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

[Stretch2727]

It may be as simple as letting production know how important this factor is. It might have been Bob Lutz that told a story about bad panel gaps (at GM?) and he said heads would roll if it didn't improve and he was willing to spend to fix it. Punch line being it cost nothing, the managers just needed to let production staff know and they were just a bit more careful.

[

It wasn’t Lutz. It was a Volkswagen story.

This was Lutz. Here is the article. Last 3 paragraphs.

Bob Lutz Talks Panel Gaps, Tesla, and Why Every Detail Matters

 

[StealthP3D]

Okay, now the math assuming 500k cars per year:

• 500k cars / 12 months * 1.5 months / half quarter = 62.5k cars to be sold in the last weeks of the quarter.
• 62.5k cars * $40k cost to build the car = $2.5 billion

Say at the beginning of the quarter they have $8 billion in the bank. Half way through the quarter, this starts to convert to inventory that will be sold in the last weeks of the quarter.

The nadir of their account balance is $6.5 billion, with $2.5 billion sitting in cars waiting to be sold. (While it’s not truly this simple, see example caveats below, I think the concept still holds.)

They’re using over 1/3 of their cash balance just to build cars for the quarter – to fund their ongoing operations. Sure that money comes back at the end of the quarter, but they needed to spend it in the interim to build cars – hence it takes money to make money.

If you scale to 3 million cars per year, this cash requirement now because 6x as larger, or $15 billion.

This was more true when all cars were made in the US but shipped worldwide (due to the shipping causing a delay between the revenue expense and revenue recognition). But Tesla's suppliers give them favorable payment terms so, in many cases, the selling of a car results in revenue upfront for parts and materials that haven't even been paid for yet.

What this means with the China Gigafactory ramped up is improved cashflow. And when cars are no longer being shipped to Europe, due to Gigafactory Germany being operational, the cash flow will improve further. So Tesla is not very far away from being able to scale massively without their cash needs being massively increased. In fact, their cash on hand should steadily improve, not only from profitable sales but also due to the timing of most of the sales revenue being recognized before Tesla has to pay for the parts and materials. That is a HUGE benefit of producing the cars in the same local they are sold in (reduced cash needs).

 

[StealthP3D]

Of course Tesla will do dividends.

After Elon sells his shares to colonize Mars and Institutions are in control.

If Tesla never did dividends(or buybacks) the stock is worthless.

That's not really true. It's the potential ability of Tesla to pay dividends (now or in the future) that makes the stock valuable. It's not necessary to ever pay dividends, just having the potential to pay them, if and when they ever stop growing, that creates the value.

 

[friit]

I didn’t even think of that. In an earlier tweet Musk had used “whoever” when I think it should have been “whomever”.

He posted “twitter sucks” (because he couldn’t fix the error) and “pronouns suck” (transfer blame to the English language).

English is kind of sucky. I’m still trying to work out why an alarm goes “off”, when it goes on, and English is my only language.

Just as a point of clarification - he tweeted 'red rose twitter' sucks. As he followed it up with a reference to guillotines, it's pretty safe to say he was criticising the 'socialist' part of twitter. Bernie Sanders himself managed to post a hot take on an out of context tweet by Elon.

 

[StealthP3D]

Good observations. But I'll add that four MLB teams opened their seasons on Thursday and all the rest on Friday. Many of those sports bettors who had been sidelined and started playing the stock market, may have cashed in their stocks and options in order to resume placing baseball bets. That could have been an overlooked factor weighing on TSLA and the macros during the last couple of sessions.

Why would they go back to sports betting after seeing first hand how lucrative it is to ride the stock market?

 

[Beezer_14]

Tesla - Sustainable dominance.

 

[Paul_SF]

2020s - the EMP era.

 

[Unpilot]

Tesla-Juice it!

cause I am in the process of getting....a little juiced

 

[StealthP3D]

More than pronouns, people suck.

 

[StealthP3D]

Oh snap! Tesla is screwed.

Bugatti Is Selling Electric Car for $35,000
/s

That's the starting price for the entry level Bugatti. If you want the top speed of 42 mph, you have to spend a lot more for the top of the line trim level! Really.

 

[Mo City]

Tera Austin / Giga Texas (whatever you want to call it)

Work is gettin' done. They are not wasting any time.

So much for issues with drones. I have a feeling there will be lots of drone videos from plenty of folks. This one is short and worth a look in regular speed.

