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TSLA Introduction for the Uninitiated

Discussion in 'TSLA Investor Discussions' started by uselesslogin, Feb 17, 2015.

  1. uselesslogin

    uselesslogin Enthusiast

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    All,

    Here is a one page document I have put together that I would appreciate some feedback on:
    An Introduction to Tesla Motors for the Individual Investor


    I wanted to put the basic reasons I hold a long term position in TSLA down on paper and get your thoughts on this. I wanted to start with a single page summary of the reasons why a long term investment in TSLA is attractive. It seems like there is not much discussion of these fundamentals because many of us are already aware of them. However, I took a position in TSLA almost entirely because of CapitalistOppressor's thread and realized it is highly unlikely a newcomer would discover that thread today.

    I'm also wondering if we don't want to establish a sticky thread that includes not only a summary document but a lot of documents that go in depth on each advantage. For example on the battery we not only have CapitalistOppressor's excellent thread but also a great chart put together by 32no regarding energy density in various EV batteries. It would nice to put these in the same place with some additional information to give a new investor a complete picture. We obviously can't rely on the financial media to do so.
     
  2. austinEV

    austinEV Active Member

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    Another Austinite! You weren't by chance in the white model S in front of me when I got pulled over this morning by the highway patrol were you? :) (expired stickers)

    You are correct, we don't write as many paeans to TSLA that we used to. I think it would be amusing to try to crowd source a sort of wiki on the bull case for investing (and may as well make a bear case one too).

    I think you would do well to go back and read some of the 1000's of words written back in 2013 when many such articles were written. Julian's excellent and very long writeup that he published on SA is required reading too. http://seekingalpha.com/article/1463661-on-elon-musk-and-tesla-motors-the-art-of-modern-warfare-in-a-noble-cause

    I think it's fine it just misses a whole bunch of other points. Like:

    • The model S is excellent and award winning regardless of it's drivetrain.
    • EV's are simple, with few moving parts and therefore a good value proposition in long term cost of ownership and safety.
    • It is difficult or impossible for other automakers to follow TM's footprints without cannabilizing their own factory capacity and profit models (dealerships won't sell something with low repair cost)
    • more...
    I could go on and on, and used to when I was younger and more spry. The argument is that EV's are better than ICE cars, TM is best positioned to take advantage of this. if you buy that argument, it becomes a matter of watching TM's execution to plan. Then you get 700B market cap.
     
  3. GenIIIBuyer

    GenIIIBuyer Member

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    I see a lot of people throwing out this $700B in ten years number. I don't want potential investors to get ahead of themselves. $700B is the best-best case scenario, with perfect execution.

    Even with perfect execution and no further capital raises required. I think it's important to keep in mind that there will be at least 25% dilution (just employee stock comp) over ten years. So the projected perfection home run return is not 700B/25B = 28X. It's more like (700/25)*(1-.25) ~ 20X.

    Best-best-best case is TSLA stock grows at 35% annually while Tesla revenues grow at 50% annually over ten years. Now, that 35% will not be straight-line and will cost you a lot of sleepless nights if you put all your eggs in the TSLA basket.

    Personally, with my $40 cost-basis. I will be happy with the market return going forward, and happy to delay my tax bill. New investors should be aware that they are buying shares from short-sellers or people that bought sub-$100. Could probably dedicate several pages to short-selling dynamics.
     
  4. deckofficer

    deckofficer Member

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  5. GenIIIBuyer

    GenIIIBuyer Member

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    PSA: Beware of members pushing new investors to purchase Leap Call Options. I have seen many members lose their shirts over the years doing that.

    Also, please do not sell Leap Put options, I lost my shirt in AAPL doing that a few years ago.
     
  6. Robert.Boston

    Robert.Boston Model S VIN P01536

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    Good advice—options require care and feeding—but the OP's one-pager doesn't talk about anything except share purchases, so I'm not certain what you're reacting to.
     
  7. uselesslogin

    uselesslogin Enthusiast

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    So I'm starting to think what I would really like for the investors forum is a sticky thread for articles past and present with a top post that has all of them. Maybe we run an annual poll to determine the top 5 articles/blogposts/threads.
     
  8. Johan

    Johan Took a TSLA bear test. Came back negative.

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    Why not though? I would encourage anyone to get the best data available and make up their own mind. Even if your own model doesn't get to 700B valuation in 10 years but "only" 300B I don't see why LEAPs would be a dangerous strategy. Anyone old enough to buy options of any kind with any serious money is, I'm sure, smart enough to understand that with leverage comes increased risk?

    Good data and analysis makes for good choices when it comes to in what and in which companies to invest. How to invest is a slightly different question and has to do with where on the risk/leverage scale you want to position yourself. Kind of unrelated really?
     
  9. Robert.Boston

    Robert.Boston Model S VIN P01536

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    We could create such a post easily enough; you could also create a Wiki page on this site. I think what we'd find, though, is that most articles quickly become dated. An insightful 2012 article isn't going to be particular informative today.
     
  10. gavine

    gavine Petrol Head turned EV Enthusiast

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    OP: You should mention in the document that SuperChargers are free for life as well. That's a big deal that many take for granted.
     
  11. GenIIIBuyer

    GenIIIBuyer Member

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    It was pre-empting some posts that I'm sure will come, just wanted to get it on the first page in case this becomes a main thread.

    - - - Updated - - -

    I assumed from the title of the thread that this was a starting place for non-sophisticated investors. I think you're giving the average investor too much credit.

    Agree risk/leverage is a personal decision.
     
  12. Robert.Boston

    Robert.Boston Model S VIN P01536

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    There's an ambiguity as to whether a "new investor" means an old hand looking at a new stock, or a novice investor. Regardless, I think it best to lay out the investment thesis for Tesla and let the investor decide how best to act on it—which is basically what the OP has done.
     

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