TSLA Market Action: 2018 Investor Roundtable

[tivoboy]

At a certain point, Boeing’s book value was less than zero.
787 development cost about 20 billion and almost sunk them.

Italian nose, Chinese wings, the sum of the parts did not mesh, causing
Endless delays.

The Chairman of the board at tesla might be mostly symbolic,
Making sure Elon sleeps at home. Making sure Grimes
Does not sleep at factory. And so forth.

I do not believe the wings were Chinese (or any parts for that matter). Japan, yes, not China

 

[Fact Checking]

Dominant in EV's totally. Dominant in overall auto industry, totally not.

An Apple-esque 20/50/90 market position is entirely possible for Tesla:

• ~20% market share by unit count,
  
• ~50% market share by revenue,
  
• ~90% market share by profits.

Of course a lot of things have to go well on the Tesla side and a lot of things have to go wrong on the ICE side for that to happen.

 

[omarsultan]

Production data could be released later today (4-5pm) or tomorrow morning (9am), it will be interesting to see the market reaction to that, because plugging those delivery figures into their existing models most analysts will have to increase their Q3 projections.

I think Q3 numbers are going break a lot of models--folks are doing to have to go reset Excel column width to get rid of all the "#######"

 

[Toolsmack]

A danger of the short squeeze theory is that as the price gets higher there are more people that are willing to gamble on a ride down. If some shorts have to cover at 310, someone else steps in and says 310 is too high for Tesla. Those people need to cover at 350? A new set of bears says 350 is too high for Tesla. Unless the borrow rate for loaned shares spikes making new shorts pay more, then we could continually battle a new set of shorts every price level.

The market action today made me think we have some new shorts replacing the burned shorts from Friday. They think 309 is too high apparently.

Reminder: I’m an idiot investor

 

[carterm2]

Why hasn't anyone explained how it is possible for 80K production number (rumor)... EM wrote to employees about doubling last quarters production, and still no one is commenting in regards to how this is possible, and what it means going forward.

Has there been an increase in general assembly lines... new production facility, maybe in a tunnel?

 

[RobStark]

Ford's comeback was also mostly following the recovery of the economy as a whole. Ford isn't doing too well now either after all his policies are now in place... he got out before the consequences could be fully accounted for.

What Mulally policies have had negative consequences for Ford?

It seems Mark Fields was fired for his own policies not for adhering strictly to Mulally's vision.


BTW It seems the consensus for Chair is someone with 30 plus years of corporate experience, that has never made a material mistake and no Progressive can describe as evil/greedy?

 

[Fact Checking]

New Why hasn't anyone explained how it is possible for 80K production number (rumor)... EM wrote to employees about doubling last quarters production, and still no one is commenting in regards to how this is possible, and what it means going forward.

The leaked ~80,000 units of Q3 production figure consists of ~53,000 Model 3's (which is within guidance) plus ~27,000 Model S/X (which is within guidance as well).

So this was only 'impossible' to those who disbelieved Tesla's projections and guidance - i.e. most analysts and all of the shorts.

 

[SpaceCash]

Dominant in EV's totally. Dominant in overall auto industry, totally not.

literally why not? the ONLY restricting factor is production, which they are exponentially ramping up. They make the best vehicles. Period.

 

[lklundin]

Has anyone considered how fast ICE sales will die the day the first poor owner of a late model BMW tries to trade it in and learns used ICE cars are as worthless as great grandma's fine bone china?

That day will be here very soon, and this is a powerful selling point against buying anything other than a Tesla.

Here in Europe a lot of relatively new cars are diesel and they are widely known to be unsellable.

But Tesla is already demand constrained, so I guess it changes nothing.
I am also guessing Tesla also has plans to build a European GF as soon as they can.

 

[dc_h]

Just some names I would love to see on the Tesla board, those with proven business success with global and/or direct to consumer brands that are loved by customers:

- Phil Knight (Nike)
- Bob Iger (Disney)
- Jeff Bezos (Amazon)
- Richard Branson (Virgin)

(I think anyone from Apple would be too troublesome given there competing car project, but if that stopped then Tim Cook or Jeff Williams would be great.)

Someone like Jack Ma (Alibaba) might be an interesting choice as well.

Howard Schulz, although he appears to be running for president.

 

[Joe F]

Have not seen this mentioned: With the election of 2 new board members requiring a vote, does that trigger a short share recall? Couple that with Q2 earnings announcement and is that going to be a BFR like liftoff?

 

[Driver Dave]

Dominant in EV's totally. Dominant in overall auto industry, totally not.

Auto industry will become all EVs fairly soon.

So therefore...

 

[Fact Checking]

A danger of the short squeeze theory is that as the price gets higher there are more people that are willing to gamble on a ride down. If some shorts have to cover at 310, someone else steps in and says 310 is too high for Tesla. Those people need to cover at 350? A new set of bears says 350 is too high for Tesla. Unless the borrow rate for loaned shares spikes making new shorts pay more, then we could continually battle a new set of shorts every price level.

