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

[Silentk]

Spotted on Twitter:

Jonathan Hewitt on Twitter

 

[UnknownSoldier]

Here is the latest SimpleWall.st TSLA valuation based on 5-yr discounted cash flows:

Below Fair Value: TSLA ($800.03) is trading below our estimate of fair value ($996.23)

Seems TSLA is NOT overpriced, despite what shortzes would have you believe.

View attachment 511567

This website performs an Intrinsic Value calculation for about 7,000 different equities overnight after each trading day, based on their methodology for valuing cash flows.

You can see individual calculations by following the link at the lower-right of their intrinsic-value chart from their webpage.

Cheers!

I'm assuming this calculation is made just for the auto business, the only part of the business where we can forecast cash flows.

So everything else which could potentially contribute is still on the table for making potential value higher? I mean....that's why it's potential and not realized value. But that's cause for optimism nonetheless.

 

[elasalle]

Questions about Q1 deliveries and why I feel they may be lower than expected.

I have a feeling that TSLA may report lower than expected Q1 car deliveries. First I don't know what the "expected number" is, but given that Elon has stated that their goal is well over 500K deliveries for this year, then I suspect that a number significantly below 100K for the quarter may be perceived as a miss. Here are my reasons:

1) Model Y ramp. Is TSLA building a whole new production line in Fremont for the Model Y or are they using an existing M3 line for this? I suspect they are using an existing M3 line and if that is the case, there will be less M3s built as they ramp Model Y and therefore less Model 3s delivered. They will not begin delivering Model Ys until March and these will not significantly show up in Q1.

2) No prebuilt inventory at the end of Q4. TSLA delivered more cars than they produced in Q4 which means that they do not have much inventory to deliver. This combined with reduced M3 production due to #1 above means that they will deliver less cars in Q1.

3) China corona virus. Yes, I know that the shutdown in China was only for 1 week, but I don't see too many customers out "car shopping" during this outbreak.

These are my reasons why deliveries in Q1 may be low, but I want to know from the community what they feel the expected deliveries will be. After all, a miss only happens when expectations are not met.

There is something to be learnt from last year. Missed Q1 but met yearly guidance. So Smart Money would be buying any dip. Ofcourse FUD, CNBC, Lutz, TSLAQ etc will make it a big event.

 

[CyberDutchie]

...
However, when comparing the Model S -- or even the Model 3, for that matter -- to the Taycan lineup, range seems like the wrong parameter. People who consider buying the Taycan do it for one main reason, and one secondary reason. The main reason is the perception of performance (since a large proportion of the people who have the financial means to afford one don't possess the driving skills to actually push the car to its limits safely, but they probably like to claim they do); the secondary reason (for a small minority) is the actual performance. And then a second significant parameter in that comparison is the price: some people are simply priced out of the Taycan. Others, who can afford it, don't see the need for it and understand that a Model S, X or 3 fits their actual needs better without really sacrificing on performance. Storage space and/or number of seats, anyone? And then of course there are the Porsche lovers, who buy it because it's a Porsche, and for them it's irrelevant what Tesla offers. Of course, many Porsche lovers are in fact Porsche ICE lovers who don't care about the Taycan lineup and may actually grow resentful towards the company if they see a clear shift towards electrification.
...

Many Porsche fans love the brand because of the interior cockpit design. They hate the minimalistic design of Tesla. Also, the ability to personalize the interior with many choices of leather, stitching, etc.—they consider the interior more luxurIous than that of a Tesla.

 

[Beltsbear]

The problem with this entire train of thought is that if CA is anything at all like PA, the utilities are regulated by a Public Utilities Commission whose agility can best be described as "glacial". For Tesla to put their business -- which relies on constant small improvements and optimizations -- at the mercy of such an agency would be utter insanity.

I am not advocating that Tesla take over PG&E but it would not be as bad as you say. Obviously with someone as smart as the Elon Musk and getting back to first principles, a whole lot of things about how the utility operates especially software and decision-making could be improved with little input from the state.

most of the kinds of projects that musk want to start would pretty much be automatically greenlighted as they are solar and distributed. And the shutting down of bad power plants would probably be very easy even with the state intervening. But probably the biggest change would Be software and decision making, and a whole lot of deficiencies can be removed purely with software and very minor technologies. for example Tesla could turn off large amounts of car charging and home draw on demand with the right agreements.

I don’t think Elon has the time for this, but I think Tesla light and power would be a success.

 

[StealthP3D]

Holy frick, those harvesters were fast....

It looks to me like the Germans are trying to show up the Chinese!

If this kind of execution carries through the entire project, the market will be impressed!

 

[Prunesquallor]

While probably misguided the environmentalists are not dumb. In Germany the courts are quite independent, so what politicians may say is not likely to matter much. In that sense the re-filing at a higher court to protest the plantation harvesting so close to Tesla's deadline is a smart move. If the plantation is not gone by the end of the month, then no further logging can be done until much later in the year.

