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

[UnknownSoldier]

You know, when people here start acting giddy, inevitably TSLA finds a way to disappoint. Get it under control people! By tomorrow, the usual suspects will be pointing out that Tesla will have little or no income (just like everybody else) during Q2. They can't sell cars or batteries that they can't build.

So yeah, we'll see a big pop tomorrow because Tesla had a good Q1, and then just like that it will be in the past and TSLA will follow the macros again. Is there any reason that won't be down, down, down as our crisis deepens? Who is going to be excited about battery day with bodies stacking up in the streets?

You can't control the macro environment. You can, however, hedge it.

 

[Foghat]

The whole thing was confusing because Tesla shut down out of caution and to abide by the local county order, which was ambiguous and not defined. Days later a statewide order came down that clearly stated auto manufacturers are essential which nullifies the county order.

I'm not necessarily saying Tesla will open Fremont back up next week of even the week after. I'm just saying they can chose when they want to start production again. I personally think it will be the 3red week of April

It will be interesting to observe how they maneuver around shelter in place possibly being extended into summer, which school closures for the rest of the year may potentially indicate.

Governor Newsom has also made overtures to potential of keeping the order going into summer as well.

Guidance for Q2 may be a true challenge under such conditions.

 

[StealthP3D]

The whole thing was confusing because Tesla shut down out of caution and to abide by the local county order, which was ambiguous and not defined. Days later a statewide order came down that clearly stated auto manufacturers are essential which nullifies the county order.

The statewide order doesn't nullify the county order since it specifically allows cities and counties to implement more stringent requirements (but not more lenient ones). I suppose Tesla could try to argue that clause only applies to the nature of the requirements but not to who it applies to but I doubt that would be successful in the midst of a medical emergency. I do think as the threat dies off, legal arguments will have a better chance of success and, more likely, Tesla will be able to convince the County Health Dept. they have safeguards and protocols in place that allow it to manufacture safely. If the county stubbornly refuses to let them start manufacturing then Tesla will have to convince a judge that the order is no longer necessary for public safety. As long as Tesla was willing to potentially pay the daily fines for such a violation, they could continue to manufacture until a judge could hear the case. But I doubt it will come to that.

More likely, the President would issue an order declaring the epidemic is to the stage that cities, counties and states cannot prohibit certain kinds of essential economic activity.

The people of California want the state to get back to work, pressure will only build, and pandemics tend to not last that long anyway. Since Tesla has manufacturing capacity in China to tide them over from a cashflow perspective, they can outlast a good many California businesses anyway.

 

[30seconds]

Oh, I am not questioning his pay in any way - he deserves every single penny, share and then some.

In 4Q2019 - as the market cap went above 100B, Tesla had to show a certain tranche of shares allotted to his compensation on their earnings. He doesn't get those for a while (average of 6months where market cap is >100B), and even if he does, he won't sell any. But for accounting this in effect went into expenses column reducing the GAAP profit shown in their earnings. Since we are talking about GAAP profit possibility for 1Q2020, my question is if those are still in 'expense' account or are taken off now just from accounting point of view?

So you are supposed to account for events that are likely to occur, but only in relationship to the timing and likelihood of the even actually occurring. In other words they should have only accounted for proportion of the future expense with the expectation that as the company spent more time >100B more of the expense would be accounted for.

Given the uniqueness of this compensation package there are not other examples to turn to. So the Audit Partner pretty much will need to go to the Star Chamber of Audit Partners at their firm and after some ritual chanting and burning of incense some sort of official sounding ruling based on not much but spoken with much confidence will determine how this is treated.

Most likely outcome is that the previous Q expense is not reversed but kept as a reserve since the trigger average share price is around $540 and b/c of the run earlier this year the plus current share price recovery the trigger still can be hit by mid year.

 

[powertoold]

The statewide order doesn't nullify the county order since it specifically allows cities and counties to implement more stringent requirements (but not more lenient ones).

People misunderstand this. More stringent doesn't mean it can contradict the higher authority. If the federal government says you can have freedom of religion. The state can't discriminate against Muslims for example.

The state order already says car mfgs are essential. The county can't say they're non-essential.

On the other hand, if the state doesn't classify car mfgs, then the county can decide they're not essential.

 

[Bet TSLA]

I don't think Gali has superficial understanding. He's a YouTube personality, so he tends to dramatize things for our entertainment

Wow, I just listened to Rob Maurer (Tesla Daily) and Gali (Hyperchange) discussing the upcoming delivery numbers (yeah, I know I'm late). How embarrassing for Gali. I like Rob because he actually knows what he's talking about, does good research, and is very clear when he doesn't know something. In comparing their expectations, Rob goes into detail on various reasons he came up with the numbers he did. Gali says he "modeled it out" by mostly guessing. Rob's estimate was 88K deliveries, so he got it right on. Gali's was way low (65K).

