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

[Artful Dodger]

Some people consider options to be unethical because of how rigged it can be and how much it distorts natural trading.

↑ So much THIS ↑

 

[StarFoxisDown!]

No, this is obviously incorrect. If Tesla maintains a 30% margin on their automotive products, that product line alone allows Tesla to purchase 3 out of every 10 cars produced, while keeping automotive gross profits near zero (minimizes income taxes while growing the robotaxi fleet) .

Even more important is that Tesla's purchase of its own cars for robotaxi fleet use is a longterm backstop for demand, and will ensure that ASPs remain strong throughout the decade.

This ignores the fact that Tesla has openly said that they will be taking cars back when they come off of lease. Therefore the robotaxi fleet doesn't need to be built entirely from new production. You're also ignoring the fact that IF Robotaxi is a viable option, that means Tesla has achieved FSD and unlocked all deferred revenue + adoption rate of FSD and FSD subscription will skyrocket. Tesla's margins won't be 30% at that point......they will be much higher.

There's also the question of just how big the Robotaxi fleet would be, especially in the first 1-2 years of operating the fleet. And lastly, you ignored the part about Robotaxi's instantly providing profits/cash back to Tesla. There won't be a delay in costs to then recognizing revenue like say Waymo would incur. It's a flip of the switch to where the up front costs of the fleet are quickly to be recovered.

 

[TheTalkingMule]

No, this is obviously incorrect. If Tesla maintains a 30% margin on their automotive products, that product line alone allows Tesla to purchase 3 out of every 10 cars produced, while keeping automotive gross profits near zero (minimizes income taxes while growing the robotaxi fleet) .

Even more important is that Tesla's purchase of its own cars for robotaxi fleet use is a longterm backstop for demand, and will ensure that ASPs remain strong throughout the decade.

The funniest part of all this is why they'll do it. Simply because they'll want total control of the data, as this is merely a test run for Mars-based autonomy. Hilarious.

 

[StarFoxisDown!]

You have ignored quite a few options. Just ones mentioned already by Tesla from time to time:
1. HVAC integrated products for houses and other buildings;
2. New vehicle classes;
3. Trains, Planes...
4. Energy intermediation (they already have entered, but we ignore it, this is one fo the largest single human revenue categories);
5. Energy production (probably mostly solar);
6. Then there all those that have not yet been discussed;
7. Sure, toss in Robotaxi, Semi, Cybertruck, Optimus etc.

And the list goes on. Every time we underestimate how comprehensive the Tesla mission is we imagine they'll not be capable of finding productive uses for all the FCF. I have no idea what they'll actually do, but I am certain they're far from done in revolutionizing sustainable planetary improvements.

I'm not ignoring any of those things. I think people are ignoring just how much cash Tesla will be bringing in over the next two years. Again this is based on Tesla's OWN guidance in the 10k for CAPEX through 2024.

 

[jhm]

As long as somebody is burning fossil fuels somewhere, Tesla will have something to invest in.

 

[Krugerrand]

I'm not ignoring any of those things. I think people are ignoring just how much cash Tesla will be bringing in over the next two years. Again this is based on Tesla's OWN guidance in the 10k for CAPEX through 2024.

I think Tesla has a plan for the cash. We just don’t know the plan yet.

 

[Artful Dodger]

Imagine if sports team members and coaches (both sides) bet on the outcome of a match, and then during the match colluded to beat the spread.

... then further imagine that the owners of the Arena hired the referees exclusively from the retirement roster of their own team.

Note: snagging an occasional 'win' in a rigged game does not make Options trading 'ethical'.

 

[jbcarioca]

If you promise to provide a cogent, correct demonstration as to how they can be used for good I promise I shall not Mod-delete your response. Just this once.

This time you've done it. Hence, my single, only, never-before-stated and never to be repeated defense of the existence of securities options:
1. They generate income for their originators;
2. They allow institutional owners to hedge their portfolio risks;
3. The allow institutional holders to plan for purchase or sale based on pre-determined portfolio goals;
4. They allow institutional investors to make conditional purchases or sales to enable easy disposition/acquistion when required by portfolio concentration requirements.

There are others, of course. and we all know that the victims will be, as they always are, speculators. Further we also know the speculators always win because the have highly sophisticated planning tolls that enable them to lose more money without ever admitting anything other than gains. The Bernie's and the Nobel Prize winners also make money personally from selling their 'intelligence'.

