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

[Artful Dodger]

Nice 5 dollar drop in SP right around 6am. sets my mood for the day.

There's an old saying on Maui: "Never judge a day by the weather".

Cheers!

 

[Gigapress]

Soon the IRA subsidies are kicking in which is why it might be favorable to increase production for Model Y in Austin, Semi in Nevada, Megapack in Lathrop and possibly also for Powerwall by January 2023
So Tesla might be shipping Batteries in December to these Factories and therefore they need to reduce Production in December in Shanghai and maybe this is also a factor for the delayed ramp up from 3300 to 5000 in Berlin which happens now in January instead of in mid December. Then we also learned that they sent some of the top engineers from Shanghai to the US, possibly also to be prepared for a production increase in January 2023.

I see these developments as a sign that the + 50 % production goal compared to 2021 (930‘400 Cars) will be largely met for 2022.

Shipping batteries from China to USA would make those vehicles ineligible to receive any American clean vehicle credits because of the sourcing requirements for critical minerals and battery components.

 

[SmokyPeat]

Your conclusion that the BoD is hesitant to approve a share buyback is premature. How do you know one is not underway as we speak? Under SEC reporting rules, Tesla would not have to disclose any share buybacks conducted in Q4 until it files it's 10-K (likely around Jan 30, 2023).

Further, buying shares is only one way the Board can act. They can also buy call options on TSLA. Recall the unusual_whales tweet highlighting a $5 call options play last month (when considering option premium and strike price upon excersicse).

TL;dr People need to stop jumping to conclusions based on conjecture and w/o full consideration of the reporting timelines. That's what created the current narrative, not any objective facts. And doubt benefits the shortzes.

100%. I would add that I like Emmett Peppers as much as the next guy, but he does have a very active imagination.

 

[y_naught]

I won't mention the color spectrum, but my mood is improving!

Doh! Knock it off.

 

[Bandit]

I wonder at what point the pressure to do something about the stock price depression is growing from inside. For someone who joined last year with stock-based compensation (ESPP) locked in for two years at then price levels of around $400 the current levels must be so demotivating. Elon has often mentioned that salary at Tesla is above industry norms because of the ESPP program. For many who joined in the last two years I wonder how they feel about this program now… they still get to buy shares at 15% discount butcher 2-year lock-in promise must be a huge disappointment.

In addition to @Krugerrand 's solid points around other motivations, I don't believe Tesla's ESPP is structured the way you describe. Most ESPPs seem to be pretty standardized with small variation around the offerring period length. In short, ESPPs will typically look at two share prices - the price on the date at the start of the offering period and the price on the purchase date. Using your number above, assuming SP was $400 at the beginning of the offering period and if it were $170 on the purchase date, the employee would be purchasing their shares for $144.50 (15% below the lower of the two prices.) When the SP catches up to what we all know it's worth I'm sure those employees will be extremely happy!

 

[StealthP3D]

Tesla China's response is in the Bloomberg article, a one-word "untrue" with zero elaboration. What that means exactly is anyone's guess.

It means exactly what it appeared to mean: It's untrue that Tesla China planned to cut production due to soft demand. Why this confuses anyone is beyond me.

 

[Chunky Jr.]

It means exactly what it appeared to mean: It's untrue that Tesla China planned to cut production due to soft demand. Why this confuses anyone is beyond me.

I think the uncertainty is they could be saying the specific claim of a 20% cut is untrue. So if it was cut by 15% instead of 20%, Tesla China would be correct.

 

[nativewolf]

But since there is no pr dept every one guesses

 

[Moon Buggy]

If earnings keep going up and you're long, then none of this stuff matters. My gut tells me they are indeed cutting China production because China demand fell off. That said, there are many other markets they should be able to expand into and I don't know if these production cuts will be lasting.

I'm buying up shares here because I just think a lot has to go wrong not to justify this share price if you're at all forward looking. If you assume Cybertruck will find new buyers and will be profitable, if you assume EV adoption is going to continue to skyrocket worldwide, and if you assume that Tesla's margins won't crater, then you're probably going to be handsomely rewarded.

To me the current atmosphere is great to slowly add to my position, which I haven't done this heavily since 2019.

 

[gene]

You must be a newbie investor - you're supposed to buy low and sell high, not the other way around!

I don't feel like we've been hemorrhaging (as you put it) this year. In fact, we are at about the same levels I started to feel uncomfortable about on the way up, at the end of 2020. I felt we were getting ahead of ourselves, but I was shouted down by the mo-mo crowd who wanted TSLA to keep going up. With two full years of growth under us I feel more than comfortable with TSLA's valuation because I think we are actually under-valued by 2X, maybe 3X, depending upon how you look at it. So, very limited downside now compared to the unwanted runup to over $400 (split adjusted).

I don't understand all the angst displayed here by inexperienced investors who appear to not understand the chaotic way markets work. In my view, I have watched the underlying value of my shares climb and strengthen for two solid years, even as the share price climbed for the sky and then retreated back to December 2020/January 2021 levels of two years ago. A couple of COVID shutdowns that didn't substantially setback the overall trajectory of the company much being the most notable exceptions. I see massively more production capacity than we had two years ago and strong demand for Tesla products at surprisingly high price points. I see a general acceptance in the industry that electrification is the way forward and the difficulty the rest of the industry is having in ramping EV production while controlling the cost to manufacture. That means Tesla will have to take on an outsized share of the mission.

Tesla is in a much stronger position than they were two years and production volume and sales are accelerating. While average sales prices (looking forward) might be slightly lower than they were two years ago, margins will be much higher. Tesla is growing into a cash printing machine almost as quickly as typical TSLA bulls expected two years ago. The mission is on track, the Supercharger Network is much bigger with a much further reach than it had 2 years ago, the Tesla Service Network is greatly expanded and Semi has started early deliveries with Cybertruck expected to come on-line next year.

