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

[henchman24]

Due to the massive Covid/Ukraine supply shock. It's not talked about so often because people get mad when policy makers say they want to increase unemployment but we are still at 3.6% unemployment, which is .4%-1.4% below the "natural" rate the FED likes to see. Tight labor markets are inflationary and reduce productivity. If we see unemployment increase a little that's another great sign that the FED will relax.

The labor differential moved down to 39.3... lowest since May 21. There are some signs of the labor market easing.

 

[Krugerrand]

What's interesting to me is how Elon/Tesla navigated the auto industry's revenue stream.

With knowing that BEVs need way less service over the long run so that service revenue stream doesn't exist so they go out and build their charging network to get 10%+ profit perpetually through their Supercharger network. Meanwhile Ford, GM, LICE doesnt have this and have given away all the potential profits to the 3rd party companies like EVgo, Chargepoint, Electrify America (VW?). Even though it isnt much, there is something to be said about a never ending, slowly increasing source of profit.

I agree, Q3 could be the start of some mind blowing numbers from all facets of Tesla's business. I can't wait!

To be fair, Tesla never intended to charge for the Supercharger Network. As with many well intended plans, things don’t necessarily work out the way you expect.

So much of what Tesla planned to do was to spur on other companies to take up the baton and run with it, which simply did not happen. Elon should have asked me and I’d have told him the only thing he’d spur on was resistance. People suck.

 

[Krugerrand]

There won't be another Elon. If Tesla and the EV movement can't survive without him then it's a house of cards based on nothing, and I don't believe that for a second. The technology is sound on a first principles level and has progressed past the tipping point. Tens of thousands of people at Tesla have been exposed to the "Elon way" of questioning everything and pushing forward in the face of adversity. That influence doesn't disappear with him.

I’m hoping one of his children is enough like him.

Completely disagree with the rest you write as I’ve mentioned in other posts. 20-30 more years of Elon and a new generation of humans, then maybe.

Adding: On the surface this will seem unrelated but it goes to how stubborn and slow to change people can be; recently watched a 3-part series on Ulysses S Grant. It’s been over 150 years since he set his own slave free and fought for African Americans to be treated the same as white people. He fought against the KKK etc…. And just where are we now? (rhetorical)

 

[Krugerrand]

Also, if he is the irreplaceable lynchpin without which all will fail, we’d have to wonder why powerful people in Russia or Saudi Arabia or wherever have not had him assassinated yet, especially with him publicly taunting their governments.

Failure to do something doesn’t mean it hasn’t been attempted, won’t be attempted, or isn’t being thought about. You have noticed that Elon went from no bodyguards to a whole regiment, right?

 

[thesmokingman]

Failure to do something doesn’t mean it hasn’t been attempted, won’t be attempted, or isn’t being thought about. You have noticed that Elon went from no bodyguards to a whole regiment, right?

And he tweeted about his death not long ago, so don't be surprised if he suddenly disappears or something. I remember my mom texting that she didn't like that text lol.

 

[Cherry Wine]

Depends on market expectations... we've see a bit of a tide change on economic data, and if the market is expecting May CPI to show that inflation has peaked... that will be the source of the rally.

My guess is that we'll get a choppy continuation of the rally for a few more days (based on current expectations), but then a selloff/pause as we get closer to the June 10th release since "the market" isn't quite ready to believe that the inflation boogeyman really is dead yet.

 

[Stretch2727]

For the SP500, we haven't had a 3 year bear market since the Great Depression (might have been the onset of WW2... yup turns out it was). 01 hit 31 months... taking until 25 for recovery is very unlikely. We are much more likely to see ATHs this year than it taking until 25...

So what defines the end of the bear market? 20% up from the recent low or passing the old peak?

I thought it is 20% up from the recent low so still more time to pass the prior peak?

 

[ZachF]

I guess the key question is: if a Recession is probable . . . .when does it arrive?
Look at the US job openings data:
View attachment 810950
We had 11.5m job openings in March 2022. Delta airlines cancelled 200 flights this holiday weekend due to staff shortages.
IMO, we will need to see job openings drop considerably to get a meaningful drop in consumer spending to help fuel a recession.
The divergent and contradictory economic data that I see really has me perplexed.

btw: the shaded areas of the chart above indicate US recessions.

