TSLA Market Action: 2018 Investor Roundtable

[dqd88]

That's all true, my point was that Elon talking about whether to buy Tesla shares or not, based on future cash flows, would read rather awkwardly in hindsight if Tesla is not cash flow positive in Q3.

Consider the knowledge context: Elon probably already knows the preliminary financial results and knows whether Tesla managed to become cash flow positive in Q3 or not, with 99.999% certainty.

If it turns out that Tesla isn't cash flow positive in Q3 then why did he still (seemingly confidently) present that outcome as a realistic possibility to investors?

What he says is of course truthful no matter the outcome, but this particular statement will be rather awkward to look back upon if Tesla misses their positive cash flow expectations.

Which is why I consider this a (probabilistic) signal that Tesla is cash flow positive in Q3. YMMV.

I was reading that tweet as
(with subtext)
"If you think Tesla is overvalued today compared to probable value of wayyy into the future cash flows, sell. Otherwise, buy."
Or, in other words, in the long term, a big swing in today's SP is small relative to the far-into-the-future SP.

But, you could be right, he could be talking about Q3, since that is the order of the day.

 

[dqd88]

Yeah, please...sue me or it is not true...

We will sue the big guys, or the one's in the public. Even journalists.
James Stewart at the NYT or Dana Hull-bloomberg. Slap them with a $1M lawsuit. Would be awesome. Watch them file for personal bk.
And the medium sized hedge funds. Take 'em down to bk.

Are you solo or work for a hedge fund?

 

[Artful Dodger]

CleanTechnica's @ZachShahan tries his hand at Shortsville Times Editor for a day:

This Is Failure

 

[bhtooefr]

I have no problem with shorting based on overvaluation. It's only when shorts spread lies... they should be prosecuted. They can get away with it because it's a bunch of "little guys" supposedly, but if you add them up in aggregate it's very damaging. And when media outlets (NYT, Bloomberg, et al) do it, they should be sued for libel.

Netflix I think would be a sound short.
Or some of these stocks that pop from an IPO frenzy
Snapchat would've been a decent short.
RH might be a good one.
I'm sure there are hundreds, maybe thousands.

I get it.

Hell, while not actually a short position, I bought a put LEAP against Ford - I believe that very long-term, something's going to happen to make it go down in value, based on their strategic decisions, so I decided to gamble there. (I'm no longer in that position, because I saw I would get a nice profit out of it, and saw a buying opportunity for one of my actual investments, but still.)

 

[Fact Checking]

The weakest point in the luvb2b analysis is the Model 3 margin, in my opinion. 16% margin is definitely conservative; it may be closer to 20%. In which case, profits are quite massive.

The 16% gross margin on the Model 3 in Q3 looks reasonable:

• Tesla reported "slightly positive" GM on a 2.1k/week production rate in Q2, excluding non-cash costs (stock compensation and depreciation/amortization)
• Tesla guided for 15% GM on Model 3 in Q3
• Tesla guided for a 25% GM on Model 3 in 2019 at a 10k/week rate
• There's some uncertainty about how much stock compensation will be in Q3, and that counts as a cost against the Model 3 gross margin

I don't think 20% is in the cards for Q3: the 4.1k/week rate is probably still too low for that kind of margin.

But we should also remember that:

• @luvb2b's Q3 estimates are already way beyond Wall Street estimates for Q3
  
• Some members reported that Estimize wouldn't even allow the entry of revenue figures close to @luvb2b's estimates, due to it being 'out of range' with the consensus and with the Wall Street range ...

... so the fact that luvb2b's estimates are conservative is good: this leaves room for negative surprises and it would still be a beat.

 

[ValueAnalyst]

If Elon wants to burn shorts, he could start with Positive Earnings Pre-Announcement.
this is kind a opposite to profit warning announcement.

Why are you assuming that Elon wants to burn shorts, when most of his latest actions/tweets (False Confidence on 20,000 by December, “Best I’ve Ever Felt About Tesla” right before everything went to hell in a handbasket, Failed Short-Burn of the Century, The Cap at $420, Pedo 1, Pedo Revisited, War on SEC) have only burned call option holders? We know he hates volatility, and we know leveraged option plays amplify volatility due to delta hedging, so could he be trying to rid what he sees as short-term gamblers, regardless of how far out your expiration date was at purchase, from Tesla’s investors base? He and long-long-term shareholders might even see eliminating short-term gamblers, with short-term defined as anything less than multi-decade horizon, as a benefit to true investors of the company.

 

[Buckminster]

Elon's view:
1) Biggest world issue is climate change - Tesla - Solved.
2) Backup plan to 1) plus positive humanity vision - Million people on Mars - SpaceX BFR - Solved.
3) AI - working on it.
4) Solve various other issues as you see them. Peeps losing money on Pensions across the world due to shorties. Call them out using TSLA debacle. - working on it...

