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

[larmor]

This brought to mind how a business needing to deliver something could call a Robotaxi and put both their goods and a delivery person on board. The RT could be programmed for multiple stops and a return to origin.

Everyone gets their pizza, or Amazon order, or whatever, the business has lowered their delivery costs, and the problem of getting from the RT to specific apartments, offices, etc. is solved with use of a low wage employee.

RT and optimus to deliver packages-- are you listening amazon? Maybe the major auto manufacturer they are talking to about FSD licensing is rivian making amazon delivery trucks...

 

[unk45]

You don’t take into account the 2 most important reasons why free cash flow was negative:
- $2.7B growth in inventory, which was confirmed on the CC to be sold during Q2
- $1B AI infrastructure capex.

These 2 items were choices done by the Tesla management team. They could have chosen differently.
Capex was $2773M, that is hundreds of millions more than the highest amount in the previous 4 quarters, Q1 23 was only $2072M.

The inventory build will be gone next quarter.
The AI capex will probably remain elevated because Tesla wants to go from 35000 H100 equivalent to 85000 by the end of the year.
Tesla has apparently decided to focus on investing in AI infra the previous and also the coming quarters. We already knew this from Elons tweets, but now we see this in the quarter results.
The FSD push is probably already enough risk for the cash balance, resulting in a more conservative capacity increase (delaying or minimizing the unboxed production lines), also in the light of a (hopefully temporarily) softer demand (for all EVs).
This is like Intel investing big time during semiconductor down periods, because they could and the competition couldn’t.

Obviously investors and capex were the two most significant components. Intel is a really good example, although they were not really diversifying but simply advancing more quickly than competitors could do.

I hope your more optimistic view is correct. You often have better insight than do I.

 

[Krugerrand]

Oops, you did not go to the bottom:
second to last line item: Free cash flow: -2531
you showed 'from operations', were that not have been negative it would have been catastrophic.

when including Capex, a crucial line item and the basis for future expectations, the reality is that for the first time in several years they do not now generate enough cash flow to support all their plans.

We now can see why Monterrey is seemingly delayed, what existing factories are about to build the new derivative models and why the revolutionary new processes planned are being somewhat curtailed.

Were this to be some other company that did not have revolutionary plans and a track record of making seeming impossible things happen this might not be a serious issue. This is Tesla, so they really need that large cushion, especially with interest rates as high as they are.

Without much doubt we understand the reasons for this:
-Suez canal;
-Giga Germany effects of terrorist attack;
-most desirable models and variants sometimes short supply while predicted choices less desired so inventories grew. Plethora of other reasons why demand suffered;
- Blew money on unproductive tactics (e.g. imprudent advertising choices, inadequate sales and delivery processes, etc);
- Distraction on 'shiny objects' rather than improving core businesses;
-slower than desirable rollout of Semi and storage products;
-and a few more.

Each of those resulted in either lower revenues or higher costs or both. These can be debated as can a number of others. The net results, however, cannot be debated. Those are facts!

I hoped never to write such a post. I hope they've awakened and will return to the core skills that brought TSLA so far. Shiny objects such as FSD and Optimus may happen soon enough. Will they eliminate the need to repair existing deficiencies? I do not think so.

Relax. You don’t even own shares anymore. It’s all good. I understand that’s not going to satisfy your brain, but I’m telling you, it’s under control. Sit back and watch the master class Elon’s giving.

 

[Webeevdrivers]

Roughly 3000 price drop for both 3 and Y in Canada. Nice.

 

[unk45]

Relax. You don’t even own shares anymore. It’s all good. I understand that’s not going to satisfy your brain, but I’m telling you, it’s under control. Sit back and watch the master class Elon’s giving.

Were it really a master class he'd have taken these steps almost a year ago when he himself began the warnings. He DID see these developments, but did not take action as soon was he might have, were he not distracted. OK, not an investor right now, but an interested party and now hoping for positive signs.

 

[Drax7]

Bleeding cash -$2.5bn FCF

View attachment 1041119

Free cash flow= cash flow from operations - capx
Capx directed at ai chip sets
Without investment in Ai compute chips there is no FSD

 

[CitizenKane]

Well, seems I finally made a successful short trade But more importantly, really happy with how Tesla addressed market concerns from the past few weeks. Awful quarter but still good future prospects.

Speaking of gambling, I closed the short trade at 165. Very happy with almost 18% profit in a few days. Now if I could only do that every week I'd very soon be richer than Musk. Then I'd by X from him, rename it to Y??, make free speech free again and build a bigger rocket than his to move humanity to Jupiter.

 

[Ellec]

Roughly 3000 price drop for both 3 and Y in Canada. Nice.

OEMs right now

 

[Ellec]

Free cash flow= cash flow from operations - capx
Capx directed at ai chip sets
Without investment in Ai compute chips there is no FSD

I put them on ignore, you'll be glad you did.

 

[Chunky Jr.]

The winners are the ones who prepare for the future. The rest of the OEMs are doing a great job preparing for the now.

"Skate to where the puck is going to be, not where it's been"

 

[Krugerrand]

Were it really a master class he'd have taken these steps almost a year ago when he himself began the warnings. He DID see these developments, but did not take action as soon was he might have, were he not distracted. OK, not an investor right now, but an interested party and now hoping for positive signs.

