TSLA Market Action: 2018 Investor Roundtable

[jhm]

@jhm do you have this excel spreadsheet? data from 1965 - 2017, free from BP of all folks

Downloads | Statistical Review of World Energy | Energy economics | BP

Wind is growing ~19.4% in 2017, 14% per year year 2006-2016 BUT 1,122,terawatt hours installed
Solar is growing ~35.2% in 2017, 49.7% per year 2006-2016 and 442.6 terawatt hours installed
to me, at first glance, Wind got a head start, but Solar is gaining
data is free (and a bit startling)
(Solar in 2006 was a paltry 5.8 terawatt hours installed and wind was 132.9twh)
i guess it's easier to install PV panels everywhere vs "big honking 2-5 megawatt turbines" BUT the transition is accelerating (49.7%/yr for 10 years!!)

Yes, I use that data quite a lot. My recollection was not numerically exact though. I was probably mixing up capacity growth numbers (GW) with generation growth (GWh). In any case, we are both making the same point about solar growing much faster in relative terms as it catches up and surpasses wind.

 

[jhm]

Verified account 16m16 minutes ago
Most bullish sign for Tesla yet! This goof said Tesla is not in autonomous driving. Yet my #model3 drives me on autopilot everyday. Broken clock. $tsla

See how driving a Tesla messes with your ability to see investments objectively?

 

[Cosmacelf]

On Tesla? Very VERY VERY roughly (it is massively dependent on IV, so this could be off by factors of 3) $3000 for doing it once. I actually spent a while calculating "static rates of return" assuming that the options expired, treating the premium payment as interest on the tied-up money. Didn't do it unless the static rate of return looked better than the alternative investments.

So if you did this every 45 days for a year, you’d make $24K, or about 8% interest of the tied up $300K assuming options expired. Not too bad, I guess. The downside is that occasionally (once a year?) you’d end up buying Tesla stock at more than market when it took a tumble.

 

[Cosmacelf]

Kind of ironic how the $7500 fed tax credit is actually a disincentive for Tesla to offer leases. Once (if?) that credit goes away, then it’ll make sense for Tesla to start offering leases again for Model 3. Do you think that’s what they’re waiting for, for the impact of the tax credit to be minimal before offering leases? Would it then make sense to create a subsidiary to hold and sell leases so that they could claim full revenue from the lease up front? Or is that never going to happen?

 

[CuriousSunbird]

Kind of ironic how the $7500 fed tax credit is actually a disincentive for Tesla to offer leases. Once (if?) that credit goes away, then it’ll make sense for Tesla to start offering leases again for Model 3. Do you think that’s what they’re waiting for, for the impact of the tax credit to be minimal before offering leases? Would it then make sense to create a subsidiary to hold and sell leases so that they could claim full revenue from the lease up front? Or is that never going to happen?

Would make more sense to have a profitable bank do the leases and have Tesla service the leases and give RVG.

 

[EinSV]

Kind of ironic how the $7500 fed tax credit is actually a disincentive for Tesla to offer leases. Once (if?) that credit goes away, then it’ll make sense for Tesla to start offering leases again for Model 3. Do you think that’s what they’re waiting for, for the impact of the tax credit to be minimal before offering leases? Would it then make sense to create a subsidiary to hold and sell leases so that they could claim full revenue from the lease up front? Or is that never going to happen?

I think they need cash and don’t want to delay receiving it, which would happen if they bundled and sold the leases. Seems like just a matter of time before they offer leases on Model 3 like they do on S/X, which will expand the Model 3 market even more. Maybe next year after production ramps to 10K/week and deliveries are worldwide.

 

[CuriousSunbird]

I think they need cash and don’t want to delay receiving it, which would happen if they bundled and sold the leases. Seems like just a matter of time before they offer leases on Model 3 like they do on S/X, which will expand the Model 3 market even more. Maybe next year after production ramps to 10K/week and deliveries are worldwide.

The problem is how you divide up the funding and the risks.

If Tesla does the lease directly, it eats up a lot of cash they don't have.

If they ask a bank to do it, the bank will be worried about taking residual risk on a new and controversial product.

If they offer the bank an RVG, the bank will charge a lot for 3 year risk against Caa1/B- credit.

 

[Cosmacelf]

I think they need cash and don’t want to delay receiving it, which would happen if they bundled and sold the leases. Seems like just a matter of time before they offer leases on Model 3 like they do on S/X, which will expand the Model 3 market even more. Maybe next year after production ramps to 10K/week and deliveries are worldwide.

