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

[cliff harris]

It does amaze me that the stock is even lower in pre-market. Like others, I would attribute a lot of this to macro fears. However, to turn off the bull goggles and strap on some bear goggles, this narrative could be in place:

1. Elon is behaving distracted and erratic on twitter, possibly alienating customers
2. Shanghai still not at full production
3. Neither Texas or Berlin ramping in any dramatic fashion
4. Still waiting for cybertruck, roadster, semi
5. Ford EV truck is now a reality

I think 1) is the worst problem, because damage to a brand is not easily undone. 2) will pass within a month, 3) within a quarter. I do think that Ford will be VERY LOUD about their new ev, and their media buddies will lap it up, contrasting with a cybertruck that exists only as a prototype.

We all know Q2 is not going to be record breaking, due to 2), so it might be that we wait until Q3, with meaningful contributions from Texas and Berlin, before we actually see the market shift its opinion on the stock. I would say that everyone should wait until Q3 financials / SP of $1,200 before selling any shares at all, or wait until Q1 2023 if you can, and want to get the full benefit of the 2 new factories calculated in.

Also, for all elons (very valid) criticisms of the ESG rating, its the governance bit that he ignores. Tesla DOES seem to be run in a way where the CEO can randomly say anything he likes, to 80 million potential customers, even if drunk/high. I like elon best when he is chatting to tim dodds, not when he is angry or tired and starting political arguments on twitter. The G bit in ESG IS teslas weak point.

 

[elasalle]

Tesla whale calls for $15 billion stock buyback after share price craters
https://www.cnbc.com/2022/05/19/tesla-investor-calls-for-stock-buyback-after-share-price-falls.html

It’s uncle Leo …. Must be butt hurt just like rest of TMC

Buybacks are really the way out of this mess … but 15B might be a bit high
Divideds get taxed. Buybacks don’t
Elon can announce it anytime…. If one company did it I’m sure there would be a few more that follow

 

[Thekiwi]

Interesting chart:

 

[elasalle]

Tomorrow should be very interesting. Fingers crossed!

The herd is not satisfied until they see capitulation… might as get done with it

Just keep option open to load up on leaps when that happens

 

[RationalOptimist]

It does amaze me that the stock is even lower in pre-market. Like others, I would attribute a lot of this to macro fears. However, to turn off the bull goggles and strap on some bear goggles, this narrative could be in place:

1. Elon is behaving distracted and erratic on twitter, possibly alienating customers
2. Shanghai still not at full production
3. Neither Texas or Berlin ramping in any dramatic fashion
4. Still waiting for cybertruck, roadster, semi
5. Ford EV truck is now a reality

I think 1) is the worst problem, because damage to a brand is not easily undone. 2) will pass within a month, 3) within a quarter. I do think that Ford will be VERY LOUD about their new ev, and their media buddies will lap it up, contrasting with a cybertruck that exists only as a prototype.

We all know Q2 is not going to be record breaking, due to 2), so it might be that we wait until Q3, with meaningful contributions from Texas and Berlin, before we actually see the market shift its opinion on the stock. I would say that everyone should wait until Q3 financials / SP of $1,200 before selling any shares at all, or wait until Q1 2023 if you can, and want to get the full benefit of the 2 new factories calculated in.

Also, for all elons (very valid) criticisms of the ESG rating, its the governance bit that he ignores. Tesla DOES seem to be run in a way where the CEO can randomly say anything he likes, to 80 million potential customers, even if drunk/high. I like elon best when he is chatting to tim dodds, not when he is angry or tired and starting political arguments on twitter. The G bit in ESG IS teslas weak point.

Great post. Thank you, Cliff. This is pretty much how I see it too.

 

[mars_or_bust]

Also, for all elons (very valid) criticisms of the ESG rating, its the governance bit that he ignores. Tesla DOES seem to be run in a way where the CEO can randomly say anything heh likes, to 80 million potential customers, even if drunk/high. I like elon best when he is chatting to tim dodds, not when he is angry or tired and starting political arguments on twitter. The G bit in ESG IS teslas weak point.

Bollocks. The Governance of Tesla is its strongest point. It enables the visionary leader to put his vision to full realization.

 

[elasalle]

Glass half full…
S&P down ~4% for one year, TSLA up ~ 22%
PE ratio is now ~95
Shanghai reports no Covid for 3+ consecutive days… and is heading for opening
Austin Model Y deliveries to customers is starting

Elon is one man advertising machine on zero budget
Lots of cash, no need for debt … harder for competition who need more funds in this environment

Give me 800 or give me 600 I’ll make sure I’ll be happy either way
Cheers!!

 

[JupiterMan]

Tesla whale calls for $15 billion stock buyback after share price craters
https://www.cnbc.com/2022/05/19/tesla-investor-calls-for-stock-buyback-after-share-price-falls.html

It’s uncle Leo …. Must be butt hurt just like rest of TMC

Buybacks are really the way out of this mess … but 15B might be a bit high

Going into a recession I don't think this would be wise timing. Whilst I have no concerns about future profitability/cash flow of Tesla, maintaining strong cash reserves at this time would be wise.

I would rather that capital is spent for growth of the company and its products rather than appeasing shareholders in the short term.

 

[SN_8]

Also, for all elons (very valid) criticisms of the ESG rating, its the governance bit that he ignores. Tesla DOES seem to be run in a way where the CEO can randomly say anything he likes, to 80 million potential customers, even if drunk/high. I like elon best when he is chatting to tim dodds, not when he is angry or tired and starting political arguments on twitter. The G bit in ESG IS teslas weak point.