EDIT: 2nd video

 

[kengchang]

Of course Tesla will do dividends.

After Elon sells his shares to colonize Mars and Institutions are in control.

If Tesla never did dividends(or buybacks) the stock is worthless.

How's a stock worthless without dividend/buyback? You are not making any sense

1. You buy TSLA share which means you own a piece of the company
2. Tesla is making money thus increasing the asset/shareholder equity the company holds
3. Asset+Shareholder equity going up means your share value increase due to the that share owns more asset

 

[StealthP3D]

This might be a bit more informative:
Elon Musk's SpaceX in talks to raise funds at $44 bln valuation - Bloomberg News

Now if we can only find those people familiar with the matter then we'll have something!

You will need to qualify as an accredited investor and there will be a minimum investment which is likely at least $250K (if not multiple millions).

 

[SO16]

How's a stock worthless without dividend/buyback? You are not making any sense

1. You buy TSLA share which means you own a piece of the company
2. Tesla is making money thus increasing the asset/shareholder equity the company holds
3. Asset+Shareholder equity going up means your share value increase due to the that share owns more asset

Their point is that the stock can’t go up “forever”.

 

[StealthP3D]

It really doesn't matter anyway as Fossi is back defaming the moniker of Big Sky Country on Sucking A$$ anyway.

Last I saw a construction services company had filed a lien against his Florida condo for failure to pay. It made me think he might have had a bigger short position than I originally assumed. This lien was back from the middle of TSLA's big run.

 

[Mo City]

You will need to qualify as an accredited investor and there will be a minimum investment which is likely at least $250K (if not multiple millions).

Can an IRA be used for this purpose?

 

[Beltsbear]

That's not really true. It's the potential ability of Tesla to pay dividends (now or in the future) that makes the stock valuable. It's not necessary to ever pay dividends, just having the potential to pay them, if and when they ever stop growing, that creates the value.

Also if FSD and the Tesla network come to pass, they will be paying dividends much sooner.

 

[StealthP3D]

The Tesla 20s - not just a decade

It's actually the beginning of the Age of Aquarius. They really jumped the gun back in the 1960's (really).

 

[FrankSG]

This.

While the TMC braintrust is way smarter than all of the above in stuff relating to Tesla there is no way anyone here has a better understanding of how the S&P inclusion could play out in different scenarios.

Sure Tesla is a big elephant to let in compared to previous cases but they can still use data from all previous inclusions that we just don't have.

If the committee is worried about the situation based on previous data they are likely to do something about it. No inclusion at all, delaying inclusion, lower than standard weight at inclusion, trying to get Tesla to make more shares available etc etc.

And if they are not worried based on previous data they'll just make a standard inclusion.

They might not get it right but they have way more info on how it is likely to go than anyone here can possibly have.

I'm not sure I agree with this.

Sure,

• They've dealt with large inclusions before with market caps in the same ballpark as Tesla
• They've dealt with companies coming straight into the S&P 500 before that skipped over the S&P 400.
• Perhaps they've occasionally dealt with a stock with such a large short interest.

However, I'm not sure they've ever included a stock with:

• Such a massive options market (currently an order of magnitude larger than any other). Has there ever been an options market as massive of TSLA's current options market?
• A stock with so many different opinions on its true value, and so many sky high price targets. Probably not too many stocks where a large portion of investors won't even consider selling after SP goes 10x within a year, and some (me) wouldn't even considering selling if it went 25x within a year.

The ginormous TSLA options market and how many shares it takes out of circulation in particular is something that heavily impacts the S&P 500 inclusion, and I'm not sure how aware the committee is of this and how well they understand it.

All these factors combined make for a truly unprecedented S&P 500 inclusion, and I'm doubtful the committee understands this as well as some TMC members and retail investors.

 

[UnknownSoldier]

I’ve been told that a stock where the company doesn’t do buybacks or dividends is worthless.

I guess this means I better sell all my AMZN then, it’s worthless!

In fact, let’s look at all the members of the infamous FAGMAN group:

Facebook - does not pay a dividend
Apple - pays a dividend
Google (Alphabet) - does not pay a dividend
Microsoft - pays a dividend
Amazon - does not pay a dividend
Netflix - does not pay a dividend

So, out of the 6 big tech companies, 4 of the 6 do not pay a dividend and are worthless! If only I knew, I would never have owned any of these companies and made so much money from their shares!