TSLA Market Action: 2018 Investor Roundtable

[Tslynk67]

Meanwhile in Fremont...

TeslaBull on Twitter

 

[theschnell]

Buying options in TSLA is risky and often counterproductive. Market makers are too powerful and you’ll likely lose.

Best plan is to stop trying to get rich quick and just accumulate.

Makes for better sleeping as well.

 

[SO16]

Sure, a lot of us are doing awesome!!!

View attachment 337290

Short term traders trying to make a quick buck for doing nothing.....and then complaining when it doesn’t work out for them. Sorry, I don’t feel sorry for them.... at all.

 

[Fact Checking]

BTW., here's a very interesting thread of a BMW enthusiast turned Tesla enthusiast.

Some gems:

Long time BMW (~20 years) enthusiast here. Registered just to throw my two cents on this thread (I am active on n54tech & bimmerpost but only lurked here), . I currently have an E36 325i with track suspension setup and a E82 135i with Performance Suspension upgrade and many M3 suspension part upgrades. The 135i is tuned and is a beast especially with the upgraded suspension setup.

I was in the market for a new car and cross shopped between the M2 Competition and either latest or upcoming M3 and the Performance Model 3. Well, I test drove the Performance Model 3 and was just blown away. The hyper-low center of gravity and low polar moment of inertia (just a frunk where a heavy engine would be) and insanely quick, smooth and silent acceleration just threw a curve-ball to everything I knew about sport sedans & performance cars. Especially one in this weight class. The car is simply a beast and absolutely out performs anything BMW has to offer today. After a few days of taking it up my favorite mountain twisty roads with very spirited driving I'm absolutely convinced of this. I would most likely need to go to a Porsche Cayman to beat the handling aspects of this car but even that wouldn't have the instantaneous power & torque of the Performance Model 3.

It was hard to leave the BMW family (I was initially certain I was going to go for the M2 CS) and enter the unknown of Tesla startup and build quality issues, but frankly the product is just too good and wouldn't leave my mind and eventually I decided I had to have it.

Order was placed and now having lived with it for a couple of weeks I'm more impressed than ever. I can say I was very hesitant on the ultra minimalist interior but now I absolutely love it. For me this is very much an iPhone moment - when a new product suddenly makes everything else seem outdated and old.

I have a lot of BMW enthusiasts in my social circle, go to BMW CCA events. I give out demo rides to anyone that asks. One of my friends who is as long of a BMW enthusiast as me (a driving instructor for our local BMW CCA) was so impressed he ended up ordering a Performance Model 3 and now selling his M3.

My 2011 135i which I absolutely love (esp. with suspension work) will be going up for sale soon. I'll be keeping my E36 325i (for now) when I feel like driving a stick shift but I have a feeling it may not end up getting much use.

Tesla has a ways to go in the customer service, delivery, and production parts of their company. Especially right now, they are having major growing pains. But I can say, the car is phenomenal and so far has been worth the hassle of the current delivery process and the bit of risk I'm taking with service and potential issues of a new car model.
​

But read the rest of the discussion as well, such as where he explains that he's a sound enthusiast:

On fidelity they are decent for car audio. I am very picky and not a lot of car audio setups make me happy - as long as they rate decent I'm fine, not going to throw a ton of money into it when I already have to fight the acoustics of the car along with engine and road noise. I may rate the fidelity of the speakers 135i a bit higher than the Model 3 'Premium Sound'. However there is a HUGE difference beyond the fidelity of the speakers - the Tesla is silent and actually lets me enjoy the music without the underlying drone of the engine.

At a stoplight or stop and go traffic, ALL I hear is the music. It's just so incredibly nice and a bit unjarring at first. I feel like I'm sitting in my quiet living room coasting along and enjoying the music. This is just one of the small experiences of the Tesla that combined with a few dozen other small things really elevate the ownership and driving experience that's hard to explain without owning one for a bit.

The Tesla also has (I believe) a combined total of 15 speakers compared to the 7 or 8 in the 135i so that along with the silence give it a 'concert hall' experience.
​

And this is from a 20+ years BMW enthusiast with multiple BMWs enhanced for racing. These kinds of super invested and super loyal customers are the ones BMW was expected to lose last.

Guys and gals, mark the date: it's happening, and the $TSLA stock price will eventually reflect this new reality of the car industry.

 

[SO16]

Incorrect, due to the false info in the tweet...many of us made investing decisions that afternoon and in the days after that caused substantial losses. I wish I had not moved funds around but I had to because of how my long term options were affected. I am still down from what he did that day. If he hadn't tweeted and we just had the Q2 earnings - it would be fine. Why defend such terrible behavior by a CEO? It might not have cost him much, but it did cost shorts and longs alike. I would definitely say he owes his investors but I definitely don't want anymore of his brand of help!

