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

[The Accountant]

So….did you feint left and go to NYC, or feint right and head to Connecticut? Sly move, whichever one is right

(he’s probably in Delaware or Maine, I’m thinking)

I was waiting for someone to call me out on that.
I’m certified (CPA) in NY and I now live 5 min over the border in CT.

 

[WattsHappening]

You don't make a final offer without all finances lined up. That's why Elon would have sold prior to the final offer and he knows him wanting to buy twitter for the original price will tank the stock(which it did, 1M shares were sold off the second that announcement came in...and it wasn't him who sold).

I hope you're right. I will be thrilled to have worried for nothing.

 

[MrMoo]

You don't make a final offer without all finances lined up. That's why Elon would have sold prior to the final offer and he knows him wanting to buy twitter for the original price will tank the stock(which it did, 1M shares were sold off the second that announcement came in...and it wasn't him who sold).

I don't believe this is true. I would love to be proved wrong but I think Elon is as good at buying twitter as J Powell was at proving inflation was transitory. They can be in the same boat together.

 

[StealthP3D]

I don't believe this is true. I would love to be proved wrong but I think Elon is as good at buying twitter as J Powell was at proving inflation was transitory. They can be in the same boat together.

Is it just my imagination or does this forum have an inordinate number of people who have negative views of Tesla/Elon Musk but who simultaneously would love to be proved wrong?

Wouldn't it be easier to just realize that not many companies can compare favorably to Tesla and not many industrialists/technologists can compare favorably to Elon Musk? I suppose some people are not happy unless they are wringing their hands together worried about some supposed fault or another, even if history shows they probably don't need to worry.

 

[TheTalkingMule]

Is it just my imagination or does this forum have an inordinate number of people who have negative views of Tesla/Elon Musk but who simultaneously would love to be proved wrong?

What do you think this is? Some kind of Tesla Motors club? Lol @ our recent troll density.

Excited to turn the page tomorrow and move into the "real undeniable earnings era". If we can lock down TWTR and get past that too......gravy.

 

[MrMoo]

Is it just my imagination or does this forum have an inordinate number of people who have negative views of Tesla/Elon Musk but who simultaneously would love to be proved wrong?

Wouldn't it be easier to just realize that not many companies can compare favorably to Tesla and not many industrialists/technologists can compare favorably to Elon Musk? I suppose some people are not happy unless they are wringing their hands together worried about some supposed fault or another, even if history shows they probably don't need to worry.

I assume this is talking about the posters on the forum and not my comment directly. In which case I can only say, the ones who aren't worried aren't posting. The ones who are worried are more vocal about it. It's just how it's always been, whether it's about a company or about the blender they bought from the store.

 

[Gigapress]

If I’m not mistaken, there is a Twitter thread

 

[MC3OZ]

I assume this is talking about the posters on the forum and not my comment directly. In which case I can only say, the ones who aren't worried aren't posting. The ones who are worried are more vocal about it. It's just how it's always been, whether it's about a company or about the blender they bought from the store.

It is also the case that often those that are worried are joining the dots on things that might not be connected, in ways that can't be proven by a detailed cause-and-effect argument.

Ideally when there is strong evidence that evidence should be backed by data, production, deliveries, margins, price changes, etc

Anecdote, assumption, rumour or opinion isn't necessarily a strong argument backed by data.

The fact that people might be worried about a particular issue doesn't prove it is a problem. When there is no clear evidence, the decision to worry or not worry is mostly personal preference and inclination.

Most worries start with assumptions, especially when those worrying don't question their assumptions,

However, when an issue is genuine, I expect Elon and Tesla work work on solving it, I only would worry when they show no clear signs of addressing a genuine problem. So far, I haven't had many reasons to worry, not because there is a shortage of genuine issues, but because I'm confident all relevant issues are on the list.

 

[Ogre]

Headline by AP:

"11 more crash deaths are linked to automated-driving systems"
10 of the deaths involved vehicles made by Tesla

I'm amazed how by not having the "other" side of this discussion it sounds really bad on the surface ...but:
How many fatalities or accidents would Tesla have if autopilot wasn't being used?
How many accidents / fatalities does Tesla have per mile vs other mfg?

It is even more meaningless than that. It doesn't bother to eliminate deaths where the car not using Autopilot was at fault.

It might include accidents where a Tesla was on AP and gets rammed by another car.