Inflation is eroding into purchasing power, real incomes are declining (5% wage growth with 8% inflation = 3% real decline) and people are dipping into savings or borrowing to cover the difference. If/when that stops then much of those job openings are no longer needed.

 

[scaesare]

Your post brings up a good point: Not only do we need to be past the tipping point, the subsequent adoption needs to be rapid enough that we don't get TO the global warming tipping point...

I'm genuinely interested in what you disagree with regarding this, @captkerosene

 

[henchman24]

So what defines the end of the bear market? 20% up from the recent low or passing the old peak?

I thought it is 20% up from the recent low so still more time to pass the prior peak?

Peak to trough is the bear market. Then we move to recovery time. So yeah once the trough hits, there is a more time to pass before ATHs.

 

[Nocturnal]

And he tweeted about his death not long ago, so don't be surprised if he suddenly disappears or something. I remember my mom texting that she didn't like that text lol.

The world is a crazy place, but the extra judicial murder of a US citizen who happens to be the wealthiest man on Earth, and whose companies are a matter of national security to both the US and Chinese governments, is not something any nation or group would take on lightly.

 

[Cherry Wine]

You don’t think governments might push those dates back or reduce/lighten parameters if say suddenly Tesla wasn’t around to bleed their ICE market and profits? Never mind that certain companies cheated the rules for DECADES and others have been lobbying very recently for more time and less stringent goals.

That’s why I’m adamant that we’re no where near the tipping point. Everything can still be easily undone. Neither the genie nor the worms have been let out, poking their heads out a bit.

Additionally, I fear (read expect) that a replacement is already being thought up - tobacco industry fought like heck and then came up with vaping and child attracting flavors, auto industry came up with ‘clean diesel’ and hybrids, and basically have sucked and failed at compelling BEVs in a lot of ways, fossil fuel industry said let’s extract natural gas because that won’t cause any issues, utilities said let’s make up a bunch of bs rules so customers pay through the nose for energy, can’t easily get off the grid, and certainly can’t make their own energy unless we say so and tell them how much and when; behold our regulations!!!

Sadly I agree. Without Tesla around to threaten to eat traditional automakers' lunch, they could -- even now -- easily implement any number of anti-consumer business practices that drag the transition out for many years. Dealer mark-ups, nonsensical engineering decisions designed to drive up service revenue (thereby making EVs less of a value proposition), production limitations, MSRP increases, etc.

 

[BrownOuttaSpec]

To be fair, Tesla never intended to charge for the Supercharger Network. As with many well intended plans, things don’t necessarily work out the way you expect.

I semi-agree since you can't really make a profit on something giving it away for free (Free Unlimited Supercharging for most pre-2018 cars) so they initially never intended to charge for it but had to have known if they plan to sell 10M+ vehicles that they couldn't continue to do that.

Tesla CEO Elon Musk said that the perk wasn’t sustainable and he even admitted that they should have ended the incentive earlier: “Sorry, it’s not really sustainable at volume production and doesn’t incentivize optimal behavior. We probably should have ended this earlier.”

But Elon/Tesla had the foresight to pivot to turning a once loss leader/promotional item into a reoccurring never ending profit center. It's a lever they can pull at any time to push demand (although I don't see that being necessary ever again)

So much of what Tesla planned to do was to spur on other companies to take up the baton and run with it, which simply did not happen. Elon should have asked me and I’d have told him the only thing he’d spur on was resistance. People suck.

1,000% agree on both points. People suck

 

[phoggy123]

I guess the key question is: if a Recession is probable . . . .when does it arrive?
Look at the US job openings data:
View attachment 810950
We had 11.5m job openings in March 2022. Delta airlines cancelled 200 flights this holiday weekend due to staff shortages.
IMO, we will need to see job openings drop considerably to get a meaningful drop in consumer spending to help fuel a recession.
The divergent and contradictory economic data that I see really has me perplexed.

btw: the shaded areas of the chart above indicate US recessions.

