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

[MarcusMaximus]

I finally convinced one of my coworkers to purchase into TSLA, and he did so yesterday.

He only bought one stock though.

So, I guess it's something? Or maybe he's the cause of the turn? xD

I assume he’s treating you to coffee today?

 

[jbcarioca]

Despite higher deliveries, fewer S/X and more 3 could wipe out the GAAP profit. It should still be close to breakeven (certainly not -700 million like Q1).

One significant unknown is how much tax credit sale revenue might be recognized in the quarter. Further, there are quite a few material charges for new factory plant and equipment that could be managed to good effect. The investments for development of FSD, Model Y, Roadster, Pickup and Semi will be material but we have no way to judge how all that will influence the quarter.

Based on past practice I expect that if sales have been very good, say within ~10% of 4th quarter or better, they might just pull some levers to improve teh earnings. After all, they certainly 'threw the kitchen sink' in to sink Q1. It seems highly probable that they need very modest changes to book a non-GAAP and GAAP profit this quarter if NA sales have maintained the apparent momentum of May and RHD deliveries are now proceeding well.

Frankly I see everything being very positive for 2020, but Q2 and Q3 of this year will both be influenced disproportionately by managed events. Specifically, if battery supply bottlenecks will have been resolved then there will be grounds to expect optimistic results. If not, they'll very probably choose not to recognize income they can defer and will anticipate expenses in order to make 2020 magnificent. With FUD as high as it is, there is minimal advantage to show modest improvements unless near certain sustainable Chinese production including battery supplies is pretty much assured in 4th quarter.

Finally, the choice to smooth the logistics will probably produce WIP, due to all those vehicles in transit. Sometime in 2020 we'll probably see accounting changes to allow faster income recognition. That, of course, would require some form of distributor/dealer arrangement. We also may well see some other arrangements to allow Service Centers, Superchargers and possibly some parts supply/distribution to be taken off balance sheet. Very little discussion has considered these changes. Major financial engineering to allow more conventional reporting is inevitable unless Tesla chooses to go private. Tesla has substantial unrecognized financial value that until now might not have had sufficient magnitude to attract the appropriate investors. The US 2017 tax rules do provide a nearly irresistible opportunity to monetize some assets.

Thus, I think we need only consider whether delivery volumes will end out at Q4 2018 levels or not. If they do, all the tools are available to allow nice profits. If they don't, there is much less incentive to report better profits.

 

[ZachF]

Testing $190 now

 

[LN1_Casey]

I assume he’s treating you to coffee today?

I'm +10 hours from California, so it's the end of the work day for me. I'm already home, but I'll harass him tomorrow about how the stock changed. He said he'd buy more depending on how things with this one went, so here's to hoping it doesn't go back down, haha.

 

[Singuy]

Testing $190 now

That's a weird and crazy statement if written 6 months ago. Someone would put you in an asylum.

 

[Wooloomooloo]

I will point out one difference: in 2011, if Amazon, Walmart, Disney, or Apple were serious about competing with NFLX, they could have defeated Netflix. I can't imagine how other companies can defeat Tesla.

Smart investors don't read the BS from Wall Street. Lou Simpson, Carl Icahn, etc. all do their own research. I imagine the first thing a smart investor would do is to talk to real Tesla owners and test drive Tesla vehicles.

Keep in mind NFLX had a second down leg in 2012.

I"m having a hard time with this Netflix comparison for 2 major reasons. The first is that Netflix was disrupting an industry that was entrenched and people hated... Cable Companies, who were slow to adapt and inefficient. Netflix was cheaper and far more convenient, and if like me you were a cord-cutter (which I did in 2009) you were saving a ton of money too.

Now your point about them being crushed if Apple and others had competed is interesting, but doesn't ring true. Apple was already competing with iTunes, which has been around longer, but I take your point that serious streaming didn't compete until later. Hulu aside, HBO, Prime and others came much later. But here's the major difference with Tesla: most people who subscribe to Netflix, also subscribe to other services - and Netflix simply retained its lead through a) a rapidly growing market and b) not really losing market share. This isn't a zero sum game - I have Hulu, CBS, Netflix, HBO and still occasionally rent from Apple, or use FuboTV for live sports. They can co-exist. Netflix stayed ahead of the pack by producing its own content, and avoiding being a simple utility of entertainment.