Nope. It had to happen this way. Why do you think he went to all the trouble to protect the company in the first place. It’s not about him being there 24/7; he can’t and he won’t be.

You’re thinking like you. You need to think like Elon to understand. That’s most everyone’s problem; running the company through their eyes, rather than the eyes of guy in charge.

Hindsight makes everyone look like a genius. The real genius is in what’s happening now.

 

[JusRelax]

A Tesla ought to really look as if it is a Tesla (or Cyber) to promote brand awareness. If it looks very different, then more education will be required. The more people see Teslas on the road, the more they will consider getting one.

Enter:

CyberCab.

 

[hitchhiker]

Were folks really happy when they paid $68k for the MY which is now closer to ~$35k (w/tax credit for cheapest one I saw)?

Hardly an apples to apples comparison when you compare the most expensive with all the extras from before with the cheapest bare-bones today.

but as someone who paid 70k (with all the extras and including FSD and tax) in 2022, it sometimes irks me that I still owe about the same as the current retail price (though minus the FSD). But the two years I've had driving it so far are worth it.

 

[2daMoon]

Were it really a master class he'd have taken these steps almost a year ago when he himself began the warnings. He DID see these developments, but did not take action as soon was he might have, were he not distracted.

This may provide insight into the changes in management and other job cuts of late. Some of these people may have been influences that resulted in a delay, simply because they didn't see things the way Elon can, yet persuaded him onto more conservative paths.

In the interest of understanding Elon better, I've been working my way through the Iain Banks "Culture" series. The book, Player of Games, was clearly an influence for Elon. He is most certainly a masterful player of games.

This book was also the source for the ship names "Just Read The Instructions" and "Of Course I Still Love You" which were used for SpaceX floating landing platforms. Reading it seems to have left a lasting impression on him.

 

[AudubonB]

I find myself in the amusing position of defending an avowed short-seller. Anyone who has spent any time reading my non-Mod, non-wordplay, non-family posts knows I consider short selling antithetical to the capital markets; that the SEC has acted unforgivably in formally declaring short sellers having the same “Investor” status as those who actually invest: the longs.

BUT

First, I am Canute, and I tell my flock that I have no power to stop the tide*, nor disavow the world as it is.

Second, one who presents his or her opinions in forthright manner, as unpleasantly opposite to what another believes or has financially positioned, never gives another the right either to treat that person like garbage nor to turn my thread into a cesspool.

The latter is why I always have and always will hold - and on occasion show by Mod actions - slingers of mud with all the opprobrium I can.

*King Canute did not command the seas not to advance. He told his court he had no power to.

 

[Chunky Jr.]

Ride hailing is basically summon + navigate on autopilot. Maybe all the work on summon (eg navigating in a parking lot) has been in preparation for this.

 

[keydiver]

I totally get the reasoning Elon presented, but at battery day they also talked about performance improvements through the new form factor. Would be great if at the next call someone could ask if these didn´t turn out as planned or if price is just more important at the moment.

I think of the 4680 DBE development, just like Tesla's lithium refinery, as more of a "show-the-way" project than anything else. Several manufacturers have already announced plans to produce the 4680-sized cells, and once they are sure they have worked out all the kinks of the DBE process they would undoubtedly license it to others. Who wouldn't want to build cells using 1/10 the factory footprint, no drying ovens or drying time, and no residual chemicals left in the cell that cause more rapid deterioration? It's the Tesla way, lead and others will (hopefully) follow. Or, maybe it's lead, follow, or get out of the way?

 

[Ellec]

The after hours move has left a big gap up. Wonder if these are always filled or sometimes one is left alone.

 

[2daMoon]

The after hours move has left a big gap up. Wonder if these are always filled or sometimes one is left alone.

With any luck this is but the first of many steps to be ascended in 2024, in this "slow" year Tesla has taken off for their transition to new phases of operation.

 

[Drumheller]

Were it really a master class he'd have taken these steps almost a year ago when he himself began the warnings. He DID see these developments, but did not take action as soon was he might have, were he not distracted. OK, not an investor right now, but an interested party and now hoping for positive signs.

The A.I. hardware spend is a good move, even if it was part of driving free cash flow into the negative. A.I. is the new gold mine. Companies that don't go heavily into A.I., or fail with it, aren't looking at 2nd place... they're looking at being the next Kodak or Blockbuster. Elon is in the thick of A.I. development. He knows and sees this far better than I do, and it seems very obvious to me.

The inventory build up I do believe is related to softening demand. I believe that is a combination of an economy becoming a train wreck (I know many wealthy and retired don't believe me because they are insulated and believing the numbers put out by govt. Had a retired friend tell me with a straight face that inflation is only 3% a few days ago) and FUD having an effect on sales. I, too, have met several people that refuse to consider a Tesla because of the FUD they believe. Recently I saw a friend's neighbor had traded in his 1 year old Model 3 for a Chevy Bolt. I very nearly did a literal facepalm at that.

I agree with Tesla going hard at A.I., even if it means drawing down some of the cash store. I don't have a good answer for the FUD impact on demand and I don't know that I can much to improve the economy. I am arguing for better raises for my employees but being met by resistance on that.