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

[Rammstein]

Love your new house AnthonyJ. I bought my new house with TSLA. I love it so far and really thankful for all the smart people here that helped me cut through all the FUD.

 

[PeterJA]

And now that wacky Elon is offering to buy out Dogecoin whales, or create his own cryptocurrency "if necessary".

https://twitter.com/elonmusk/status/1361255427669909504
https://twitter.com/elonmusk/status/1361256069583024128
https://twitter.com/elonmusk/status/1361262357205442562

 

[StarFoxisDown!]

Burry keeps pushing his $100/share and actually lumping TSLA in with companies like Gamestop!

'Big Short' investor Michael Burry says Tesla stock could plunge 90% without major fallout - and a slump could reduce speculation

Totally fine with Burry continuing to lump Tesla and Gamestop together. It shows how incredibly stupid his position is on Tesla. It's actually easier to point out how uninformed so called "professionals" are at this when people around me ask about things they read in the financial media like this.

 

[mongo]

So if bitcoin's price oscillates with peak amplitude of 1% about the price that Tesla paid, let say this cycle happens 30 times per day, each time constituting "... any time subsequent to their acquisition ..." from the 10k, then that would mean they would have a $450 million loss per day from this oscillation. If it went on for a year, they would report a $164 billion loss for the year even though that is much larger than their total original position and their actual position is nearly unchanged at all times.

I think some details of how this will actually be accounted must be missing from the 10k. If not FASB will certainly need to make some changes to their accounting rules.

My guesstimation: After the first drop, the new basis would be adjusted based on the loss taken. Since they do not claim gains, the basis will stay at that point and there would be no further losses unless the value drops further.

Lol, you know its a heat PUMP, right? You're digging a basement in your houseboat...

Well It Snowed Last Night In Austin | Youtube Feb 14, 2021

The heat pump still adds energy to the system (garage), just not with the COP multiplier. Like putting a window air conditioner in the middle of a room. The heat pump system will also add restive heat (via motor inefficiency) as needed.

 

[Mich]

This man's humor is a bit insufferable, but his thesis is interesting.

He says a crash in Bitcoin's price may cause Tesla to report a big quarterly loss, crashing TSLA to a great buying opportunity. He claims this is because accounting rules consider a drop in the value of Tesla's Bitcoin holding to be a loss, even if Tesla doesn't sell the holding.

Do the accountants here (such as @The Accountant) concur?

Edit: A Bitcoin crash below the price Tesla paid may be less likely now if, as predicted by some pundits, Tesla's purchase starts a trend of big companies buying Bitcoin.

Stupid question from a non-us guy: why not just sell and re-buy to realize gains in the GAAP balance sheet?

 

[lafrisbee]

10F in San Antonio with 4" of snow. Two rolling brownouts so far. We have AirBnB guests staying in the loft apartment above our unconditioned, but doors closed, garage, I remotely opened the windows and turned on our Model Y Octoheater to warm garage interior and have it warm their floor a bit. Not efficient. Maybe we can get Elon to create a 'Survival Mode' for the cars!

SURVIVAL MODE INDEED!
I have a tiny (by the neighborhood's standard) 980 sqft home 500 yds from the Florida Atlantic coast. It is a friggin' brick. No need to worry about a hurricane as long as it only gets to lower class 5. A tornado came through snapping large telephone poles and carrying them hundreds of yards. One such 2ft-thick post made me think god was playing with yard darts as it went straight through a friends 3ft x 3ft skylight without touching anything else. He live 300 yds from me.
Now to SURVIVAL MODE.... The CyberNOTatruck is going to be the back-up power supply and bunker as SOON as my number is called.
I can logically consider the price of the vehicle as $10K worth of Zen. The only two things that losing power for greater than 2 days upsets me is a cool place to sleep and my koi not getting any oxygen.
The most we have ever been without power was 16 days, usually it is 3-7 days. And an event occurs about once every 3-4 years.
The entire Koi pond system (51k gallons) uses about 4 kwh a day. And I only need the bed to be cool for 9 hours. With running power tools I might need to drive the vehicle to a supercharger (or a friend that live inland for the night) every 3 or 4 days. Even without a V2G converter it will be an almost orgasmic experience after having been without reliable electricity for 25 years.