It doesn't matter if shorts recycle between each other: it's the net aggregate of short shares, and the net covering/reduction of their short positions that fuels any 'short squeeze' or 'short hug'.

And that was still very high last Friday: over 33 million shares. As long as the overall short interest stays this high, shorts are going to lose $330m for every +$10 rise in the share price, and $3.3b for a +$100 rise in the share price.

It also appears that there's a 'core' of short interest, of around 30 million shares, that's not recycling. Eventually they'll have to start covering.

 

[DGates]

Until we get official delivery numbers I'll add this to the anecdotal numbers. A co-worker took delivery of his Model 3 here in Vancouver on Saturday - says that Tesla told him they had 750 delivered this past week and 90 just on Saturday.

 

[shrspeedblade]

Am I only the only one who had the thought, "Except for premarket Tesla stock is rather dull today!"

 

[dc_h]

BTW It seems the consensus for Chair is someone with 30 plus years of corporate experience, that has never made a material mistake and no Progressive can describe as evil/greedy?

I had been posting for Eric Schmidt, which has not been popular. I like him due to street cred and known to not try to take over and oust owners.
Howard Schultz on the other hand has built a very popular brand and while a hard working guy, he’s one of those guys who makes priorities to drive progress while maintaining control.

 

[jhm]

While technically true, there's three major flaws in this line of argument:

1)

The problem with ICE automotive are the profit margins, which are atrociously low at 6%, which makes them fragile to even small fluctuations in demand.

I.e. they are only making 'dozens of billions of dollars in profit', because they have an even higher revenue base.

A comparatively small drop in demand can cripple them - as it did around 2009 when every U.S. car companies went bankrupt, except Ford and Tesla, because consumers mostly voluntarily reduced their consumption due to economic uncertainty and deleveraging:

And that was a temporary drop in demand everyone knew would recover within a couple of years - while the EV related drop in demand is going to be permanent, it's never going to recover once gone. 90%+ of the customers who buy Teslas never buy an ICE car, ever again.

2)

But it gets worse: to ICE carmakers every EV sale made is a lost ICE sale. So by converting to EVs they lose the profits from their highly optimized ICE products unexpectedly early, years before expected end of life, reducing margins and forcing eventual write-offs.

This creates a catch-22 problem: they rely on ICE sales and profits for their valuation and for the continuation of their business, but by reducing ICE sales they lose valuation. There's a lag of at least 3-5 years before they can mass-manufacture the entirely new technology - during which time they are exposed to the drop in demand, drop in valu

3)

ICE carmakers are new to the EV world, it's a largely new industry to them, where they don't know how to scale up and don't want to scale up due to problems #1 and #2.

So even if they enter the "we have to build EVs" phase, just about now, they are in a fundamentally disadvantageous position not just competitively but from a fundamental business model point of view.

And they cannot just change the business model, unless they are willing to write off hundreds of billions of dollars of ICE equipment within the next couple of years. So the only path they have forward is an expensive, painful 'conversion' and dual-technology ICE/EV manufacturing process - which might or might not work out in the end, plus they have to hope ICE demand doesn't deteriorate.

Nice analysis! My speculation is that as ICE implodes there will be substantial consolidation in the industry. This could prove to be a boon for Chinese battery and EV makers to acquire western auto brands for cheap and supply them with batteries, tech and other components. Even Tesla could potentially get into this, though I'd expect, reluctantly. One could image a government bail out scenario where Washington pressures Tesla to buy up a failing US automaker so as to preserve a US auto industry, Midwestern jobs, and votes. This could be one reason why Tesla does not need to worry about building a $20k EV, as a government bailout could fund it from the ashes of US ICE. One could go on with such non-fact-checkable speculation.

 

[Tslynk67]

What I find curious is that there's still someone out there with the will, the means and the mechanism to keep pushing the SP back under 310.

This brings me back to my previous hypothesis, which is that nefarious anti-Tesla interests have bought common shares in large quantities which they can then proceed to dump when the fancy takes them = no need to short AND they probably even make some money out of it too.

It this feasible, or do I need to put my foil hat on?

 

[Fact Checking]

Here in Europe a lot of relatively new cars are diesel and they are widely known to be unsellable.

But Tesla is already demand constrained, so I guess it changes nothing.

Actually, it changes a lot, because it creates more demand for higher priced units. It's not just the number of customers that matters, but their willingness and ability to pay for cars as well.

Diesel sales are indeed collapsing in Europe:

UK sales slump 16% as diesel demand plunges
Diesel SUV Sales Dropping Dramatically In Germany | CleanTechnica​

And note that Diesel sales in Europe are mostly about better fuel economy. Diesel customers forced to buy high price gasoline again makes the contrast between EV charging costs and gasoline costs even stronger - driving more sales to Tesla.

So Tesla will be able to sell more LR, AWD and Performance units in Europe, as dissatisfied customers of high value diesel cars start considering premium EVs.

Higher margin sales -> more cash flow -> faster expansion of Tesla manufacturing capacity.

 

[SpaceCash]

Really interesting how much shorts don't want three ten to hit