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

[Artful Dodger]

Jim Cramer: Tesla's Common Stock Offering a Good Thing in the Long Run

not a bad video from cramer on the offering.

Cramer's video on Youtube:

 

[The Accountant]

I'm wondering, is the GAAP profit from the release of the valuation allowance imputed into the determination of whether they are "more likely than not" going to be profitable in 2020?

Because with $1,956m in extra profits it would be rather hard to not be profitable in 2020, right?

In computing profitablility for the Deferred Tax Asset realization, you cannot take the profit from the release of the Valuation Allowance itself into consideration. So the $1,956m (or any part thereof) can't be used for the Valuation Allowance release assessment.

 

[bzbee]

OT:

Just a lurker here and I appreciate all the insights you guys provide, hoping to be more active going forward. I thought this Barron’s article was funny. Apparently it’s a mode S issue now haha View attachment 510833

No need to make fun of the brightest minds at Barron's. The mistake was briefly corrected. Apparently it's a Model X Sedan issue

 

[Artful Dodger]

Don't they have to set aside money for Elon's next payday too ?

Well no, no *cash* money set aside, but they do have to claim a GAAP expense for his stock compensation. But if you're talking about the 2nd tranche triggered with TSLA at $150B market cap, I think we should ALL have those problems!

Cheers!

 

[mikevbf]

An interesting video from Gali especially regarding the 10-K. He found that TSLA plans to significantly increase capex starting this year and speculates that a lot of it will go towards bringing cell production in house. If you're interested, start at about 4:30.

 

[Dan Detweiler]

This should be played at this annual shareholder meeting coming up as Elon enters the room. Checky, but would be Elon.

YES!

 

[neezer]

Jim Cramer: Tesla's Common Stock Offering a Good Thing in the Long Run
https://www.thestreet.com/video/jim...-long-run?puc=yahoov&cm_ven=YAHOOV&yptr=yahoo
https://www.thestreet.com/video/jim-cramer-tesla-common-stock-offering-a-good-thing-in-long-run?puc=yahoov&

 

[LJS22]

Steve Westly was on power lunch just now. Again he’s my favorite Tesla communicator. Absolutely nails all the points and painted the exact picture of the auto industry currently and why Tesla is soaring.

I’ll post video when CNBC does.

 

[Ocelot]

I was saving this post for quieter times...but since you asked:
The annual 10K comment on the Deferred Tax Valuation Allowance has been consistent for many years....except for this year.
For the first time, Telsa has not stated that "it is more likely than not that the Tax Asset will not be realized".
This change in wording, I believe, means that a partial or full release of the valuation allowance to income is coming soon.
My guess: No later than Q3 2020; however, if Q1 is significantly profitable, they may take it then.
The Valuation Reserve now sits at $1,956M

2014 10K.… it is more likely than not that our U.S. deferred tax assets will not be realized
2015 10K …. it is more likely than not that the net deferred tax assets will not be realized
2016 10K ….it is more likely than not that its net deferred tax assets will not be realized
2017 10K…. it is more likely than not that the U.S. deferred tax assets will not be realized
2018 10K…. it is more likely than not that the U.S. deferred tax assets will not be realized

2019 10K…. We continue to monitor the realizability of the U.S. deferred tax assets taking into account multiple factors, including the results of operations and magnitude of excess tax deductions for stock-based compensation. We intend to continue maintaining a full valuation allowance on our U.S. deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Release of all, or a portion, of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded.

Could be wrong here , but is it possible wording changed due to change in CFO's? I mean it will obviously happen at some point, but wonder if they will hammer it, or sprinkle it.

 

[JBRR]

Cramer's video on Youtube:

a man is known by the company he keeps

Josh Wolfe on Twitter

 

[sparcs]

True. I've been investing long enough to know that the best "catalysts" to rising share prices are not known in advance.

that aged well. funny how things change only 24 hours later.

 

[RobStark]

One of Tesla's advantages is that it's actually made in the U.S. (or China or Germany once GF4 gets going). Mexico is not one of Tesla's biggest markets. And having had a car and a refrigerator made in Mexico, I'm not keen on repeating the experience.

I had a most excellent Honda Accord made in Mexico.

Ditto Samsung Refrigerator and 46" TV.

Rather have MiM Model 3 than MiC Model 3.

Mexico has more free trade agreements than any other country.

Can ship tariff free to Canada,US,Brazil,Argentina,Chile,Colombia and virtually all the Americas.

 

[Highway2Heel]

Here come the ETFs...right on schedule....2:45 pm EST

 

[heltok]

Why did Tesla decide to raise capital? Because they thought it was a good decision to. Thus the company should be worth more than it was before the raise. It could however indicate that things were not so well as we thought before the raise, but it could also indicate that things were better than we though, we don’t know.

