TSLA Market Action: 2018 Investor Roundtable

[KarenRei]

Really? In the last 2 months: 8 have started construction, 10 have gotten permits, and ~30 new locations have opened. I don't call that all but stopped.

Overall there are 38 under construction, and 117 with permits. (And that is just what we know of.)

"All but stopped" may be an exaggeration, but we haven't seen this low of a rate of construction since 1H 2017. Despite the fact that new vehicles are hitting the road faster than ever.

I'm really hoping to see a reversal of this in Q4, given that they should be able to spend more money while still turning a profit vs. Q3 (higher production rates, higher margins).

 

[MP3Mike]

2019 Jaguar I-Pace: An Electric SUV Hot on Tesla’s Heels

Not perfect—the lagging touch screen in my test car made me want to drive it off one of Monterey Peninsula’s scenic cliffs—but still, pretty great.

JLR’s jump on electrification has bought it a competitive advantage of roughly 18 months over every premium car maker that isn’t Tesla.

Listen up, consumers: A lot of armchair quarterbacks have assumed that, whenever original equipment manufacturers pulled the trigger, their resources would allow them to overtake Tesla’s intellectual property quickly. But with more players to compare, it’s becoming obvious that Tesla’s advantage in powertrain tech won’t be so easily commodified or wished away.

For example: The new I-Pace matches the Tesla Model X 75D in range (around 240 miles) but it requires a 20% larger battery to do so. The Model X is also 14 inches longer and 400 pounds heavier, so a whole class above in size.

 

[Ratanpara]

Dan Neil @WSJ in his Review of Jaguar I-Pace : teslamotors

 

[SpaceCash]

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!

All this argument against buybacks is reason why Apple has hundreds of billions of unproductive cash just sitting on its balance sheet.

We all agree that TSLA is deeply underpriced, and that Tesla will soon turn profitable, if it hasn't already. I expect $1B in GAAP profits and $2B in free cash flow in 2H18, and I do not expect ASP's to decline much, as production increases throughout 2019 and Tesla starts international deliveries of higher priced variants.

Given the above, it makes no sense to not buy back stock now at $300, and go for it after the short squeeze at much higher prices.

Tesla's growth is limited, not by lack of capital, but by non-financial factors (e.g. lack of electricians as Elon noted on the last call). He's not avoiding to raise capital just to stick it to WS; that would be emotional, personal, and dumb. He's not raising capital, because more capital does not automatically translate to quicker growth, as Elon himself explicitly said on the last call, and the excess cash would just sit there, like Apple.

It would be great if Tesla initiate a share buyback program, even if they just buy $10m per quarter, it will send a strong signal. If they buy $20m in 2018, $200m in 2019, $500m in 2020... all the long term models need to incorporate this factor.

Right now many shorts think in the best case Tesla can turn into a $100B company, so their risk is manageable. If the share price remain low, Tesla continue to buyback more shares, when 80% of the shares are bought back and canceled in the next 10 years, per share price could reach $30k without short squeeze, and there will be no chance for them to cover because the remaining shares are not for sale. This scenario seems crazy, it's not that crazy.

Thanks for explaining it. The plethora of disagrees I racked up on my post, wherein I specified that I was just musing, was starting to get to me just a little bit.

It would be awesome, and those that disagree seem to have a tenuous grasp of market dynamics and must not understand the position Tesla is in right now as a stock.

 

[ValueAnalyst]

Thanks for explaining it. The plethora of disagrees I racked up on my post, wherein I specified that I was just musing, was starting to get to me just a little bit.

It would be awesome, and those that disagree seem to have a tenuous grasp of market dynamics and must not understand the position Tesla is in right now as a stock.

Ignore the disagrees. Stick to facts and reason, and push forward.

 

[mongo]

It would be great if Tesla initiate a share buyback program, even if they just buy $10m per quarter, it will send a strong signal. If they buy $20m in 2018, $200m in 2019, $500m in 2020... all the long term models need to incorporate this factor.

Right now many shorts think in the best case Tesla can turn into a $100B company, so their risk is manageable. If the share price remain low, Tesla continue to buyback more shares, when 80% of the shares are bought back and canceled in the next 10 years, per share price could reach $30k without short squeeze, and there will be no chance for them to cover because the remaining shares are not for sale. This scenario seems crazy, it's not that crazy.

I still don't get it. That would be good for stock holders (including Elon and his Mars plans) and bad for shorts, but how does it help Tesla to spend its cash on bumping up the stock price? If they never raise capital, how is the stock price relevent to the company?

 

[scaesare]

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.