So the court has about ten days to determine whether the protest-filing has merit - if it takes longer (incl. a finding that it does have merit), then Tesla can't finish the harvesting within the deadline and the overall timeline goes out the window.

On the somewhat brighter side, it is important to understand that the court ordered an immediate ban simply because if they hadn't the harvesting would have been over by the time the court had made its determination. So the temporary stop is just motivated by caution.

On the very bright side, Tesla had excellent timing in its raising of capital, because we seem to have significant volatility ahead...

If GF4 schedule gets set back by months, I hope Tesla triggers Plan B and says “Thanks Germany for the weak-*** effort. Bye.”

 

[StealthP3D]

Many Porsche fans love the brand because of the interior cockpit design. They hate the minimalistic design of Tesla. Also, the ability to personalize the interior with many choices of leather, stitching, etc.—they consider the interior more luxurIous than that of a Tesla.

Yeah, the Porche is better for those who want to impress how much wealth they have or how sophisticated they must be. We will see how long that business model works.

When Tesla gets to the point it can make more cars than it can sell, and the hold-outs are rich people who want to impress, Tesla can always cater to them by coming out with a "techno-peacock" trim level for $60K more. It will have numerous useless dials, colored glowing lights and buttons that all operate with silky smooth rotation or satisfying "clicks". As the commander of the vehicle gets everything set just right, the various lights will glow to indicate "all systems are go". At that point, the commander will push the "start" button and the ride will begin. The commander and his/her guests can gently stroke the luxurious materials during the ride to increase their sensory satisfaction. It will easily be worth the extra $60K considering all the "old school" automakers are out of business and, as a bonus, the extra profit will be welcomed by Tesla investors.

Ordinary people will just get in more pedestrian trim levels and tell the car where they want to go.

 

[Prunesquallor]

Yeah, the Porche is better for those who want to impress how much wealth they have or how sophisticated they must be. We will see how long that business model works.

When Tesla gets to the point it can make more cars than it can sell, and the hold-outs are rich people who want to impress, Tesla can always cater to them by coming out with a "techno-peacock" trim level for $60K more. It will have numerous useless dials, colored glowing lights and buttons that all operate with silky smooth rotation or satisfying "clicks". As the commander of the vehicle gets everything set just right, the various lights will glow to indicate "all systems are go". At that point, the commander will push the "start" button and the ride will begin. The commander and his/her guests can gently stroke the luxurious materials during the ride to increase their sensory satisfaction. It will easily be worth the extra $60K considering all the "old school" automakers are out of business and, as a bonus, the extra profit will be welcomed by Tesla investors.

Ordinary people will just get in more pedestrian models and tell the car where they want to go.

Don’t forget der schmoking package.

 

[nativewolf]

Tesla has a GF-Berlin page now:

Gigafactory Berlin-Brandenburg

Among the observations: they're not simply planting three trees for every tree they cut; they're planting three times the area of the land that they cut. This is an important distinction, as replanting is done at much higher density than trees grow in older strands.

Well..for once the dubious honor to correct @KarenRei . No. It really doesn't. In fact, it may be worse. This was a monoculture conifer forest, it was mature, it had captured the maximum amount of growth possible on that site with that species mix. The only way a tree was growing was due to natural mortality providing sun/rain/nutrients. A new monoculture forest is going to have the same issue, you grow biomass on a site until such time that it is constrained by the engine that powers that growth (species, soil/geography, and sun/moisture). Your number of seedlings has relatively little to do with the amount of carbon capture, nor anything to do with ecological significance from anything other than carbon capture. If you care about carbon capture, plant those trees in a warm climate and lock them up in long long rotations, like converting Australia sugar cane land to a long lived Euc that can support 2x the biomass of a conifer forest in Germany. If you go about restoring natural ecosystems you will plant a mix of trees that have different primary roles than carbon capture but will of course still capture some carbon. I'm a fan of both outcomes and plant broadly but am much much more concerned with acreage vs number of seedlings. In commercial forestry I can safely generalize and say that the trend is to greatly reduce the number of seedlings/acre. More seedlings/acre in fact reduces yields as suppression (caused by excess competition) happens more quickly than we previously thought. Now, I'm not an expert on northern EU conifer forest (though I studied forest research a bit in Finland) and own Ponsses very similar to the ones on the twitter feeds. I'd expect them to behave in just the same manner. Ecologically speaking than I'd be a fan of converting more area, even if that means less seedlings. Over time the forest area is the constraint to both a healthy ecosystem and to long term sequestration. Over time a natural forest will add seedlings ..naturally.