 

[AudubonB]

~~~As long as the sub-discussion on how Tesla’s explorations of and incursions into the realm of cryptocurrencies remains on such appropriate topics as how it affects its bottom line, balance sheet and so forth, then it absolutely belongs here, and I thank participants for honoring the distinction between those topics and those which belong in the crypto thread.~~~

Here is one question: although my understanding from looking through the 10-K is that the Bitcoins Tesla now possesses were acquired by purchasing with cash, could there be - would there be - should there be a distinction if the company were to mine its own?

First, there has been some mention that Dojo could be considered a supercomputer that might be able to mine the remaining Bitcoins faster than anyone else; second, given Mr Musk’s tweet referenced by @PeterJA, were Tesla to create its own cryptocurrency, it most definitely could - AND reach that unassailable 50.x% level - before even revealing its existence.

As @st_lopes , @PeterJA , @The Accountant and others either have alluded or stated directly, there are some yawning gaps in GAAP.

 

[Nocturnal]

Now to SURVIVAL MODE.... The CyberNOTatruck is going to be the back-up power supply and bunker as SOON as my number is called.
I can logically consider the price of the vehicle as $10K worth of Zen. The only two things that losing power for greater than 2 days upsets me is a cool place to sleep and my koi not getting any oxygen.
.

You should consider picking up a portable solar panel that can power some basic pumps/bubblers. I keep a reef aquarium so also plan to replace my emergency generator (for the tank really) with the CT. Worst case I'll park it on my back porch and run a power cord in to the tank.

 

[feigen66]

Burry keeps pushing his $100/share and actually lumping TSLA in with companies like Gamestop!

'Big Short' investor Michael Burry says Tesla stock could plunge 90% without major fallout - and a slump could reduce speculation

Happy to slay another self-interest bear for the planet.

 

[ZeApelido]

California:

Has to shut down power in sparse areas because of unprecedented wildfires.

Texas:

Shuts down power to entire state and ups electricity rates 1000% because "it's cold".

Texas: Hold My Beer

 

[Words of HABIT]

When Apple finally admits it has to have the iCar manufactured in China by a Chinese company.

Foxconn?
Apple iPhone maker Foxconn teams up with Chinese automaker Geely to make cars for other companies

 

[Nocturnal]

Here is one question: although my understanding from looking through the 10-K is that the Bitcoins Tesla now possesses were acquired by purchasing with cash, could there be - would there be - should there be a distinction if the company were to mine its own?
.

Considering the impact of Tesla creating their own crypto is interesting. Tesla fans will buy anything related to the brand so say they created it and accumulated a certain amount, a public release of the platform would be an instant money maker. Not dissimilar to issuing stock, just no dilution.

Now, let's go a step further. Tesla engages in business internationally and across electrical grids. Imagine a crypto currency that supports this entire eco-system. Sell power through Autobidder? Bam, you get TesCoin. Roll up to a Supercharger? Debits your Tescoin wallet. The possibilities for gamification of this to let Tesla owners and fans earn credits towards Tesla swag, cars, charging etc. are sizable.

Hey, we need more people in geographic area XYZ to provide us with Autopilot data. Ok, to encourage them we will pay them 1 Tescoin for every 100 miles traveled in that region while using Autopilot. Want to let your neighbor, or even a stranger use your 14-50 outlet to charge? No problem. Tesla will determine the amount of energy used and debit their Tescoin wallet and add to your wallet. Robotaxi revenue or consumption? Tescoin. No waiting for CC payments to clear, you get the funds instantly. You could be renting out your car at home while using someone else's robotaxi while on vacation, and the funds would seamlessly transfer back and forth. Referring customers to buy a car? Tescoin. This would also make it easier for third parties to use Tesla chargers, or Boring tunnels.

I think this is important. I need to think about this more.

 

[capster]

For those asking about accounting impact of BTC holding (@PeterJA), I did some quick technical accounting research. The conclusion is ridiculous (to me) and extremely counterintuitive to general accounting principles. This has to do with the fact that SEC and PCAOB (Public Company Accounting Oversight Board - Wikipedia) have yet to acknowledge what crypto assets are. So, absent their guidance, classification defaults to Intangible Assets, which have horrible revaluation principles under US GAAP. The assumption for intangibles is that they are not easily exchangeable, so fluctuations in value would not occur often, and establishing market value would be too subjective. With that assumption there is no means to adjust values upward, only downward. That’s clearly a crappy assumption for a crypto asset.

