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

[mercer2]

https://twitter.com/x/status/1607218287192215555

 

[Cattledog]

Or last week is the low. That’s what my friend prefers.

Well said, that friend of yours is a friend of mine!

Anecdotal, but the 20+ Model 3s and the 20+ Model Ys that were available 2 days ago within 200 miles of 78212 (my zipcode) are gone daddy gone this morning...

And a few other random checks:

Beverly Hills 90210 - 0
Redmond 98052 - 0 (Seattle)
Cupertino 95104 - few dozen Ys, 0 3s
Austin 78725 - 0
Miami 33128 - 1 Model Y, 11 Model 3s
Manhattan 10018 - 0
Denver 80202 - 9 Model Ys, 0 Model 3s

Brilliant move Tesla.

I'm wiping calling my the bottom (please).

Looks like Miami and Denver have gone down and Cupertino is wiped out. Others still at 0. Good news.

Would be good to figure out on a non-end-of-quarter-push-basis (NEOQPB), what percentage of production should go to 'showroom' stock so that Tesla can take advantage of walk-in buyers. 5%? 10%? More?

 

[Christine69420]

A tweet from Omar aka Whole Mars Catalog:

https://twitter.com/x/status/1607390547299430402

Tweet labeled: Single piece front underbody casting

Edit: From a Model Y. A pretty xmas card.

 

[Chunky Jr.]

China COVID info, from https://www.cnn.com/2022/12/26/economy/china-covid-surge-economy-strain-intl-hnk/index.html.

Key excerpts below:

“Factories and companies are also forced to shut down or cut production because of more workers getting sick.”

“Auto manufacturers sold 946,000 vehicles from December 1 to December 18, down 15% from the same period last year, according to most recent statistics from the China Passenger Car Association.”

“BYD, the country’s largest electric vehicle manufacturer, said it had to slash production by 2,000 to 3,000 vehicles per day as more workers are unable to work.”

“The Covid outbreak has severely impacted our production,” Lian Yubo, vice president of BYD, said Thursday at a forum in Shenzhen. “20% to 30% of our employees are sick at home.”

He added that the company’s monthly production is likely to fall short of target by 20,000 to 30,000 vehicles for December.”

“Many factories have been forced to shut down for weeks because of sick workers and lack of orders, according to Chinese media.”


Nothing Tesla-specific in the article, but:

-China COVID situation a mess right now.
-Lots of factories temporarily shutting down due to sick workers or problems with suppliers due to sick workers.
-Last week of BYD deliveries they may have been lucky. Likely to see impact for them this week.

Conclusion:

There is no Tesla-specific demand problem in China. Looks much more like a country-wide problem over the next few weeks not at all specific to Tesla.

True, but BYD has outsold Tesla almost 5-1 recently. That makes me wonder if there may be an issue and I don’t think it is wise to sweep any potential problems under the rug.

 

[wtlloyd]

A tweet from Omar aka Whole Mars Catalog:

https://twitter.com/x/status/1607390547299430402

Tweet labeled: Single piece front underbody casting

This is 18 months old, or so it's reported to be, in the comments.

 

[jerry33]

True, but BYD has outsold Tesla almost 5-1 recently. That makes me wonder if there may be an issue and I don’t think it is wise to sweep any potential problems under the rug.

BYD has a lot of low priced models. Android sells more than iPhone too.

 

[Singuy]

True, but BYD has outsold Tesla almost 5-1 recently. That makes me wonder if there may be an issue and I don’t think it is wise to sweep any potential problems under the rug.

More like 2 to 1. Byd numbers include hybrids. When it comes to similar class of cars Tesla is way ahead. Lots of nuance from those numbers.

 

[KBF]

True, but BYD has outsold Tesla almost 5-1 recently. That makes me wonder if there may be an issue and I don’t think it is wise to sweep any potential problems under the rug.

I'm not an expert on BYD, but what I gather is that they also make a lot of PHEV's - and the demand for those will definitely plummeting worldwide (and I think that segment is where most of their past lead over Tesla in sales comes from, AFAIK).

I think it's also logical that some of their struggles are augmented by Tesla's recent China discounts. Tesla sales meant at least some BYD customers switching over.

Tesla's decision to focus purely on BEV meant they never wasted resources on temporary tech. BYD is in the process of switching over to increase BEV production at the expense of PHEV's, but this expansion really isn't growth, its more of a rebalancing that is expensive (and new BEV sales have to offset lost PHEV sales first - it's a hard transition for all legacy makers).

I don't think we should sweep data under the rug, but we should be considerate of nuance and context - and it's okay to acknowledge but not fixate on unlikely potentials (positive or negative)... Though using history as meaningful data points, we have reason to assume Tesla skews more to the positive actual outcomes. They have shown an ability to deal with surprises and challenges.

The only people that need to be anxious about these very temporary 'demand' swings are those with margin or shorts. Medium to long shareholders have the luxury of patience (even if there are times we're kicking ourselves for our less than ideal timing on buying & selling).

