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

[Johan]

Why? Serious question.

When in this current 10+ year journey was their opinion helpful to ‘investors’?

Their opinions certainly didn’t help me get a 10-bagger nor to help me continue to accumulate even more over time. Indeed, I held like an addict with their last fix in hand despite their roof top shouts of vaporware, fraud, bankruptcy et al.

I welcome intelligent and informed thoughts and opinions. Anything else is junk regardless which side of the fence you’re standing on.

Exactly this. In other words: the Mark Spiegels of the world have NO valuable information, analysis or ideas concerning TSLA. On this board though I read thoughtful negatives about TSLA being put forward and discussed every day, from smart and wise people.

 

[The Accountant]

Isn’t the 360,000 target a number for deliveries, not orders. Number of orders (demand) is less in question than deliveries (supply, or is it logistics).

Yes, 360k related to deliveries ...I was not very clear with my point.
Just making up some numbers to make my point clearer: if there are enough orders in Q4 to reach a range of 360k to 375k deliveries for the year, Tesla may not go all out crazy to push for the 375k number. If some deliveries fall into Q1 2020, that might be better.

 

[Fact Checking]

Mass production of 1k per week in June likely means production begins in February or March. Most construction will have to be done in Q4 and most tooling and equipment installed by very early Q1. Maybe payment days are 90-180 days so perhaps capex most likely to hit in Q1 and Q2.
For batteries I think the first 2-3k production is already installed and paid for in GF1 (some will first be used for GF3 before being diverted to Y at Fremont). But maybe 4-5k more capacity (and likely including Tesla cells this time) will have to be invested during 1H20 to prepare to take Model Y to 7k per week eventually. Some of this payment may fall into 2H20 however.

This is what Carsonight (with "friends and family" working at GF1) said recently about GF3 battery module supply:

 

[Johan]

Constructive bearish opinion can reveal potential issues. Besides, any stock can drop if it’s overpriced. It also not good to live in an echo chamber.

In fact, the FUD and permabears may have inadvertently contributed the most to Tesla’s long term success. I believe the intense scrutiny and malice directed at Tesla drove EMs superhuman effort to relentlessly improve production, costs, and product.

The hardship that Tesla endured has produced a leaner and more focused company. Being dragged though hell has turned Tesla into a sword that will cut through “competition” for decades.

Moral: Forcing the world’s foremost engineer-entrepreneur to spend every living second to make a company succeed is not a good way to make the company fail.

 

[ReflexFunds]

Isn’t the 360,000 target a number for deliveries, not orders. Number of orders (demand) is less in question than deliveries (supply, or is it logistics).

Tesla seems very confident of reaching 360k deliveries. This implies some margin for error so my base case for Q4 would be about 110k right now.

Based on Elon’s email, net orders in Q3 were likely c.110k (so 13k increase to backlog). We know orders in Q2 also exceeded deliveries (let’s say by 3k?) and that they also entered Q2 with an order backlog after releasing new options in Q1 (let’s say 10k)? So perhaps Tesla entered Q4 with a backlog of 26k orders. Order rate in Q4 is also running ahead of Q3, so perhaps on track for 115k in Q4 (to be conservative) or another 5k increase to the backlog.

So it looks to me like Tesla could enter Q1 with a backlog of over 31k orders. This is a solid buffer to lower seasonal demand. So even if order rate falls 40% QoQ, Tesla could still hit 100k Q1 deliveries.
This is consistent with Elon’s Q2 call comment that QoQ delivery growth will be difficult in Q1, but it doesn’t necessarily mean Q1 will not be profitable

 

[AlMc]

Tesla is doing very well right now.

I am wondering, if the cash flow in the coming 12 months can support the expansion going on:

1. Model Y production equipment

2. Roadster production line

3. GF4 project (land, buildings, equipment)

4. Scaling of the roof in the coming months will cost for production equipment and to finance the time it takes from making the roof to collecting the money for the installed roof

5. production capacity for the semi

6. production capacity expansion for batteries and probably cells

7. repayment of debts that are due in these 12 months

I guess some of these items can be covered by the $5MM cash on hand, some more by loans.

As so often in the past, I believe Tesla and Elon keep finding many interesting (and profitable) ways to spend money. Way faster than the cash comes in. That is a good thing because it accelerates the mission.


But do we rule out a cap-raise in the next 12 months?

I suspect we get a cap raise after 'battery day'. They will need to start several GFs to achieve their goals with the new batteries IMO.

 

[dmckinstry]

He'll be back in 100 years to say "see! I told you Tesla will be $10!"

.Be fair! That $10 was for worst case possibility.

 

[Johan]

I suspect we get a cap raise after 'battery day'. They will need to start several GFs to achieve their goals with the new batteries IMO.

This exactly. We mustn't forget that even if TSLA should magically go to $600 next year, on announcement of growth not only being on a previously stated trajectory but actually increasing even faster, it doesn't automatically mean liquidity for Tesla (no money befals Tesla as the stock price increases). But an increased stock price helps the company in many other ways, one of them being that it really helps raise capital... (Which is what ultimately creates money in the pocket for Tesla to do the investments necessary to grow relentlessly).

 

[jerry33]

.Be fair! That $10 was for worst case possibility.

But that was the only number that was singled out by the media.

 

[Remus]

Tesla model 3 sales on fire in China? Someone said this is an old photo so one of you guys maybe can confirm or deny.

