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

[TheTalkingMule]

Someone at the next annual shareholders meeting: Hi Elon, long time investor, I'm wondering if you could ever see a time when Tesla would do a share buyback? I mean, is there anything that could possibly happen that would cause this to be a good way to spend part of the warchest?
Elon: Hold my beer! Well, maybe, if Tesla has no other engineering goals, regardless of profitability or not, regardless of the share price, then maybe...

Again, any other CEO would think differently, but Elon will always find a better way to spend cash according to his principles. I think he's been pretty clear on this sentiment.

We can go ahead and nix any talk of buyback, for the simple reason that all it accomplishes is putting pressure on shorts.

Elon's not going to deploy capital purely for a non-business purpose if it doesn't actually threaten the company. Which it clearly does not.

 

[hobbes]

Do you guess think restructuring cost due to layoffs will go on q2 or q3? I would say it has to take at least a month to evaluate who to layoff which their severance pay will fall under q3 right?

Rob thinks it'll go on q2.

I have the feeling Elon might want to put all not-so-good news into Q2 which is weaker because of Shanghai shutdown anyway to make it an effective bear trap, before turning the heat on with the Austin/Berlin ramps, stock split and possibly FSD in Q3 or Q4. Not advice, just a guess.

 

[Oil4AsphaultOnly]

But if they bought to close, how could they be termed "an investor", as they have no shares.

The reimbursement conditions didn't specify "investor". It only worded the condition as "purchased OR acquired Tesla common stock", which implies that as long as they "sold low and bought high" (as opposed to bought high and sold low), the actual sequence of that action didn't actually matter.

 

[StealthP3D]

Until Alaska is as well-serviced with Superchargers as are less scattered-population regions, I will fight share buybacks tooth and nail.

The prevalence of Superchargers in scattered-population regions of Alaska and whether Tesla does a share buyback, are not correlated in any meaningful way. Tesla is not cash constrained when it comes to Supercharger buildout - the density of Superchargers in any given area is a function of the density of Tesla traffic in that area. Tesla probably also considers the nature of the traffic - the more "local" the traffic is, and the higher state of average charge those vehicles have, the less need for Superchargers. This is because Tesla wants to be efficient with their capital.

Superchargers have an on-going cost. Even if they are only rarely used, they still have nearly the same overhead cost to maintain functionality. Plese note that I am not arguing for a share buyback, or against a faster expansion of SC's in Alaska, I'm simply saying the two have nothing to do with one another.

 

[StealthP3D]

Someone at the next annual shareholders meeting: Hi Elon, long time investor, I'm wondering if you could ever see a time when Tesla would do a share buyback? I mean, is there anything that could possibly happen that would cause this to be a good way to spend part of the warchest?
Elon: Hold my beer! Well, maybe, if Tesla has no other engineering goals, regardless of profitability or not, regardless of the share price, then maybe...

Again, any other CEO would think differently, but Elon will always find a better way to spend cash according to his principles. I think he's been pretty clear on this sentiment.

I agree that doing a share buyback is the same thing as management saying, "we have no better use for the capital". Ideally, Tesla can always invest the capital more profitably than by buying shares, even when those shares are mightily under-valued.

 

[Ogre]

I agree that doing a share buyback is the same thing as management saying, "we have no better use for the capital". Ideally, Tesla can always invest the capital more profitably than by buying shares, even when those shares are mightily under-valued.

There will be a point in the future where Tesla earns more money than they can conceivably spend profitably. Hard to say how far out that will be, but the talent pool will eventually be a constraint. Eventually Tesla will hit a brick wall and won’t have enough talented staff capable of effectively deploying that next billion dollars.

Of course maybe by then Tesla AI takes over many of those decision making tasks and processes…. Have to wonder ow soon before many of Tesla’s human employees follow the instructions of their AI. I’m sure there are some processes where this already happens to some degree in the assembly lines.

 

[strangethingintheland]

Interested to hear from 2018 model 3 new invites. Are you recently (June 2022) invited?

