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

[M|S|M MYP]

Doctor, Engineer, and Lawyer are the valid Asian careers. Ask me how I know.

You forgot investment banker.....

 

[RobStark]

That assumes Ultium could successfully compete against the likes of Tesla. They would have to become more adept at innovating at manufacturing. More problematic, they would need to be able to secure (or manufacture) batteries in sufficient volumes to allow the kind of volume manufacture of vehicles that compete head to head with Tesla and/or with gas cars/trucks.

The only way I see this working is if they concede Tesla's market to Tesla and somehow make a business out of it by gutting ICE sales. And that's ignoring the battery supply problem. Then there is the legal question of whether GM could create an entity that could ignore the dealership covenants. There would be lawsuits. If they use the existing dealerships then they have most of the same problems GM has now with going electric.

The only real advantage I can see over the current status quo with GM is they could raise money easier and change corporate culture easier. But this path would be certain and eventual death for the remaining GM so I'm not sure why that portion would be valued more than zero (remember, they have big debt). Essentially, this amounts to a massive restructuring and raising of new capital while simultaneously writing off bad debt and writing their most valuable assets (engine and transmission manufacture and design) down to zero.

Dreaming of how wonderful things could be is nice but in the process of making all this happen it's not a good idea to pretend the business case will just work itself out. Just like the current situation, it all has to work from a dollars and cents perspective.

They don't have to beat Tesla. They just have to compete with VW,Rivian, Lucid et al.

They are building 1 30 GWh Gigafactory. There would be more incentive to buildout GF faster.

Sure anybody can sue for any reason. Franchised dealers would lose this one fast. There is no law against starting a brand new company from a spinoff.

Old GM would be worth more than Zero because selling ICE Trucks and SUVs is still profitable. Some people here can't accept that. Millions of Americans want to buy Silverados,Suburbans, and Tohoes with average selling price of $50k and $15 profit per vehicle. But this won't last forever. Hence my ~$10B evaluation.

 

[StealthP3D]

Old GM would be worth more than Zero because selling ICE Trucks and SUVs is still profitable. Some people here can't accept that. Millions of Americans want to buy Silverados,Suburbans, and Tohoes with average selling price of $50k and $15 profit per vehicle. But this won't last forever. Hence my ~$10B evaluation.

I think that's extremely optimistic when we know GM's ICE products have shrinking market share and EV's will shortly be pressuring margins lower. I doubt they even have enough time left to pay off existing debt. That makes them worth zero in my book.

 

[StealthP3D]

One more thing. Ultium Motors would have 200k Federal EV credits.

Volvo and Polestar each get 200k Federal EV credits since they have different tax ID numbers.

This makes me happy. It means there will be a whole slew of EV spin-offs that have the $7,500 Federal Tax Incentive. This will kill off the ICE business faster than you can say "What pollution? We have catalytic converters."

 

[gabeincal]

But remember, I have magical powers - What ever I say or do brings about the opposite move of what I'm expecting in the SP....

Well then don’t bloody say it!!!

 

[RobStark]

I think that's extremely optimistic when we know GM's ICE products have shrinking market share and EV's will shortly be pressuring margins lower. I doubt they even have enough time left to pay off existing debt. That makes them worth zero in my book.

I know the books here have ICE business at ZERO.

But since Ford and FCA still have value the market doesn't think so.

It doesn't really matter that unprofitable ICEv sales are going kaput.

Big AZZ Truck with Big AZZ engines sales are just fine

They could eliminate unprofitable cars and small SUVs while remaining CARB/CAFE compliant by buying Ultimium Motors credits at a fixed reasonable price.

 

[Hock1]

That assumes Ultium could successfully compete against the likes of Tesla. They would have to become more adept at innovating at manufacturing. More problematic, they would need to be able to secure (or manufacture) batteries in sufficient volumes to allow the kind of volume manufacture of vehicles that compete head to head with Tesla and/or with gas cars/trucks.

The only way I see this working is if they concede Tesla's market to Tesla and somehow make a business out of it by gutting ICE sales. And that's ignoring the battery supply problem. Then there is the legal question of whether GM could create an entity that could ignore the dealership covenants. There would be lawsuits. If they use the existing dealerships then they have most of the same problems GM has now with going electric.

The only real advantage I can see over the current status quo with GM is they could raise money easier and change corporate culture easier. But this path would be certain and eventual death for the remaining GM so I'm not sure why that portion would be valued more than zero (remember, they have big debt). Essentially, this amounts to a massive restructuring and raising of new capital while simultaneously writing off bad debt and writing their most valuable assets (engine and transmission manufacture and design) down to zero.

Dreaming of how wonderful things could be is nice but in the process of making all this happen it's not a good idea to pretend the business case will just work itself out. Just like the current situation, it all has to work from a dollars and cents perspective.

