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

[neroden]

What kind of numbers do you expect for Q2 that will positively surprise the Street and what basis is there that it is happening?

The preponderance of the evidence is pointing to 80-90K total (including S/X) at this point, to me. S/X will be lower than steady-state 25K because Raven came out late.

The Street will probably find some way to spin this as a miss (FactSet numbers with artificially high numbers stuck in) but it's actually higher than the analysts' estimates.

What they can't spin as a miss is the Q2 *financials*, which are what I was talking about. Won't see those until end of July or early August though. I expect those to show cash flow positivity (not sure about GAAP earnings), and given the current level of pessimism, that will make analysts' heads explode.

 

[neroden]

What is your evidence that having knowledge of all those things actually improves prediction accuracy in the longer term?
And what is your evidence that being able to predict things accurately about discrete events in the future actually leads to an increase in investment performance? There are some pretty well-known long-term investors whose philosophy seems to be to make investments that would do well in a range of scenarios, wherein they implicitly acknowledge that their prediction ability in their (full-time) pursuit is imperfect. Is investing your full-time pursuit too?

Yes, and I would say the same as they do. Tesla in particular will do well in a vast range of scenarios.

However, I know this because I know that the fossil fuel business is dying and everything is being electrified, with renewable energy taking over. And all the other EV manufacturers are in substantially worse positions than Tesla, and there are high barriers to entry. (BYD, BAIC, and Geely are in the next position; followed by Renault and Nissan; followed by VW maybe). I had to know all those things to see that nearly all the negative scenarios people laid out for Tesla were just silly.

 

[Jayjs20]

The SP has dropped about 100 dollars since I bought those Jan21 leaps, do I get a prize yet?

I always think back to that Jeff Bezos interview, in the somewhat early day of Amazon, he talked about how he kept seeing Amazon's SP go down while watching the balance sheet go up and it made no sense to him. This was a few years before the amazon stock explode upward. Hopefully TSLA does the same, except sooner than later.

 

[Unpilot]

How long can I avoid buying more stock.....this sale is insane.

 

[neroden]

I often see references to these analysts and short sellers being dumb and stupid. Actually they are very very cunningly smart. Deviously smart.

The idea is simple. Constantly keep beating the drum beat of exaggerated and fake bad news everyday, so that the public gets scared, loses faith and stops buying their cars. Once that happens, it is an easy downward spiral and all the fake doom and gloom actually becomes a reality. It is as simple as that. The best way to bring a company down is to spread rumors about the product and company.

So this latest FUD is to scare the prospective buyers - don't even think of buying their cars hoping that some company will rescue at some point.

Yeah. It's such utter nonsense. I mean, GM actually did go bankrupt, so did Chrysler, is anyone having problems getting their cars serviced? No they aren't. People have no problem getting Deloreans serviced and they only made a few hundred. My grandmother got her Studebaker and her Cord serviced after they went bankrupt and shut down -- no problem!

The financial state of the company just has *nothing to do with* whether you can get your car serviced at this point -- there are too many Teslas on the road, they'll be supported.

This nonsense obviously works on some people, but it doesn't work on nearly enough people to affect demand significantly.

 

[BioSehnsucht]

Won't Shanghai go a long way toward solving this? Margins should be much better on the SR+ produced there. Fremont shifts back to LR trims plus model Y. Granted, they have to get through a few quarters to get there, but it's not far in the future at this point. I have a difficult time imagining the GMs not getting much better by Q1 2020. The stock may suffer until they get there, but after the capital they raised, Tesla is in solid shape to deal with several quarters of lower gross margins.

GF3 only builds SR's for the China "region" (so not just China, but not the world either). EU, NA, etc will be supplied from Fremont still.

 

[neroden]

@neroden Do you have a link to where Tesla has done any MCU upgrades? I didn't think they have even done a single MCU1 to MCU2 upgrade. (Or are you talking about MCU1 without Nav to MCU1 with Nav upgrades?)