Yes. 2018 M3, safety score has been 95+ for months. Came in last night at 97. Surprised at just how much it can do. But at a relaxing drive it is not (yet).

 

[PeterJA]

...I pointed out the crazy predictions that [Elon] made over and over, yet he keeps selling a very expensive package to people are convinced that it'll arrive soon or within the time they have their car....

This criticism sounds like the people who said landing a rocket was a crazy prediction. They couldn't understand (or wouldn't admit) that each failed attempt moved Elon's team closer to eventual success.

Note that nobody was injured in that development program, which is also true for FSD Beta.

 

[scaesare]

Four months.

Gates is getting a raw deal. What he says is true: Shorting TSLA doesn't hurt the company. It's a bet that the share price is too high - it isn't an attempt to lower the share price. He hasn't been out badmouthing Tesla or Musk and contributions to liberal media weren't targeted at Elon. If he hates Musk it's because Elon started a fight with Buffett, Munger and himself. Elon has done a lot of reputational damage to the three of them and they didn't deserve it. (I was a BRK investor for decades and still have a very high regard for Buffett and Munger ... Gates a little less so.)

From, ironically, the SEC:

It is widely agreed that excessive short sale activity can cause sudden price declines, which can undermine investor confidence, depress the market value of a company’s shares and make it more difficult for that company to raise capital, expand and create jobs. This is particularly aggravating for entrepreneurial companies; the engines of new job creation. In the crash of 2008 short sale activity reached record levels and exacerbated the market turmoil, leading to one of the most severe economic declines in modern history

Excerpt from Shorting America

For those of you who think I'm just trolling the board ... I am not. These are my honest opinions.

That's what I was afraid of.

 

[UnknownSoldier]

Elon will never spend a penny on stock buyback just like marketing. Why? He'll always prioritize spending on physics first principles, like engineering headcount. It simply does NOT matter as it is at its best an indirect positive to the mission.

IMO, talking about this is moot for Tesla or any Elon run company. Other CEOs are materially different...

I used to believe that until he decided a valid physics first principles use of his money was to buy Twitter.

Now there is no longer any reason to pretend this is true. Elon is just the same as anyone else, if he feels like buying something he will buy it. If he feels like doing stock buybacks he'll do it and pretending otherwise is delusional and self-defeating.

 

[CorneliusXX]

Tesla has $18b in cash. It’s a bunch, but not particularly egregious and Tesla has a fair number of ways they can deploy large amounts of cash. Apple didn’t start their share buybacks until they had over $100 billion. Berkshire was similarly slow to initiate buybacks. In Apples case their buyback program massively, benefitted shareholder… but they still keep an absolutely massive cash hoard for rainy days. Likewise BRK. These are well run, disciplined companies which have weathered the recent stock market downturns extremely well.

If you spend money on buybacks too soon, you can miss out on opportunities or run into unneeded solvency problems. The urge to spend Tesla’s cash to buy back shares seems to largely come from shareholders who are less interested in long term and more interested in shoring up the SP in the short term which is the wrong reason to buy shares back.

Completely agree with your post on keeping the warchest. It would be nice to have a few spare $b in the bank if there is a recession - might pick up a lithium mine or two on the cheap. Maybe if they hit a similar number as you state ($100b+) where all opportunities could be easily purchased then the decision might change.

It's usually at the real depths of a recession where financing is unavailable and the best bargains are had. At that point in time cash is most certainly king.

 

[2daMoon]

A little something to brighten the HODLer outlook and close up the weekend as we look forward.

Mr. C.T. Dots threw some more questions to his A.I. friend and turned out an excellent perspective about many things Tesla. The nuggets are worth the time to view. At least they were to me.

Enjoy

 

[wipster]

While Amazon and Tesla are completely different companies from a growth perspective, it will be interesting to see what happens to the Amazon SP tomorrow when it splits 20-1 and goes from $2,447 to $122. It will be an indicator of how attractive the stock gets to younger investors when it becomes affordable... the same will be true after Alphabet's 20-1 split as well.

