. So, to be clear, we may see some rebound with the new, refreshed S and X cars. I think this is what Elon and Tesla were expecting about the time of the Q1 conference call. I worry that the latest email from Elon imploring employees to reduce cost stems from the fact that they have not seen the S and X rebound they were hoping for thus far in Q2, which brings me to the very last demand point.

4) I think some of the chaos (and some of the FUD) around Tesla in the past year has eaten into demand. Because Tesla's Service organization was so strained in Q4, a friend of mine who purchased an X had a really crappy delivery experience. He still likes the car, but I imagine he's not the evangelist that he might have been if his delivery experience was much better. Perhaps he's not alone. Another admittedly anecdotal example: An older family relation of mine was interested in buying an electric vehicle last September. I spoke to him about Tesla, and he seemed like he was onboard. However, he's not the early adopter type. He's cautious and conservative. At the end of the day, he bought a BMW plugin hybrid instead. I'm sure he settled for a far inferior car. I think it was just the headlines and the controversy that he just could not stomach. He may not be alone.

To be clear, I'm big believer in the superiority of Tesla's products and in the company's competitive position, especially over the long term. However, the company may be facing a big temporary challenge as its near term demand may be very different than what the company expected for its cost structure. I'm not worried about the demand picture in the very long run. But I think how the demand picture shakes out near term is of critical importance. Thoughts or comments are appreciated.

 

[neroden]

Just because Shanghai GF building is near completion doesn't mean they will be starting production anytime in the next few months.

There's still likely a lot more work to be done to start production.

Equipment needs to be delivered and installed. Robots. Stamps. Lines. Etc.

Workers and people need to be hired.

Battery supply chain in China needs to be hammered out.

Parts supply chain in China needs to be hammered out.

In my opinion, best case scenario is that they produce a few thousand Model 3s by end of the year in Shanghai.

While that is certainly *a* scenario and I might call it the most *likely* one, calling it the "best case scenario" is clearly incorrect. The internal timelines are very clearly to have all the equipment installed, all the workers hired, the supply chain lined up, and the first cars coming off the lines in September. They've said as much. That's what they're planning. After that, the debugging starts. We all, quite reasonably, expect all kinds of problems which will prevent a fast ramp-up. But the best-case scenario is that everything goes smoothly and by December they're producing 3000 cars/week.

 

[Frank Einstein]

I took losses to get out the day of the earnings report but honestly I look like a genius right now to bail when I did.

There aren't any support levels left according to TA so this is uncharted territory and there is no bottom. So let's see how far down it can go I guess.

I have a ton of respect for people who post when they’re out, rather than just slipping off the radar and going quietly. Thank you.

As someone who's been lurking on the forum for many years, I understand the emotion and worry that’s in the air. It reminds me of when (2016?) we dropped back to $140 iirc from the then ATH of $290ish. There have been other instances of very negative sentiment, but what we're experiencing now is certainly up there among the worst.

I see the current price action as a sign of increasing desperation to stop Tesla from disrupting the status quo; it comes from a position of fear rather than strength. I might be wrong about this, I might be hopelessly naive, I don’t have any sources or evidence, I may well end up riding this stock all the way down to 0. I don't have the technical expertise to understand or even to access a lot of relevant data, probably I simply don't have the brainpower or else it'd be me launching my own rockets to Mars. All investments inevitably have some element of faith. However this plays out, and I think it’ll likely be fine, I do appreciate your collective wisdom. I plan to hold for decades (although I did sell a little last year), but everyone needs to decide what's best for them - and that's not always what's most financially astute. Don't underestimate the value of being able to enjoy a calm and stress-free night's sleep.

 

[neroden]

I'm really surprised there are not more posts about demand right now on this forum

This is because long-term demand concerns are idiotic.

To me, softness in near-term demand is the biggest change in terms of the Tesla investment picture in the past year -- and its absolutely critical.

Perceived softness in near-term demand is ENTIRELY explained by the US and Netherlands tax credit expirations, and the leak of the refresh on Model S and X. And it seems the demand for overloaded Performance cars at $10,000 for 0.2 of a second acceleration has run out.