So, my preliminary conclusions are the following.

Under US GAAP
Treated as intangible asset. Tested for impairment (eg, impaired assets mean assets that have lost value or utility) every reporting period. Any reductions in value are posted to profit and loss (P&L) and not flowing through Other Comprehensive Income (OCI - below the Income line used for EPS). No ability to revalue upwards absent selling of the asset. In other words, write downs would negatively impact GAAP EPS and there would be no ability to write up the asset, absent a disposition/sale of the asset.

Note this is not a recurring write down. If the position started at $1.5B and at end of next quarter it was worth $1B, there would be a -$500M loss recognized on P&L, and the balance sheet asset would now have a revaluation reserve against its cost basis, netting also to $1B. If next quarter it was still $1B, there would not be another write down. If it went back to $1.5B, there would be no reversal unless the asset is sold.

source: Cryptocurrency: The Top Things You Need To Know

Under IFRS
Also in an intangible asset. However, under IFRS, where a market exists for the intangible asset, reporters can revalue their asset both up and down.

Downward adjustments have two outcomes: if reversing a previously recognized unrealized gain - OCI, if reducing below original cost basis - P&L.

Upward adjustments equally have two outcomes: if reversing a previously recognized unrealized loss - P&L, if increasing beyond original cost basis - OCI.

I still need to dig in to what happens on realization or disposition of the asset. My educated guess is that it first reverses any accumulated OCI and excess hits P&L, but I may be wrong.

Not perfect, given that unrealized losses (past original cost basis) hurt EPS, whereas unrealized gains above cost basis don’t benefit EPS. At least reversals of losses (up to original cost basis) will benefit EPS.

While not perfect, a lot more representative than the US GAAP presentation.

https://www.grantthornton.global/gl...counting-for-cryptocurrencies--the-basics.pdf

Conclusion
US GAAP is generally a few years behind the rest of the world. Unrealized losses on the overall position get booked to P&L, with the loss reducing the balance sheet cost basis of the asset. Unrealized reversals or gains are not recorded. Reversals and gains are only booked once the underlying asset is sold (to be confirmed, but likely true). Incredibly one sided and a disservice to financial statements users because you could have extremely appreciated assets and you would never know from presentation.

Likelihood is that we see technical guidance released in the coming months as more S&P 500 companies start to hold crytpo. It would be senseless that companies reporting under IFRS would be benefited from appreciating crypto assets while US GAAP reporters would be completely disadvantaged.

Think of it this way... if Volkswagen held BTC, they could record both gains and losses (with a mix of P&L and OCI) and their balance sheet presentation would be reflective of actual value. Tesla would just recognize unrealized losses with no means of reversing previous unrealized amounts, absent disposition of the asset.

On the plus side, if Tesla had a BTC gain which wasn’t reflected on their books, they could sell the BTC in a quarter to improve the numbers for that quarter at their discretion.

Or, am I missing something?

 

[st_lopes]

Stupid question from a non-us guy: why not just sell and re-buy to realize gains in the GAAP balance sheet?

Taxes would be the only thing that comes to my mind. I don’t believe there are replacement property rules for accounting purposes. However, that kind of in and out trade can have adverse tax consequences.

@capster i would agree with your hypothetical example. That would be one way to crystallize the gain for reporting purposes. Downside is the tax implication if their intent was to rebuy and hold the BTC.

 

[jbcarioca]

Since the US markets are closed we might consider the most obvious markets in which Tesla has zero presence. Thus, consider the 20 largest auto manufacturing countries in the world. As of 2018 Production Statistics | www.oica.net has public data. FWIW there is much more detail in paywalled sources:
Six of the largest twenty now have zero Tesla sales or production:
India it seems will soon have a factory, at least of the Bangalore enthusiasts have their way: Produced 5.2 million. There is a vibrant enthusiasm for Tesla, as we all know. legislation is driving renewables and BEV growth.
Brazil has some serious self-induced problems with trump-like extremism but official enthusiasm for Tesla. Unlike India there is not national support for renewables but there is State enthusiasm for wind power and some BEV incentives in the largest States. 2.9 million produced 2018 plus Mercosur and Mexico preferential trade driving both imports and exports.