Looking at all the sites they plan on planting it seems to be some micro program of 1-10 hectares, probably shifting marginal ag land or brownfield sites into forest. Inconsequential carbon wise but perhaps useful from a local land use/aesthetics type of thing. Not likely to do any significant ecological rehabilitation with such low levels of planting. However, it is well and proper that they make this offset effort.

You may ask why Australia? Property rights. Property right enforcement is just terrible in most tropical countries. New Zealand and Australia have great climates for forest growth and strong property rights enforcement (so the trees you plant may actually be there in 20 years).

Good on Tesla to spend the monies. Frankly planting is so low cost they could easily do more (we plant pine for $0.50/seedling-seedlings and planting costs), thus cost to plant 200 acres is about $6000.00). In the SE of the US this type of forest has a fully closed canopy in 5 years, by 15 it is possible to harvest or thin. Frankly I am shifting to even lower densities. Maybe 400/acre. If tesla wants me to offset with a natural ecosystem mix than maybe cost would shift upwards by 5x. Still...nothing to Tesla.

 

[Christine69420]

If GF4 schedule gets set back by months, I hope Tesla triggers Plan B and says “Thanks Germany for the weak-*** effort. Bye.”

I hope not. But searching for GF4 Tesla probably was in contact with several possible locations. If one of those was very ready to go... Tough decisions.

But it will probably not come to that. The new court is still in Brandenburg (OVG Berlin Brandenburg court) so they should know the situation well enough.

 

[KarenRei]

Well..for once the dubious honor to correct @KarenRei . No. It really doesn't. In fact, it may be worse. This was a monoculture conifer forest, it was mature, it had captured the maximum amount of growth possible on that site with that species mix. The only way a tree was growing was due to natural mortality providing sun/rain/nutrients. A new monoculture forest is going to have the same issue, you grow biomass on a site until such time that it is constrained by the engine that powers that growth (species, soil/geography, and sun/moisture). Your number of seedlings has relatively little to do with the amount of carbon capture, nor anything to do with ecological significance from anything other than carbon capture. If you care about carbon capture, plant those trees in a warm climate and lock them up in long long rotations, like converting Australia sugar cane land to a long lived Euc that can support 2x the biomass of a conifer forest in Germany. If you go about restoring natural ecosystems you will plant a mix of trees that have different primary roles than carbon capture but will of course still capture some carbon. I'm a fan of both outcomes and plant broadly but am much much more concerned with acreage vs number of seedlings. In commercial forestry I can safely generalize and say that the trend is to greatly reduce the number of seedlings/acre. More seedlings/acre in fact reduces yields as suppression (caused by excess competition) happens more quickly than we previously thought. Now, I'm not an expert on northern EU conifer forest (though I studied forest research a bit in Finland) and own Ponsses very similar to the ones on the twitter feeds. I'd expect them to behave in just the same manner. Ecologically speaking than I'd be a fan of converting more area, even if that means less seedlings. Over time the forest area is the constraint to both a healthy ecosystem and to long term sequestration. Over time a natural forest will add seedlings ..naturally.

Looking at all the sites they plan on planting it seems to be some micro program of 1-10 hectares, probably shifting marginal ag land or brownfield sites into forest. Inconsequential carbon wise but perhaps useful from a local land use/aesthetics type of thing. Not likely to do any significant ecological rehabilitation with such low levels of planting. However, it is well and proper that they make this offset effort.

You may ask why Australia? Property rights. Property right enforcement is just terrible in most tropical countries. New Zealand and Australia have great climates for forest growth and strong property rights enforcement (so the trees you plant may actually be there in 20 years).

Good on Tesla to spend the monies. Frankly planting is so low cost they could easily do more (we plant pine for $0.50/seedling-seedlings and planting costs), thus cost to plant 200 acres is about $6000.00). In the SE of the US this type of forest has a fully closed canopy in 5 years, by 15 it is possible to harvest or thin. Frankly I am shifting to even lower densities. Maybe 400/acre. If tesla wants me to offset with a natural ecosystem mix than maybe cost would shift upwards by 5x. Still...nothing to Tesla.

I'm confused... what are you correcting?

 

[JustSaying]

Don’t forget der schmoking package.

Thankfully, I sold all my der schmoking stocks over two years ago (MO & PM ,great current dividend yields)
and reinvested the proceeds inTesla.
It sure is better to be lucky , than lucky to be smart....

 

[gerebgraus]

Questions about Q1 deliveries and why I feel they may be lower than expected.

I have a feeling that TSLA may report lower than expected Q1 car deliveries. First I don't know what the "expected number" is, but given that Elon has stated that their goal is well over 500K deliveries for this year, then I suspect that a number significantly below 100K for the quarter may be perceived as a miss. Here are my reasons:

1) Model Y ramp. Is TSLA building a whole new production line in Fremont for the Model Y or are they using an existing M3 line for this? I suspect they are using an existing M3 line and if that is the case, there will be less M3s built as they ramp Model Y and therefore less Model 3s delivered. They will not begin delivering Model Ys until March and these will not significantly show up in Q1.