And that should have been "I'm NOT worried..."

 

[Right_Said_Fred]

Maybe you want to think about it a little, and read my sig?
Hint: It's one of my accounts, which I tried to position to replace perceived loss of ability to hold TSLA in my other registered accounts after going private twit. Holding private TSLA would have been impossible in Canada in registered accounts.

I do appreciate that you disagreed with my statement that -35% from Aug 6 is doing awesome, obviously it's not. Thanks for noticing, appreciated!

BTW, I'm not complaining (I was aware it may go this way) - just pointing to stupidity and insensitivity of OP's comment. Telling others all is fine is beyond insensitive...

I only asked a question about the graph, it wasn’t clear what exactly it was showing. Nothing more.

Your sig? Not visible on mobile.

As for the rest of your complaints: I didn’t say I disagreed with what you said and also didn’t say that all is fine. You must have confused my post with the posts of other people.

Having said that, I agree with what others have posted: your actions on Tesla possibly going private were very premature. That is your own responsibility.

 

[generalenthu]

$1B in GAAP profits and $2B in free cash flow in 2H18

Is that a typo? If they post $1B in Gaap profits this year, in H2, I'll eat my hat. For real. Literally. Not kidding.

On the other hand, will you eat a hat if they fail to get to half of that??

 

[Artful Dodger]

The tweet was a mistake.

The tweet was to be fair to small investors. That's not a mistake, that's good intent. Wall St and the Financial media have poisoned your thoughts.

Why did I make a public announcement?

The only way I could have meaningful discussions with our largest shareholders was to be completely forthcoming with them about my desire to take the company private. However, it wouldn’t be right to share information about going private with just our largest investors without sharing the same information with all investors at the same time. As a result, it was clear to me that the right thing to do was announce my intentions publicly​

 

[KarenRei]

Is that a typo? If they post $1B in Gaap profits this year, in H2, I'll eat my hat. For real. Literally. Not kidding.

On the other hand, will you eat a hat if they fail to get to half of that??

ZEV credits go into GAAP profits, no? Wonder how much they have saved up....

 

[generalenthu]

ZEV credits go into GAAP profits, no? Wonder how much they have saved up....

Yes, they do, but they're not supply constrained. They're demand constrained, as in, the market needs only so many of them. And that's no where close to what you might assume to get to a Billion dollars in GAAP profits.

 

[Artful Dodger]

Given the above, it makes no sense to not buy back stock now at $300

Well, one effective use for share buy back would be to avoid dilution when issuing new shares to employees for stock-based compensation.

 

[ValueAnalyst]

ZEV credits go into GAAP profits, no? Wonder how much they have saved up....

So do recognizing deferred Autopilot profits, and I expect Version 9 to help with that.

 

[beachbum77]

This might be already posted but it’s looking like deliveries are going well, thanks to all the owners and Tesla community.

Tesla's volunteer-boosted Model 3 delivery weekend is a wake-up call for legacy auto

What other manufacture can generate this type of support?

The more appropriate question is what other manufacturer is so pressed to meet a delivery target they need help from their customer base to get cars delivered?...There isn't one.

 

[EVNow]

The tweet was to be fair to small investors. That's not a mistake, that's good intent. Wall St and the Financial media have poisoned your thoughts.

Why did I make a public announcement?

The only way I could have meaningful discussions with our largest shareholders was to be completely forthcoming with them about my desire to take the company private. However, it wouldn’t be right to share information about going private with just our largest investors without sharing the same information with all investors at the same time. As a result, it was clear to me that the right thing to do was announce my intentions publicly​

The tweet per se was not a mistake. What was a mistake was publicly disclosing intention before doing the necessary homework. By talking to independent experts (not large shareholders) - EM could have figured out how plausible his idea was, made sure it had a good chance of working and then sent that tweet (with a link to an explanatory blog post).

I absolutely hate the fact that a lot of companies give non-public information to large shareholders. I don't even know how this is legal - if it is legal - it should definitely not be legal.

For a long time I've avoided playing in the market because it is really rigged i.e. large investors get a lot more information & other advantages compared to small ones.

 

[Artful Dodger]

What was a mistake is to have publicly disclosed intention before doing the necessary homework.

Elon: "The only way I could have meaningful discussions with our largest shareholders was to be completely forthcoming with them about my desire to take the company private."

So Elon is telling us that there is some work that could not be done in advance of disclosing his intent to take Tesla private. And Elon talked to the Board about going private in advance, before his tweet:

Tesla board: Elon Musk started talks about going private last week - ZDNet Aug 8, 2018

"Six of Telsa's board members on Wednesday confirmed they've met several times over the past week with CEO Elon Musk to discuss taking the company private.