I am a cowboy that lost (losing) a significant amount of my net worth on LEAPs over this stuff. We are like ants to Elon - he is putting a fire out that we haven't seen yet because it is outside the nest. He has our collective back but not always all of the individuals all the time.
Do I want him to look after my money better - yes
Do I want him to do 1), 2), 3) and 4) - yes
These aren't always compatible unfortunately.

 

[kbM3]

That's all true, my point was that Elon talking about whether to buy Tesla shares or not, based on future cash flows, would read rather awkwardly in hindsight if Tesla is not cash flow positive in Q3.

Consider the knowledge context: Elon probably already knows the preliminary financial results and knows whether Tesla managed to become cash flow positive in Q3 or not, with 99.999% certainty.

If it turns out that Tesla isn't cash flow positive in Q3 then why did he still (seemingly confidently) present that outcome as a realistic possibility to investors?

What he says is of course truthful no matter the outcome, but this particular statement will be rather awkward to look back upon if Tesla misses their positive cash flow expectations.

Which is why I consider this a (probabilistic) signal that Tesla is cash flow positive in Q3. YMMV.

Why would it be awkward?

Wouldn’t summing all future cash flows result in only a minor difference in present value if there is a $0.50 loss vs. a $0.50 profit in Q3?

 

[ValueAnalyst]

Elon's view:
1) Biggest world issue is climate change - Tesla - Solved.
2) Backup plan to 1) plus positive humanity vision - Million people on Mars - SpaceX BFR - Solved.
3) AI - working on it.
4) Solve various other issues as you see them. Peeps losing money on Pensions across the world due to shorties. Call them out using TSLA debacle. - working on it...

I am a cowboy that lost (losing) a significant amount of my net worth on LEAPs over this stuff. We are like ants to Elon - he is putting a fire out that we haven't seen yet because it is outside the nest. He has our collective back but not always all of the individuals all the time.
Do I want him to look after my money better - yes
Do I want him to do 1), 2), 3) and 4) - yes
These aren't always compatible unfortunately.

Exactly. This is the common view among long-long-term investors, and call option holders are collateral damage, according to this group. Maybe even unwanted.

Another possible explanation: option writers of Jan19 LEAPS have hundreds of billions to lose if TSLA squeezes shorts before expiration, and they have Elon by the pants.

 

[Fact Checking]

Why would it be awkward?

Wouldn’t summing all future cash flows result in only a minor difference in present value if there is a $0.50 loss vs. a $0.50 profit in Q3?

I was talking about cash flow, not GAAP income:

"That's all true, my point was that Elon talking about whether to buy Tesla shares or not, based on future cash flows, would read rather awkwardly in hindsight if Tesla is not cash flow positive in Q3."​

And my conclusion was about cash flow as well, not income:

Which is why I consider this a (probabilistic) signal that Tesla is cash flow positive in Q3. YMMV.​

 

[avoigt]

So, given the current Elon and Tesla situation, do we all agree to NOT lend our shares to shorts?

I agree and we all should try to avoid our shares to be lent out. My bank confirmed they don't do it and honestly if they would do against my will I would have gone to another bank or broker.

I fully agree to Elons view that shorting should be illegal. If we allow shorting than there should be at least an instrument that is equally pushing the stock up in an artificial way like shorting is doing on the downside. Free markets would required equality with instruments for both sides be it long or short. That we do not have today. Right now I do see an unfairness in instruments and abilities to influence the stock. This is all but like a free market and a stock that is influenced equally by people buying and selling.

Besdie that I do not see a valid argument for shorting anyway. In particular if you have a situation where a large portion of the flow is shorted you have a situation where big money is able to influence the operative business of a company negatively. In my view shorting should be at least restricted to a certain amount to avoid misuse as we see it here with Tesla.

Just my personal opinion and I am aware shorts will have a different view.

Nevertheless I just can recommend everybody who is long to double check with his bank or broker and make sure his/her stocks are not shorted. The lower their float is the better the ability of the market to determine the true value of a company in the stock price.

 

[Yggdrasill]

The 16% gross margin on the Model 3 in Q3 looks reasonable:

• Tesla reported "slightly positive" GM on a 2.1k/week production rate in Q2, excluding non-cash costs (stock compensation and depreciation/amortization)
• Tesla guided for 15% GM on Model 3 in Q3
• Tesla guided for a 25% GM on Model 3 in 2019 at a 10k/week rate
• There's some uncertainty about how much stock compensation will be in Q3, and that counts as a cost against the Model 3 gross margin

I don't think 20% is in the cards for Q3: the 4.1k/week rate is probably still too low for that kind of margin.

You're completely guessing, though. If you try to work out a reasonable gross margin based the financials from the previous quarters and current ASP/option mix, it's easy to get to a higher number than 15-16%.

