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

[SPadival]

Anyone who is invested in Tesla should probably invest some time in reading/ listening to Walter Isaacson’s biography.

Elon is in “Demon Mode”. As his ex-girlfriend said, it’s harsh, but it gets sh** done.

https://www.wsj.com/podcasts/the-journal/elon-musk-demon-mode/69f38af7-7caf-47e2-b853-14448d807909

 

[alexxs88]

Your seemingly off-base negative nancy guesses aren't appreciated here nor are they constructive for this thread. Frankly I'm happy Elon is in charge of this ship. If it were someone like you it would've sunk long ago.

I'm just pointing out a fact. Do you disagree with it? It's very rare that a leader is suitable for all phases of a company, from aggressive growth in startup phase, to "boring" money making in a stable phase or to aggressive growth again while being a half a trillion dollar company. He spent most of his career growing businesses in negative margin territory while scaling aggressively. He has been amazing at it and got results that very few people in the world could've achieved. There's no disputing that. But the large majority of that time, those companies weren't making money.

What some of you might not recognize is that he's taking a 500B company into startup mode. That means cutting costs aggressively to increase runway, while trimming businesses that would take away from the core focus that's supposed to provide the core growth.

My take (and you - or anyone else - are welcome to not read it, but writing a separate message pointing out how you're not reading it is a bit odd) is the following: Tesla was faced with a choice. Become a sustainable EV company, with different models, nice charging network and decent financial numbers for a car company, while keeping FSD development expenses in check. Iterating, making a decent L2 system. Arguably, this would've been a sure path towards achieving their mission statement, but it would've come at the expense of a major re-evaluation of market cap based on car company multiples. Or trim EVERYTHING ELSE and focus solely on making the technology that makes cars drive themselves. This involving tremendous risk to the company itself, as any startup founder will be able to tell you. From the massive CapEx required to buy the Nvidia compute power to the huge depreciation the Nvidia chips suffer because of technological improvements. We're talking about 50% over 2-3 years. Then the actual question is how far away is Tesla from achieving L4.

The optimists will say it's because he can see the finish line. The pessimists will say that it's an ego trip and Elon doesn't care about Tesla as much as he cares about his name being plastered on "Musk made the autonomous cars for the people". And he's not interested in Tesla being the BEV-equivalent of BMW or Daimler. I can see both arguments, but the current valuation is too sure of itself.

 

[Ellec]

Your seemingly off-base negative nancy guesses aren't appreciated here nor are they constructive for this thread. Frankly I'm happy Elon is in charge of this ship. If it were someone like you it would've sunk long ago.

The ignore function is good on the forum.

 

[EVMeister]

I'm just pointing out a fact. Do you disagree with it?

Evidently so, as I gave it a disagree. And it was not a "fact" you posted, it was pure opinion. Which I disagreed with. You actually said: "I know you were being sarcastic, but, as a guess, >70% of the quarters he was in charge of A business, have been on negative profit." Please try to understand the difference between fact and opinon (a.k.a "guess").

 

[alexxs88]

Evidently so, as I gave it a disagree. And it was not a "fact" you posted, it was pure opinion. Which I disagreed with. You actually said: "I know you were being sarcastic, but, as a guess, >70% of the quarters he was in charge of A business, have been on negative profit." Please try to understand the difference between fact and opinon (a.k.a "guess").

Are you joking? You must be joking. The guess was for the actual percentage, not whether the majority of quarters are negative or not. You can easily get the exact number for Tesla from when they IPO'd and SpaceX, Neuralink and others are losing money. SpaceX made a profit in Q1 2023, but that's about it.

If he would've said basically anything else other than "profitable", it would've been very hard to argue with. And I wouldn't have. Elon is almost addicted to high risk, high reward scenarios, hence the latest decision to essentially pause any other Tesla business arm and just focus the entire company on a high risk, high reward product.

 

[EVMeister]

Are you joking? You must be joking. The guess was for the actual percentage, not whether the majority of quarters are negative or not. You can easily get the exact number for Tesla from when they IPO'd and SpaceX, Neuralink and others are losing money. SpaceX made a profit in Q1 2023, but that's about it.