Then, there would be the unions to deal with.

 

[ammulder]

I think that's extremely optimistic when we know GM's ICE products have shrinking market share and EV's will shortly be pressuring margins lower. I doubt they even have enough time left to pay off existing debt. That makes them worth zero in my book.

Some of the GM debt is surely related to EV development, and would go along with the spinoff rather than sticking with the legacy company.

Also, EVs compete with GM's core market only on paper so far. In a couple years maybe there will be meaningful volume of electric pickups and mid/large SUVs, but even if you believe that to be true (not too many large electric SUVs in the short term pipeline) it remains to be seen whether the price will be competitive. I think GM has some years yet of decent profits off large ICE vehicles.

On the other hand, those really large vehicles are starting to look like the final frontier for ICE -- as soon as there's a Suburban-equivalent EV with comparable price and decent range, legacy auto is going to take a monster hit. (At this point I feel like Tesla could put a hammer blow on the small-car market when they get around to it, but I still don't see a way for them to put out a minivan or Suburban without a gigantic battery and the corresponding slow charging and oversize price tag.)

 

[StealthP3D]

so whos buying at this price currently?

Many of us were forward thinking enough to already be loaded to the gills with TSLA. But we only comprise a tiny percentage of all investors, most of whom don't own a single share!

 

[clmason]

Congrats to all of us!

For those with massive gains and thinking of taking profits, remember that many funds are just now placing their bets. We were lightyears ahead of them, but they take massive positions. For example:

Tesla Stock TSLA Closes at Record High as Hedge Funds Boost Stakes Before Battery Day

A lot more like these are coming. Shares will be scarce even after the split. S/P will be climbing for YEARS to come. We will look back and think TSLA was a good value at the first split.

 

[Pezpunk]

I could retire right now honestly in the Philippines. Gorgeous views, cheap beachside property, daily fresh seafood, amazing adventure activities. And that's what takes the pressure off me, knowing that financial independence is a relative term. For many people around the world, even having $100k USD can mean you live like a damn KING. Get all the attention of everyone locally and be a celebrity with life stories of America to share. And they speak english well in the Philippines but this also applies to many countries like India, SE Asia, Latin America, etc.

For the US? I could honestly do it on $1 million with a family and a modest retirement job. Most people could. It's amazing how little so many people live with in America paycheck by paycheck.

Retirement is a mindset. You can choose to be "financially free" anytime you want, and that's a pretty powerful mentality to have in the back of your mind to relieve yourself of stress. You just need your inbound cash to even or exceed your outbound cashflow.

At $2.5 million I could pay for childrens' college, go on vacations whenever I want, live in a decent house (not in a major city), and live stress free. That's the goal.

Of course, my target is $10 million+ and I have an active plan for that. Then again, my equivalent plan is to live until I'm 100, so want to make sure the $10 million plan doesn't come at the expense of the 100 year old plan.

It's all just an optimization equation.

Sure, i *could* live on much less, but i don't *want* to live frugally. Nor am i interested in being a bigshot ex-pat in a third world setting. I want to live in northern VA (which is on the expensive side), with a nice big financial cushion to maybe do something really crazy in my old age eventually ( i won't disgrace myself by revealing any of my ideas here). So, bottom line, my number is $10 million. I'm about halfway to my total goal, but 75% of that is in an IRA that i can't touch for another 20 years. So for now, i gotta keep my day job, since i don't want to cash out my non-retirement shares yet, or take a 72(t) distribution (which would also force me to cash out shares).

 

[ggr]

You sure? This is according to my Twitter account.

Well, I was sure, but I just checked again... you're right. Maybe I clicked the wrong tweet. I don't know.

 

[StealthP3D]

For those that think Cybertruck and Rivian RT1 is priced too high.

View attachment 577644

Man, I think that's the most bad-ass truck out there!

But not for long. The Cybertruck will probably whomp it's butt in just about every metric truck owners actually care about. Purchase price, power, payload and towing capacity, cost to maintain and fuel, adjustable ride height on the fly, included accessories (air compressor, power generator, loading ramp, lockable tonneau cover you can stand on, etc.).

I heard it has a serious drinking problem that you have to accept before purchase. And this drinking gets worse with age! But that won't deter people with more money than brains.

Not sure why you think it will cost less than Cybertruck, the headline indicates the cheapest version is more expensive than the Tri-motor Cybertruck.

 

[clmason]

The way I do is, with any long term investment I make is to make sure I layout some milestones/nice surprises, and award myself with "impulse".

I'm sure you all have a list of material stuff that you have the mean for it and wanted to own/do it for the longest time. You might even have saved up toward that, but once you reach the funding goal, you just aren't 100% sure to pull the trigger.

So, like today, TSLA jumped 11%. I've thought about buying a Leica camera for a long time, saved the money, but never quite committed to that final step.

