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

[Chartered321]

Hey fund managers, hey private bankers, hey Jim Cramer or other financial experts, are you buying Amazon? Apple? Facebook? Oohhh that's smart and such a nice piece of advice, very responsible and it must be coming from years and years of experience and studies.
Except for the cloud business, I think the products of the aforementioned companies are getting obsolete and ethically wrong, yeah all of them. Amazon kills every family owned business and it's dependent on transportation companies, Apple sells nice products but where's the innovation? Services? Forcing 3rd party companies to use their marketplace in exchange for an unjustified share of revenues? That's called mafia in Italy. The airpods? Apple Music? Wow astonishing.. Facebook? Don't even make me start on it. The use of social media is the most toxic among all the products you can spend your time on. From fake news to fake version of yourself on instagram to voyeurism to monetizing on bulls@its to fake jobs and carreers. Their use should be limited to 1-2 hours max per day. I repeat: toxic products, wake up people..
I'm buying TSLA, accumulating every day since a couple of months. It's a cheap stock because analysts think EM is a liar so there's nothing projected on their financial models. EM is a liar yeah, so the last letter to employee is a lie?
Did you do a back test on him? Is he selling nuclear weapons? No, he's an innovator, he's selling products that give joy and pleasure to people. Think people. You're smarter than this...

 

[RoadsterPlease]

if there's always a drop in stock price over night it has to be institutional investors right? T. Rowe Price?

 

[Fact Checking]

I relistened to Q1 Conference Calls and during the 33:50 mark Elon stated that he expects to lower the price of S&X due to reduce cost of 5-7%. Which makes sense given today’s announcement on lowering the price of SX by around $3k.

At the 33:50 mark the dialogue is between Adam Jonas and Elon regarding Autopilot safety. Could you please double-check this?

Here's what I was able to find in the transcript of the Q1 call about S/X costs and prices:

Elon Musk

"Yes, I should mention that the upgraded powertrain for S and X was actually launched in a significant cost down because we essentially took the high volume, we’re driving units of the Model 3 which is extremely efficient magnet motor and product electronics and we made a version for that for the contract unit of S and X. And so, we’re actually able to get cost reduction while improving range and [indiscernible] of the car. That’s just 1 example."​

I.e. sharing part of the power train drives down S/X costs.

 

[Fact Checking]

The uncertainty is part of the issue here. He may already have pledged a significant part of SpaceX too on top of uncertainty for how much the banks are willing to accept them as collateral in the first place. Margins are bitch in that they tend to unreasonably amplify weaknesses. And, in the case of Elon, that there is no source of liquidity to act as a stop-gap.

While that's true when the loan amount is in any way comparable to the wealth of a person, I think a $10b+ net worth individual (with TSLA drops taken into account) generally doesn't get squeezed by margin requirements of a $500m-$700m loan.

Since most of Elon's net worth is invested maybe in some kind of deep recession when every valuation goes down to 30-40% of the original and liquidity is expensive I could imagine it. In the current economic climate it's just one of those disingenuous TSLAQ arguments to create more fear, uncertainty and doubt around TSLA...

 

[schonelucht]

While that's true when the loan amount is in any way comparable to the wealth of a person, I think a $10b+ net worth individual (with TSLA drops taken into account) generally doesn't get squeezed by margin requirements of a $500m-$700m loan.

We don't know the size of his loan. We know he needs to post at least $5B collateral. That's significant, even for someone with his (volatile) net worth.

 

[JohnDinger]

Amazon kills every family owned business and it's dependent on transportation companies

OT but what transportation companies?

The overwhelming majority of US trucking / logistics is done through independent contractors and small businesses.

2020 is expected to be the first year where independent contractors pass FedEx/UPS for last mile deliveries, too (look at growth of Uber Eats, Postmates, TaskRabbit, etc.)

