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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Well couldn't resist, shook out the coach, recliners (s), bed, and a lot of my clothes and came up with enough to buy 2 chairs at $221.56... hopefully it's not going to get cheaper than that!
lafrisbee
Active Member
Ant logic is that they are Engineer constrained on the Manufacturing side. Remember it is about building the machine that builds the machine. There ain't no more Brainiacs available on the manufacturing side to start doing another location. Berlin and Austin have to be fleshed out.
The Accountant
Active Member
I understand and agree with your point. There is one buyback scenario that does align with the mission but I don't think Tesla would deploy it . . .but it's a valid approach as many companies have done this in the past (very popular in the 80s & 90s).
It goes as follows:
Tesla buys back $50B of stock. They don’t retire the shares but rather keep them as Treasury Stock (available to be reissued). In time as the share price rises, these Treasury Shares grow in value say from $50B to $150B. Tesla makes an acquisition (e.g. mining company, AI company, etc) using shares. They can purchase a company for up to $150B for what cost them $50B. In a way, a companies shares can act as currency. Buy it when it is cheap and then reissue when it gets pricier.
Denied by Elon with additional detail about the one time he ever spoke with Putin 18 months ago. Well before you posted this article.
Elon Musk Spoke to Putin Before Tweeting Ukraine Peace Plan: Report
The world’s richest man spoke directly with Vladimir Putin, Eurasia Group’s Ian Bremmer reported. Musk denied the report in a tweet.www.vice.com
Not good if true.
Mod: left this single post in place to show that the quoted post is misinformation. Deleted all the rest (including the original). --ggr
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Found some more behind the dresser, bought 3 more chairs @ 220.56...
How bullish is that!
I really can't understand the logic against a stock buy back at this point. Tesla, while ramping 2 factories (and doing a less substantial ramp to a 3rd), paid down practically all of their remaining debt, along with constructing the MegaPack factory, stayed FCF positive.
Even if Tesla continues building 2 new Gigafactories concurrently, the impact of them on FCF will be less and less as Tesla has more Gigafactories in volume production.
As pointed out in your post, there's many ways Tesla can use a stock buy back to their advantage. The most obvious is that Tesla can buy back stock right now at a discount and then if they need cash for a huge expansion phase in 2-3 years (for say Robotaxi), they can do an offering at a much higher valuation than today. Like 2-3X the value of today.
That will either generate 2-3X cash for Tesla for the same amount of shares or they can raise the same amount of cash with 2-3X fewer shares.
Mind boggling to me that some investors are against this
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TheTalkingMule
Distributed Energy Enthusiast
Unless you have a bunch of near term put contracts you're sweating, like myself, this is about as stress-free as it gets. There's $10B in earnings about to drop in your lap over the next 15 weeks.
I really can't understand the logic against a stock buy back at this point. Tesla, while ramping 2 factories (and doing a less substantial ramp to a 3rd), paid down practically all of their remaining debt, along with constructing the MegaPack factory, stayed FCF positive.
Even if Tesla continues building 2 new Gigafactories concurrently, the impact of them on FCF will be less and less and Tesla has more and more Gigafactories in production.
As pointed out in your post, there's many ways Tesla can use a stock buy back to their advantage. The most obvious is that Tesla can buy back stock right now at a discount and then if they need cash for a huge expansion phase in 2-3 years (for say Robotaxi), they can do an offering at a much higher valuation than today. Like 2-3X the value of today.
That will either generate 2-3X cash for Tesla for the same amount of shares or they can raise the same amount of cash with 2-3X fewer shares.
Mind boggling to me that some investors are against this
Apple waited until they had over 200 Billion in cash before they started a stock buyback. It's usually an indication that the company has run out of ideas. That last part is never going to happen as long as Elon is there!
The reason Ford didn't go bankrupt along with the rest of Detroit it because they got a ton a loans right before the crash in 2008, and had the cash to weather the storm. Knowing and reference this often, why would Elon/Tesla, on the brink of a possible really bad recession, get rid of cash?
Thankfully I don't. I have some but the amounts aren't very significant to my portfolio. I think I'm feeling it because I was a little too levered earlier in the year and spend too much time on Twitter. (I think I just might have a solution for the latter
)Why would any Tesla investor care how long Apple waited to do their stock buy back? If Zach is as smart of a CFO as we all give him credit for (including me), then, as I pointed out by myself and as @The Accountant pointed out, it's financially very smart to be buying back shares here.
