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

[CorneliusXX]

You just know that's going to turn out well.

Italian design and Chinese manufacturing is certainly better than the alternative.

 

[Mad@gascar]

In theory, buying back stock should not impact the market cap up or down. There will be fewer shares and each share will be for a larger percentage of the company. All else being equal, the share price should theoretically raise by an equivalent percentage because all the metrics used to value each share are always relative to the percentage of the whole that each share represents (EPS, etc.). Share price should theoretically rise while the market cap stays the same.

Fredneck is right. You are neglecting the fact that any cash (and debt) must be included in the market cap. Spending money on a share buyback reduces the amount of cash, and therefore the market cap by an equivalent amount.

Imagine, for the sake of simplicity, a company holds $100 million in cash. The company has no debt and no operations - a cash-holding company, so to speak. Clearly, the company should be valued at exactly $100 million. The company has a million shares outstanding. Each share is worth $100.

Now the company decides to buy back half its shares, for $50 million. It now has $50 million in cash, it's market value is $50 million, and there are 500,000 shares outstanding. So each share is still worth $100, but the market cap is halved, as it should.

This is exactly the reverse of raising capital: The next year, the company might raise $950 million in capital by selling 9,500,000 shares at $100 each. Now the cash hoard is $1 billion, the company is worth $1 billion, but with 10 million shares outstanding, so the stock price is still $100/share.

 

[humbaba]

Italian design and Chinese manufacturing is certainly better than the alternative.

I hope you aren't implying that Chinese design, which Musk has just recently been promoting, would be a poor alternative?

 

[Artful Dodger]

Those who are perplexed by the constraints on an actively managed ETF, may want to place a related question in the chat box during the ARK quarterly report webinar. It will commence 15 minutes after today's market close.

https://register.gotowebinar.com/register/9009747195251486466

Thanks for the tip Curt, but I'd be a 'Boglehead' if I wasn't already a 'Muskie'.

Passive/Indexed or TSLA for me. Nawh, just TSLA... I really dispise some of the carbon / extractive industries that weasel their way into an outsized share of those index funds.

I'll go up or down with TSLA, and work on behalf of Tesla's mission.

Cheers!

 

[UncaNed]

Unless you need to exercise to defer taxes or get to long term vs short term capital gains

Do the shares you get from the exercised option keep accruing ownership time back to the date the option was purchased until you sell the shares?

 

[CorneliusXX]

I hope you aren't implying that Chinese design, which Musk has just recently been promoting, would be a poor alternative?

A little from column I, a little from column C.

 

[Artful Dodger]

Adam Jonas' value: $0 −$5.01

FTFY

 

[bzbee]

I'll UPDATE in about 45 min after the Daily Short Selling volume numbers are out.

Daily Short Selling Volume vs Short Interest... is it a useful statistic?
New Short Stats Speak Volumes. That's It

Tesla talk 7:57

 

[Artful Dodger]

Well, when your TSLA reaches 2.5M, you sell and buy again, and then you’re tax exempt .

Lol, don't tell @Right_Said_Fred but that's only a very pessimistic* SP tgt of $2,320/share

So wot, 4-6 years then?

Cheers!

* if you hold 1,200 shares of TSLA

 

[ggr]

I defer of course to the Primus Inter Pares, but bearing in mind the many who struggle to sift through the torrent of posts for investment advice, would humbly suggest again that a two colour system of whatever hue and shade for on / off topic could be an easy solution for a common problem. If that is deemed a poor solution, I rest my case, and look forward to a vibrant, albeit colourless forum going forward .

I'm on another forum too (BeechTalk if anyone cares) where there is a standing rule that sarcastic posts should be in green. It works a little bit of the time, but more often than not, there will be followups:
. "You're an idiot" -- not recognizing that the statement was meant sarcastically
. "Why is this post green? Why are people liking it?"
. "Your posting should have been in green, because you're clearly being sarcastic"
. followed by "What do you mean, I meant every word!", or
. followed by "Oh, is there a rule about colored postings?"