 

[RobStark]

New Cars - New Car Prices & Research - Motortrend - MotorTrend

Spoiler Alert








1) Tesla Model 3
2) Genesis G 70
3) BMW 330i

 

[SO16]

Those, who clicked "Disagree" to the above, Please, do tell me how do you envision the supersmart AI NeuralNet (TBD) jumping out of the V3 Tesla ASIC processor, floating around the car and wiping the camera lenses using the Force like a good Jedi !

In my 30+ year career as a software developer (specialized in AI techniques applied to Molecular Modeling), I have seen my fair share of good, capable software, yet I fail to imagine how to make software do something for which the hardware capability does not exist.


Possibly, but it would be rather costly. Just as pre-AP1 cars were too costly to retrofit with AP.
Problem isn't the cost of a few water sprayer heads, but the missing wiring and water piping for them inside the body of the car. That caries the prohibitive labor cost of retrofitting, as it would require massive dis-assembly and re-assembly of the car.

Have you needed to wipe off the cameras? I haven’t. I suppose if I went mud bogging, that may be a different story.

 

[RobStark]

OT but what transportation companies?

The overwhelming majority of US trucking / logistics is done through independent contractors and small businesses.

2020 is expected to be the first year where independent contractors pass FedEx/UPS for last mile deliveries, too (look at growth of Uber Eats, Postmates, TaskRabbit, etc.)

Top 5 Largest Trucking Companies in the US

JB Hunt is a partner and reservation holder of Tesla Semi


Then there are Costco, WalMart, Target and Supermarket chains that have their own fleets of Semis. Coca Cola Pepsi Co Anheuser Busch.

 

[Pras]

We don't know the size of his loan. We know he needs to post at least $5B collateral. That's significant, even for someone with his (volatile) net worth.

Why assume that he didn’t put spacex shares as collateral? Is that because banks prefer a liquid stock than illiquid? I guess while it is a factor, banks take all kinds of collateral. My point, could he not be using spacex shares for collateral?

 

[BioSehnsucht]

Have you needed to wipe off the cameras? I haven’t. I suppose if I went mud bogging, that may be a different story.

I've yet to clean either the repeater or B pillar cameras beyond the regular cleaning they get from rain and/or car washes every few weeks. I'm ashamed to admit I've actually gone a couple of months at one point without any kind of car wash beyond whatever the weather provided.

Somehow, the backup camera on the other hand, I've had to clean several times if the conditions were just "right". Not spontaneously, just over many weeks, eventually realizing I'm having a harder time seeing anything at night through it. Luckily, this is not super important for the purpose of safe driving when already moving in traffic, with the other cameras in play (since the occasions to stop and reverse in traffic are rare). Again though, the build up was gradual, so a regularly scheduled cleaning for any robotaxi should solve it.

 

[Tslynk67]

I got another referral, this time from the people who supply my GoCycles, and when I first met them, three years back, they were running a Ford dealership

I've never tried to sell Tesla to them, but have regularly visited their place in my Model S, then Model X for annual service and a few issues with the bike. So they've seen the cars plenty and obviously piqued their interest and they started asking me about it when I visited a couple of weeks back.

They've bought a pre-Raven inventory X100D with supercharging thrown-in, so one less "in transit" and a bargain for them. Win win!

And of course all their customers that buy electric bikes (quite expensive ones too I may add) will now see this Model X, the quiet revolution will continue.

And my work colleague that I mentioned yesterday, where they sold the inventory car he wanted, he sorted out another - he said S70D, so not sure if that's CPS or not. He too, will evangelise.

 

[Tslynk67]

Can someone advise what’s up with Charley Grant from WSJ...his last few articles have been quite inflammatory.

The guy's a complete a-hole and has been writing FUD and complete garbage about Tesla for years now, I can't stand him.

 

[Pras]

With Musk exercising the 175000 shares, he may have had to put up $5.5m just to exercise the option but almost $15m to pay for taxes. So effectively he spent $20.5 to buy 175k shares, paying ~$117 per share.

To exercise remaining 5m shares he will thus need nearly $600m in cash.

His share in the company will then grow by ~3%.

