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

[Pras]

As a reminder to all long. The 52 week high is still 379. So hold!!

 

[humbaba]

You can guess the short trends more accurately than taking Ihor's word at face value.

Isn't most of his business with short-sellers? It would make sense for him to be on his client's side.

His business is providing "real time" short interest information. And, as far as I know, yes, that is mostly of interest to short sellers. But it is only useful if it is accurate -- no one wants to pay for bad information. His accuracy, or lack thereof, is inherent in the method, the data, whatever -- but there is no deliberate bias to overstate or understate. That would make no sense.

 

[Fact Checking]

WE provide a manufacturer’s warranty on all new and used vehicles, production powertrain components and systems and energy storage products we sell. In addition, we also provide a warranty on the installation and components of the solar energy systems we sell for periods typically between 10 to 30 years. We accrue a warranty reserve for the products sold by us, which includes our best estimate of the projected costs to repair or replace items under warranties and recalls when identified. These estimates are based on actual claims incurred to date and an estimate of the nature, frequency and costs of future claims. These estimates are inherently uncertain given our relatively short history of sales, and changes to our historical or projected warranty experience may cause material changes to the warranty reserve in the future. The warranty reserve does not include projected warranty costs associated with our vehicles subject to lease accounting and our solar energy systems under lease contracts or PPAs, as the costs to repair these warranty claims are expensed as incurred. The portion of the warranty reserve expected to be incurred within the next 12 months is included within accrued liabilities and other while the remaining balance is included within other long-term liabilities on the consolidated balance sheets. Warranty expense is recorded as a component of cost of revenues in the consolidated statements of operations. Accrued warranty activity consisted of the following (in thousands):​

While this is true, there's also the following factors:

• If Tesla Service is 2x the organizational size due to constant warranty work, the related higher fixed, overhead costs and other operational inefficiencies will NOT be accounted as a "warranty costs". Only direct warranty costs are such. BTW., we also know the amount of warranty work per quarter: in Q2 it was $61m - a significant percentage of service revenue.
• Depreciation and amortization of a larger service infrastructure will likely not be accounted as automotive cost of goods either.
• The elevated discretionary "goodwill repairs" are probably not warranty work either: it's a very young fleet where customers expect most problems with a new car to be under warranty, even if they are not.

So my original point remains, the automotive part of Tesla Service has worse margins due to a very young fleet.

Furthermore, used vehicle sales are also service revenue: this might be a channel where trade-in and lease return vehicle related losses are recognized. This too is going to be something that Tesla will probably grow out, as they gain more experience with used car sales and leasing.

 

[wipster]

Um, smash the windows? Use the jaws of life? Lots of car doors aren't opened by pulling the handle after a collision because they're deformed from the impact. Nothing new, but tragic, nonetheless. Can understand the family's anger and sadness.

But apparently we have a FF here in @Joshker so maybe he can weigh in for expert opinion?

Definitely written by an ambulance chasing lawyer. Takes lithium batteries a long time to catch fire. Plus it was supposedly an S but the picture is of a model 3. Methinks this stinks, but if it bleeds it leads.

 

[Remus]

I probably got slaughtered by saying this: now we're laughing at shorts. But when Tsla sunk below 200 and I was sitting on tons of paper loss, I did double down. That was like throwing good money after bad. When I pressed the buy button I felt like my daughter is accusing me of gambling with her college fund!

 

[The Accountant]

Apologies to Neil Diamond and The Monkees:

I thought Musk was pretty much a fairytale
And TSLA stock was just a bust for me...
Shorts were out to get us,
That's the way it seemed,
Falling prices haunted all my dreams...

Then I saw Q3,
Now I'm a believer!
You can see
No FUD in my eyes
I'm in love, I'm a believer, I couldn't leave Tesla if I tried...

What? No Roy Orbison tune?

(TSLAQ) Crying
I was alright for a while
I could smile for a while
But I saw the Q last night, it held my Shorts so tight
As it stopped to say, "Profit !"
Oh, you wished me well, you couldn't tell
That I'd been crying ............

 

[Southpasfan]

The anti Tesla company bias is sometimes hard to figure out. I sort of put it down to a very emotional response to people who are so pro-Tesla, kind of like some sort of college rivalry.

However, according to some basic research, the market cap of some car companies is: VW 97B, Daimler 60B, GM 52B, Honda 48B, Tesla 45B, Ford 36B.

Sales, in cars, for those companies in 2018 are VW 10.83M, GM 8.3m, Honda 4.9M, Tesla 240k, Ford 5.3M

So, putting aside the emotions, isn't the argument that, if market cap is a basic measure of value, that Tesla's stock price already has a premium due to the discrepancy between its sales and market cap.

I can't find a comparable small car company that I recognize. The premium may be justified, but it looks like its there.

 

[wipster]

What? No Roy Orbison tune?

(TSLAQ) Crying
I was alright for a while
I could smile for a while
But I saw the Q last night, it held my Shorts so tight
As it stopped to say, "Profit !"
Oh, you wished me well, you couldn't tell
That I'd been crying ............

I'm working on "Pretty Tesla"...