What will they use it for? We don’t know, but here are some plausible ideas:

1. Secure the company. Be prepared if Covid-19 kills FCF the coming quarters or for some other reason the company has a difficult time
2. Use cash to acquire some company or part of a company, for example Panasonic GF1 cell production, some Semi truck manufacturer, some Lithium miner, some taxi/ride sharing company
3. Build another battery gigafactory with own cell production
4. Build more car factories for Semi, Cybertruck, Model 2 or more 3/Y in China/Asia/Europe
5. New product line for example bicycle, Escooter, boat, EVTOL
6. Some combination of above

 

[ggr]

In a desperate attempt to write some serious content instead of spending too much time moderating, I have the following comments about the capital raise.

First, dilution. To a first approximation, a properly priced capital raise doesn't directly affect the stock price. There are a few more shares lying around, but there is also more asset value on the balance sheet, and they cancel out. It seems people hear the word "dilution" and think "Oh, no, that must be bad...". It isn't, it's neutral.

But then there's the second order term. What is the money going to do? If it's to keep the company alive, that's bad. If you believe that the company can put the money to good use, that's good. And presumably if you're invested in the company you believe that. So, in the absence of TSLAQ fantasies, this is clearly a good thing.

What can the company (specifically Tesla) use the extra money for?
. Retire debt. No, that's silly. If you are growing value, a lot of that debt is the cheapest way to buy money. By all means retire the debt over time, out of recurring cash flow, but no need now.
. Provide more security in the event of unexpected external factors. Great! Increases confidence in the company.
. Acquire other companies. Great, if you have someone to acquire. No targets (that we know of) on the horizon.
. Use as capital for expansion. Great! If you have the people to staff the new efforts.
. Use the money to hire/train more good people. Tesla University anyone?
. Explore new opportunities, particularly capital-intensive ones. Tesla has a great track record of doing this.
. Accelerate existing programs. Plenty of those (Tesla Network, Megapacks, Semi ...)

I'm sure I'm missing others, by all means add to the list. But to me the bottom line is that the capital raise has to be a good thing for Tesla. "When you are riding the tiger, don't get off."

(Going through some of this with my startup at the moment. That's why it's on my mind.)

Edit: @heltok, great minds think alike.

 

[Fobble]

Steve Westly was on power lunch just now. Again he’s my favorite Tesla communicator. Absolutely nails all the points and painted the exact picture of the auto industry currently and why Tesla is soaring.

I’ll post video when CNBC does.

CNBC definitely changed their view on Tesla. I noticed Steve Westly, a former Tesla board member, has been on CNBC programs lately. In the past when CNBC was completely bearish on Telsa, all they invited were Bob Lutz and the likes.

 

[ggies07]

This should be played at this annual shareholder meeting coming up as Elon enters the room. Cheeky, but would be Elon.

Ya know, he would come out on stage with one of these faces Ahh, 2020 is going to be a good one.

 

[Fobble]

Ya know, he would come out on stage with one of these faces Ahh, 2020 is going to be a good one.

This is better than the moves he did during Shanghai ribbon cutting

 

[Tslynk67]

I feel a little dirty...have a sell order in at 799.99

Just a smidge..but still

Ha, I had one set too, but I removed it when the price moved up to $795.

I fully expect the MM's to keep it below $800 tomorrow, but looking for another pop on Monday.

But what a day! Those shares I bought yesterday in AH for $750 were a good move in hindsight. never got to re-buy my $805 call this morning, put an order for $1 for it, but I missed that dip. Hey ho, don't mind to see 100 at $805 if that's the way it is.

 

[Ameliorate]

In a desperate attempt to write some serious content instead of spending too much time moderating, I have the following comments about the capital raise.

First, dilution. To a first approximation, a properly priced capital raise doesn't directly affect the stock price. There are a few more shares lying around, but there is also more asset value on the balance sheet, and they cancel out. It seems people hear the word "dilution" and think "Oh, no, that must be bad...". It isn't, it's neutral.

But then there's the second order term. What is the money going to do? If it's to keep the company alive, that's bad. If you believe that the company can put the money to good use, that's good. And presumably if you're invested in the company you believe that. So, in the absence of TSLAQ fantasies, this is clearly a good thing.

What can the company (specifically Tesla) use the extra money for?
. Retire debt. No, that's silly. If you are growing value, a lot of that debt is the cheapest way to buy money. By all means retire the debt over time, out of recurring cash flow, but no need now.
. Provide more security in the event of unexpected external factors. Great! Increases confidence in the company.
. Acquire other companies. Great, if you have someone to acquire. No targets (that we know of) on the horizon.
. Use as capital for expansion. Great! If you have the people to staff the new efforts.
. Use the money to hire/train more good people. Tesla University anyone?
. Explore new opportunities, particularly capital-intensive ones. Tesla has a great track record of doing this.
. Accelerate existing programs. Plenty of those (Tesla Network, Megapacks, Semi ...)

I'm sure I'm missing others, by all means add to the list. But to me the bottom line is that the capital raise has to be a good thing for Tesla. "When you are riding the tiger, don't get off."

(Going through some of this with my startup at the moment. That's why it's on my mind.)

Edit: @heltok, great minds think alike.

It's okay, this just accelerates the timeline on everything, including share buybacks in the future works for me, I don't feel diluted at all!