I love this. We need a “Spoils of War” thread to share our victory splurges. Islands are cool and all, but your camera looks amazing.! I have my eye on something outlandish that makes me cringe (at the price) but would be so awesome to have!

 

[perwis]

I think they know I had conviction but I think they look at it as a brainwashed cult member. Anyways, I tried explaining to them the investment opportunity of a lifetime and just got frustrated and gave up. They wouldn’t watch most of the videos I sent them from YouTube. Oh well their loss!

Weird thing is I think they are smart. I just think the media has so much control over public opinion. They would just hear the FUD all day and think I’m crazy. These guys are highly educated and 2 of them actually do wealth management for a living. Those guys won’t be getting any of my business and I think they know it.

Clearly they did not take the lessons from Warren Buffet and Peter Lynch:
invest only in what you understand.

Quoting Lynch:
“It’s when you’ve decided to invest on your own that you ought to try going it alone. That means ignoring the hot tips, the recommendations from brokerage houses, and the latest “can’t miss” suggestion from your favorite newsletter—in favor of your own research. It means ignoring the stocks that you hear Peter Lynch, or some similar authority, is buying.” (Peter Lynch, One Up on Wall Street)


You understood Tesla was an opportunity. You did your own research.
You invested.
You deserve this.

 

[WMTribe90]

OK. Don't want to hijack this thread but with all the talk of retirements, what's your retirement number?

My retirement number was 1.5 million, which I reached in March of 2017 when I “retired” at age 40. I quit working for others out of necessity. Now I do real estate investing (couple rentals) on the side and raise my three boys. I’ll be home schooling two of them until the school system gets back to normal. A flexibility my semi-retirement allows. Thanks largely to Tesla I’ve since doubled my retirement number. Its nice to have the added cushion.

 

[Fobble]

I foresee TSLA to become a trillion dollar company.

Is it you Ron?

 

[smorgasbord]

I don't see how GM spins off Ultium Motors - it seems more like Unobtainium Motors to me.

First, Cathie Woods has pointed out that the legacy ICE automakers aren't spending what they need to spend on EV development. She said GM was spending about 10% of its R&D budget on EVs and 90% on improving ICE - when it should be reversed.

Second, she points out that these companies are between rocks and hard places. They need to spend more, but their existing products are selling in smaller numbers at smaller margins. So, they don't have the money to properly invest.

Third, how does GM structure ownership so that the new company is free enough to do what's really necessary to be successful without ending up competing with its parent company? Every electric SUV Unobtainium Motors sells is one less Silverado GM gets to sell. And if Unobtainium gets vehicle autonomy, who handles the knowledge transfer to GM, and how does that transfer not hurt Unobtainium Motors ability to innovate?

So while an EV spin-off does the Clayton Christensen thing of getting people focused on the new thing without having to support the old, I don't see how GM can properly finance the new company without killing itself off. Mary Bara is not going to fund Unobtainium Motors with 90% of GM's R&D budget for 7 years, so how much does GM put in and how much can they raise?

I suppose they think with frauds like Nikola raking in the dough they'd be able to raise billions.

But, what really kills this is Mary Bara's failure to recognize how quickly change is coming. She still thinks there's a decade or two for EVs to take root. Just watch the video a couple pages back. She's in no rush, and I doubt GM will be able to form a company where the leaders do recognize how far behind they already are and how quickly they really need to move.

 

[NicoV]

As a coach I instilled in my players that being in shape (money to you) and skilled (market understanding to you) gives them the ability to properly execute when the opportunity presents itself. And that is what luck is.
I also told them that it is better to be lucky than good...because a good team will always lose to the "lucky" team.

OT
And I instructed them to never refer to a contest as one in which they "beat" the other team...except in cases where the final score was always a zero for the opponent, and greater than 5 goals for us.
Lastly, On Award night I would hand out fruit instead of trophies. "And the recipient of the Banana for best defensive shutdown of an opposing Striker goes to..."
The symbolism was not lost on them.

Luck favours the prepared.

 

[StealthP3D]

Luck favours the prepared.

I've believed this as long as I can remember. I know people whose first response to anything new or different is always along the lines of "It'll probably all go to hell in a handbasket". This isn't a rational analysis - it's just the way they think. And these people are rarely lucky.

When I started investing I knew the profit potential was essentially unlimited. I also knew I could lose everything. So I took action to maximize the former and minimize the latter. This involved a lot of research and exploring different ideas. Mostly, I studied what had been successful in the past and applied it to the current environment. When I was successful some people called it "luck". I had to agree with them. But as I continued to invest and have good results I started to think it was more than luck.

Yes, you have to prepare to be lucky. This doesn't guarantee luck but that just means you didn't prepare properly. There is such a thing as pure luck (buying a winning lottery ticket probably qualifies) but, in most cases in real life, people attract good luck (or repel it).