Anyway, among other things, our Lord Tyrant has declared even this discussion off-topic, and when I get caught up, I will be further enforcing it.

 

[MC3OZ]

This is some speculation on production volumes out of Fremont in future, were battery packs are coming form etc...
Take it with a grain of salt, but I think I can jump the low bar set by the media and Adam Jonas, at least I am trying to be factual and logical...
With 2 paint shops I'm gong to assume they can paint around 16,000 cars per week at Fremont in 2020-2021.
Ignoring logistics in and out of the factory, cells, or more specifically battery packs are the big issue constraining production volumes.

With sufficient packs my guess is they could make the following volumes: (per week)

• Model 3 - 5,000-7,000
• Model Y 7,000-9,000
• Model S/X 1,500-2,000

For Model S/X the logical steps are:-

1. Tesla makes new Plaid pack for 300-400 Paid Model S(/X) per week. Normal Model S/X production 100 KWh continues.
2. Ramp Plaid Pack to 500-600 per week extend to LR,,,, 18650 cells now make SR 85 KWh pack

For Model 3/Y - 35 GWh out of GF1 initially makes say 10,000-11,000 per week, and the Semi can only be made in limited volumes.

Again the logical steps are:-

1. Make Plaid pack for for Performance Model 3/Y 1,000-2,000 per week.
2. Extend to Plaid LR Model 3/Y 3,000-4,000 packs per week. GF1 cells now used for SR/SR+ and say 100-200 semis per week.

To fully ramp the Semi and produce the Cybertruck, they need to complete a similar process to Model 3/Y probably initially 3,000-4,000 Plaid packs per week.

Long term Tesla may eventually make modules for all car and truck packs in house, GF1 cells may then be used for Tesla Energy....

Telsa might not be following my plan, but I don't see this plan as overly difficult, risky, or capital intensive.. If they do have a better plan, I bet it also tick all those boxes.

In fact the major risk is they new Plaid pack modules might be difficult to make, or may have some other issues, at 300-400 per week this isn't a "bet the company proposition". And I don't see why Tesla would make it a "bet the company proposition", they don't need to move that fast.

As mentioned in the excellent David Lee videos, Model Y Production is close to incremental in terms of not increasing Opex by much....

So if Shorts are gleefully piling in now, they might not be that happy this time next year, as something like my plan above may be common knowledge, and a fair chunk of it may have already happened.

 

[Nocturnal]

Ok, come on. Whoever is running the simulation is just messing with us now.

 

[BenPrice]

So the Boring Company has been boring, and is reportedly making good time on the Las Vegas project.

The Boring Company's Las Vegas tunnel is nearly 50% done

But linked from there was a prior article about opposition that Boring Company faced. In short, the Boring Company proposal was for ~$52M while a competing proposal was for ~$215M. The board member getting kickbacks pushing for the losing proposal then said the committee hadn't properly understood the proposal and that, instead of the proposed ~$215M the company could actually get it done for "as little as" ~$85M.

I can't help but think about Tesla's competitors here. Its like when they tear down the Model 3 and realize for them to market an EV with equivalent performance and range the price tag would be quite a bit more. The come backs seem to be along the lines of "he's cheating!" which echoes the frequent accusations of fraud made against Musk's companies.

But when I see the "When we said $215M we really meant $85M" I can't help but wonder how the committee was supposed to respond to this.

"So, in your original proposal you were planning on over charging by 150%?"

"Um, no, but if we had to we could do it at a loss. We could find ways to make it that cheaply."

"So, you are saying the new proposal would be cutting corners? We need the transportation system to be safe and reliable."

edit: forgot to include link to second article Elon Musk's Boring Company meets opposition over Las Vegas tunnel bid

Elon should get ahead of this situation and say something like:

“If they could do it for 85 then you should absolutely do both - Ours and theirs - we won’t interfere with each other and we’ll pay 100% for the joint entry exit platforms. If we don’t produce a working service you get your money back and you’ll have a trolley system in place.”

The result is a shared entry/exit and the consumer can vote. An awesome public experiment. If the Austrian service shuts down 5 years after opening then it would totally validate the Boring Co.

