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

[Max Plaid]

Well we hear lots of people who loves the product therefore they buy the stock. This guy hates the product and doesn't buy or understand why would anyone buy the stock. That's fine too. Everyone has different opinions on the matter. Not many people would buy that company's stock if they absolutely hate their product.

Then why are they hanging around here complaining that Tesla is over-valued and the cars are crap?

 

[Joe F]

Then why are they hanging around here complaining that Tesla is over-valued and the cars are crap?

Because they enjoy being added to many ignore lists.

 

[Electroman]

This current bailout, which is limited, is not a blank check like what I was replying to.

Is the current bailout amount from Fed would it be roughly equivalent to the deposits combined for all accounts. ?

How much is that ? Just curious?

 

[cusetownusa]

I

This is a bullet proof and hard shell truck. We will park ours in the front. Might be protection against drive by (jokingly) and it is all recorded.

true. Winters suck around here though and having a garage is key.

 

[bkp_duke]

Is the current bailout amount from Fed would it be roughly equivalent to the deposits combined for all accounts. ?

How much is that ? Just curious?

Bank Term Funding Program

The Federal Reserve Board of Governors in Washington DC.

www.federalreserve.gov

 

[Electroman]

Bank Term Funding Program

The Federal Reserve Board of Governors in Washington DC.

www.federalreserve.gov

Looks like BTFP is to reassure depositors and stave off any such liquidity crisis in the future, so that bank need not go under.

I don’t think that will help SVB depositors. That is how I understood it.

 

[bkp_duke]

Looks like BTFP is to reassure and stave off any future such liquidity crisis and reassure depositors.

I don’t think that will help SVB depositors. That is how I understood it.

https://www.cnn.com/2023/03/12/investing/svb-customer-bailout/index.html

"Made whole" = bailout

 

[Cosmacelf]

Here’s a great video that explains the Silicon Valley Bank collapse, and the governments response. It is mildly humorous he has a very dry sense of humor.

 

[FastEddieB]

"Made whole" = bailout

President Biden said the funds would come from the FDIC, from funds paid in by the banking industry. Is that inaccurate?

 

[STS-134]

But with this current bailout there is a consequence of failure.

Going out of business.

The feds bailed out the depositors- not the bank. The investors/owners of the bank are not being bailed out and will suffer a loss. The depositors won't.

This is why this bailout is so different from 2008, where they bailed out the banks rather than the banks customers.

Yes, but I would exclude a few people from the FDIC coverage, in the event that they had more than $250k worth of deposits at SVB: Thiel, Sacks, and Ackman. The Incredible Tantrum Venture Capitalists Threw Over Silicon Valley Bank

If you're going to cut holes in the hull of a ship while you are on the same ship, you get last dibs/lowest triage priority on seats in the lifeboats if the ship sinks.

 

[bkp_duke]

President Biden said the funds would come from the FDIC, from funds paid in by the banking industry. Is that inaccurate?

No one has those details. But remember this, historically taxpayers have been on the hook for all of these bailouts. The banking industry has not funded it's own bailouts.

 

[Cosmacelf]

President Biden said the funds would come from the FDIC, from funds paid in by the banking industry. Is that inaccurate?

That’s right, funds will come from the banking industry. Um, do you know anyone who doesn’t have a bank account? Guess who will actually pay for these bailout fees? The banks … who will pass on costs to their customers … which are all taxpayers …

 

[STS-134]

That’s right, funds will come from the banking industry. Um, do you know anyone who doesn’t have a bank account? Guess who will actually pay for these bailout fees? The banks … who will pass on costs to their customers … which are all taxpayers …

Are FDIC fees structured so that they're paid per account and proportional to the amount in the account, up to $250k? It looks like this is actually not the case, as banks pay assessment fees on all liabilities, not just insured deposits, and I don't see any exclusion for accounts with more than $250k in them: FDIC: Deposit Insurance - Assessments

If that's the case then it doesn't really make sense to me why there's a limit in the coverage, except maybe to encourage people to spread their money around to smaller banks.

 

[Singuy]

President Biden said the funds would come from the FDIC, from funds paid in by the banking industry. Is that inaccurate?

The nuance is depends on the size of the bank run.

No bank run, business as usual then funds mainly come from the bank selling of asset+FDIC making up the difference
Large bank run then FDIC's reserve will be wiped out and the treasure will step in to loan tax payer's (or printed?) money to the banks

It's all about selling confidence right now and the administration is talking as if there will not be a bank run. The chance of a bank run is slim because in order to fund a business, you need the bank. So yes you can technically take money out from one institution and put it into another.

 

[Knightshade]

Large bank run then FDIC's reserve will be wiped out and the treasure will step in to loan tax payer's (or printed?) money to the banks

The shortfall will be paid by the other banks, not taxpayers

From today announcement:

Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.