Regardless of that, the one thing everyone knew for sure is that they didn't want to get streaming from their regular cable provider. The whole point was to escape them.

Now in the car world, things are different in those key ways - market share is a zero sum game here, and it's likely the EV market size will grow more slowly than the EV market diversity. That didn't happen in streaming. Also people don't necessarily hate current car manufacturers. Honda fans would love to see a Honda EV. Even the much maligned VW group has people who can't wait to get a VW EV. Personally I would love to see a VW Camper Van EV... if one came out, I'd almost certainly buy it.

So while I don't think Tesla is going to fail, I don't see the Netflix story as being relevant to explaining why they will succeed, just because there are parallels in the stock price.

 

[Zaxxon]

Quick thoughts on InsideEVs' US estimates for the first two months of this quarter:

Jan-Feb 2019 = 15,275 total Teslas
Apr-May 2018 = 14,995 total Teslas
Apr-May 2019 = 28,275 total Teslas = +85% over the first two months of Q1 2019, +88% over first two months of Q2 2018.

Too early to draw any conclusions on Norway at this point, other than that it'll blow Q2 2018 out of the water. Remains to be seen how this Q stacks up to last Q.

 

[elasalle]

For every Long that bought at 370+, there is a Short that Sold at 180-

 

[Remus]

Last year Apple put an ECG machine into a $400 wristwatch. This year they made a screen with better tech than a $42,000 studio reference monitor for about 1/10th the cost, while continuing to screw with facebook and googles data snooping business models just because its the right thing to do.

Anybody that mocks Apple does it at their own peril. The best result Tesla shareholders can ask for is if Apple and Tesla become partners in some manner, because Apple would likely be the hardest competitor for Tesla if they chose to enter the car space. Their brand is 2nd to none, they have excellent designers and supply chain experience, and they have virtually unlimited cash to play with, (Plus the overlap of Tesla & Apple users is large).

Apple's "ECG" machine continues to screw up heart beat data in runners, a long complaint from the marathon runners community and one of the reasons vast majority in that community use garmin.

Apple has chosen to enter the car space, they have spent sugar load of money on this and they have replaced the management team for the car projects multiple times with nothing to show for.

get your fact straight.

 

[ZachF]

over $190 now

 

[Doggydogworld]

Its an "estimate", while good numbers must be taken with a grain of salt. Remember Bloomberg's esitmate of Model 3 sales from Q1?

Bloomberg was never accurate until their last minute "adjustment". InsideEVs has a very good track record.

Any ships that load up in the last month of the Q are a good sign, because it means the wave is being unwound. I wouldn't imagine this one has a load that is expected to be delivered in 25 days.

Grand Quest is scheduled to reach Shanghai on June 19. Even if it's a couple days later they'll have time to deliver most of those cars.

The real proof of unwinding the wave will be a ship loading later this month. None are scheduled yet, but there's still time.

 

[Shake N Bake]

over $190 now

My guess is we will see a lot of activity from the shorts at this level to keep the price below $190. Let's see what happens

 

[Zaxxon]

S/X specifically per InsideEVs:

Jan-Feb 2019 = 1,675 X
Apr-May 2018 = 2,475 X
Apr-May 2019 = 2,425 X = +45% over the first two months of Q1 2019, on par with first two months of Q2 2018.

Jan-Feb 2019 = 1,350 S
Apr-May 2018 = 2,770 X
Apr-May 2019 = 1,850 S = +37% over the first two months of Q1 2019, -33% vs first two months of Q2 2018.

So, the X has recovered this quarter to approximately match last year's Q2-so-far numbers, despite the Ravens not yet being ramped up. The S is still significantly down vs last year, but has recovered a bunch compared to Q1 of this year.

 

[RoadsterPlease]

I honestly think $tsla will never touch 180 ever again.

 

[Singuy]

I"m having a hard time with this Netflix comparison for 2 major reasons. The first is that Netflix was disrupting an industry that was entrenched and people hated... Cable Companies, who were slow to adapt and inefficient. Netflix was cheaper and far more convenient, and if like me you were a cord-cutter (which I did in 2009) you were saving a ton of money too.