If both SP's have a considerable rise, that really bodes well for Tesla, especially after the 3rd quarter stats are announced. That is if nothing super bad happens to the economy in the interim... keeping my fingers, hands, toes, and legs crossed that doesn't occur.

 

[CorneliusXX]

Have I been ordained to change GoJo’s mind?


View attachment 813017

Is it the real or unreal earnings that aren't sustainable?

 

[wtlloyd]

There will be a point in the future where Tesla earns more money than they can conceivably spend profitably. Hard to say how far out that will be, but the talent pool will eventually be a constraint. Eventually Tesla will hit a brick wall and won’t have enough talented staff capable of effectively deploying that next billion dollars.

Of course maybe by then Tesla AI takes over many of those decision making tasks and processes…. Have to wonder ow soon before many of Tesla’s human employees follow the instructions of their AI. I’m sure there are some processes where this already happens to some degree in the assembly lines.

Tesla will invest in Mars infrastructure. Teslabot and Tesla Energy are the backdoor legitimizing agencies. Any reasoning forward thinker will have a light turn on in their head should Tesla announce they are venturing into hard rock mining and mineral concentration refining. All roads lead to Mars, and there is no point where there can be sufficient capital for that.

 

[RobStark]

 

[jerry33]

The prevalence of Superchargers in scattered-population regions of Alaska and whether Tesla does a share buyback, are not correlated in any meaningful way. Tesla is not cash constrained when it comes to Supercharger buildout - the density of Superchargers in any given area is a function of the density of Tesla traffic in that area. Tesla probably also considers the nature of the traffic - the more "local" the traffic is, and the higher state of average charge those vehicles have, the less need for Superchargers. This is because Tesla wants to be efficient with their capital.

Superchargers have an on-going cost. Even if they are only rarely used, they still have nearly the same overhead cost to maintain functionality. Plese note that I am not arguing for a share buyback, or against a faster expansion of SC's in Alaska, I'm simply saying the two have nothing to do with one another.

While the logic is correct, if there are few Superchargers there will be more resistance to purchasing.

 

[UnknownSoldier]

While the logic is correct, if there are few Superchargers there will be more resistance to purchasing.

More to the point: The least used Superchargers are often the most important ones. Superchargers were meant for travel use, not daily urban charging. The Superchargers that let you drive from NYC to LA are the ones that are important. The Superchargers inside NYC and LA are certainly helpful for people who don't have home charging, but they are not essential like the one in Iowa which lets you continue on your trip.

We need more Superchargers around the national parks, incidentally. This is something Tesla should actually prioritize because the national parks are some of the post popular destinations for road trips and one of Tesla's key competitive advantages is you can conveniently travel with a Tesla unlike other EV's.

 

[RichardL]

The Superchargers inside NYC and LA are certainly helpful for people who don't have home charging, but they are not essential like the one in Iowa which lets you continue on your trip.

While I agree with you, I would just point out that some of us need to pass right across LA in order to continue our trips

 

[Skipdd]

More to the point: The least used Superchargers are often the most important ones. Superchargers were meant for travel use, not daily urban charging. The Superchargers that let you drive from NYC to LA are the ones that are important. The Superchargers inside NYC and LA are certainly helpful for people who don't have home charging, but they are not essential like the one in Iowa which lets you continue on your trip.

We need more Superchargers around the national parks, incidentally. This is something Tesla should actually prioritize because the national parks are some of the post popular destinations for road trips and one of Tesla's key competitive advantages is you can conveniently travel with a Tesla unlike other EV's.

Aren’t there some really big national parks in Alaska

Going to Alaska is on my bucket list. Was supposed to go there in 1976 as part of a camping trip when I was a teenager. But the ALCAN highway got washed out so we couldn’t drive it and diverted to the Pacific NW for the rest of the trip. The whole trip was based on visiting national parks across SW Canada and then going to Alaska. No hotels, just camping. Now I would need hotels lol, but it would be lots of fun to do in a Tesla. Just saying..