Rrrgh, I don't have a link, but I am quite sure they've done at least one MCU1 to MCU2 upgrade. It was reported at this forum. It was pretty involved IIRC; they don't want to do them. Now, I think we're on MCU3 or MCU4 now... haven't heard of any upgrades to them.

 

[KSilver2000]

Any theory about 176.99 being the low so far? .99 being interesting.

That means it hasn’t reached the low yet.
Wait until .97, then you know it’s on sale/clearance.

 

[MarcusMaximus]

Looks like the unlimited supercharging is finally clearing out some of the old S/X inventory. Near me S, is down to 39(from >100 a week ago) and zero X(not trying to start a "this is the number near me" cascade, just noting this is a sudden, huge shift downwards in available inventory). This was, to me, the last actual indication of weakness in demand(as opposed to just random speculation). Things are looking good, I think.

 

[Right_Said_Fred]

GF3 only builds SR's for the China "region" (so not just China, but not the world either). EU, NA, etc will be supplied from Fremont still.

Until they decide not to. If GF3 has excess capacity - not likely, but who knows - and Fremont gets overcrowded - producing S, X, 3 and Y at the same time - Tesla could decide to start shipping SR's not just to the Asian region but also to Europe. We buy Apples made in China, so why not Teslas. The margins would be better, the shipping costs probably the same.

 

[AlMc]

I wouldnt worry about the SP today. The whole market is in headless-chicken panic mode. Right now Beyond is down 5% alphabet down 6.7%. TSLA actually holding up relatively well. Facebook is down 8% and...
Uber is up slightly...because the stock market is full of absolute flipping maniacs who think that uber will somehow magically make a profit at some point before the heat death of the universe.
People are acting like dorks.
Hold your shares. If you can... this is an insane bargain price to buy.

Off topic:
I have no UBER but it is up, IMO, because the tariff war escalation has caused an increase ( and threat of further increase) in new car prices AND used car prices. So, this makes UBER a more compelling alternative than owning a car.

 

[Todd Burch]

Today's move is about macros, macros, macros. I don't think the market is trying to say anything about TSLA today in particular. This is about tariff fear. TSLA is still doing better than 60% of FAANG stocks:

 

[neroden]

Some of us who might claim such encyclopedic knowledge of all those subject would be guilty of hubris or worse. Even the most capable and diligent human beings could not justifiably claim such knowledge.

That said, seriously diligent and capable people of normal intelligence are quite capable of making "...pretty accurate predictions..." in a fairly short term. Longer term there are too many variables for any human being to be "pretty accurate" except in an exceedingly narrow respect. Even the famously prescient people and most successful forecasters such as Leonardo da Vinci, Albert Einstein, Thomas Edison and Warren Buffet have had much less accuracy than would be needed to suggest anything other than huge success in some areas.

Honestly it seems almost impossible for anybody to think they know what will happen regarding BEV adoption in general, much less TSLA.

Oh come on. A simple exponential projection is actually sufficient to have been correct on BEV adoption in general (meaning worldwide) for the last decade. And for solar adoption, too. For wind adoption the exponential *might possibly* be flattening out now, but it's too soon to be sure.

(There's something to be said for simple models with very few variables to tweak -- it's harder to accidentally put your subconscious biases into them. Jhm has talked about this over on the Shorting Oil thread.)

All the other evidence is supporting.

Predicting TSLA is of course harder. I didn't say I made *detailed* predictions. I said I had a ton of knowledge and was therefore able to make some reasonably accurate predictions. They're not detailed. "Will do better in a recession than an index filled with fossil fuel stocks" is a prediction, but not a detailed prediction (that's one I have made).

I'm also predicting fairly near-term human extinction (the evidence is pretty strong), but I think people would rather not talk about that. I'd like to avoid it, but the prediction has a strong likelihood.

All of us probably have deep conviction about what should happen if mankind can thrive. Deep conviction and highly convincing scientific evidence are obviously insufficient.