Gali's an enthusiastic ignoramus, a YouTube personality. He fits right in with the Third Row crowd, which is pretty much a mutual admiration society. Enthusiastic too. But useless other than the access they seem to have to information that others don't. The Elon interview sort of worked because they mostly had the good sense to shut up and let Elon talk.

Yeah, I'm kind of grumpy this evening. Too much death and incompetence in the air. Probably shouldn't take it out on people who are mostly harmless.

 

[Foghat]

The statewide order doesn't nullify the county order since it specifically allows cities and counties to implement more stringent requirements (but not more lenient ones). I suppose Tesla could try to argue that clause only applies to the nature of the requirements but not to who it applies to but I doubt that would be successful in the midst of a medical emergency. I do think as the threat dies off, legal arguments will have a better chance of success and, more likely, Tesla will be able to convince the County Health Dept. they have safeguards and protocols in place that allow it to manufacture safely. If the county stubbornly refuses to let them start manufacturing then Tesla will have to convince a judge that the order is no longer necessary for public safety.

Does anyone have a feel for how the County Health Department may proceed with Tesla in next few weeks given the Governor’s leaning toward extending the order potentially into summer?

 

[mblakele]

The statewide order doesn't nullify the county order since it specifically allows cities and counties to implement more stringent requirements (but not more lenient ones). I suppose Tesla could try to argue that clause only applies to the nature of the requirements but not to who it applies to but I doubt that would be successful in the midst of a medical emergency. I do think as the threat dies off, legal arguments will have a better chance of success and, more likely, Tesla will be able to convince the County Health Dept. they have safeguards and protocols in place that allow it to manufacture safely. If the county stubbornly refuses to let them start manufacturing then Tesla will have to convince a judge that the order is no longer necessary for public safety.

I'm expecting the solution to involve some combination of hygiene protocols patterned after the Shanghai GF and antibody testing.

An antibody test for the novel coronavirus will soon be available

 

[30seconds]

The statewide order doesn't nullify the county order since it specifically allows cities and counties to implement more stringent requirements (but not more lenient ones). I suppose Tesla could try to argue that clause only applies to the nature of the requirements but not to who it applies to but I doubt that would be successful in the midst of a medical emergency. I do think as the threat dies off, legal arguments will have a better chance of success and, more likely, Tesla will be able to convince the County Health Dept. they have safeguards and protocols in place that allow it to manufacture safely. If the county stubbornly refuses to let them start manufacturing then Tesla will have to convince a judge that the order is no longer necessary for public safety.

Threat isn't dying off anytime soon, especially with patchwork across the US but free travel between "restricted" areas.

At some point in the future this will become obvious and the country will go into lockdown for 4-6 weeks and hopefully brought back online with massive testing and contact tracing. This seems to be the only solution that has worked anywhere else struck by this virus in a substantial way.

Until then, good luck with predicting when things will be anywhere close to normal.

 

[Foghat]

Threat isn't dying off anytime soon, especially with patchwork across the US but free travel between "restricted" areas.

At some point in the future this will become obvious and the country will go into lockdown for 4-6 weeks and hopefully brought back online with massive testing and contact tracing. This seems to be the only solution that has worked anywhere else struck by this virus in a substantial way.

Until then, good luck with predicting when things will be anywhere close to normal.

Given this reality, would it be best for Tesla to put out a revised 2020 production guidance now as opposed to later in order to reset market expectations moving forward?

 

[StealthP3D]

People misunderstand this. More stringent doesn't mean it can contradict the higher authority. If the federal government says you can have freedom of religion. The state can't discriminate against Muslims for example.

The state order already says car mfgs are essential. The county can't say they're non-essential.

On the other hand, if the state doesn't classify car mfgs, then the county can decide they're not essential.

There is definitely a legal argument on both sides. Which one would prevail is anyone's guess. I'm guessing in the middle of a pandemic, the county might prevail. You are free to disagree but I would caution against over-stating your case. Because it most certainly is open to legal interpretation. The fact that Tesla presented their legal argument does not mean they would prevail. Far from it. As the pandemic winds down, their chances get better. And at that point, the County would likely remove the order so they wouldn't have to defend it in court.

 

[powertoold]

Because it most certainly is open to legal interpretation.

