TSLA Market Action: 2018 Investor Roundtable

[neroden]

I suspect many bulls are waiting until after earnings to see if there's a negative "surprise". I trust luvb2b's modeling and he is predicting worse bottom-line numbers than the average analyst is.

That said, if many people are expecting a drop after earnings, the market has this way of making it a self-defeating prophecy. So who knows.

Maybe the market will be forward-looking and look at production/delivery numbers or something.

There may be a lot of people cooling their heels until Q3, as I am.

 

[brian45011]

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.

Tesla began direct leases in early 2014 when it was flush in cash from the proceeds of selling $2.3 billion in 2019 & 2021 convertible notes that were marketed as being for construction of GF-1 (and other corporate purposes.) As that cash was used to fund operations, Tesla began funding direct leases using the various iterations of the Warehouse Agreements, usually paying back much of the drawn amounts when the proceeds of each subsequent capital raise were received. Many of those leases were transferred to the ABS trustee in 1Q18 so there is a sizable commitment available under the 2017 WH agreement.

Beginning M3 leases in the US may be a harbinger of what is going on with demand

 

[Esme Es Mejor]

I spent 30 years as an investment banker working in leasing (admittedly ships & planes, not autos). I don't think I would feel comfortable predicting M3 residual values three years out at this stage.

How do you feel about predicting ICE residual values three years out?

 

[bdy0627]

Exiting some trading funds on this little bounce might be prudent short term?

Option Sniper:
mkt dropping not over yet. may continue to drop or bounce a bit then drop but anyway not over yet. possibly see some more serious pullback next week - $spx to 2795 2784 $fb to 166 $nflx to 342 $amzn hard to say but if can't hold above 1800 very likely see 1776 $googl 1224 likely

 

[abasile]

How much growth should be priced into TSLA today? How much risk should be subtracted from that growth estimate?

I honestly don't know, but probably at least 50% annual sales growth. We'd like to see closer to 100% annual sales growth, but that's easier said than done, and would almost certainly require more infusions of outside capital.

While not on your list, I find the semi among the announced product that might produce the best margins long term.

Right, I didn't mention individual vehicle programs on that list. Tesla Semi has decent margin potential, but I doubt that it's as good as the Model 3 Performance, among other products. If the long range semi has an 800 kWh battery pack, then that by itself would cost a minimum of $80,000. If the total cost to build and sell a $180,000 truck is on the order of $150,000, that's less than 20% margin. Tesla has also advertised a cost of $0.07/kWh for Megacharging. That seems pretty aggressive, given the costs of acquiring/leasing land, building and maintaining solar farms, installing battery storage, operating the Megachargers, and financing all of the above. I would consider $0.07/kWh an aspirational goal only. That said, even if it ends up being $0.15/kWh, that still wins against diesel.

Musk has shown no skill at making or selling more commoditized products as he showed with his solarcity failure.

With respect to SolarCity, it appears to me that the main issue was the leasing model that most projects were using. Wall Street didn't take kindly to this approach and we see that Tesla Energy has shifted heavily toward loans and cash deals instead. Correct me if I'm wrong, but the elimination of leasing seems to have been the biggest factor in their sales dropping. The actual solar products are solid and they are competitive on price (at least when Tesla Energy is pushed, i.e., by showing a competing bid). However, I'll concede that Gigafactory 2 has not been ramping up as quickly as I'd hoped for.

 

[CuriousSunbird]

How do you feel about predicting ICE residual values three years out?

Pretty good - I think the market's going down (short SC).

 

[electracity]

That makes TSLA worth more than $300 today, assuming positive but disappointing future growth.

$300 less the risk. So your a short.

If you are not short, then you believe that growth will not be "disappointing". So secret factories is the thesis? Secret underground factories perhaps? Growth requires production. What Tesla has announced is that they will soon announce a greenfield factory project that will have a capacity of a half million cars. Why is that not concerning if TSLA is based on growth?

 

[Matias]

It doesn't matter who is telling him this, he should have taken my "Nobody's Advice" a week ago and routed all his tweets through his lawyer by now. Those tweets shouldn't have happened in the first place, he's been spending way too much social capital on embarrassing tweets which get deleted and that's a finite resource.