He can raise $600m by selling 2% of his stake in spacex ( but then he may have to pay income tax gains again). So i guess he will refrain from that. Hence the best course of action for him continues to take loans now and in future, if an when Tesla stock recovers, pay some of his loans back.

 

[Tslynk67]

This is really sleazy on Tesla's part. Moreso that usual even.

When I heard Model S prices dropped today I rushed to the Tesla webite on my iPhone, went into the configurator for Model S, and was baffled by the pricing I saw, which made no sense. I had to click around and scroll around until I realized the configuration I was creating was actually $86,500. I sure wish Tesla wouldn't be so sneaky. It feels deceptive.

Heads' up: I know many of you disagree. Maybe all of you. No need to pile on with disagree demerits. kthxbye

Indeed, it's deceptive IMO and they don't need to do it - they could have an "indicative savings" figure somewhere else on the page, but the money you pay for the car should be the main figure.

Thankfully in Europe they were admonished for it and stopped the practice.

 

[mongo]

I've now lost all confidence in you as a source of information.
How do you get to:

We don't know the size of his loan. We know he needs to post at least $5B collateral. That's significant, even for someone with his (volatile) net worth.

From your original claim:

We know from the proxy statement that on December 31 2018, Elon had pledged 13 million TSLA shares or $4.45B at that time. Since then he had to fund his lifestyle, capitalize the interest on this loan, pay mortgages on significant real estate, take part in the TSLA raise and maybe also invest in some of his other ventures (SpaceX, Boring). It's not impossible the required collateral today approaches $5B. At roughly $200 per share that's 25M shares. He outright owns 33M shares and has a further 4.5M or so ITM options that vested. While he is not getting margin calls, well over 50% of his TSLA holdings are now pledged.

Or from funding SpaceX with TSLA to funding TSLA/ lifestyle with SpaceX?

The uncertainty is part of the issue here. He may already have pledged a significant part of SpaceX too on top of uncertainty for how much the banks are willing to accept them as collateral in the first place. Margins are bitch in that they tend to unreasonably amplify weaknesses. And, in the case of Elon, that there is no source of liquidity to act as a stop-gap.

Nor does your original premise hold any water. The size of colleteral must be larger than the debt (typically). However, that is a bound on the loan, not a indicator of loan size. The collateral securing my mortgage is multiples of the current mortgage (speaking of mortgages, Elon refinanced his) . Sort of like someone who got into TSLA on the ground floor before it increased at least 10x (recently) or >6x(currently). Looking at Elon's loan size based on collateral size based on the value of the stock at the high water mark vs when the line of credit was established is *sugardy sugar*.

Nor does your liquidity comment match any of his recent actions.

 

[Right_Said_Fred]

I just cleaned the mud and sludge of my Iphone and came to the conclusion that the camera discussion is way too much OT. All possible arguments have been exchanged, so discussion closed.

Mod

 

[traxila]

We don't know the size of his loan. We know he needs to post at least $5B collateral. That's significant, even for someone with his (volatile) net worth.

How do we know he needs to post five bill in collateral? How big is this loan that he should post five bill? Does anyone have an idea what five bill in collateral would get you in a loan?

 

[JohnDinger]

Why assume that he didn’t put spacex shares as collateral? Is that because banks prefer a liquid stock than illiquid? I guess while it is a factor, banks take all kinds of collateral. My point, could he not be using spacex shares for collateral?

SpaceX shares aren't liquid, and the value of SpaceX isn't validated by the broader market. As an example, if he raised 500M at a 50B valuation, there's only 500M worth that supports that valuation. When you go public, the whole market supports the valuation.

I think Musk's "margin loans" are just a big, fat nothingburger. The key price of these loans are likely below $75/share.

He's probably exercising these options for tax purposes.

Options don't get capital gains, so by exercising now, he's locking in a low price for his capital gains to accumulate.

 

[SPadival]

His loan from the biggest banks that participated in the cap raise is $507 million. I doubt he has any sizeable loans with any other banks. Why would the collateral be 10 times the loan size??

Elon Musk owes $507 million to banks helping Tesla raise capital - Reuters