 

[dc_h]

C

They are 104,439 short of 360,000.
They need to pick up deliveries by 7,253, or 7%, over Q3.

Challenge accepted, I predict 112,023 Q4 deliveries with 105 at Fremont (85/20) mix and 7023 at Shanghai.

 

[KarenRei]

Gasparino reporting that in a meeting with bankers after the meeting, Tesla's management told the bankers that they have the short sellers right where they want them and are going to squeeze them dry. No interest in cash from banks whatsoever; they're fully content with the position they're in.

Tesla puts the brakes on short sellers

 

[humbaba]

I probably got slaughtered by saying this: now we're laughing at shorts. But when Tsla sunk below 200 and I was sitting on tons of paper loss, I did double down. That was like throwing good money after bad. When I pressed the buy button I felt like my daughter is accusing me of gambling with her college fund!

The difference is that you aren't delusional. If you doubt that take a step back and reassess. The shorts of the kind being discussed (not the oil-funded once) never do that. There is reflection, no re-consideration of their position.

 

[Carl Raymond]

I vote to designate shorters and tslaQ believers as flat earthers from now on. Such a fitting name.

Don’t forget people who deny we have a problem with rising levels of greenhouse gasses. You don’t want them to feel left out.

 

[Dan Detweiler]

Apologies to Neil Diamond and The Monkees:

I thought Musk was pretty much a fairytale
And TSLA stock was just a bust for me...
Shorts were out to get us,
That's the way it seemed,
Falling prices haunted all my dreams...

Then I saw Q3,
Now I'm a believer!
You can see
No FUD in my eyes
I'm in love, I'm a believer, I couldn't leave Tesla if I tried...

...and for reference for those of you not so chronologically challenged...

 

[jerry33]

The anti Tesla company bias is sometimes hard to figure out. I sort of put it down to a very emotional response to people who are so pro-Tesla, kind of like some sort of college rivalry.

However, according to some basic research, the market cap of some car companies is: VW 97B, Daimler 60B, GM 52B, Honda 48B, Tesla 45B, Ford 36B.

Sales, in cars, for those companies in 2018 are VW 10.83M, GM 8.3m, Honda 4.9M, Tesla 240k, Ford 5.3M

So, putting aside the emotions, isn't the argument that, if market cap is a basic measure of value, that Tesla's stock price already has a premium due to the discrepancy between its sales and market cap.

I can't find a comparable small car company that I recognize. The premium may be justified, but it looks like its there.

That comparison is invalid because Tesla is a growth software company that also makes cars in a non-traditional way. The others are mature car manufacturers that are unlikely to grow more.

 

[mickificki]

Gasparino reporting that in a meeting with bankers after the meeting, Tesla's management told the bankers that they have the short sellers right where they want them and are going to squeeze them dry. No interest in cash from banks whatsoever; they're fully content with the position they're in.

Tesla puts the brakes on short sellers

squeeze the shorts like pimples hahahahaha!

 

[powertoold]

That comparison is invalid because Tesla is a growth software company that also makes cars in a non-traditional way. The others are mature car manufacturers that are unlikely to grow more.

Not to mention the energy business...

 

[brian45011]

But "Goodwill" work does count as a warranty expense. Wouldn't that (and the time spent stocking the service center and maintaining it's equipment) count as COGS for service, and thus negatively affect it's margins?

Yes. But a -20+% gross margin is a loss of $119 million in 3 months at the gross profit level (i.e. with no allocation of SG&A).

 

[Dan Detweiler]

Gasparino reporting that in a meeting with bankers after the meeting, Tesla's management told the bankers that they have the short sellers right where they want them and are going to squeeze them dry. No interest in cash from banks whatsoever; they're fully content with the position they're in.

Tesla puts the brakes on short sellers

"TSLAQ are like pimples."
Not a bad analogy when you think about it. LOL!

Dan

 

[rallykeeper]

When I ordered a couple years ago I noticed they were using Salesforce for their CRM. Many consider Salesforce the market leader...but having worked on Salesforce instances the past 11 years there are many ways to do it wrong. I wouldn't know what the situation is with Tesla's instance but I have overheard employees complaining about it so I'd imagine there's plenty room for improvement.

Not sure where it's wrong (or even if they're using SalesForce for service).

There are plenty of anecdotes on TMC about Tesla simply failing to follow-up on service related items. Moreover, they often claim that they have literally no record that they needed to follow-up. I can definitely add to that list of anecdotes.

While I think some of that is likely an over-stretched service staff simply not following up, it seems so pervasive that it might also be attributable to a CRM that is poorly-designed or implemented.

On a related note, they literally have no way to receive information from customers while the car is in for service -- that can't be good for efficiency. The app doesn't allow for communication and the service centers often aren't able to even answer the phones.

 

[KarenRei]

BTW, speaking of doors getting jammed in accidents, I was wondering if maybe this is somewhere that Tesla could innovate, too. Taking SpaceX's experience with explosive bolts, they could have the door hinges and latching mechanisms physically sever themselves in an accident if the impact force/speed is great enough. Possibly even preemptively, and with a bit of a kick to make sure that the door moves out before the frame deforms in a way that could wedge it in.