If he would've said basically anything else other than "profitable", it would've been very hard to argue with. And I wouldn't have. Elon is almost addicted to high risk, high reward scenarios, hence the latest decision to essentially pause any other Tesla business arm and just focus the entire company on a high risk, high reward product.

The percentage you spat out was what I disagreed with, so there you go. What you describe with Elon - well that's the true mechanics of growing unique companies which do things no other company does at an unprecedented growth rate (which requires risk and plenty of negative quarters during the growth phase).

 

[nativewolf]

All depends on the ROI of allocated capital, and the spending priorities.

At present Elon is all in on AI training capex, and Elon is conservative about preserving the existing cash buffer.

Existing Supercharging can still be profitable, while expanding Supercharging might currently not be the best return on allocated capital.

The have done a lot of Supercharger expansions recently, the $25K compact vehicle is delayed, and other manufacturers have delayed their EV plans.

So perhaps a go slow on SC expansion for a while might not be a disaster.

Maybe, EM has done things like this before. Firing all the twitter content moderation team is the best example. So then advertisers ads started showing up in very offensive content so buyers pulled ad campaigns, revenues sunk but nothing changed so they stopped using twitter altogether. To get the advertisers back twitter has been rebuilding the team from scratch. That's the reason that bondholders have such a low valuation on Twitter, massive plunge in revenues, ad buyers, type of ad buyers, etc. EM is back stepping as fast as he can there. It's valued at only 25% of the purchase price and for anyone other than a CEO with 50bln in stock they'd be facing the loss of the asset. EM didn't like content moderation because his own post were removed because he has a potty mouth- as my grandmother would say.

This seems similar, something didn't seem right and rather than figure it out EM just cut the team. It could be the SC team was putting SCs in bad locations and supervision had been poor and the important metrics missed. I could completely see a SC team, faced with competing objectives, focusing on the easiest to solve (installed base of SCs) rather than something hard like getting the SCs in the best locations.

I am not privy to the details of lease agreements between Tesla and actual property owners. I am sure that this will impact all the contractors, it will cause significant delays with local permitting offices, will likely tick off some utilities.

I don't think it will be terribly hard to rebuild a SC team but it is going to cause delays and some SC failures/outages.

 

[nativewolf]

Your seemingly off-base negative nancy guesses aren't appreciated here nor are they constructive for this thread. Frankly I'm happy Elon is in charge of this ship. If it were someone like you it would've sunk long ago.

This thread needs more people being cautionary/bearish. Investing isn't gambling and the more information the better. It's up to readers to decide if it alters an investment hypothesis.

The craziest people IMO are some of the bulls, I mean really nutty like blame the media and calling a reporter a fraud etc only to find out the reporter had done their job very well indeed and were correct. Did the name callers apologize to the thread...no they did not. Just loaded up on the next reporter, then attack Troy for his estimate forecasts.

Now Troy has once again made an estimate forecast that ...will not be well received by the bulls. Will they attack him and then graciously apologize? No, don't think they will apologize when they are proven to be dead wrong.

EM has gone to China and made some level of deal with the CCP to get FSD there, it is a huge opportunity but fraught with risk re loss of IP. Details not released but it involves some level of cooperation with a CCP controlled mapping company. It pumped the stock and EM desperately needs that as his comp vote is coming up. It also removed him from the USA while a high profile layoff was taking place so he doesn't have to answer questions on that. Leaving town and firing people is never a good look.

The push to RT is going to have massive negative environmental costs and uncertain long term impacts on sustainability. I am not sure it will be much more than marginally positive and it's my view that millions of additional EVs would outweigh the impact of RT in the next decade.

 

[alexxs88]

I think it would've been a much better play to spin all of Tesla's AI (including FSD) into a separate company with Tesla initially owning 100% of the shares. That would've incentivized engineers to join and also provided a decent separation between a company that's growing and which is profitable (Tesla cars + energy) from the AI play, which is growing much faster, but not yet profitable and very risky. There would've been a lot of advantages to doing this:

1. Easier to raise capital for the AI division since it doesn't have the weight of a huge car business on top which has to report better numbers each quarter (Elon complained about this numerous times).
2. The running of the "boring" cash cow which is Tesla cars could've been handed over to someone else, providing they follow the expected growth curve of "new models, new factories, bigger volumes" which was obvious to many for years and was the main reason why I initially invested in the company.
3. In case, for whatever reason, FSD doesn't work out or takes longer to, there were no ill side effects to the company that's actually advancing the mission TODAY. Similarly, as long as improvements were seen, given the potential market cap of the solution is in the trillions probably, I don't think investors would've had any problem pumping money into the AI play.