But it is not the "G" that drags on Tesla's score. Watch yesterday's Tesla Daily where Rob breaks down Tesla's ESG score. Governance is rated much more highly than either the E or the S. This is absurd on its face, as Rob adeptly calls out.

 

[jabloomf1230]

The arbitrary ESG score given to Tesla is payback for its arbitrary safety score used for assigning the FSD beta.

 

[Atomsla]

Going into a recession I don't think this would be wise timing. Whilst I have no concerns about future profitability/cash flow of Tesla, maintaining strong cash reserves at this time would be wise.

I would rather that capital is spent for growth of the company and its products rather than appeasing shareholders in the short term.

Agreed, I dont see the point of lowering the company's cash balance to buy stock back. It's a thing to do when there is no real expected growth for the company coming up.

 

[mongo]

Going into a recession I don't think this would be wise timing. Whilst I have no concerns about future profitability/cash flow of Tesla, maintaining strong cash reserves at this time would be wise.

I would rather that capital is spent for growth of the company and its products rather than appeasing shareholders in the short term.

Agreed, I dont see the point of lowering the company's cash balance to buy stock back. It's a thing to do when there is no real expected growth for the company coming up.

The Tweet advocated using FCF surplus to buy back shares, not reduction of cash on hand.

https://twitter.com/x/status/1527137981206671360

Tweet text:
@KoguanLeo

Agree!
@MartinViecha
, Tesla must announce immediately and buy back $5 billion of Tesla shares from its free cash flow this year and $10 billion from its free cash flow next year, without effecting its existing $18 billion cash reserves with ZERO debt.

 

[RationalOptimist]

Crazy editing, but funny. And, alas, contains truth.

https://twitter.com/x/status/1519404457154461696

 

[traxila]

I don’t understand why anyone here thinks this is stock specific.

TSLA does not have enough cash to start pledging buybacks. Recession risk is unknown and nothing is more important than the company’s financial independence and integrity and by corollary, the mission.

AAPL and GOOG are both buying back to the tune of 80 to 90 billion just this year! Have you noticed how their stock price has been steady and even going up? Actually no. They have been taken to the woodshed like the rest of the market.

When the market turns, TSLA will go up hard.

Question is when does the market turn, fake rallies aside.

 

[WarpedOne]

What are these nicks I've never seen posting here before?

 

[mongo]

I don’t understand why anyone here thinks this is stock specific.

TSLA does not have enough cash to start pledging buybacks. Recession risk is unknown and nothing is more important than the company’s financial independence and integrity and by corollary, the mission.

AAPL and GOOG are both buying back to the tune of 80 to 90 billion just this year! Have you noticed how their stock price has been steady and even going up? Actually no. They have been taken to the woodshed like the rest of the market.

When the market turns, TSLA will go up hard.

Question is when does the market turn, fake rallies aside.

Because each stock is in a different position?

Speaking from a view point of fiscal stewardship, not stock price influence:
Tesla is basically no debt, much cash on hand, and high positive free cash flow while expanding.
Should they keep their war chest? Absolutely.
Will additional vehicle factories (higher expansion rate) matter until chip and cell shortages are resolved? Nope.
Is TSLA a good investment at the current price point? Golly, I sure hope so.

So why wouldn't it make sense to direct at least a portion of additional cash surplus (no pledged buying rate) to an appreciating asset? They don't need to remove the shares, they can hold and sell them later if need be.

 

[petit_bateau]

May or may not be the case. I seriously think he has some mental health problem. I got this feeling of him started last Nov.

He's got a lack of girlfriend problem, again.

(and that tends to be when he listens to Thiel & Co more, out there on the alt-R)

 

[generalenthu]

Wow, we are at the S&P 500 entry price, again, after 18 months of phenomenal execution.

 

[traxila]

Because each stock is in a different position?

Speaking from a view point of fiscal stewardship, not stock price influence:
Tesla is basically no debt, much cash on hand, and high positive free cash flow while expanding.
Should they keep their war chest? Absolutely.
Will additional vehicle factories (higher expansion rate) matter until chip and cell shortages are resolved? Nope.
Is TSLA a good investment at the current price point? Golly, I sure hope so.

So why wouldn't it make sense to direct at least a portion of additional cash surplus (no pledged buying rate) to an appreciating asset? They don't need to remove the shares, they can hold and sell them later if need be.

It would not matter to pledge to buy a conditional 15 billion over the next two years. Stock might even get hit because market decides it is underwhelming and looks desperate.

GOOG is buying 90 billion this year it is getting spanked. It is at a 20 PE.

Tesla has a war chest but it is really at the bare minimum it needs.

If the market decides the 70s are here, they may decide to trade blue chip stock at single digit PEs like they did at the time.

Tesla is a great stock and I think the best company, but I remember buying years ago with the hope that it would be at its current price by 2025 or 2030 the latest.

It is really hard to understand how much the Fed is responsible for the current valuations.

 

[SarahsDad]

So I’ll go ahead and call the bottom at 622. Hoping it doesn’t go that low but history tends to repeat itself.

Biggest TSLA drops:

2016 50% (57-28. Solar city acquisition)
2019 52% (76-37. Model 3 “production hell”)
2020 64% (193-70. COVID)
2022 50%? (1243- 622)?

I’ve been through all 3 prior 50% drops and haven’t sold a share yet. Luckily I don’t do options so I can afford to hold. Of course macro events are heavily influencing this drop but I also I think MMs are trying to flush out all the highly leveraged option holders, buyer beware.

So except for COVID, there’s been support at a 50% drop. Having said that, I don’t want it to drop any lower than it is now. But it could.

I remain long term as bullish as ever.