Meanwhile, people in the US are still waiting to get their white interior SR+ Model 3s, and people in Iceland haven't gotten any cars yet.

However, the company may be facing a big temporary challenge as its near term demand may be very different than what the company expected for its cost structure.

Nope. The major problem is that *production* is not where it was supposed to be. It still isn't.

It's pretty clear to me that the Raven refresh for S&X was planned to producing by early March if not earlier, and it was delayed. Model 3 was supposed to be producing more cars per week, and Panasonic couldn't keep up with cell production (which is probably not going to be fixed until the end of June), which is why large parts of Europe are still waiting for their cars.

I'm not worried about the demand picture in the very long run. But I think how the demand picture shakes out near term is of critical importance. Thoughts or comments are appreciated.

Don't worry about demand. Worry about supply!

 

[avoigt]

Some off you may know me from posting quite a bid in the past and I appreciate all the appreciation I received.

Because I heard from some that my posts have been helpful I decided that I may be able to make a larger impact for our mission by moving to Twitter addressing a larger audience and I did move. In parallel I did write some articles atz CT and elektroauto-news and are still overwhelmed by the positive feedback I received here as well at Twitter as well at this web pages.

Over the years I have seen many shorts and trolls in this threat particularly and believe its probably no surprise that most of them have similar names and very similar syntax while texting. That can't be a coincidence.

At Twitter where I expected many trolls trying to chase me and annoy me I found just some very few and reliable ones following me since a long time posting their opinions with no facts or feedback since many months. Thats funny for me that they keep trying while never heard any feedback from me because its not worth it.

Since my time is limited and I enjoy writing as well I had to cut down my time either here or at Twitter and decided to read but not write as much at TMC.

Now since I returned the last days to spend a bid more time at TMC while the SP went down my observation is that way more trolls and shorts are trying to influence here versus what I experience at Twitter.

My modest advice, do not even respond or try to argue as all what they won't is a wider audience and attention to spread their FUD but if you read carefully there is nothing what they really have to contribute or to say.

Just a subjective point of view but thought I share it for the benefit of the audience.

 

[capster]

Shareholders are not happy now !

I’m a shareholder and I’m happy.

Tesla is making incredible progress. If you doubt that, just look at the strength of the opposition being mounted.

At the moment, the successful Maxwell merger is more significant to me than the latest tantrum being expressed in the stock price.

Remember, someone wants to shake those shares out of your hands. Don’t be deceived.

 

[MarcusMaximus]

I'm really surprised there are not more posts about demand right now on this forum (or if I've missed current ones, please provide some links). I'd love to hear more educated guesses about demand and shipment forecasts for this quarter and the next few quarters (particularly some of the educated guesses that stem from country registrations where we do have some knowledge).

To me, softness in near-term demand is the biggest change in terms of the Tesla investment picture in the past year -- and its absolutely critical. It seems obvious to me that the cost cutting and erratic actions on pricing in the past three months were directly related to softer demand than Tesla anticipated. Musk basically conceded as much when he said that "people want to buy the Model 3, but the price is just too high" (I'm paraphrasing). That's an admission that demand is not where they thought it would be for the Model 3. Also, I think Tesla has been surprised about the softer than expected demand for S and for X. Here are some issues.

1) Going back to 2013 or so and the company's estimate for combined S and X global demand was 40k units annually. Initially, demand proved to be much higher than Musk or anyone else had assumed. Expectations soon ramped up to 100k units annually. At this point, it's always hard to re-calibrate expectations, but if steady state demand for S and X is actually 60k-70k annually, would that be so surprising? Relative to initial expectations, the products would still be home runs. And there are some reasons why a new steady state of demand might be falling into place.

2) With the model 3 production delayed, perhaps Tesla was forced into a situation of goosing demand as best it could for S and X for a couple of years by way of unsustainable referral programs. They also had the benefit of people buying the S since the 3 was not available. So, perhaps the 100k annual target looked much more solid than it was.