 

[Ellec]

This thread needs more people being cautionary/bearish. Investing isn't gambling and the more information the better. It's up to readers to decide if it alters an investment hypothesis.

The craziest people IMO are some of the bulls, I mean really nutty like blame the media and calling a reporter a fraud etc only to find out the reporter had done their job very well indeed and were correct. Did the name callers apologize to the thread...no they did not. Just loaded up on the next reporter, then attack Troy for his estimate forecasts.

Now Troy has once again made an estimate forecast that ...will not be well received by the bulls. Will they attack him and then graciously apologize? No, don't think they will apologize when they are proven to be dead wrong.

EM has gone to China and made some level of deal with the CCP to get FSD there, it is a huge opportunity but fraught with risk re loss of IP. Details not released but it involves some level of cooperation with a CCP controlled mapping company. It pumped the stock and EM desperately needs that as his comp vote is coming up. It also removed him from the USA while a high profile layoff was taking place so he doesn't have to answer questions on that. Leaving town and firing people is never a good look.

The push to RT is going to have massive negative environmental costs and uncertain long term impacts on sustainability. I am not sure it will be much more than marginally positive and it's my view that millions of additional EVs would outweigh the impact of RT in the next decade.

I agree we need a balanced discussion, but the recent users only post negative comments, which is just as bad as ultra bulls who discount anything negative. Troy tracks numbers and usually updates them toward the end of the quarter as more information so they end up looking accurate and like they have some predictive value, his work is valuable but not as a long term predictor. All they do is give is a rough guess on where production/deliveries are now and might be in the next few weeks. Extrapolating that to the rest of the year is opinion and speculation, as is him guessing on the causes i.e. demand issue.

Also suggesting Elon went to China to pump the stock and avoid being questioned about the layoffs is hilarious. He met with the second most powerful politician in China and various other top business men, that's the kind of FUD that get's you put on ignore.

 

[CitizenKane]

Are you joking? You must be joking. The guess was for the actual percentage, not whether the majority of quarters are negative or not. You can easily get the exact number for Tesla from when they IPO'd and SpaceX, Neuralink and others are losing money. SpaceX made a profit in Q1 2023, but that's about it.

If he would've said basically anything else other than "profitable", it would've been very hard to argue with. And I wouldn't have. Elon is almost addicted to high risk, high reward scenarios, hence the latest decision to essentially pause any other Tesla business arm and just focus the entire company on a high risk, high reward product.

Is this what is happening though? I interpreted the quarterly call such that Tesla will remain a car company and produce more models. FSD will be an important part of the offer but not the sole focus. Maybe I misunderstood.

I am also not sure I understand the "high reward" part of FSD. If it is - as an example only - 2 million Tesla car owners paying 99 USD per month, it doesn't strike me as a huge deal. So I guess the high reward must be the Robotaxi business. Uber's revenues are something like 30% of Tesla's. Will Robotaxi revenues be greater than Uber? When? And with what margins? Robotaxi still seems too much of a "pie in the sky" to me, a bit like when Musk said X would become the "everything app". Or maybe the more easily calculated advantages would be that buyers will prefer Tesla because of the FSD feature and/or license the tech to other car makers.

 

[Ellec]

Is this what is happening though? I interpreted the quarterly call such that Tesla will remain a car company and produce more models. FSD will be an important part of the offer but not the sole focus. Maybe I misunderstood.

I am also not sure I understand the "high reward" part of FSD

Then you should probably invest elsewhere.

 

[CitizenKane]

Then you should probably invest elsewhere.

I don't really care that much what you think I should invest in, to be honest. I am heavily invested in Tesla because it is quite easy to see the shift from ICE to EV, I don't believe it will stop despite the slightly slower pace the past year, and I think Tesla will continue to benefit greatly from this shift. There are lots of other opportunities in Tesla that I am curious about and want to understand better, which is one of the reasons I participate in this forum. If you feel that my contributions are uninteresting or pointless, feel free to use the ignore function, I wont take offense, I promise.