Sorry, I could not resist that second, not number commentary.
Just remember, though, that the CBOE did and does allow farmers to reduce crop price risks.

 

[Nocturnal]

Imagine if sports team members and coaches (both sides) bet on the outcome of a match, and then during the match colluded to beat the spread.

I think the better analogy would be if you were betting on Roulette, but if it looked like the ball would stop on your color the house could spend money to push the wheel a tiny bit more.

 

[Prunesquallor]

So in this case, what is Tesla? Wouldn't they be the actual teams? One that can't be involved in these trade.

I suppose the analogy would be better if it were the officials who were colluding. The team should be judged on its talent and execution with respect to its opponents - the final score is a measure of that. Instead, those metrics would get distorted by officials whose rulings were such that they targeted specific final scores. Betting knowing that the officials are corrupt would be unethical.

 

[kbM3]

Even then.......lets say optimistically Robotaxi is ready by 2024, the scale of Tesla's free cash flow will still be too much for even Robotaxi's to absorb. And it's not like the transition to Robotaxi's would be this long, drawn out thing. It's a flip of a switch for Tesla. So the cash/profits return start immediately.

Which is then going to make Tesla's cash position balloon up even more.

Tesla owning their own robo-taxis would eat up a lot of cash the first few years.

Also owning their own solar and Megapacks to feed Megachargers and Superchargers.
Also their own Semi fleet.
Own robots.
But if robo-taxi succeeds, that cash generation would very soon be overwhelming.

 

[canoemore]

Could be Tesla is just trying to solve inflation by absorbing and sitting on all the recently printed money sloshing around.

Look at me. I'm the Fed now.

First principles, duh.

 

[ByeByeJohnny]

This ignores the fact that Tesla has openly said that they will be taking cars back when they come off of lease. Therefore the robotaxi fleet doesn't need to be built entirely from new production. You're also ignoring the fact that IF Robotaxi is a viable option, that means Tesla has achieved FSD and unlocked all deferred revenue + adoption rate of FSD and FSD subscription will skyrocket. Tesla's margins won't be 30% at that point......they will be much higher.

There's also the question of just how big the Robotaxi fleet would be, especially in the first 1-2 years of operating the fleet. And lastly, you ignored the part about Robotaxi's instantly providing profits/cash back to Tesla. There won't be a delay in costs to then recognizing revenue like say Waymo would incur. It's a flip of the switch to where the up front costs of the fleet are quickly to be recovered.

Tesla had some incredible luck with the used car prices in regard to their plan to use the cars returned from leases as robotaxis.

Even with less than 10% of cars leased and much lower sales numbers three years back those cars would have been starting to pile up now.

I think it's safe to assume Tesla are not stockpiling those at this time but are instead taking advantage of the market for used cars.

Those of us that were critical of the plan, saying robotaxi would not be ready were right. But somehow Teslas plan to get those cars back worked out great anyway.

It's almost like Tesla can't lose even when they are mistaken.

 

[Artful Dodger]

And lastly, you ignored the part about Robotaxi's instantly providing profits/cash back to Tesla.

Lol, not ignoring, but unable to express an informed opinion (I hope that still matters around here). That's better left to our members with biz/acctg chops ( paging @The Accountant )

But let's ALSO not ignore the CapEx required to deploy Megapack at all/most Supercharger sites, and enough Solar farms to support the Megacharger (Semi charging) network. That's a nearly endless sink for 'spare' cash.

And M&A. Again, Tesla is production constrained right now because they DON'T control the supply of $5 and $10 dollar chips from decade-old FABs. Or, just buy PG&E and solve N. California's grid woes permanently. Texas ERCOT needs some real CapEX. Same can be said for Germany and China, too. Ooh, how about buy Western Austria and turn it into a solar farm? Then the Sahara.

TL;dr There are LOTS of ways to deploy Tesla's growing mountains of cash WITHOUT dividends (which you appear to favor a priori).

 

[Johann Koeber]

No, this is obviously incorrect. If Tesla maintains a 30% margin on their automotive products, that product line alone allows Tesla to purchase 3 out of every 10 cars produced, while keeping automotive gross profits near zero (minimizes income taxes while growing the robotaxi fleet) .