This is pretty much everything I hoped for, and Tesla's execution has matched my rather lofty expectations even through two years of COVID that brought many businesses to their knees by breaking their supply chains. Tesla has proven to be amazingly resilient to these negative forces and challenges. So I see my shares as having a much higher intrinsic value than they did at the same price two years ago. And since I followed my own advice to avoid leverage and not to invest money I needed to live on, I'm more secure than ever in my financial future. That's because I focus on the intrinsic value of my shares and not the number that a spastic market applies to them. The market tries to fool and trip investors who try to time time the market or who become emotional over the share price.

Don't watch the share price, watch the company, even a person of below average intelligence can be "smarter" than the market. This was the same advice I gave when share prices were soaring (watch the company, not the share price). Investing is incredibly easy once you realize the share price is not a good proxy for the true value of your shares, at least not about 50% of the time. You have to trust your own analysis and avoid having to sell during periods when the market doesn't want to pay the correct amount for your shares or buy with money you may need to spend soon. And never kick yourself for past mistakes, always look forward and try not to make the same mistakes again.

Given the incredible growth of profits and sales, production capacity, worldwide demand, and the successful progression of the mission, it's really difficult for me to understand why some shareholders are so depressed. I can only conclude they don't have a clue about investing in high growth companies. The opportunity is rarely this good.

Excellent post. Thank you. I copied and pasted this to some of my friends who own TSLA but do not spend any time here on this thread. Thankfully, they are all 2013 TSLA buyers.

 

[insaneoctane]

If you are one to pray to gods, then don’t forget they require sacrifices.

Haven't we all sacrificed enough YTD?

 

[2daMoon]

Well, once done with Alice in Wonderland it seemed right to follow up with Through the Looking Glass. In reading these, it is amazing to take notice how the nonsense, irrationality, and silliness of these books are shared with some parts of this TMC forum.

Hopefully, like Alice, I'll eventually wake up to find the world around me normal and the madness of life in the disturbing dream but a memory.

HODL

 

[StealthP3D]

I wonder at what point the pressure to do something about the stock price depression is growing from inside. For someone who joined last year with stock-based compensation (ESPP) locked in for two years at then price levels of around $400 the current levels must be so demotivating. Elon has often mentioned that salary at Tesla is above industry norms because of the ESPP program. For many who joined in the last two years I wonder how they feel about this program now… they still get to buy shares at 15% discount butcher 2-year lock-in promise must be a huge disappointment.

Your premise is wrong unless the employee was just hoping to game the system by working the shortest possible time at Tesla to cash out some options that had rapidly appreciated.

Any hires that plan to stick around for 5 or 6 years are getting issued new options on a regular basis with exceedingly low strikes (based on current low share prices) and will make out like bandits. I cannot understate how much I appreciate all the hard work of Tesla employees, and the manner in which it's accelerating the mission, but, no, this slump in share prices is actually very good for them, unless they plan on leaving the company shortly. And that is one of the primary benefits to a company of including stock-based compensation instead of just a check at the end of every pay period, employee retention.

Just as I have little doubt my investment will pay off in an outsized manner, TSLA employees see the revolution they are making happen from inside the company walls, they would have to be extremely short-sighted to not see how good this will turn out for themselves (and the world). You are worried about something that is actually a huge benefit to those employed by Tesla.

 

[Andy O]

They shouldn’t have to write a sentence or a paragraph or perform verbal gymnastics.

Yes they should. Just be logical. Saying "untrue" to "cutting production because of reduced demand" still allows for cutting production for other reasons.

It means exactly what it appeared to mean: It's untrue that Tesla China planned to cut production due to soft demand. Why this confuses anyone is beyond me.

Because they might be cutting production for other reasons.

I am not suggesting that Tesla Shanghai is cutting production. I'm just trying to be logical.

 

[M|S|M MYP]

Market up - $TSLA down....can't blame macros today, so i guess Elon is selling more /s

 

[bkp_duke]

If earnings keep going up and you're long, then none of this stuff matters. My gut tells me they are indeed cutting China production because China demand fell off.

Please point me to the information where "China demand fell off."

Number posted overnight showed the best monthly sales for in-China . . . pretty much ever. And Q4 is tracking to be the best quarter for in-China sales, ever.

If there is information to contradict this, please share it.

 

[Krugerrand]

I won't mention the color spectrum, but my mood is improving!

What about now?

 

[thx1139]

Said this again any cut in production that isnt due to an outside force like parts shortage, worker shortage because of COVID lockdowns, etc. is a bad thing. People that are high on Tesla believe that no matter how many you make at this point you can sell them relatively quick somewhere in the world. So produce as many as you can as fast as you can and store them if you dont have transports to move them out immediately. You never get the time back to produce those vehicles. Producing fewer vehicles in a plant means each one you make costs more to make. Producing more vehicles in a plant means each one you make costs less to make.

So to me if production cuts are indeed true and it isnt for some reason other than Chinese consumers arent purchasing fast enough also means consumers in other locations that sell MIC Model Y arent purchasing fast enough either.

 

[Drax7]

I think the uncertainty is they could be saying the specific claim of a 20% cut is untrue. So if it was cut by 15% instead of 20%, Tesla China would be correct.

Yeah right, that’s how a politician would act

 

[replicant]

They make exactly that for Elon

False. Musk must seek pre-approval from a securities lawyer of Tesla (not the SEC's) and only for specific events or financial milestones.

https://www.sec.gov/divisions/enforce/claims/docs/musk-final-judgment-10162018.pdf