 

[Christine69420]

I am also not sure I understand the "high reward" part of FSD. If it is - as an example only - 2 million Tesla car owners paying 99 USD per month, it doesn't strike me as a huge deal.

Yeah they might as well not bother.

It's not a huge deal. My napkin math say it's only equivalent in profits to Tesla selling 26,000 more cars every month. For as long as they are subscribers.

In my head that is a very huge deal!

 

[cliff harris]

I am not privy to the details of lease agreements between Tesla and actual property owners.

But you do seem to be intimately informed about the internal metrics and finances of twitter, a privately held company. Or did you just assume all that because CNN says so?

 

[FEERSUMENDJIN]

Interesting that were it not for @Christine69420 posting on this forum, I would not be aware of the Cybertruck event taking place 35 miles from where I live. It seems I'm not the only one. I have had my Model 3 for 4 years, I have a Tesla account so they have my email, mobile and credit card. And yet no communication about this. In fact I haven't had any marketing comms from Tesla UK, ever.

Didn't Elon recently say the sales and distribution organisation needs sharpening up? Couldn't agree more.

I did get the emails, must be your account settings. I am registered to see (and fondle) the CT at Glasgow and Edinburgh at beginning of June. The SC team emailed me afterwards making it clear they are going to try and sell me a model 3 or Y

 

[CitizenKane]

Yeah they might as well not bother.

It's not a huge deal. My napkin math say it's only equivalent in profits to Tesla selling 26,000 more cars every month. For as long as they are subscribers.

In my head that is a very huge deal!

99*12=1188 USD per year and user gives 2.4 billion USD in additional revenues per year if we count on 2 million subscribers

26,000 sold cars per month * 12 * 40,000 (approximate average selling price) would give 12.5 billion USD in additional annual revenues.

Or am I missing something?

 

[Artful Dodger]

$F

Ford Motor Company files Recall of 242,669 US vehicles: NHTSA

 

[cliff harris]

Uber's revenues are something like 30% of Tesla's. Will Robotaxi revenues be greater than Uber? When? And with what margins? Robotaxi still seems too much of a "pie in the sky" to me, a bit like when Musk said X would become the "everything app".

Things take time. Re-usable rockets was absolutely pie in the sky. Now its so routine elon doesn't even tweet each launch. How long has elon held X? not long, and the feature improvements have been 50x faster and better than when it had its old lazy and incompetent management.

Robotaxi could easily destroy uber, because no driver means no wages, no healthcare, no HR. And uber is just one company. Add lyft, and every other global ride share company. Then add every taxi company too. Even taking 10% of that globally is insane.
Imagine a situation where robotaxis are available. Does a single woman going home late at night in a city call a robotaxi, or some random car with a random guy driving it (uber/taxi).
Frankly even being able to set temperature and music to your liking in a taxi is worth $ to me. Being able to avoid talking to the driver is worth $ to me. And I'm not a guy who would ever feel unsafe in a taxi.

 

[CitizenKane]

Things take time. Re-usable rockets was absolutely pie in the sky. Now its so routine elon doesn't even tweet each launch. How long has elon held X? not long, and the feature improvements have been 50x faster and better than when it had its old lazy and incompetent management.

Robotaxi could easily destroy uber, because no driver means no wages, no healthcare, no HR. And uber is just one company. Add lyft, and every other global ride share company. Then add every taxi company too. Even taking 10% of that globally is insane.
Imagine a situation where robotaxis are available. Does a single woman going home late at night in a city call a robotaxi, or some random car with a random guy driving it (uber/taxi).
Frankly even being able to set temperature and music to your liking in a taxi is worth $ to me. Being able to avoid talking to the driver is worth $ to me. And I'm not a guy who would ever feel unsafe in a taxi.

I get that and I agree and I hope it becomes reality. But to be able to base an investment on it, I'd like to feel more comfort in the plan, not least with Tesla's habit of being extremely over optimistic with FSD timelines. I was one of those who foolishly believed FSD would be ready several years ago, based on Musk's statements.