Yes, you’re probably right that Model 3 leasing is as much if not more dependent on wanting cash up front. It’s a demand lever that they want to delay pulling for as long as they can. Out of curiosity, anyone know of a third party that you lease a Model 3 from?

 

[MP3Mike]

It’s a demand lever that they want to delay pulling for as long as they can. Out of curiosity, anyone know of a third party that you lease a Model 3 from?

Yes. Here is a thread about it: Tesla Now Accepts 3rd Party Leasing on Model 3??

 

[brian45011]

Here's an interesting Twitter thread stating the bull case, with projections. Maybe one of you is the author...?
Worth a read in any case...
Smack Check on Twitter

Shows:
3Q18 $9.1 million in profits
4Q18 $409.6 million in profits

Annualizing 4Q18 = $1.64 billion or about $9.36/share. What P/E will the market support?

https://www.nasdaq.com/symbol/tsla/earnings-forecast

 

[theschnell]

Shows:
3Q18 $9.1 million in profits
4Q18 $409.6 million in profits

Annualizing 4Q18 = $1.64 billion or about $9.36/share. What P/E will the market support?

https://www.nasdaq.com/symbol/tsla/earnings-forecast

Look at Amazon’s PE with nearly $1 trillion market cap. They are a great company, but the law of big numbers makes their PE look ridiculous in my eyes.

 

[Starno]

Big Short’s Eisman Is Shorting Tesla for ‘Execution Problems’

 

[electracity]

Are you actually comparing a company that makes products and has backlog that could last for years with companies that never even had plans on how to monetize their product?

The key word is "bubble". Good companies came out of that era. But at the bubble valuations were wacky. What was correctly understood at that time was that a great deal of commerce was moving online. What was substantially ignored was valuation.

I do think that by 2030 Tesla has the possibility of being as big as BMW is today. That is a remarkable success and more than achieves Tesla's goals. That makes TSLA worth maybe $50 today.

Given recent announcements an estimated high/low range of Tesla car production can be estimated for 2025. You guys don't want to do that calculation because that would begin to realistically quantify a TSLA valuation.

The best bull case is that TSLA is a story stock and that the story line will continue. I'm looking forward to renting my Model 3 out on the Tesla Network.

 

[Drax7]

Shows:
3Q18 $9.1 million in profits
4Q18 $409.6 million in profits

Annualizing 4Q18 = $1.64 billion or about $9.36/share. What P/E will the market support?

https://www.nasdaq.com/symbol/tsla/earnings-forecast

A P/E Based on the yearly sales growth rate for the next 3 years,
50 seems ok.

 

[CuriousSunbird]

Nope. Things like the residual value guarantees can just evaporate and never need to be paid as the guarantee expires unexecuted.

Could be. But RVG is less than a tenth of current liabilities.

 

[neroden]

*eyeroll* Try applying a P/E of 10 to a plausible model of earnings in 2020, assuming Model 3 rampup as planned (to 500K/year), stationary battery rampup to the Gigafactory limits, and the semi. (No solar roof, no Model Y.) I get a valuation of $280-$320 (depending on ASP and GM assumptions and assumptions about recurring CapEx/recurring R&D)

 

[abasile]

I do think that by 2030 Tesla has the possibility of being as big as BMW is today. That is a remarkable success and more than achieves Tesla's goals. That makes TSLA worth maybe $50 today.

This might make sense if:
1. Tesla were to reach the size of BMW and then basically stop growing.
2. Tesla's profit margin no better than BMW's.
3. Little or no value attributed to Tesla Energy or the Supercharger network.
4. Little or no value attributed to Tesla's in-house efforts at autonomy.
5. Tesla were to be constrained by reliance on franchised dealers.
6. No more "optionality" than BMW currently possesses.

Basically, "legacy" automakers like BMW are being heavily discounted because they aren't seen as growth stocks. TSLA is very much a growth stock.

 

[Richgoogol]

Found what could be the reason that it’s down today The 'Big Short' Steve Eisman is now short Tesla The 'Big Short' Steve Eisman is now short Tesla

 

[Unpilot]

What is it with these guys that get it right once....then the Media crowd thinks they are prescient.

 

[brian45011]

A P/E Based on the yearly sales growth rate for the next 3 years,
50 seems ok.

What sales growth rate are you forecasting? CapEx (and likely some R&D) for new products have been deferred for at least a year since no new capital will be raised during 2018 (and then likely only after the audited 10K is filed in mid-February.) There has been no new constriction to expand the footprint at GF-1 for over two years.