The major concern I see is the idea of a bullwhip happening where, the rising costs of inflation hits the lower end of consumers. Transportation, food, and housing eats up all income and once debt is topped out they stop buying. Inventory rises, orders drop, layoffs happen. Couple this with a cooling (hopefully not all out collapse) of the white hot housing market and you have yourself a problem. You are already seeing big drops on house prices, and the tech industry start layoffs given the removal of free money and profit expectation.

I think the labor force issues remains ongoing for sometime as people who retire, or kids that never made it out of mom and dads basement stay away from labor. We have a massive US imbalance of people leaving the labor force to what is needed to just keep it running, not even grow.

 

[Gigapress]

Failure to do something doesn’t mean it hasn’t been attempted, won’t be attempted, or isn’t being thought about. You have noticed that Elon went from no bodyguards to a whole regiment, right?

Why didn’t they murder him 5 years ago, back when his security was weaker and Tesla was in a much more vulnerable position as they attempted to ramp Model 3 production?

Seems like a pretty poor strategy to wait until:

1. Tesla is worth a trillion dollars and is self-funding their own growth with huge free cash flows
2. Elon Musk is critical to NATO peacekeeping objectives in Ukraine and beyond
3. Elon Musk is critical to China’s CCP goals
4. Starship is almost complete and ready to send RosCosmos launch contracting into total irrelevance

Anyone who’s ever gardened knows that it’s easier to take care of pesky weeds before they’ve spread everywhere and dropped hundreds of seeds.

 

[JRP3]

Adding: On the surface this will seem unrelated but it goes to how stubborn and slow to change people can be; recently watched a 3-part series on Ulysses S Grant. It’s been over 150 years since he set his own slave free and fought for African Americans to be treated the same as white people. He fought against the KKK etc…. And just where are we now?

Look at the switch from horses to ICE, once it reached a tipping point of obvious superiority and affordability there was no stopping it. This is far less of a change and a more apt comparison.

 

[JRP3]

I'm genuinely interested in what you disagree with regarding this, @captkerosene

I'd imagine officer Kerosene's user name says it all.

 

[thesmokingman]

Look at the switch from horses to ICE, once it reached a tipping point of obvious superiority and affordability there was no stopping it. This is far less of a change and a more apt comparison.

View attachment 810977

The problem is that the US is the slowest in EV adoption at 29%. Someone posted that tidbit yesterday iirc. And it sure is a downer.

 

[scaesare]

And he tweeted about his death not long ago, so don't be surprised if he suddenly disappears or something. I remember my mom texting that she didn't like that text lol.

That was somewhat tongue in cheek after Rogozin wrote about him being accountable though....

That having been said, I don't put it past The Bad Guys attempting something nefarious.

 

[Krugerrand]

I semi-agree since you can't really make a profit on something giving it away for free (Free Unlimited Supercharging for most pre-2018 cars) so they initially never intended to charge for it but had to have known if they plan to sell 10M+ vehicles that they couldn't continue to do that.

Tesla CEO Elon Musk said that the perk wasn’t sustainable and he even admitted that they should have ended the incentive earlier: “Sorry, it’s not really sustainable at volume production and doesn’t incentivize optimal behavior. We probably should have ended this earlier.”

But Elon/Tesla had the foresight to pivot to turning a once loss leader/promotional item into a reoccurring never ending profit center. It's a lever they can pull at any time to push demand (although I don't see that being necessary ever again)


1,000% agree on both points. People suck

Yes, but what I’m saying is the plan WAS to give free Supercharging for life, but that all the rest that happened or didn’t happen changed that intention - specifically but not limited to all other OEMs were supposed to run with it and did not, which then forced Tesla to carry on in a manner they hadn’t intended and that all changed the end result.

Tesla did not intend to have battery factories or even be leading the EV market share. I believe they thought at best they’d be a high end niche mfger like Porsche and then they could have sustained free Supercharging for life.

Additionally, people suck and instead of just using the Superchargers for long distance travel, people were using them for their everyday travel instead of plugging in at home (those that had home charging available). There was also entitlement; I paid so much for this car and thus for the Supercharging etc…. People kept their cars plugged into them for hours because apparently they were also entitled to take up a fueling space from others.