All the best to everyone here - I hope we all see much success in 2023! Not just financially, but with peace and joy in our relationships, too!

 

[Discoducky]

Polestar.

Paging @The Accountant or other experts : Do you think the below can be considered "making a profit" when it is due to a one-time "accounting credit"?

"Here are the key numbers from Polestar’s third-quarter earnings report, its first as a public company following its merger with a special-purpose acquisition company in June.

• Revenue: $435.4 million, versus $212.9 million in the third quarter of 2021
• Operating loss: $196.4 million, down from $292.9 million a year ago

Despite the operating loss, Polestar was able to report a net profit of $299.4 million, or 14 cents per share, thanks to an accounting credit related to the revaluation of future share payouts. (Because Polestar’s share price has fallen since it went public, it will have to pay out less than it had previously expected, hence the credit.)"


I'd like Polestar to succeed, but it is important for folks to realize how close/far away profitability is for all other BEV makers...

Polestar is on-track for 50k cars in 2022, hopefully with more scale next year they can reach better numbers.

 

[theschnell]

Leo was not margin called and has no margins.

https://twitter.com/x/status/1607039801911566337

If he’s not on margin, why is he such a baby?

 

[Singuy]

https://twitter.com/x/status/1607397546921693187

 

[Ogre]

Paging @The Accountant or other experts : Do you think the below can be considered "making a profit" when it is due to a one-time "accounting credit"?

"Here are the key numbers from Polestar’s third-quarter earnings report, its first as a public company following its merger with a special-purpose acquisition company in June.

• Revenue: $435.4 million, versus $212.9 million in the third quarter of 2021
• Operating loss: $196.4 million, down from $292.9 million a year ago

Despite the operating loss, Polestar was able to report a net profit of $299.4 million, or 14 cents per share, thanks to an accounting credit related to the revaluation of future share payouts. (Because Polestar’s share price has fallen since it went public, it will have to pay out less than it had previously expected, hence the credit.)"


I'd like Polestar to succeed, but it is important for folks to realize how close/far away profitability is for all other BEV makers...

Polestar is on-track for 50k cars in 2022, hopefully with more scale next year they can reach better numbers.

In accounting terms, a profitable is profitable.

That says nothing about their ability to be profitable going forward. They are only profitable because…

In my book, if your ASP is less than your Cost of Good sold, your company is in trouble. It’s not clear how many companies clear that barrier and thats without adding in operational expenses.

 

[bkp_duke]

https://twitter.com/x/status/1607397546921693187

In a month, they will be in good shape. This is just letting a fire run through everything.

 

[Singuy]

In accounting terms, a profitable is profitable.

That says nothing about their ability to be profitable going forward. They are only profitable because…

In my book, if your ASP is less than your Cost of Good sold, your company is in trouble. It’s not clear how many companies clear that barrier and thats without adding in operational expenses.

Seems like Polestar barely clears it at 0.9% gross margin for the last Q. Miles ahead of Rivian and Lucid. However Nio looks to have a 22% gross margin even with the tiny revenue they generated. However their operating expenses is like 50% of revenue while Tesla is less than 10% of revenue. Still, they are not in stupid territory like Rivian and Lucid with GM at -250% and operating expense@ 170% of revenue..lol. Piling on a mountain of cash underneath every starship static fire test will burn less money than those companies cause WTF.

 

[Todd Burch]

True, but BYD has outsold Tesla almost 5-1 recently. That makes me wonder if there may be an issue and I don’t think it is wise to sweep any potential problems under the rug.

Too many variables to know. Logistics details relative to COVID could be the reason. Why would BYD suddenly overtake so many Tesla sales over the last few weeks? We just set a record in November. BYd is a little cheaper yes, but not enough to explain that sudden difference. And we know BYD has significantly limited production recently, so I suspect we’ll see the trend change.

 

[M|S|M MYP]

If he’s not on margin, why is he such a baby?

Cause he thinks Elon did him wrong by:

1. Selling
2. Unfollowing him

 

[Dave EV]

China COVID info, from https://www.cnn.com/2022/12/26/economy/china-covid-surge-economy-strain-intl-hnk/index.html.

Key excerpts below:

“Factories and companies are also forced to shut down or cut production because of more workers getting sick.”

“Auto manufacturers sold 946,000 vehicles from December 1 to December 18, down 15% from the same period last year, according to most recent statistics from the China Passenger Car Association.”

“BYD, the country’s largest electric vehicle manufacturer, said it had to slash production by 2,000 to 3,000 vehicles per day as more workers are unable to work.”

“The Covid outbreak has severely impacted our production,” Lian Yubo, vice president of BYD, said Thursday at a forum in Shenzhen. “20% to 30% of our employees are sick at home.”

He added that the company’s monthly production is likely to fall short of target by 20,000 to 30,000 vehicles for December.”

“Many factories have been forced to shut down for weeks because of sick workers and lack of orders, according to Chinese media.”