Has he any history of bipolar behavior?

 

[Esme Es Mejor]

Pretty good - I think the market's going down (short SC).

On that, we agree. How does that affect your view of legacy automakers & their captive financing arms?

 

[anticitizen13.7]

Has he any history of bipolar behavior?

Read Ashlee Vance’s bio of Musk. Even if Elon is not bipolar, it’s obvious he has had some mental issues since childhood.

 

[hobbes]

If I was the banker I would be worried about all the alleged issues with and hurrying of manufacturing - I would want to wait and get some evidence.

So you think that was different with Model S ?! Compare to residual value of early Model S. Should be a conservative estimate as that was their first mass produced car.


EDIT: Since someone already seems to have misunderstood this post: My point is that the Model S was rushed in the beginning, too, and had starting problems, same as Model 3. So early cars of both should have a resale value which is a bit worse than later ones. Just an idea to model Model3 resale value as well as possible.

 

[hobbes]

I suspect many bulls are waiting until after earnings to see if there's a negative "surprise". I trust luvb2b's modeling and he is predicting worse bottom-line numbers than the average analyst is.

That said, if many people are expecting a drop after earnings, the market has this way of making it a self-defeating prophecy. So who knows.

Maybe the market will be forward-looking and look at production/delivery numbers or something.

There may be a lot of people cooling their heels until Q3, as I am.

Can you link me there, must have missed it. Thanks.

 

[Jayjs20]

So you think that was different with Model S ?! Compare to residual value of early Model S. Should be a conservative estimate as that was their first mass produced car.

Lets not get carried away. Both the Model S and 3 were pretty big risks and both had the potential to take down the company.

Model 3 was Tesla’s last ‘bet-the-company’ project, says Elon Musk

 

[CorneliusXX]

Definitely you should give Musk a call then I am sure they would jump at someone who could find a partner to provide leases.

This feels like less than genuine advice.

But honestly, I doubt it will take very long for there to be many lease options. There are hundreds of leasing companies. The most aggressive will offer a lease soon at a high effective rate then others will come in and drive the price down.

 

[Esme Es Mejor]

$300 less the risk.

No, silly. Do you expect 14% annually from the market going forward? I don’t.

Try 5.5%. That’s the rate over the last 11 years. And we probably only get that if we’re in the middle (or end) of a bull market in 2030.

Assuming 5.5% market returns justifies a current SP of over $700. You’ll want to knock that down substantially because of risk, but you still end up well over $300.

 

[Rammstein]

This Eisman guy is just another zombie on my list.

What do you mean by Zombie?

 

[Matias]

Secret underground factories perhaps?

Actually it is in a volcano

Ooops, now I have to kill you

 

[Matias]

This feels like less than genuine advice.
.

 

[Sparky]

Has he any history of bipolar behavior?

No idea and I wouldn't know how to anticipate either SpaceX' or Tesla's trajectory from that. So far, he's been quite a force. For the CC, I'm wondering if he's going to drop some new tactical or strategic move.
With EM, I've learned not to get complacent thinking I know how things proceed from here.
Small example: I think he really likes the tent. I think they learned it's very cost effective in terms of getting quickly to production. We might expect a GA5 tent to get Fremont quickly to 10k/year. Understand the GA part is only a portion of the equation, packs, paint, parts conveyance etc etc all have to be there too. But they'll get a leg up on production with another tent, tweak other lines and then construct regular building around tent while they build cars in it.

 

[Skryll]

No idea and I wouldn't know how to anticipate either SpaceX' or Tesla's trajectory from that. So far, he's been quite a force. For the CC, I'm wondering if he's going to drop some new tactical or strategic move.
With EM, I've learned not to get complacent thinking I know how things proceed from here.
Small example: I think he really likes the tent. I think they learned it's very cost effective in terms of getting quickly to production. We might expect a GA5 tent to get Fremont quickly to 10k/year. Understand the GA part is only a portion of the equation, packs, paint, parts conveyance etc etc all have to be there too. But they'll get a leg up on production with another tent, tweak other lines and then construct regular building around tent while they build cars in it.

I wonder if the tent was also an exercise for china GF