Jeffrey Yin Shen on Twitter

A redditor from China also claimed

"Sales seem to be crazy in China right now. Workers reporting the systems are going down from too many requests.

Some insight from locals - The 355k RMB price tag is very reasonable, comparable to many cars in class. A Tesla is an easy choice - Free license plate is an incredible incentive for EVs, since it normally costs ~100k RMB for a Class A license plate in Shanghai for example - Lack of places to charge is a concern to many potential buyers"

This is an old photo. I think from Q1 2019 if I remember correctly. One of the reasons we drastically overestimated the delivery.

 

[AlMc]

I can't say it's improved that much over the last six plus years, but it hasn't gotten worse either, except for the phone tree problem a couple of months ago. I believe that's been mainly fixed though.

How was it fixed?

They removed the message about live chat, and if you press one, you always get to a person who will redirect you.

Thank you Jerome

 

[Unpilot]

The ultimate buy signal. This guy is consistently wrong and trades on pure emotion

sonic (@sonicmerlin) | Stocktwits

Jabesus....you read that drivel?

 

[CyberDutchie]

I don’t care about him or his notes, but what you did to get dumped from their mailing list greatly intrigues me.

Probably posted too much of his notes here, and with non-flattering commentary

Also his notes are often released to MS clients a couple of hours before pre-market opens, to give them an advantage to trade on the information. However, the last few times, he hasn’t been able to move the stock much with his notes and opinions.

 

[CyberDutchie]

Found this in an article summarizing Tesla Analysts' comments:

Morgan Stanley, Equal-Weight, Price Target Unchanged at $230

"Tesla posted a stronger than expected 3Q gross auto margin and cash flow. A repeat of last year's unsustainable second half run? Or is the Tesla business model finally finally achieving self-financing status? The China ramp may extend this year's momentum deep into 2020."

- Adam Jonas

His head still in the sand..

 

[j6Lpi429@3j]

The ultimate buy signal. This guy is consistently wrong and trades on pure emotion

sonic (@sonicmerlin) | Stocktwits

It is...amazing. People are so gullible. The website is even called stock TWITS and yet there are people who think these people, with analysis like this...might actually be better than random coin tossing. I do think that people have become such idiots, that if you started an ETF, maybe stock ticker IDIOT and used it to make investments in stuff only idiots would support...that it might be a real moneyspinner. Obviously it would have a lot of WeWork and SNAP

 

[shrspeedblade]

I was at the Fremont factory yesterday- lots of cars being loaded in the staging lots- seemed to be more Model X than I’m used to seeing. These people just don’t let up.

 

[Papafox]

I've been reading this Investorpedia article and would like to give a real-life example, as I understand it, of margin requirements for maintaining a short position.
* There are both initial and maintenance margin requirements for short-sales.
* Typically initial margin requirements are for 150% of the short sale at time of initiation and
* Maintenance requirements are for the current market value of the short sale, along with at least 25% of the total market securities in the margin account. Sometimes the brokerage will increase this 25% additional amount if the stock is particularly volatile.Here's the computations that Investorpedia uses as an example, with margin requirement at 30%:

Now, let's use an example that reflects what is happening with TSLA (with 30% margin requirement initially)

In the above example, the short entered a position of 1,000 shares when TSLA was trading at $200, and the brokerage required a 30% maintenance margin. You can see that once TSLA climbs above $300, the margin calls start getting expensive. Now consider if the brokerage houses get worried with TSLA heading higher, quickly, and they want to get marginal players out of this short. If the brokerage raises the margin requirement for TSLA to 45% as it passes through $350, the total Margin Requirement would be $507,500 and the margin call would be for $207,500. At some point the game becomes too pricey for an average player to afford and they are forced out.

 

[Johan]

I've been reading this Investorpedia article and would like to give a real-life example, as I understand it, of margin requirements for maintaining a short position.
* There are both initial and maintenance margin requirements for short-sales.
* Typically initial margin requirements are for 150% of the short sale at time of initiation and
* Maintenance requirements are for the current market value of the short sale, along with at least 25% of the total market securities in the margin account. Sometimes the brokerage will increase this 25% additional amount if the stock is particularly volatile.Here's the computations that Investorpedia uses as an example, with margin requirement at 30%:
View attachment 470317
Now, let's use an example that reflects what is happening with TSLA (with 30% margin requirement initially)
View attachment 470316
In the above example, the short entered a position of 1,000 shares when TSLA was trading at $200, and the brokerage required a 30% maintenance margin. You can see that once TSLA climbs above $300, the margin calls start getting expensive. Now consider if the brokerage houses get worried with TSLA heading higher, quickly, and they want to get marginal players out of this short. If the brokerage raises the margin requirement for TSLA to 45% as it passes through $350, the total Margin Requirement would be $507,500 and the margin call would be for $207,500. At some point the game becomes too pricey for an average player to afford and they are forced out.

Are you saying the broker can increase the margin requirement as volatility in the underlying stock goes up? Sounds like the short sellers got at great deal on that loan.

 

[Fact Checking]

.Be fair! That $10 was for worst case possibility.

The $10 "bearish scenario" was an unprecedented, unnecessary and irresponsible act of concern trolling by Adam Jonas, which he knew would be highlighted by the media...

Note how Jonas never voiced such a "bearish scenario" for GM, which he rated a "strong buy" in the summer - while GM actually went bankrupt a short 10 years ago...

So I'm not buying that excuse.

 

[gene]

Weekend Podcast to listen to, be sure to click on the podcast. excellent!

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