Nothing Tesla-specific in the article, but:

-China COVID situation a mess right now.
-Lots of factories temporarily shutting down due to sick workers or problems with suppliers due to sick workers.
-Last week of BYD deliveries they may have been lucky. Likely to see impact for them this week.

Conclusion:

There is no Tesla-specific demand problem in China. Looks much more like a country-wide problem over the next few weeks not at all specific to Tesla.

The long term fallout of China opening the gates for COVID to freely roam it's population will have a few effects:
1. Short term, lots of people will get sick, causing average workforce productivity to fall significantly as people take sick time.
2. Long term, there will be a reduction in the overall workforce as more people die from COVID or are removed from the workforce as they get long COVID.

There are lots of other nuances here as well - will China see a surge in other airborne diseases such as RSV and flu as they reduce limits measures to spread COVID as we've seen in the USA?

The stubborn inflation and supply chain disruptions that we are still seeing, even though we've been operating as "COVID is over" for the past year or so, is because COVID is not over. COVID has significantly disrupted the labor force and appears to be ready to continue to disrupt the labor force for for the foreseeable future.

In the long term, as long as Tesla keeps on executing by producing great products (and hopefully Elon learns to be less divisive), Tesla remains positioned in a great spot for long term growth.

But expect a lot of ups and downs along the way. Certainly at least for 2023, but I would expect to see the effects of COVID ripple on for 5 years, at least.

 

[Rarity]

Paging @The Accountant or other experts : Do you think the below can be considered "making a profit" when it is due to a one-time "accounting credit"?

"Here are the key numbers from Polestar’s third-quarter earnings report, its first as a public company following its merger with a special-purpose acquisition company in June.

• Revenue: $435.4 million, versus $212.9 million in the third quarter of 2021
• Operating loss: $196.4 million, down from $292.9 million a year ago

Despite the operating loss, Polestar was able to report a net profit of $299.4 million, or 14 cents per share, thanks to an accounting credit related to the revaluation of future share payouts. (Because Polestar’s share price has fallen since it went public, it will have to pay out less than it had previously expected, hence the credit.)"


I'd like Polestar to succeed, but it is important for folks to realize how close/far away profitability is for all other BEV makers...

Polestar is on-track for 50k cars in 2022, hopefully with more scale next year they can reach better numbers.

Cash flows are a good metric to track because they are harder to massage. In the case of Polestar, it has 9-month free cash flow of -$1.0 billion. Default dead?

This year, it has only spent $7 million on property, plant, and equipment. That number is a bit of a head-scratcher to me. Could be that they just aren't spending any money on innovating or growing manufacturing.

Edit: Further context. BYD's 6-month free cash flow to June was roughly +$1 billion. See report. Tesla's 9-month free cash flow to September was +$6.1 billion. See report.

 

[The Accountant]

Paging @The Accountant or other experts : Do you think the below can be considered "making a profit" when it is due to a one-time "accounting credit"?

"Here are the key numbers from Polestar’s third-quarter earnings report, its first as a public company following its merger with a special-purpose acquisition company in June.

• Revenue: $435.4 million, versus $212.9 million in the third quarter of 2021
• Operating loss: $196.4 million, down from $292.9 million a year ago

Despite the operating loss, Polestar was able to report a net profit of $299.4 million, or 14 cents per share, thanks to an accounting credit related to the revaluation of future share payouts. (Because Polestar’s share price has fallen since it went public, it will have to pay out less than it had previously expected, hence the credit.)"


I'd like Polestar to succeed, but it is important for folks to realize how close/far away profitability is for all other BEV makers...

Polestar is on-track for 50k cars in 2022, hopefully with more scale next year they can reach better numbers.

I am providing a more in-depth answer as I think this is relevant to our investment in TSLA.
Polestar had an Operating Loss of $196m in the 3 mths ending Sep 30. And, you can see in the P&L below that they had gross profit of only $4m; that's a 1% profit margin. This is where the relevancy comes in. If Tesla takes price cuts to encourage demand in a recessionary period, most (if not all) competitors will not be able to match the price cuts. They will suffer. If they reduce prices, they will lose more money; if they don't reduce prices, they would sell less cars . . .and lose more money.

Through the first 9 months of 2022, Polestar "cash from operations" was negative $1B (not shown below). They only have $1B of cash on the balance sheet.
Polestar will need to raise more cash.

 

[samn]

The stubborn inflation and supply chain disruptions that we are still seeing, even though we've been operating as "COVID is over" for the past year or so, is because COVID is not over. COVID has significantly disrupted the labor force and appears to be ready to continue to disrupt the labor force for for the foreseeable future.

My guess is that a significant part of that had been China's quarantine and lockdown protocols making travel and business activities difficult and bringing things to a halt repeatedly.

China allowing travel without quarantine is going to be a huge normalizing step. That and eliminating travel and work lockdowns when infections flare up are going to make it much easier to do business in China. I suspect this will majorly reduce disruptions.