2) No prebuilt inventory at the end of Q4. TSLA delivered more cars than they produced in Q4 which means that they do not have much inventory to deliver. This combined with reduced M3 production due to #1 above means that they will deliver less cars in Q1.

3) China corona virus. Yes, I know that the shutdown in China was only for 1 week, but I don't see too many customers out "car shopping" during this outbreak.

These are my reasons why deliveries in Q1 may be low, but I want to know from the community what they feel the expected deliveries will be. After all, a miss only happens when expectations are not met.

If Tesla considered demand an issue then they would have cut prices. Coronavirus means 1-2 weeks lost production in China. The issue is not only the Tesla plant, but the supply chain as well.
The limiting factor in both USA Model 3, Y and Shanghai is the battery cell supply. There is one little caveat. If both the demand for Model 3 and ramp of Model Y were slow Tesla could just accumulate the extra battery cells for Model Y for later quarter. That could hurt Q1 sales number, but it would not impact the yearly sales. As the accumulated cells would be used after the Model Y sales picked up. We will know more about this once Model Y deliveries start.

 

[BenPrice]

Sorry to hear that, but I guess you survived it?

Ya. Never wanted to find out how “safest car ever” handled the business.

Model 3 is a tank. Hit at around 30mph on drivers front wheel.

But also totaled by insurance.


Best of luck to you all this week. I believe it will be memorable.

I went 50k on oct 2019 1200s. Think that’s where we are headed here shortly, and if I’m right I turned $3,000 into $1,000,000 this run. If I’m wrong I only got a half million.

Photo is options returns in 3m off $3,000 starting investment.

 

[StealthP3D]

Joking aside, it seems @kishdude has a legitimate question: What exactly are the expectations for Q1-20, and will they be met?

Except that it wasn't presented as a "legitimate question", it was posed as a "feeling" that Q1 would come in below expectations based upon three reasons, the second and third "reasons" already being widely known and accounted for (that inventory was sold out at the end of Q4 and the Coronavirus caused an unplanned 1-week shutdown at G3). Quarterly misses occur when something is worse than accounted for and no reasons were provided why we could expect that to be the case here.

@kishdude admitted he didn't know what the expectations were but that these factors might cause Q1 to come in under expectations, completely ignoring that these two facts are already widely known (certainly by analysts and anyone with a reasonable opinion as to what we can expect). The first reason (Model Y ramp might impact Model 3 production) has been covered by management. As I recall, they have indicated they don't see any impact. While it might be a valid concern that management is wrong about this, I don't see any evidence presented to support that case. So it's just a "feeling". I learned long ago not to invest based on "feelings". Some prove to be right, some are just based on FUD. Feelings are not a good indicator without facts to back them up.

Me, I think they will be met if they are kept reasonable, and I am not very worried about those caveats.
BUT please let's not get ahead of ourselves and promise moons out of our reach, like we so often tend to do.

I tend to agree with you here. But my many years of investing has taught me that, 9 times out of 10, it's a fool's game to play the quarterly numbers game with a good growth company. Unless you have inside information, it's a crapshoot whether the market will consider the results a "miss" or not. Taking the longer-term approach of buy and hold solves that problem nicely. Those who want to play that game will not make up their minds about quarterly results until we are a lot closer to the end of the quarter than we are now.

 

[StealthP3D]

Well..for once the dubious honor to correct @KarenRei . No. It really doesn't. In fact, it may be worse.

I'm really confused with what you are disagreeing with. Karen simply said they are not replanting three times the number of trees, they are replanting three times the acreage. It sounds like that is something you would agree with.

 

[StealthP3D]

I went 50k on oct 2019 1200s. Think that’s where we are headed here shortly, and if I’m right I turned $3,000 into $1,000,000 this run. If I’m wrong I only got a half million.

Photo is options returns in 3m off $3,000 starting investment.View attachment 511610

I guess the moral of the story is you should have started with more than $3k!

 

[JoaoD]

Haven´t seen this being discussed here, Tesla raised their Capex guidance by $0.5B to $1B per year for the next 2 years.
That is most likely why they raised the ~$2B in stock recently.
This may or may not be related to the recent rumors about a new Giga Factory planning, potentially in Texas.

 

[jw934]

I'm really confused with what you are disagreeing with. Karen simply said they are not replanting three times the number of trees, they are replanting three times the acreage. It sounds like that is something you would agree with.

I think the disagreement is with "replanting is done at much higher density " on the one hand, vs. "more seedlings/acre in fact reduces yields as suppression... I'd expect them to behave in just the same manner, . . . [with] less seedlings".