 

[printf42]

I want to comment on the R&D accounting thing. This has always been a TSLAQ argument that is based on specious reasoning.

It is true that Tesla accounts for R&D differently than other automakers who put it in automotive COGS and this, in a sense, makes Tesla's auto gross margin percentage not directly comparable to other car companies without first making some attempt to adjust for this accounting difference. It is also true that many bulls, especially amongst the masses of poorly informed retail investors, are not aware of this.

However, bears running with this point do not like to acknowledge that Tesla's R&D expenses do in fact behave more like indirect overhead expenses than COGS, because Tesla's R&D is apparently more or less invariant with respect to production volume. GoJo, of course, conveniently neglects to mention that since it doesn't fit his narrative. The ratio of Tesla's total R&D spending to auto gross profit has been declining precipitously and will continue to do so as production volume continues to explode. It's leveled out at 16% in recent quarters because Tesla's volume growth temporarily plateaued and because Tesla is ramping up a whole bunch of new R&D efforts. Tesla is doing R&D on a lot of stuff that has nothing to do with making S3XY cars. For example: Dojo, Optimus, FSD computer, Megapacks, Powerwalls, Solar Roof, Autobidder, metallurgy for die casting that has many potential long-term applications beyond car-making, Robotaxi, and secret skunkworks projects we don't know about. Since Q1 2018, Tesla's vehicle deliveries have grown by an order of magnitude while R&D expenditure has merely doubled. This is a property of fixed costs, not variable costs, and COGS is supposed to represent variable costs only or fixed costs like factory overhead that directly relate to producing goods.


View attachment 865009

View attachment 865010

Spoiler: Raw Data in Tabular Format

Quarter	R&D / Auto Gross Profit	Auto Gross Profit	Research & Development
Q1 2018	65%	$ 569	$ 367
Q2 2018	56%	$ 691	$ 386
Q3 2018	21%	$ 1,711	$ 351
Q4 2018	18%	$ 1,955	$ 356
Q1 2019	45%	$ 751	$ 340
Q2 2019	32%	$ 1,016	$ 324
Q3 2019	27%	$ 1,222	$ 334
Q4 2019	24%	$ 1,434	$ 345
Q1 2020	25%	$ 1,311	$ 324
Q2 2020	21%	$ 1,317	$ 279
Q3 2020	17%	$ 2,105	$ 366
Q4 2020	23%	$ 2,244	$ 522
Q1 2021	28%	$ 2,385	$ 666
Q2 2021	20%	$ 2,899	$ 576
Q3 2021	17%	$ 3,673	$ 611
Q4 2021	15%	$ 4,882	$ 740
Q1 2022	16%	$ 5,539	$ 865
Q2 2022	16%	$ 4,081	$ 667

Again a very good analysis!

My layman’s reasoning:

Legacy OEM’s R&D are mostly used for refreshing models every few years, those R&D hardly has any residual value outside of specific model’s lifespan.(Most reusable components are outsourced to suppliers)

While Tesla’s R&D is mainly towards software and chips, new manufacturing techniques and materials, that can be applied to all future products. Thanks to them only having 3 “aging” models(yes, Y is just a bigger 3), model specific R&D is minimal and probably can be ignored in comparison.

Hence, it makes sense for legacy OEM to count R&D in CoG while Tesla does not, and that also explains why Tesla R&D doesn’t correlate to sales.
(Tesla is a software company, yo!)

 

[Singuy]

Hey, here's a recent Q post/thread that ties all three of these together!

https://twitter.com/x/status/1580517011213672452

Yeah blah blah blah

GM 2019 revenue: 137B
GM net income: 6.58B

Tesla 2022 TTM 67B
Tesla Net income: 9.5B

I don't care where or how Telsa puts R&D, but last time I checked we only care about the bottom line, and at half the revenue, Tesla is making almost 2x the net profit. Also I don't care if Tesla is a car company or a dildo company. Revenue, net income and growth determines the price of the stock and the PE multiple it gets.

 

[Gigapress]

It is also the case that often those that are worried are joining the dots on things that might not be connected, in ways that can't be proven my a detailed cause-and-effect argument.

Ideally when there is strong evidence that evidence should be backed by data, production, deliveries, margins, price changes, etc

Anecdote, assumption, rumour or opinion isn't necessarily a strong argument backed by data.

The fact that people might be worried about a particular issue doesn't prove it is a problem. When there is no clear evidence, the decision to worry or not worry is mostly personal preference and inclination.

