TSLA Market Action: 2018 Investor Roundtable

[Reciprocity]

Now Ford shares are being hit after hours following its disappointing earnings and guidance.

Heck Fords now the safest because they have already dumped cars and Tesla is maybe 5 years from mass produced Pickups? If Ford started seriously today, they could have an competitive offering in time to not get wiped out.

 

[Krugerrand]

Within days, same media outlet, same author, reporting on mirror image events,

one analyst reiterating a target price 40% below current share price, another reiterating a target price 50% above current share price,

and these headlines, lols,

JP Morgan predicts Tesla shares will plunge more than 40% before the end of the year


Buy Tesla shares for the coming 'step-function up' in sales: Instinet

Pushed angry button option and also super power option button (which is as I’ve said previously would be blowing people up with my mind).

 

[TradingInvest]

Heck Fords now the safest because they have already dumped cars and Tesla is maybe 5 years from mass produced Pickups? If Ford started seriously today, they could have an competitive offering in time to not get wiped out.

I will not try to predict Ford's stock price, I really don't care about it. But if I try to predict Ford's business future, it doesn't look good. They can't compete with Tesla for electric trucks. There are too many reasons. The question is how long can they continue to sell pickups with nice profit? I think 2 years. Tesla will likely to unveil a pickup truck and take reservations. That should be the end of it.

 

[Bet TSLA]

I already own a MX and have majority of my wealth invested in Tesla. I am already doing everything I possibly can.

Hmm. I've given hundreds of people the chance to drive my cars, and rides to several times that number. I like to think that's promoting interest. I also spend time explaining how painless it is compared to owning ICE vehicles. That's in addition to being all in on TSLA.

I'm quite sure I'm not doing everything I possibly can.

 

[Skryll]

The money would be better spent buying a Model 3 Performance & giving people rides in your spare time. Or even using it as an Uber/Lyft car, if you wanted more people to see it.

Exactly what I have been doing. I wrote about it on 2018 Tesla Model 3 – driving for Lyft for fun and if you want to sign up too, consider using my referral code Become a Driver and get the same bonus as me ($1.55 for every ride you do in first 60 days, capped at $775)

Lyft riders love it, reactions are from 'gotta sell my S4 for this' to 'you made my day, I always wanted to see a Model 3 up close' and 'can I take a picture?'

In addition I have been giving test drives to friends and family, and our neighbor who test drove mine in february was so blown away he canceled his mercedes order and put in a reservation for a model 3. He is taking delivery in august of his P3D which hopefully I get to test drive then in return

 

[Krugerrand]

Of course, if you put too big share of your investments in one stock (whether long or short), that causes emotional relationship with the company. But to my understanding (and what I’ve read), institutional investors rarely put more than two percent of their portfolio to one stock.

So at 2% not enough to care about the money? Or is it more likely only 2% because there’s a fear of losing too much money on a mistake investment? Are we talking 2% of $100 or 2% of $100M?

Money=emotions unless you don’t care about money and what it can provide for you; things, status, basic survival items, etc... If it’s throw away money then people can detach more readily from emotions because they don’t need it, but even under that situation people still tend to feel loss when it’s gone or joy for what it provided them in the moment; maybe a fancy dinner or being entertained for a period of time.

 

[generalenthu]

Hmm. I've given hundreds of people the chance to drive my cars, and rides to several times that number. I like to think that's promoting interest. I also spend time explaining how painless it is compared to owning ICE vehicles. That's in addition to being all in on TSLA.

I'm quite sure I'm not doing everything I possibly can.

Do you big swingers (@Bet TSLA & @Richgoogol ) have deposits on the roadster founders edition? Are you getting the SpaceX option package?

How about a reservation for the Tesla semi. I heard they have great potential as an RV.

 

[sweter]

Fantastic post! Please allow me to expand on your reasoning, and then use that to kill thesis 3: Demand.

Your post talks about in order for any legacy carmaker to compete in the EV space, they have to release a car that is better than their own ICE model of similar price range. Therefore, each EV they produce will replace an ICE that they would have sold.