The confirmation came a day after Musk first mentioned the idea publicly on Twitter, sending the stock market into a tizzy"​

So even in this Media story published on Aug 8, they are already pushing the false narrative that Elon's tweet initiated the SP runup on TSLA. It did not, the Financial Times breaking news that the Saudi PIF has taken a $2B stake in TSLA is what initiated the runup, as I have explained here in detail.

So which homework was left undone before the Financial Times kicked off the SP run up at 12:18 pm EDT? Elon's tweet was at 12:48 pm EDT and was sent to be fair to small retail investors. If anything, that's what Wall St. is pissed about, they want their insider trades to be legal, to be exclusive, and to be private.

 

[RobStark]

. What i still have doubts is the solar panel part. solar panel is really commodity now and tesla does not have the scale to be cost competitive.

The sales pitch on the Tesla solar panel vs competitors is

1) They are more attractive

2) Tesla can sell you a complete solution, installed and warrantied by one company.

Solar Panels, inverter, control unit, Battery Energy Storage, and EVSE ( electric vehicle service equipment), and BEV.

If one subsystem fails that manufacture can't blame another for the failure.

Anything goes wrong you just call Tesla and they take care of it.

 

[beachbum77]

Elon: "The only way I could have meaningful discussions with our largest shareholders was to be completely forthcoming with them about my desire to take the company private."

And Elon talked to the Board about going private before tweeting. So which homework was left undone before the Financial Times kicked off the SP run up?

Developing a real game plan in a document the BoD could actually review and vote on would have been a nice start. I was involved in a private corp buyout about 15 yrs ago. No word was leaked to anyone until our plan was reviewed by the current BoD and approval was voted. Only then did we announce to the employees and the local press in a company-wide email and subsequent press release.

That is how it is supposed to be done.

 

[EVNow]

So here's the filing records going back to 2015/Q4:

2015/Q4: Filing Date: 2016-01-04 (Mon), Accepted: 2016-01-04 06:05:35 (Mon), Period of Report: 2016-01-03 (Sun)
2016/Q1: Filing Date: 2016-04-04 (Mon), Accepted: 2016-04-04 16:57:12 (Mon), Period of Report: 2016-04-04 (Mon)
2016/Q2: Filing Date: 2016-07-05 (Tue), Accepted: 2016-07-05 06:17:10 (Mon), Period of Report: 2016-07-03 (Sun)
2016/Q3: Filing Date: 2016-10-03 (Sun), Accepted: 2016-10-03 16:47:46 (Sun), Period of Report: 2016-10-02 (Sat)
2016/Q4: Filing Date: 2017-01-03 (Tue), Accepted: 2017-01-03 16:25:20 (Tue), Period of Report: 2017-01-03 (Tue)
2017/Q1: Filing Date: 2017-04-03 (Sun), Accepted: 2017-04-03 06:02:22 (Sun), Period of Report: 2017-04-02 (Sat)
2017/Q2: Filing Date: 2017-07-03 (Mon), Accepted: 2017-07-03 15:21:19 (Mon), Period of Report: 2017-07-03 (Mon)
2017/Q3: Filing Date: 2017-10-02 (Mon), Accepted: 2017-10-02 17:19:16 (Mon), Period of Report: 2017-10-02 (Mon)
2017/Q4: Filing Date: 2018-01-03 (Wed), Accepted: 2018-01-03 17:10:27 (Wed), Period of Report: 2018-01-03 (Wed)
2018/Q1: Filing Date: 2018-04-03 (Tue), Accepted: 2018-04-03 09:00:33 (Tue), Period of Report: 2018-04-03 (Tue)
2018/Q2: Filing Date: 2018-07-02 (Mon), Accepted: 2018-07-02 09:04:06 (Mon), Period of Report: 2018-07-02 (Mon)

This is great information.

My guess is Tesla wants to give this information ASAP. But they have operational difficulty in making that happen reliably on the first working day of the month. But they have got better … from 4th & 5th, now to 2nd & 3rd.
​

Never was a delivery report filed on the 1st in this data set. This might have to do with having an extra day to collect the end of quarter delivery data and maybe a day to sign off on the language of the report, which varies from report to report and often includes other guidance as well

They shouldn't need an extra day for any of these. They should have near real time delivery information, anyway. By the end of the month they will know what the general trend is and can figure out & decide what statement to put out. They just need to fill the correct number on the first and send out the information. Like other companies do.