Thailand- with 2.2 million, primarily assembly and predominately domestic consumption. Prosperous Thais are avid car buffs.
Russia- 1.8 million and imports of everything imaginable. Tesla is present via Moscow Tesla Club but service now happens mostly in Helsinki. Superchargers are being installed to serve that Moscow-Saint Petersburg-Finland routes. Russian assembly would be a Big Deal, but there are impediments...
Turkey- 1.5 million and an enthusiastic but small Tesla enthusiast crowd.
Indonesia- 1.3 million BUT they have nickel and are assiduously courting Tesla.
Thinking only of those non-Tesla countries it is curious that all of them, everyone, have significant presence of high-spec vehicles, mostly imported.

Then there are three giants of vehicle and EV essentials. Japan, South Korea and Mexico. Tesla sells in all three but in all three domestic producers dominate. All three could easily support some of the next tier of factories.

Without delving too deep it seems clear that within the next five years ro so, Tesla will end out with production in almost all of these countries. Several have important suppliers and/or raw materials. Most of them have some obvious potential impediments too.

The question is probably less 'whether' than it is 'when' and 'how'. Most of these countries have been navigated rather more adeptly by makers who have been less effective in North America. Think brands such as Suzuki and Peugeot.

Not too much geopolitical change need happen for some others to appear on the list, such as South Africa, Iran and even Egypt. Those will probably be some form fo CKD when they happen, but geopolitics must change first.

This is intended to keep us thinking because some surprises will happen within a short time, will they not?

 

[capster]

...Bam, you get TesCoin Elons. ...

FTFY

 

[winfield100]

Yes, absolutely.

I believe passive houses should be code. Builders hate me for even knowing what that is.

Technology that has basically been around forever but applied since at least the 60s and no one wants to talk about it because fossil usage for homes would take a nose dive and up front costs for builders would slightly increase. Humans are curious creatures.

Trying to build a large custom yet almost passive home in PA and having to fight at every turn.

Onward and upward! We will get there or die trying.

OT,,,,,
@traxila
SIPS
Structurally insulated Panel Systems
usually EPS foam between 2 oriented strand "plywood" that can be very long.
There is/was a SIP School near Shepherdstown, WVa.
house can be like a thermos bottle, extremely insulated, almost no drafts (infiltration/exfiltration)
Also look at what the Solar Decathlon kids did. totally could heat a house with a 1,600 watt blow dryer so insulated
they were all covered with big PV systems and had EV's but no Tesla's back then

 

[Big Time]

Tesla looking decent in Frankfurt around +3% with high of 830 USD

 

[Curt Renz]

Benzinga - 1.5 hours ago: New Bill Could Net More Tesla, Ford And GM EV Buyers A $7,000 Tax Credit

Excerpt:

$7,000 of tax credit may soon be given to hundreds of thousands more U.S. electric vehicle buyers with a potential overhaul of purchasing incentives coming to the states.

The Growing Renewable Energy and Efficiency Now (GREEN) Act, legislation introduced by democrats, looks to increase tax credits issued to EV buyers. In all likelihood, American EV makers Tesla Inc, Ford Motor Company and General Motors Company would stand to gain the most given Tesla's current global sales are, while Ford and GM continue their push into the market.

The provision expands the qualified plug-in electric drive motor vehicle credit under Section 30D to apply a new transition period for vehicle sales of a manufacturer between 200,000 and 600,000 electric vehicles (EVs), under which the credit is reduced by $500.

The provision replaces the current phaseout period (which begins at 200,000 vehicles) with a phaseout period that instead begins during the second calendar quarter after the 600,000-vehicle threshold is reached. At the start of the new phaseout period, the credit is reduced by 50% for one quarter and terminates thereafter.

For manufacturers that pass the 200,000-vehicle threshold before the enactment of this bill, the number of vehicles sold in between 200,000 and those sold on the date of enactment are excluded to determine when the 600,000-vehicle threshold is reached.

 

[tslagreen]

Burry keeps pushing his $100/share and actually lumping TSLA in with companies like Gamestop!

'Big Short' investor Michael Burry says Tesla stock could plunge 90% without major fallout - and a slump could reduce speculation

Guy is a desperate idiot. He should stick to playing drums like a nutjob portrayed in the movie The Big Short. I love how these guys like Burry and Chanos make one good former call and think the same metrics apply to Tsla or any other stock for that matter.