Most worries start with assumptions, especially when those worrying don't question their assumptions,

However, when an issue is genuine, I expect Elon and Tesla work work on solving it, I only would worry when they show no clear signs of addressing a genuine problem. So far, I haven't had many reasons to worry, not because there is a shortage of genuine issues, but because I'm confident all relevant issues are on the list.

Investing is a game of making predictions about the future, which requires understanding in order to model the future accurately, and obtaining understanding is best done with the Scientific Method which is based on data and falsification of hypotheses.

It is difficult to learn how to avoid jumping to conclusions based on insufficient evidence. A number of built-in heuristics and cognitive biases make this the default human behavior. Slow, rigorous thinking is more work and may lead to answers that are correct but nevertheless defy intuition.

One cognitive bias at play is base-rate neglect, where people will estimate the likelihood of an event occurring based of how specific information seems to fit together while ignoring the prior probability of something like that happening in the first place. Compounding this problem is confirmation bias which will attune the brain to notice information that tends to support pre existing beliefs, exactly opposite of the falsification goal. Your memory is associative and if it’s primed to think of reasons why something is probably true then it will tend to do so and forget the reasons why that hypothesis might not be true. In ambiguous situations, where in reality there may be insufficient information to conclusively understand what’s happening, these psychological tendencies make it very easy to invent a very convincing narrative and see all kinds of evidence supporting it while others will have their own biases leading down the same kind of path but to a totally different conclusion. Thus begins the mudslinging and talking past each other. Cortisol and epinephrine are squirted out into the bloodstream, a fight-or-flight physiological response is triggered, and nobody involved is happy or learning anything.

This is where the value can be found in grounding everything in the evidence backed by data, production, deliveries, margins, price changes, etc over the anecdote, assumption, rumour or opinion. Also in discussing ideas instead of personal attacks.

 

[Knightshade]

You don't make a final offer without all finances lined up.

I mean, you don't sign a merger agreement without doing all needed due diligence first either, yet here we are!

Yeah blah blah blah

GM 2019 revenue: 137B
GM net income: 6.58B

Tesla 2022 TTM 67B
Tesla Net income: 9.5B

I don't care where or how Telsa puts R&D, but last time I checked we only care about the bottom line, and at half the revenue, Tesla is making almost 2x the net profit. Also I don't care if Tesla is a car company or a dildo company. Revenue, net income and growth determines the price of the stock and the PE multiple it gets.

IIRC shortly after I posted this someone posted a DM convo with Gordon where they asked about the revenue/income stuff and Gordons answer was he didn't believe those #s were real.

Remember, to Q, it's accounting fraud all the way down.

 

[Singuy]

I mean, you don't sign a merger agreement without doing all needed due diligence first either, yet here we are!





IIRC shortly after I posted this someone posted a DM convo with Gordon where they asked about the revenue/income stuff and Gordons answer was he didn't believe those #s were real.

Remember, to Q, it's accounting fraud all the way down.

I actually see many, including myself, impulse buy without doing adequate dd all the time. However the money is always there...

 

[Tommy O]

I actually see many, including myself, impulse buy without doing adequate dd all the time. However the money is always there...

Can't relate.

*eats a bag of doritos*

 

[wipster]

I mean, you don't sign a merger agreement without doing all needed due diligence first either, yet here we are!





IIRC shortly after I posted this someone posted a DM convo with Gordon where they asked about the revenue/income stuff and Gordons answer was he didn't believe those #s were real.

Remember, to Q, it's accounting fraud all the way down.

Who's merging? Elon is buying enough shares to give him a majority stake in Twitter, it's not a merger with Tesla.

 

[Knightshade]

Who's merging? Elon is buying enough shares to give him a majority stake in Twitter, it's not a merger with Tesla.

You might wanna read the actual agreement. It's absolutely a merger- just not with Tesla.

He's not personally buying all 44 billion in shares... he's just agreeing to provide 33 billion dollars of the funding for the holding company that is merging with twitter to do so.

 

[wipster]

You might wanna read the actual agreement. It's absolutely a merger- just not with Tesla.

BFD, actually I really don't care...

 

[bkp_duke]

With who then?

A holding company. Basically an empty shell.

DEFA14A

 

[Knightshade]

With who then?

With X Holdings I, Inc (parent) and X Holdings II Inc a wholly owned subsidiary of parent.

You can read the whole merger agreement here

DEFA14A