Sure, but the county can't contradict the state, even moreso the federal government, which Tesla was working with in their operations letter that described the shutdown.

More stringent example - state says you can't go to the restroom between 5-10pm. County says you can't go between 5-10pm AND 5-10am.

Contradiction example - county says you can go to restroom any time.

 

[StealthP3D]

Given this reality, would it be best for Tesla to put out a revised 2020 production guidance now as opposed to later in order to reset market expectations moving forward?

You are assuming Tesla will need to lower guidance. That's not a given at this point. With the factory in Shanghai ramped up, they could hit their pre-Coronavirus guidance of 500,000 even if Fremont were to be closed for 5 weeks in total.

I think Tesla is smart to not issue new guidance without better visibility.

 

[Green Pete]

Sorry, I've seen multiple people suggest TSLA could hit 650 tomorrow. I realize the p and d numbers beat expectations but I don't see how that could justify a 44% intraday jump? I wont be sad if that happens but I just don't understand how that could be even remotely possible.

 

[powertoold]

Sorry, I've seen multiple people suggest TSLA could hit 650 tomorrow. I realize the p and d numbers beat expectations but I don't see how that could justify a 44% intraday jump?

Anything can happen in this crazy market, but I agree with you, probably not 650 this week. Next Monday sounds good though

 

[Green Pete]

Anything can happen in this crazy market, but I agree with you, probably not 650 this week.

Well If it does happen I owe whoever pointed me at the 580 calls a beer

 

[StealthP3D]

Sure, but the county can't contradict the state, even moreso the federal government, which Tesla was working with in their operations letter that described the shutdown.

More stringent example - state says you can't go to the restroom between 5-10pm. County says you can't go between 5-10pm AND 5-10am.

Contradiction example - county says you can go to restroom any time.

I agree with the principle that the county can't contradict the state orders but the state didn't say essential businesses must operate, they said they are excluded from the state order and that counties can make more stringent requirements as they see fit.

I don't want to make legal arguments here but it's clear that the county order is open to legal interpretation. So I would caution (again) against pretending to know who would prevail.

 

[woodisgood]

Wow, I just listened to Rob Maurer (Tesla Daily) and Gali (Hyperchange) discussing the upcoming delivery numbers (yeah, I know I'm late). How embarrassing for Gali. I like Rob because he actually knows what he's talking about, does good research, and is very clear when he doesn't know something. In comparing their expectations, Rob goes into detail on various reasons he came up with the numbers he did. Gali says he "modeled it out" by mostly guessing. Rob's estimate was 88K deliveries, so he got it right on. Gali's was way low (65K).

Gali's an enthusiastic ignoramus, a YouTube personality. He fits right in with the Third Row crowd, which is pretty much a mutual admiration society. Enthusiastic too. But useless other than the access they seem to have to information that others don't. The Elon interview sort of worked because they mostly had the good sense to shut up and let Elon talk.

Yeah, I'm kind of grumpy this evening. Too much death and incompetence in the air. Probably shouldn't take it out on people who are mostly harmless.

There’s little use comparing the various Tesla-related personalities. Everyone has a role to play, and anyone on the right side is alright in my book.

But I understand grumpy.

 

[Singuy]

Okay for those who thinks there will be a 3 additional months of shut down are insane. Preface, anything is possible. But a 3 months complete economic shut down will result in catastrophe and mass protest. Tesla can weather the storm, but everything around it cannot. There's not enough money in the world to keep these small businesses alive shutting them down. There's not enough money in the world to keep landlords from evicting people out onto the streets. And this is with a state that has obviously flatten the curve. Even the governor of New York understands a shut down for an extended period time is suicidal.

 

[Artful Dodger]

Sorry, I've seen multiple people suggest TSLA could hit 650 tomorrow. I realize the p and d numbers beat expectations but I don't see how that could justify a 44% intraday jump? I wont be sad if that happens but I just don't understand how that could be even remotely possible.

Here's how:

1. Bollinger Bands - Wikipedia (upper bound for technical traders)
   
2. $650 also just happens to be the 50 day moving average (a target SP for TA)
   
3. Options Expiries Friday (there's 5.5K contracts open at the $600 Strike: Motivation)

P.S. The SP dropped from $969 to $704 in 4.0 hrs of trading on Feb 3/4. That's a $265 swing on literally ZERO News. So a $200 upswing on MAJOR news (when the SP has been beaten down) is not unreasonable.

P.P.S. You might find it helpful to surrender your need to 'understand' SP movements. There are too many hidden forces at work which are only revealed in hindsight, or never revealed at all since there is so much $$ at stake.

CHEERS!