This actually puts the legacy carmakers in a lose lose situation.

Situation 1: Transition to EV. They would face the same huge capital expenditure as Tesla as they ramp up their EV production. That means they will face profit margins on EVs that is almost guaranteed to be lower than their equivalent price range ICE. Not only that, but because they lose an ICE sale for every EV sale, the gigantic fixed costs of ICE production is spread over fewer cars, which increases their costs for their ICE cars, which means their ICE profit margin decreases. Lower margin from EV + lower margins for their ICE = Lower profit margins overall.

Situation 2: Don't transition to EV. Since EVs are simply better than ICEs of the same price range, they will slowly lose ICE sales as EV production from other companies ramp up and steal sales away from their ICE's. That again means greater fixed costs per ICE sold, leading to lower margins, and even worse, no future.

Now let's see why Tesla will never have a demand problem.

Bears like to say once legacy carmakers start making and mass producing EV's, Tesla's demand is going to drop. Or more extreme, legacy carmakers are going to use their 100 year expertise in building cars to make EV's even better than Tesla's, and no one will want to buy Teslas.

Let's take the more extreme bear example, and see why that cannot be true by stretching the above bull argument to the extreme. Let's assume the best case bear scenario that every single legacy carmaker releases EV's that blow the M3 out of the water. What happens next? That means no one wants Teslas and they go bankwupt right?

No.

The Model 3 is still better than every ICE car in its price range. So unless the legacy carmakers can make enough EV's to fulfill all demand of new cars that no ICE cars are sold, there will still be people that will want a Model 3 since they're better than ICE's. Even if that extreme scenario becomes true, it would mean all ICE production of the Model 3's price range would be stopped, and the carmaker facing a write off of the century for all ICE production equipment.

Therefore, it is IMPOSSIBLE for Tesla to run out of demand. As long as there are still ICE cars sold in Model 3's price range, it cannot run out of demand. The only scenario that would cause Tesla to be demand limited would mean bankruptcy for all legacy carmakers from the complete elimination of all ICE production of Tesla car's price ranges.

One solution for OEM's would be to create a new brand (or resurrect some old one - I think somebody is already planning to do this?) and go the Tesla route: start from scratch with a high-end car and then work their way down the market. They could even join Supercharger network as I believe the invitation is still open. Having the money they do they could probably reach Model 3 level in half the time it took Tesla. So maybe by 2025-2027 they could flood the market with a mass produced and affordable EV with positive margins. This of course would be late, but it's better late than never.

But of course there needs to be a will. And strength to standup against the various oil powers.

I'm genuinely interested in which traditional auto makers are actually investing in EV technology, more than just as a compliance vehicle. Does anyone know of a good recent analysis of the EV manufacturing landscape outside of Tesla?

I think Nissan is doing good things with the Leaf and they have other plans, no?

Could be this (from WSJ):

Breaking News...

WASHINGTON—The European Union delegation meeting with President Donald Trump Wednesday agreed to some concessions in an effort to avoid a trade war with the U.S., according to a European official in the room.

The official said European Commission President Jean-Claude Juncker and his top trade official Cecilia Malmström agreed to work with the U.S. administration to lower industrial tariffs on both sides, increase LNG exports and soy beans to Europe, and align regulatory standards to allow for medical devices to have better market access in Europe, the official said.

Both delegations were still fine tuning language in a common statement on car tariffs, the official said.​

Would that mean the end of Tilburg? Or at least no necessity to expand it for Model 3 program?

 

[jhm]

Yes. Do you see that extrapolating on something like 50% growth of EVs sold per year worldwide the past few years (driven predominantly by Chinese made vehicles most Westerners would find less appealing than a Mitsubishi I-miev) to what the future supply of EVs will be is off target?

Near certain that there will be a massive gap between the tipping point of long range EVs crossing 50% of consumer demand and crossing 50% tipping point of manufactured supply. Probably at least a decade gap.

Just following EV sales or that this grows 50% a year does not tell us the appetite for EVs. It only tells us how much of that appetite is currently satisfied by available products.