The relevant law is found here:

Federal Register :: Request Access

After June 30, 2009, if the reserve ratio of the Deposit Insurance Fund is estimated to fall to a level that that the Board believes would adversely affect public confidence or to a level which shall be close to zero or negative at the end of a calendar quarter, an emergency special assessment of up to 10 basis points may be imposed by a vote of the Board on all insured depository institutions based on each institution's assessment base calculated pursuant to § 327.5 for the corresponding assessment period.

 

[EXOTIC1]

Great points! I think you are correct, but the short term pain for them will be low profit margins, increased competition, and a bad economy. If you're long a stock it may pay out - but the valuation at 500 billion is still too high. Most car company's trade at book value, TSLA does not and factors in the robotaxi income and other future income. Tesla already is valued as the most valuable car company in the world without producing or being the most valuable on paper.

TSLA is an extremely risky investment.

Tesla is not a CAR stock

 

[Singuy]

Tesla is not a CAR stock

I am never a fan for using this as a form of argument. Tesla makes like 98% of their net income from cars and 90% of their revenue from cars. Also there's really nothing wrong with being a car company. Auto is one of the few sectors that generate huge revenue. It's just that complacent big auto having zero idea how to make money on their cars and slowly transitioned into becoming a financial institution..lol. Tesla figured out how extract profits from that large revenue, so be proud and loud as a car company(until other products take over).

 

[scaesare]

I don't remember it being too much of an exaggeration. Q1 2019 report had a -1.6 Billion cash flow where Tesla just reduced their cash on hand from 3.87B from q4 2018 to 2.3b after that earning. This was right after a the tax credit phase out part 1 and Tesla closing up shops+taking away S/X overnight production line. Maybe they were not weeks away from BK, but if they miss on two more quarters then it would have been game over by what he said, October of that year. It doesn't take much to annualize the cash flow and calculate how much runway Tesla had left.

Agreed.

Interestingly the post you replied to is gone... was that his response to my asking what evidence there was that Elon was stating things that weren't true regarding the Model 3 ramp financial strain?

 

[Ogre]

Great points! I think you are correct, but the short term pain for them will be low profit margins, increased competition, and a bad economy. If you're long a stock it may pay out - but the valuation at 500 billion is still too high. Most car company's trade at book value, TSLA does not and factors in the robotaxi income and other future income. Tesla already is valued as the most valuable car company in the world without producing or being the most valuable on paper.

TSLA is an extremely risky investment.

If I were trying to figure out the most succinct way to illustrate I didn’t understand Tesla, the auto market, or investing I could not have done better.

If I am valuing a company, the one with the highest operating margin and the highest growth is a good place to start.

Most car companies trade near book value because the market sees where the industry is going and sees the how many billions these companies need to invest. Most of the auto industry has poor or negative operating margins, massive debt, and negative growth. It doesn’t take a genius to figure out why they are not trading at a big premium to book.

 

[Cal1]

This is going to be fun to watch the actual realization of what FDIC covers and what happens after they give out what they are required to do. Federal Deposit Insurance Corporation covers exactly that, bank deposits. They have always made it clear that they only cover up to $250k for each account. If you have more than that you have to sue the bank itself in court. Same as SIPC covering your investments. At a brokerage house they cover cash first and then your securities. SIPC covers up to $500k but only up to $250k in cash. Again if you exceed their coverage, you are left to litigation against the bank itself. It's called get in line to sue.

We went thru similar stuff with Pension Benefit Guaranty Corporation (PBGC) when the airlines went bankrupt. In the 80's pilots fought the airlines for their promised pensions of more than $100k and refused to take what was offered (much less). The airlines claimed bankruptcy and PBGC came in. Again the pilots union sued claiming they were promised X. The courts explained that those promises were from a now bankrupt entity not PBGC's problem/promise. I knew more than a few pilots that had to get jobs as the $40k or so PBGC payout was not enough to get by.

In all these cases the companies in each industry pay FDIC, SIPC, PBGC insurance premiums. You can't open a bank without FDIC or a brokerage firm without SIPC. Tax payers don't pay squat.

Oh what about savings and loans or credit unions (not banks and not covered by FDIC)? We could bring back memories about the 1980's Silverado Savings fiasco and I think it was Neil Bush. This one did cost taxpayers $1 billion. In the aftermath Congress passed the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), which dramatically changed the savings and loan industry and its federal regulation.

Size does matter. They saved Chrysler because they were "too big to fail". Not sure if any of the banks in the news are anywhere near big enough to warrant gov intervention. These are regional local banks in the news today and I doubt they will be treated the same as a BoA or Wells Fargo failure.