Now your point about them being crushed if Apple and others had competed is interesting, but doesn't ring true. Apple was already competing with iTunes, which has been around longer, but I take your point that serious streaming didn't compete until later. Hulu aside, HBO, Prime and others came much later. But here's the major difference with Tesla: most people who subscribe to Netflix, also subscribe to other services - and Netflix simply retained its lead through a) a rapidly growing market and b) not really losing market share. This isn't a zero sum game - I have Hulu, CBS, Netflix, HBO and still occasionally rent from Apple, or use FuboTV for live sports. They can co-exist. Netflix stayed ahead of the pack by producing its own content, and avoiding being a simple utility of entertainment.

Regardless of that, the one thing everyone knew for sure is that they didn't want to get streaming from their regular cable provider. The whole point was to escape them.

Now in the car world, things are different in those key ways - market share is a zero sum game here, and it's likely the EV market size will grow more slowly than the EV market diversity. That didn't happen in streaming. Also people don't necessarily hate current car manufacturers. Honda fans would love to see a Honda EV. Even the much maligned VW group has people who can't wait to get a VW EV. Personally I would love to see a VW Camper Van EV... if one came out, I'd almost certainly buy it.

So while I don't think Tesla is going to fail, I don't see the Netflix story as being relevant to explaining why they will succeed, just because there are parallels in the stock price.

That's because you think Tesla in terms of a car company vs an energy company. In the age of climate change and a dire predicted future, the " cable company" that every hates can be replaced by "fossil fuel" and that will give you the disruption people are comparing to. It's also a key to point out that no one is going to suffer tremendously if Comcast remains a monopoly vs climate change. Oh and the demographic is the same when it comes to thinking cable companies are just fine vs climate change is made up. Two for two.

 

[Pras]

..

For every Long that bought at 370+, there is a Short that Sold at 180-

and a long too.

But I bought back at 182.xx

 

[MarcusMaximus]

I"m having a hard time with this Netflix comparison for 2 major reasons. The first is that Netflix was disrupting an industry that was entrenched and people hated... Cable Companies, who were slow to adapt and inefficient. Netflix was cheaper and far more convenient, and if like me you were a cord-cutter (which I did in 2009) you were saving a ton of money too.

Now your point about them being crushed if Apple and others had competed is interesting, but doesn't ring true. Apple was already competing with iTunes, which has been around longer, but I take your point that serious streaming didn't compete until later. Hulu aside, HBO, Prime and others came much later. But here's the major difference with Tesla: most people who subscribe to Netflix, also subscribe to other services - and Netflix simply retained its lead through a) a rapidly growing market and b) not really losing market share. This isn't a zero sum game - I have Hulu, CBS, Netflix, HBO and still occasionally rent from Apple, or use FuboTV for live sports. They can co-exist. Netflix stayed ahead of the pack by producing its own content, and avoiding being a simple utility of entertainment.

Regardless of that, the one thing everyone knew for sure is that they didn't want to get streaming from their regular cable provider. The whole point was to escape them.

Now in the car world, things are different in those key ways - market share is a zero sum game here, and it's likely the EV market size will grow more slowly than the EV market diversity. That didn't happen in streaming. Also people don't necessarily hate current car manufacturers. Honda fans would love to see a Honda EV. Even the much maligned VW group has people who can't wait to get a VW EV. Personally I would love to see a VW Camper Van EV... if one came out, I'd almost certainly buy it.

So while I don't think Tesla is going to fail, I don't see the Netflix story as being relevant to explaining why they will succeed, just because there are parallels in the stock price.

A much more apt analogy is probably iPhone vs.... everything else available in 2006. Same zero-sum game, people absolutely loved their “crackberries” and along came Apple, making a smartphone that didn’t look like a late eighties PC.

Cars are replaced much less frequently, and Apple’s phones charged in much the same way as previous phones, so the transition is taking longer, but it has a striking number of similarities.

 

[Remus]

Just wanted to add something interesting I saw recently. I’m in Poland for the month and my YouTube feed adds are mainly adds about a network of 500 BMW i3s all around Warsaw. You can rent them by the minute with pick up and drop off locations all around the city. No payment for parking is used as one of the main points in the add. Very compelling idea actually. BMW is not taking this lying down.

maybe a way to get rid of all those i3 that nobody wants anymore.

 

[Nocturnal]

CNBC is still "very skeptical" about model 3 demand. Of course they are.

 

[MarcusMaximus]

Down goes $190.