Even more important is that Tesla's purchase of its own cars for robotaxi fleet use is a longterm backstop for demand, and will ensure that ASPs remain strong throughout the decade.

No. If Tesla keeps 30% of the automobiles they do not just disappear from the balance sheet. They are assets and remain assets, just they are counted in another title.

The income tax will be less, because only the sold cars contribute to the profit. The cars they keep are assets at cost basis, subject to depreciation.

Hope that helps.

 

[StarFoxisDown!]

Lol, not ignoring, but unable to express an informed opinion (I hope that still matters around here). That's better left to our members with biz/acctg chops ( paging @The Accountant )

But let's ALSO not ignore the CapEx required to deploy Megapack at all/most Supercharger sites, and enough Solar farms to support the Megacharger (Semi charging) network. That's a nearly endless sink for 'spare' cash.

And M&A. Again, Tesla is production constrained right now because they DON'T control the supply of $5 and $10 dollar chips from decade-old FABs. Or, just buy PG&E and solve N. California's grid woes permanently. Texas ERCOT needs some real CapEX. Same can be said for Germany and China, too. Ooh, how about buy Western Austria and turn it into a solar farm? Then the Sahara.

TL;dr There are LOTS of ways to deploy Tesla's growing mountains of cash WITHOUT dividends (which you appear to favor a priori).

Actually, no that's not what I said I favored. In my post where I listed out the options, I said I favor B and D. Which are stock buybacks and acquisitions.

The thing about stock buy backs are they can be essentially reversed at any point that the company needs more capital simply through an offering. Buybacks take liquidity out of the float and then, IF capital is needed, Tesla can do the offering which is just reintroducing the liquidity.

And in fact, even if Tesla does do an offering to raise cash down the road, by doing backbuy in the next 1-2 years, it would overall be anti-dilutive or allows Tesla to raise more cash for the same % of dilution. If Tesla does buy backs in say 2022 and 2023 when the stock is trading in a range of 1,000-1,500 and then in 2024 or 2025 when Robotaxi is ready, Tesla could do an offering at a 2-2.5 trillion valuation.

 

[StarFoxisDown!]

No. If Tesla keeps 30% of the automobiles they do not just disappear from the balance sheet. They are assets and remain assets, just they are counted in another title.

The income tax will be less, because only the sold cars contribute to the profit. The cars they keep are assets at cost basis, subject to depreciation.

Hope that helps.

Yup

 

[Artful Dodger]

Faceplant down -4.35% intraday as their 'meta-swoon' continues:

Meta Platforms Inc. Class A

Apple privacy changes cut an est'd $10B in Ad revenue from FB. Meanwhile, Tesla doesn't advertise.

Cheers!

 

[Webeevdrivers]

I like that Tesla has postponed production of the Semi, Roadster and Cybertruck wether it be for supply chain issues or just staying focused on the task of production of moneymakers. I would also like to think that they remain focused on development and pre production preparations of at least the semi and the Cybertruck so when they come out of the gate they are running. I wish they would allow a little more of this info to leak just for the sake of reassuring the shareholders that things aren’t getting “stale”.

I also wish they (Elon) would stop talking about FSD or at least stop talking about timelines as I think it hurts the companies credibility. But I know that is super unpopular on this forum so I’ll put my bullet proof shield on for that one.

The only thing I would like to see as a shareholder going forward is a small PR department to deal with issues like the heating problems some have experienced. From what I gather it is not a huge amount of cars that have the problem. Ours hasn’t and it’s occasionally freakin cold here. Yet talking to almost anyone on the street both wife and I only hear that Tesla heat systems quit working as soon as it is below zero C. I think a PR department might help with some of the misinformation that is out there.

There. That’s my two bits for now. Overall a happy owner and (very small) share holder. Staying long.

Cheers all. Stay safe on the road.

 

[mltv]

Secretary Buttigieg talks road safety, self-driving cars, EVs, and unruly airline passengers

U.S. Secretary of Transportation Pete Buttigieg joins Yahoo Finance Live to discuss plans to make American roads safer, EV adoption goals, and the federal 'no-fly' list.

finance.yahoo.com

I like Buttigieg mention about reviewing of trying to keep up with technology. Mentioned of review of mirrors. Changes design to roads.
I am hopeful changes could get rid of the side mirrors in place of cameras. Changes in road so my FSD don't get confuse. Collaboration in this area would help everyone