I have lost money on that ASSUMPTION as well based on those shares purchased at that time. But as has been stated MANY times, he NEVER said “am taking it private”. Many of us ASSUMED he would but it was NEVER a GUARANTEE. Stop blaming others for your own greed. It was your choice to purchase those shares at that time just like it was my choice. Why the hell is there no personal responsibility anymore? It’s always someone else’s fault.....right?

 

[scaesare]

Incorrect, due to the false info in the tweet...many of us made investing decisions that afternoon and in the days after that caused substantial losses. I wish I had not moved funds around but I had to because of how my long term options were affected. I am still down from what he did that day. If he hadn't tweeted and we just had the Q2 earnings - it would be fine. Why defend such terrible behavior by a CEO? It might not have cost him much, but it did cost shorts and longs alike. I would definitely say he owes his investors but I definitely don't want anymore of his brand of help!

What?

I'm a newbie to investing, but even I know that the fact I'm down on the TSLA I bought in th last few months is because I'm took a calculated risk based on speculative information.

I'm worried, as I plan to be long...but I'm not blaming Elon or anyone else either.

 

[Fact Checking]

The 5k M3 figure is well known, of course, but at what specification and margin? Seeing the stampede for high-spec cars over the last two months, it makes me wonder if we don't have a pleasant surprise waiting for us. Added to that to previously discussed ZEV's...

Still I'd urge caution.

ZEV credits:

• ZEV credits are a "buyer's market" and ZEV credits were trading at about 50% of their face value due to an oversupply of ZEV credits and an unwillingness of ICE carmakers to transfer money to Tesla (even if it causes losses for them)
• The current total annual ZEV market is estimated to be around $400m-$500m and given that ICE automotive is shrinking, the ZEV market is shrinking as well.
• ICE carmakers have brought out a lot of 'compliance' cars like the Bolt, to harvest ZEV credits. This further reduces the effective ZEV market available to Tesla.
• The recent Seeking Alpha article by a Tesla short turned temporarily Tesla long of over 1 billion dollars in ZEV credits is thus extremely out to lunch - which is not overly surprising from a Tesla short if we think about it for a minute.

I.e. getting $100m from ZEV credits would be a good result and $200m would be fantastic - but don't count on it.

Higher margins:

• Higher per unit Average Selling Price and margins help obviously, but we need to be realistic: the Q2 ASP of $57k increased to maybe $60k according to Troy. So if there are 55k Model 3 sales that's a revenue improvement of $3k per unit, or +$165m of revenue. The gross profit improvement, if these are high margin options mostly with say a 30%-50% margin would be $50m-$80m improvement. Not a "huge" number - but enough to make a real difference.
• Tesla does have a track record of creeping up operating expenses: SG&A and R&D and stock based compensation in particular. These expenses all reduce any 'net income' line directly. As to how much stock based compensation expenses could be: $TSLA in Q3 started beyond $350, and had a nice run-up in August as well, spending several days over $350. So stock compensation expenses, if employees decided to exercise options in those times, would be higher than in Q2 - and Q2 was already high.
• There's a few things going against Q3 income: China tariffs are brutal for example.

Yet there's several possibilities for a positive surprise, but it's much better to be realistic and be surprised positively, than to have false expectations and then get surprised negatively.

Tesla meeting the very optimistic Q3 guidance of 50-55k production and slightly higher deliveries, combined with profitability and positive cash flow would be a huge result in itself. Since most Street estimates expect worse results currently, meeting guidance should cause a nice pop in the stock price already.

 

[Words of HABIT]

You passed a Tesla or was it the other way?

Touché, "passed" was a pour word choice on my part. Each Tesla I saw was headed in a different direction than I, so technically I did not actually pass any Tesla yesterday, although saw many during my ICE age travel.

 

[Words of HABIT]

Totally spitballing here but what if, after the yuuuge profitability of Q3, Tesla announces an immediate and substantial stock buy-back? That would hasten the much-anticipated squeeze, although from a strictly operational perspective it mightn't be easy to justify

I've said it before that the day Tesla announces a stock buy-back is the day I sell all my TSLA shares. Steve Jobs never allowed it to Apple during his lifetime. Buy-backs are for companies that have lost their way, lost their focus, lost their innovation, lost their drive, and lost my vote.
Why would anyone hope for this is beyond me.....what, perhaps to make a quick buck on a trade at the expense of the future of humanity. Oh, the humanity!