Personally, I spend most of my time assessing risks. Some people suggest I am quite good at that, and some invest according to my disclosed views. I have consistently been beating most securities market indices for quite a few years. Even so, I'll never suggest that my future results will reflect my past ones.

Yep. Me too -- including the bit about spending most of my time assessing risks. And like you, I could always stop having good results. I can still make some pretty accurate predictions.

Thus, the last year has been my worst in two decades, partly because of my TSLA position, partly because of extraneous foreign exchange movements. Despite that I am adjusting very little, because I expect longer term positive results.

However, my own optimism is seriously constrained by my extreme pessimism regarding geopolitical disarray brought about by a quite small number of influential but incompetent government leaders in crucial parts of the world. The previous sentence is beyond my ability to judge, but the effects of that situation are far beyond anything I can conceive to predicting with even minimal accuracy. Therefore I expect to do well enough to survive financially, certainly avoiding personal catastrophe.

All of us investing in TSLA are quite exposed to the consequences of politically-controlled economic decisions. For my part I am quite convinced that Tesla is already making major decisions that will reduce these external negative consequences. GF-3, subsequent GF's and continuing innovation will serve us very well, I think. The primary constraint is certainly how long Tesla will need to decrease the present inordinate dependency on US sales and production.

Dealing with all the issues responsibly and competently still will not assure any reasonably accurate long term forecasts. Such will only reduce the consequences of errors.

Perhaps "forecast" is too strong a word for the sort of accurate predictions I was making regarding Tesla, given their vagueness.

 

[kelevra]

Today's move is about macros, macros, macros. I don't think the market is trying to say anything about TSLA today in particular. This is about tariff fear. TSLA is still doing better than 60% of FAANG stocks:View attachment 415123

no those strong price declines is due to fears that the government may decide to go after the largest and most powerful monopoly companies.

 

[Electroman]

This nonsense obviously works on some people, but it doesn't work on nearly enough people to affect demand significantly.

But I will tell you what affects demand. A friend of mine picked up his M3 a month ago and within a few days damaged his wheel on a curb. It has been sitting in the service center for three weeks with no ETA on when parts will arrive. Everyday he calls he gets the same answer, 'parts are back ordered and will arrive when it arrives'. This is utter nonsense.

Result - two others who had reservations, pulled out.

Elon just shoots himself in the mouth claiming 24 hour fixes for fender benders and such, but talk is easy. The system is broken they couldn't ship a wheel or a rim in three weeks.

 

[Nocturnal]

Yeah. It's such utter nonsense. I mean, GM actually did go bankrupt, so did Chrysler, is anyone having problems getting their cars serviced? No they aren't. People have no problem getting Deloreans serviced and they only made a few hundred. My grandmother got her Studebaker and her Cord serviced after they went bankrupt and shut down -- no problem!

The financial state of the company just has *nothing to do with* whether you can get your car serviced at this point -- there are too many Teslas on the road, they'll be supported.

This nonsense obviously works on some people, but it doesn't work on nearly enough people to affect demand significantly.

Yup. I had to disabuse an old classmate of that concern. Fortunately he listened and is buying an SR+.

They won't just be supported, in the worst case somebody will keep SELLING Teslas.

 

[Todd Burch]

no those strong price declines is due to fears that the government may decide to go after the largest and most powerful monopoly companies.

Could be--whatever the cause, the main point is that everyone's getting dragged down as a result. NFLX wouldn't be down 2% otherwise.

 

[neroden]

FB, AMZN, GOOG all down more than TSLA. Very rough macros.

Straight-up bear market.

Interesting. First one since 2008. Should last for as long as Trump is in office at this point. :-(

 

[Pras]

That means it hasn’t reached the low yet.
Wait until .97, then you know it’s on sale/clearance.

It closed at .97

Now can you buy more?

 

[neroden]

You could just sell some puts around 150. If it doesnt drop that low at least you collect some premium for your troubles.

Look at his share size. If he had enough cash to sell one put cash-secured, he would be talking about buying 100 shares, not 40 shares.