The market research also shows that the fraction wanting EVs is growing over time and growing much faster than production. Having enough people interested in an EV will never be a problem. The more pressing issue is having enough competitive EV models in every segment for every price point. I view this more a supply problem. Plenty of people were interested in buying a Model 3 two years ago, but the supply is just now hitting a few national markets. Plenty of truck drivers would love to have a well built electric pickup truck now, but these have yet to be brought to market. So the appetite for EVs runs well ahead of what EV makers can bring to market.

 

[jhm]

I think most investors assumed Sergio would still serve as consigliere to new FCA CEO in his role as Chairman.

The market seems to think that advice is worth a bit over $3B.

I wonder if Elon would do it for $3B. He's not busy building mini-subs at the moment.

 

[Quassinoid]

$TSLA down almost 2% in aftermarket. Is this just due to $F announcing bad news, or is there something else out there driving stock down?

 

[Skryll]

$TSLA down almost 2% in aftermarket. Is this just due to $F announcing bad news, or is there something else out there driving stock down?

profit taking

 

[EngRyan]

$TSLA down almost 2% in aftermarket. Is this just due to $F announcing bad news, or is there something else out there driving stock down?

80% of the time the price rebounds back to close of what it was before forming a 'V'. Good ol aftermarket low volume swings.

 

[Richgoogol]

$TSLA down almost 2% in aftermarket. Is this just due to $F announcing bad news, or is there something else out there driving stock down?

Facebook down over 20% dragging the whole market down.

 

[SteveG3]

One solution for OEM's would be to create a new brand (or resurrect some old one - I think somebody is already planning to do this?) and go the Tesla route: start from scratch with a high-end car and then work their way down the market. They could even join Supercharger network as I believe the invitation is still open. Having the money they do they could probably reach Model 3 level in half the time it took Tesla. So maybe by 2025-2027 they could flood the market with a mass produced and affordable EV with positive margins. This of course would be late, but it's better late than never.

But of course there needs to be a will. And strength to standup against the various oil powers.



I think Nissan is doing good things with the Leaf and they have other plans, no?



Would that mean the end of Tilburg? Or at least no necessity to expand it for Model 3 program?

I think they will tend to try to go region by region as much as possible in terms of replacing ICE with EVs, to minimize the imploding effect offering well done EVs will have on consumer interest in their ICE cars. ie, China will have far more EVs made available sooner than the US (regulation in China is part a legit reason to have such a regional strategy, part a nice cover for their huge incentive to go to EVs as slowly as possible, an incentive which is not so attractive for incumbents to publicly discuss). For luxury car makers, there’s much less time to play this game with Tesla’s 0.1% going on 1% circa 2020 market share, 2-3% ~2025 coming right at their ~5+% of the market.

Much more on all this, which I see as Tesla’s broadest and most far reaching moat, here,

The Fractured Tipping Point Moat

tl;dr ICE incumbents moving to EVs like a dog being dragged to the bath tub, Tesla moving like a dog seeing a squirrel- and it’s not about ICE incumbents being clueless fools.

 

[Hogfighter]

Because of this:

The Hog Negativity Index hit 10 yesterday. Back down to 9 today, but still super high. Never before has Tesla as a company been as close to real, solid profitability as they are today, and yet you’d think that they are about to go under if you read the press. The chasm has never been greater since I’ve been following the stock, with the infamous f*res being a close second.

Right now it all boils down to if you think that they can produce the 3 profitably. That’s it. They are already producing the 3 in vast quantities...that argument is basically over (was in SF yesterday...it seemed like every other car there was a Tesla, and saw a TON of 3’s). There’s absolutely no demand issue with any of the models. None. There’s no meaningful competition anywhere on the horizon that will be able to produce more than a few hundred per week....a drop in the proverbial bucket.

So the last and only defense the bears have is whether the 3 will be profitable, and 2 well respected firms tore it apart and said unequivocally that they could.

 

[EngRyan]

Facebook down over 20% dragging the whole market down.

Nvm my previous post then, Good lord, that is sooome drop on **Googles** (I mean facebook, *facepalm*) part.