3) This dynamic may have now have reversed. The overly sweet referral program has ended. Moreover, some people are surely buying the 3 in lieu of the S. Comparisons with the 3 also really hurt S and X in the seasonally slow Q1 as people realized the battery and drive train in the 3 were simply better. It's logical to think that some people waited on S and X purchases in Q1 until Tesla updated the guts of those cars. So, to be clear, we may see some rebound with the new, refreshed S and X cars. I think this is what Elon and Tesla were expecting about the time of the Q1 conference call. I worry that the latest email from Elon imploring employees to reduce cost stems from the fact that they have not seen the S and X rebound they were hoping for thus far in Q2, which brings me to the very last demand point.

4) I think some of the chaos (and some of the FUD) around Tesla in the past year has eaten into demand. Because Tesla's Service organization was so strained in Q4, a friend of mine who purchased an X had a really crappy delivery experience. He still likes the car, but I imagine he's not the evangelist that he might have been if his delivery experience was much better. Perhaps he's not alone. Another admittedly anecdotal example: An older family relation of mine was interested in buying an electric vehicle last September. I spoke to him about Tesla, and he seemed like he was onboard. However, he's not the early adopter type. He's cautious and conservative. At the end of the day, he bought a BMW plugin hybrid instead. I'm sure he settled for a far inferior car. I think it was just the headlines and the controversy that he just could not stomach. He may not be alone.

To be clear, I'm big believer in the superiority of Tesla's products and in the company's competitive position, especially over the long term. However, the company may be facing a big temporary challenge as its near term demand may be very different than what the company expected for its cost structure. I'm not worried about the demand picture in the very long run. But I think how the demand picture shakes out near term is of critical importance. Thoughts or comments are appreciated.

I don’t think you can look to Q1(or, to a lesser degree, Q2) to see any kind of steady state in S/X demand. They appear to have had more difficulty than expected switching their lines to the refresh(hence temporarily discontinued standard ranges and dramatically lower production in Q1), and that new production won’t be going full speed until June, if their estimates are correct.

There’s way too many confounds to say with any certainty much of anything about S/X demand right now.

 

[anon]

I worry that the latest email from Elon imploring employees to reduce cost stems from the fact that they have not seen the S and X rebound they were hoping for thus far in Q2

It's entirely possible. However, assuming that Musk's email was motivated by a new problem at the company and not just his latest attempt at improving margins, then there are other explanations too, e.g. lower Model 3 ASP (they said it was increasing back towards $50k in the US, but maybe it dropped again), or simply poor S/X production. Judging by posts on TMC, they only just started delivering Raven S/X last week, but seemingly only a small number, while many people are still waiting and don't even have VINs. I know that there was a regulatory delay, so I had imagined that deliveries would start in large numbers after that was fixed...but that doesn't seem to be the case yet.

Having said that, a recent post here indicates that there are a lot of Model X cars at the factory, so maybe they are just disorganised after the regulatory issues: Anyone received delivery of 2019 'Raven' Refresh?

 

[neroden]

4) I think some of the chaos (and some of the FUD) around Tesla in the past year has eaten into demand. Because Tesla's Service organization was so strained in Q4, a friend of mine who purchased an X had a really crappy delivery experience. He still likes the car, but I imagine he's not the evangelist that he might have been if his delivery experience was much better. Perhaps he's not alone.

Take it from me: Tesla's sales/delivery experience has been a crappy mess since 2013. I remember when they didn't understand how NY's car insurance system worked and kept asking for insurance before giving me a VIN number -- you can't get insurance without a VIN number. Had to demand the phone number of a local NY person to get the problem straightened out, took weeks.

In other words, the crappiness of sales/delivery experience hasn't really changed. :-( The Q4 deliveries just brought it into sharp relief, and maybe finally brought it to the attention of top management, who had been ignoring it for five years. They REALLY need to fix it. But it hasn't deterred too many people from buying the cars for the last 6 years....