 

[neroden]

At this point, I am actually not expecting a GAAP profit -- luvb2b's model shows that it's a very close thing. I'm expecting a non-GAAP profit, which is a lot easier (stock option compensation is a big line item). I'm very much expecting positive cash flow, because it's hard to avoid at this point. (I'm expecting positive free cash flow too.)

 

[Words of HABIT]

....It's going to be a great week.
I can feel it.

I know I don't carry the insight of the 8-Ball, or the knowledge of FastChecker, but my gut tells me this is going to be another great week. I was right last week. Let's see if my gut can make it two weeks in a row.

 

[NicoV]

Forgot about the acceleration, probably because there was none

We're thinking to keep our wife's C-Max for the kids to use as a run-about when they start driving. Girls are nearly 15, son is nearly 12.

I lease my Teslas, then it's just a cost in the books. Previous P85 was traded back to Tesla (with €30k profit back form the lease as first payment for the new one). I'm planning to buy my Model X at then end of the lease as I can't imagine getting a Roadster 2 for at least 5 years from here.

i can imagine that (although dependent on a short squeeze). Don't tell my wife!

 

[generalenthu]

At this point, I am actually not expecting a GAAP profit -- luvb2b's model shows that it's a very close thing. I'm expecting a non-GAAP profit, which is a lot easier (stock option compensation is a big line item). I'm very much expecting positive cash flow, because it's hard to avoid at this point. (I'm expecting positive free cash flow too.)

That model is too conservative on top line and ASP, but probably underestimating SGA expenses. energy margins may be flat to worse where I remember the model assumes improvement. But overall, I am thinking it will still be a few cents of gaap profits.

 

[KarenRei]

Short term traders trying to make a quick buck for doing nothing.....and then complaining when it doesn’t work out for them. Sorry, I don’t feel sorry for them.... at all.

To put it another way: Tesla has repeatedly expressed - and backed up - that it cares about and focuses on the interests of its long-term shareholders.

Tesla has also expressed - and backed up - that it doesn't give a rat's arse about day traders and options holders. With Musk going so far as to tell them, "I couldn't care less. Please sell our stock and do not buy."

 

[Reciprocity]

I would actually completely agree with you here. In the Midwest, we have limited sunshine, tornados, etc. A larger hours with a new roof runs $10 to $16k. I don't see why anyone would pay double for solar panels. It just makes no sense when our electric bills are fairly cheap per KW due to nuclear or coal power.

I'm in Chicago land and frankly you're not wrong. Solar is not that great. Until you add an electric car or two. My rates were awesome at 10.5c/KWh before solar and about 4.5c after. When you migrate $400/month in fuel cost to $200/month in New electricity cost, on top of the original $150/mo. Solar starts to look real good. Now I pay less than $100/mo. And that covers two EVs and my home. Net savings around $275/mo. $35k system, half paid for by invectives (Fed tax credits and srec program) leaves about $17,500/12 mo /$275 savings per month = just over 5 year pay pack. The system will generate for 25+ years and electricity rates always go up, so the long term value is more then $60k+ in total net payback even though there will be some degrading of production.

Elon was right. People will eventually understand why acquiring solar City was important and required.

Residentual solar is only a tiny part of the equation. Super and mega charging, if converted to solar and battery, would give Tesla a cost closer to 5c/KWh, allowing for 30% GM for megachargers. If all where converted, Tesla would instantly become the largest most profitable utility on the planet with a highly captive customer. Don't be fooled, Tesla does not have to put the panels on the chargers, they can work deals with utilities to provided offsets and energy in smart ways so that an equivalent amount of charging is offset by smarter grid tech. In theory, 50,000 solar + powerwalls could be used to offset supercharging for a large City, and much of the mega charging will be done at the customers distribution centers and where they unload at say a local Walmart. Tesla will install solar + battery in partnership with customers. And they will be happy to do it, because the batteries and solar will be used for then entire distribution hub or store and will save them even more then switching to Tesla semi alone.

Tesla's biggest issue today is not demand, it's opportunity loss due to but being able to expand fast enough. Model 3 is totally consuming every cell they can make. Semi will require 100GWh for 100k semis per year. That is almost 5x the cells they make today at GF1. Staying public was probably the only way to realistically get the funding required for this kind of expansion.

 

[winfield100]

To put it another way: Tesla has repeatedly expressed - and backed up - that it cares about and focuses on the interests of its long-term shareholders.

Tesla has also expressed - and backed up - that it doesn't give a rat's arse about day traders and options holders. With Musk going so far as to tell them, "I couldn't care less. Please sell our stock and do not buy."