 

[SteveG3]

Just following EV sales or that this grows 50% a year does not tell us the appetite for EVs. It only tells us how much of that appetite is currently satisfied by available products.

The market research also shows that the fraction wanting EVs is growing over time and growing much faster than production. Having enough people interested in an EV will never be a problem. The more pressing issue is having enough competitive EV models in every segment for every price point. I view this more a supply problem. Plenty of people were interested in buying a Model 3 two years ago, but the supply is just now hitting a few national markets. Plenty of truck drivers would love to have a well built electric pickup truck now, but these have yet to be brought to market. So the appetite for EVs runs well ahead of what EV makers can bring to market.

At this point would you agree that there could be a vast gap in terms of years, between the tipping point of over 50% demand for EVs and the tipping point of over 50% supply?

I still see that gap likely to be a decade, possibly longer, as discussed in the thread below.

Do you see a multi year gap as likely too?

How about the chances of a decade or longer gap?

At this point what year would you estimate EVs passing 50% of the global production of consumer vehicles?

The Fractured Tipping Point Moat

 

[Ulmo]

I like the neat action on $FB. It went from high off their rockers on dope $219 plummeting down to $168 with huge volume now on the down side way more than the rest of the day combined. The price graphs (but not the volume graphs) looked the same for AMZN, QQQ, SPY, AAPL, etc., so I zoomed out 6 months for all of them, and surprise, today's afterhours dip is nothing for all those except for $FB, for which it is a Grim Reaper hook for $FB bringing it down to April levels, 3 months ago.

$TSLA shorts are taking advantage of it just like the rest.

The volume on the macros is nothing, including $TSLA. That "down" moment for the rest of the market will drift away like a dandylion. $FB's down moment is in heavy volume, so that is a real stock movement for $FB; it will follow its own story.

Old fasioned anti-Trump media like $FB and $NFLX are chasing sclerotic stinky tail that less and less people want. Although I have no doubt that this market correction for $FB will have some bounces back and forth, $FB is ossified and fragile in the one business you'd naively think is agile, but the fragile nature of centralized control reared its ugly head. Remember: centralized. That's the big mistake the people at FB sold out to. They are old media through and through, and step to the death marches of Stalinist slavemasters. Every media-based company is subject to that, and if they are not part of the commerce of freedom, they will die the death of a trillion holes. FB chose to cover for gang rape death squads at the personal request of the German Chancellor, and cut off communications of old people trying to reach out to their own familiy members for needed help, causing them to die in horrible tortorous death genuinely thinking no one loved them; I can only imagine the workers at FB cackling at their misery. FB is an evil of unfathomable proportions, the sickness, even the stench of it, is hard to shake. Everyone I know who ever worked there quit almost as soon as they were hired, and showed signs of extreme disturbance they blamed on the company, which took them some time to recover.

Even as I edit this, the macros have already recovered in their dandylion low volume afterhours drifts, whereas ossified $FB continues to struggle amid heavy volume of popping their cognitive bubble; FB is so mummified, that it takes the drip of real water to reveal their decaying skeletal remains. Godspeed

 

[EinSV]

Because of this:
View attachment 320212
The Hog Negativity Index hit 10 yesterday. Back down to 9 today, but still super high. Never before has Tesla as a company been as close to real, solid profitability as they are today, and yet you’d think that they are about to go under if you read the press. The chasm has never been greater since I’ve been following the stock, with the infamous f*res being a close second.

Right now it all boils down to if you think that they can produce the 3 profitably. That’s it. They are already producing the 3 in vast quantities...that argument is basically over (was in SF yesterday...it seemed like every other car there was a Tesla, and saw a TON of 3’s). There’s absolutely no demand issue with any of the models. None. There’s no meaningful competition anywhere on the horizon that will be able to produce more than a few hundred per week....a drop in the proverbial bucket.

So the last and only defense the bears have is whether the 3 will be profitable, and 2 well respected firms tore it apart and said unequivocally that they could.

I agree -- sentiment seems completely detached from reality, especially given where things stand with the Model 3 ramp. A little better today than yesterday but still -- as bad as late 2016 around the Spiegel bottom.