Edit: typo

 

[anthonyj]

Goes green today, like it always does when it gaps down due to a downgrade

Pretty close. Bullish af price action today

 

[Maitri982]

They auto start.

[ QUOTE="Nocturnal, post: 4395828, member: 83918"]Those things are not comparable at all. A $500 generator has to be manually started, run outside (so it doesn't kill you), allowed to annoy your neighbors, needs oil and fuel, feed an extension cord through an open door/window, force you to decide which appliance you want to run (possibly making you move your fridge). I have one of these for my reef aquarium as a backup. It was $500 and puts out 1600 watts so you can run your fridge and a couple of smaller things.

Meanwhile a power wall is instant on, zero noise, zero smell, zero maintenance, and allows you to arbitrage peak vs non-peak electricity pricing 365 days a year unlike the generator that sits in your garage. The real comparison is a whole house generator to a solar/powerwall system. A whole house generator of equivalent size to 2 powerwalls runs in the 6k range (plus install), and is worthless for 99.9% of the tie you own it. I can't wait until I have a cybertruck that I can use instead. As soon as I'm ready to replace my roof I'll likely be doing a small solar/battery system.

Yes, a solar/battery system is far more expensive but also provides far more utility and has the capability of paying for itself.[/QUOTE]

 

[Nocturnal]

They auto start.

[ QUOTE="Nocturnal, post: 4395828, member: 83918"]Those things are not comparable at all. A $500 generator has to be manually started, run outside (so it doesn't kill you), allowed to annoy your neighbors, needs oil and fuel, feed an extension cord through an open door/window, force you to decide which appliance you want to run (possibly making you move your fridge). I have one of these for my reef aquarium as a backup. It was $500 and puts out 1600 watts so you can run your fridge and a couple of smaller things.

Meanwhile a power wall is instant on, zero noise, zero smell, zero maintenance, and allows you to arbitrage peak vs non-peak electricity pricing 365 days a year unlike the generator that sits in your garage. The real comparison is a whole house generator to a solar/powerwall system. A whole house generator of equivalent size to 2 powerwalls runs in the 6k range (plus install), and is worthless for 99.9% of the tie you own it. I can't wait until I have a cybertruck that I can use instead. As soon as I'm ready to replace my roof I'll likely be doing a small solar/battery system.

Yes, a solar/battery system is far more expensive but also provides far more utility and has the capability of paying for itself.

[/QUOTE]
Not the small generators the post was discussing.

 

[Maitri982]

Adam Jonas' value: $0

he is essentially useless for investment advice. Nothing to see here...move along please.

 

[MABMAB]

Pretty close. Bullish af price action today

I agree

 

[ggr]

Buying back stock will reduce the market cap. It's the stock price that won't change. It's an even exchange of stock for dollars. The only movement to the stock price is from the fact that the shares bought back will be the lowest priced shares on the market. But that won't change the price of the stock substantially unless done suddenly.

If a buyback does change the price it shows the market was not priced properly.

This directly contradicts what you posted earlier. I almost replied to that post, but when I read it carefully you always said "value" (in the earlier post) and even though it sounded like you meant either stock price or market cap I couldn't argue with it.

Stock buybacks work because they are legal insider trading. The company knows (or at least hopes that they know) where the business is going, and if they think it is currently undervalued, buying back shares increases the stock price and yield for the shareholders who don't sell, not necessarily immediately, but in the short to medium term as the company performs better and the stock price presumably reacts. The alternative would be to issue dividends. This also reduces the cash available for deployment, but immediately reduces the stock price by the amount of the dividend. Is this really better?

 

[farzyness]

You guys might enjoy this - I posted an updated model of my TSLA price targets thru 2028 in Reddit’s r/investing subreddit and some of the replies I’m getting are pretty fun! I even got a DM from an awesome user stating their appreciation of the post and the cognitive dissonance in the comments.

Fair warning - I’m estimating a $17.5k price target by 2028

My revised (again) model of TSLA through 2028 (Price Target of $17,600 in 2028) : investing