While Tesla decided to not go private, at present, it would sure be nice IF there was a stock, like TSLAP, that only trades every 6 months or less, that I could transfer ALL my shares into, reducing volatility, that was free of most of the volatility, etc

 

[KarenRei]

I've said it before that the day Tesla announces a stock buy-back is the day I sell all my TSLA shares. Steve Jobs never allowed it to Apple during his lifetime. Buy-backs are for companies that have lost their way, lost their focus, lost their innovation, lost their drive, and lost my vote.
Why would anyone hope for this is beyond me.....what, perhaps to make a quick buck on a trade at the expense of the future of humanity. Oh, the humanity!

List of things Tesla needs capital for:

1) Finishing Fremont scaleup for Model 3
2) Finishing Giga 1 scaleup for Model 3 and other battery devices
3) Getting Giga 2 up to meeting its obligations
4) Giga 2 scaleup
5) Giga 3 (Shanghai)
6) Giga 4 (Europe)
7) Model Y
8) Semi
9) Roadster
10) Increasing density of stores
11) Increasing density of service centres
12) Converting service centres to also be body shops
13) Major expansion of the mobile service fleet
14) Massive expansions to the supercharger network in its current locations, which will increasingly outgrow its capacity as the flood of vehicles continues
15) Expanding stores, service centres and superchargers into new markets all over the world.
16) Lowering margins (for example, undoing some of their recent Model 3 options price hikes)
17) Opening up lower margin Model 3 variants
18) Eventually, advertizing
19) "The $25k Tesla"
20) "Future products" (smart home integration hardware, electric aircraft, etc)
21) More gigafactories
22) Dramatically expanded production of grid products

But oh no, we're supposed to support dumping cash in order to make options traders happy...

 

[Krugerrand]

True story... I had a dream last night where we had a short squeeze start - timing wasn't clear though. Trouble was that the only device I had to connect to the Internet was though my Paperwhite Kindle - which was, in this case, in colour - yeah I know, dreams......

*...making sure Kindle Paperwhite is set up for possible short squeeze...*

Next person who complains this thread no longer provides new and valuable information can go pound sand.

 

[Unpilot]

I'm in Chicago land and frankly you're not wrong. Solar is not that great. Until you add an electric car or two. My rates were awesome at 10.5c/KWh before solar and about 4.5c after. When you migrate $400/month in fuel cost to $200/month in New electricity cost, on top of the original $150/mo. Solar starts to look real good. Now I pay less than $100/mo. And that covers two EVs and my home. Net savings around $275/mo. $35k system, half paid for by invectives (Fed tax credits and srec program) leaves about $17,500/12 mo /$275 savings per month = just over 5 year pay pack. The system will generate for 25+ years and electricity rates always go up, so the long term value is more then $60k+ in total net payback even though there will be some degrading of production.

Elon was right. People will eventually understand why acquiring solar City was important and required.

Residentual solar is only a tiny part of the equation. Super and mega charging, if converted to solar and battery, would give Tesla a cost closer to 5c/KWh, allowing for 30% GM for megachargers. If all where converted, Tesla would instantly become the largest most profitable utility on the planet with a highly captive customer. Don't be fooled, Tesla does not have to put the panels on the chargers, they can work deals with utilities to provided offsets and energy in smart ways so that an equivalent amount of charging is offset by smarter grid tech. In theory, 50,000 solar + powerwalls could be used to offset supercharging for a large City, and much of the mega charging will be done at the customers distribution centers and where they unload at say a local Walmart. Tesla will install solar + battery in partnership with customers. And they will be happy to do it, because the batteries and solar will be used for then entire distribution hub or store and will save them even more then switching to Tesla semi alone.

Tesla's biggest issue today is not demand, it's opportunity loss due to but being able to expand fast enough. Model 3 is totally consuming every cell they can make. Semi will require 100GWh for 100k semis per year. That is almost 5x the cells they make today at GF1. Staying public was probably the only way to realistically get the funding required for this kind of expansion.

Your sir have read my mind.....and then stated what I have been thinking in a much more eloquent way than I could have.

I Salute you sir!

 

[Krugerrand]

I have a similar experience. Some time after getting my Model S I had to drive my son to Ghent with our Prius, and on the highway I was thinking the car was broken, because it had absolutely no accelleration. When I got home my wife (who drives the Prius daily) checked it out and concluded that nothing was wrong with the Prius, that’s how it always was.

Can’t wait till my wife has her Model 3. We have three cars, since our kids also once in a while need a car. Should I let them drive the old Prius, or should I buy a second Model 3 (I have a second reservation just in case I decide to go for that option). By the time my wife gets her 3, my Model S company car will be close to written off (fiscally), it might be more appropriate to buy a Model X refresh as a new company cae (and keep the S).

That was a rhetorical question, no?