For the next 2 years, Tesla's roadmap for expansion and growth is very clear - Semi, Cybertruck, Energy.......all 3 of which already have vast majority of the costs already factored in (the cost of constructing the factory building/site). During this period, Berlin and Austin will be reaching volume production (5,000/week by end of 2022), which will switch them from being a drag on FCF to a huge catalyst to FCF growth. This transition has effectively already happened. Q2 was the biggest drag on FCF from Berlin/Austin. It only gets better from here.
Are you forgetting that Tesla retired 6.5 billion in debt over the past 4 quarters? Their cash balance could easily be 24 billion right now instead of 18 billion if they had chosen to not pay off that debt.
Also......comparing Tesla's financial health and structure to Ford or any of legacy auto is borderline fear mongering. Go back into Fords financials back in 2008 and compare them to Tesla's today. Ford never had anywhere close to the gross margin, operating margin, FCF, and net profit that Tesla had in Q2.......even though Q2 had practically every kind of headwind you can think of. Mentioning any of legacy auto and what happened to them during downturns in the economy in the past has zero relation to Tesla.
Apple waited because they had Steve Jobs who was against all share buyback and dividends. Doesn't necessarily mean they were financially savvy.
cheers!!
Tension in the thread is not the problem.
The thread being cluttered by extremely unnecessary and/or irrelevant posts is the problem. An occasional joke is great, but something as repetitive as the joke about jinxing just slows everyone down and adds unnecessary clutter.
Did you stop to think about pertinence, or if it was really witty enough to post?
Wasn't trying to be fear mongering! Just pointing it out, and to say the prudent thing to do right now is just keep the cash!
What's the driving force for not keeping it? To increase the share price? Tesla shouldn't care what the share price is since they won't need to issue any new shares (other than for employee incentives, and they've already changed those to cash as a default).
If there IS a major recession, and Tesla DOES have all that cash, it could aquire some distressed companies that could help it's mission (thinking mining, or massive Service Center expansion from bankrupt dealerships, etc.). But the key is, regardless of unforseen events, if credit markets freeze up, Cash is king and let's you survive any hardship.
larmor
Active Member
One of the few areas of discussion on the internet, presumably the other is reddit regarding TSLA. I'm sure the algobots are in part driven by the drivel.
Gigapress
Trying to be less wrong
As strong as Tesla's current free cash flow and balance sheet is right now, it's not so very strong that bankruptcy is out of the question in a very bad scenario. It's definitely not so strong that Tesla is immune from cash possibly being a constraint on scaling in the next few years. Maybe it's a 0.1% probability of bankruptcy and a 1% probability that cash limits scaling speed, but that's still not as good as I'd personally like it to be.
Should Tesla have a much higher credit rating? Yes, in my opinion. Does that mean Tesla is invincible if another Great Depression happens, USA hyperinflation, American Civil War Part 2, Terrorist attacks bombing all four factories, or some other horrible tail risk? Not really. They have like 2-3 years worth of savings in their cash and cash equivalents right now, but in a really bad scenario that could prove to be insufficient.
I am reminded of Elon's comments on the 2018 Recode interview with Kara Swisher in which she was probing him on why he and the team had worked so hard and suffered so much for Model 3 Production Hell. "Tesla cannot die...It's very important for all life on Earth...If we do not solve the environment, we're all damned." I'm pretty sure that experience of burned neurons is still firmly implanted in the memory of Elon and everyone else at Tesla who went through that, and the 2008 Great Financial Crisis when they almost failed to make payroll. I think they want to stay far back from the "staring death in the face" line and not take unnecessary risks to satisfy the desires of short-term investors.
We are talking about slightly increasing human extinction risk in exchange for the minor benefits of a stock buyback. If there is a good rationale for why that's worthwhile merely because the share price is lower and a 1% tax on buybacks is about to come into effect, I still haven't seen it.
Runarbt
Active Member
Brankruptcy? You lost all credibility in the first sentence.
Runarbt
Active Member
Quite the opposite imho, MM went for a push down contrary to the Nasdaq movement.
Might have used the momentum by that false article about Elon talking with Putin. Seem that was the time it started?
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