Remember, the production and delivery numbers beat the low end of guidance by a significant amount. And Tesla has gone all out with delivering AWD and performance. With a larger number of deliveries than expected and better ASP than expected, one can expect Tesla to beat the guidance. Now, it remains to be seen whether that means 16% or 20%, but I'm just saying, this number is extremely important. It makes modeling very difficult, because a difference of 1-2% can change any conclusion based on the modeling.

But we should also remember that:

• @luvb2b's Q3 estimates are already way beyond Wall Street estimates for Q3
  
• Some members reported that Estimize wouldn't even allow the entry of revenue figures close to @luvb2b's estimates, due to it being 'out of range' with the consensus and with the Wall Street range ...

... so the fact that luvb2b's estimates are conservative is good: this leaves room for negative surprises and it would still be a beat.

I agree it's smart to keep expectations in check. But the chance of a significant beat over luvb2bs numbers is definitely present. And the current market consensus is just ridiculous.

 

[Causalien]

LoL Elon, you might as well take tesla private now and offer $260.

But this time, properly get all the documents signed and funding secured. Buy out everyone who cannot follow and re-ipo later.

 

[elasalle]

I agree and we all should try to avoid our shares to be lent out. My bank confirmed they don't do it and honestly if they would do against my will I would have gone to another bank or broker.

I fully agree to Elons view that shorting should be illegal. If we allow shorting than there should be at least an instrument that is equally pushing the stock up in an artificial way like shorting is doing on the downside. Free markets would required equality with instruments for both sides be it long or short. That we do not have today. Right now I do see an unfairness in instruments and abilities to influence the stock. This is all but like a free market and a stock that is influenced equally by people buying and selling.

Besdie that I do not see a valid argument for shorting anyway. In particular if you have a situation where a large portion of the flow is shorted you have a situation where big money is able to influence the operative business of a company negatively. In my view shorting should be at least restricted to a certain amount to avoid misuse as we see it here with Tesla.

Just my personal opinion and I am aware shorts will have a different view.

Nevertheless I just can recommend everybody who is long to double check with his bank or broker and make sure his/her stocks are not shorted. The lower their float is the better the ability of the market to determine the true value of a company in the stock price.

The tweet yesterday about index funds lending shares to short if true should be immediately disallowed, else the profits from these short sales should go back to the individuals who own these funds. Seems like neither is happening right now.

 

[Bobfitz1]

He can show hubris once Tesla posts a profit. Luv2b’s data is looking really good right now and i suspect Elon knows it. Shorts won’t go away entirely once 3rd Q earnings show a nice profit, but quarter 4 is also right around the corner and that is one massively good looking quarter based on whats happening at Tesla right now.

One thing that I truly hate about the financial media covering and spreading others FUD about Tesla is pretending the important story is a small miss while ignoring the huge progress being made and how that will result in blowing way past this quarters guidance. Case in point, if Q3 falls a thousand bucks short of a positive profit number, story of the week will be Tesla continues losing money on every car they build. Not Tesla improves net profit 699 million from previous quarter on doubled sales of Model 3. On track for substantial profits in Q4.

 

[cheshire cat]

something is coming, he just tweeted to some guy who invested all his money to tesla: Hang in there. If you are truly long-term, it will be fine.

+1

 

[davecolene0606]

A cross post form the DaveT megapost thread cuz I thought it relavent here as well:

Dave, while one could easily support an argument about the “norms” of civil business behavior. One also must acknowledge that these norms are also used as a smoke screen.

What I mean is, the entity that adheres to the social dance and hierarchy in public and yet in practice participates in every sort of maneuver to torpedo a competitor (ethics, legality, facts and truth be damned) is apparently acceptable.

Step outside of the social dance, no amount of ethics, legality, facts and truth, will stop one from being pilloried and ostracized by those who have nothing but the dance skills to fall on. Ultimately, the dancers will respond positively and even forgive the inability to adhere to the norm when the cash flow is there.

You know as well as anyone, Elon dances to different music, and this is upsetting those taught to waltz for their coming out cotillions and the adhearance to hierarchy taught in their institutional indoctrination where any inkling of creativity left over from the cotillion was rinsed from their soul and replaced with the ethos of winning the game by being the rule maker and that it’s OK to adjust said rules to ones benefit on the fly.

Elon’s accomplishments come from this difference. One overriding difference in Elon is his motivation, “what can I do that would have the most positive impact for humanity”. This in and of itself is alien to the “normal” social dance.

The “normal” social dance posits that all motives derive from financial benefit and corresponding social status leading to ones ability to make the rules. That is not his motivation and therefore he is different and must be ostracized until a way to co-opt and profit from his ideas is discovered. Now that the capital infusion leash has been cut they must find another way and in the mean time character assasination is the fall back.

Glad you used the word disappointment as it indicates thoughtfulness and flexibility. Let’s go with the results of great products that directly benefit humanity as the standard for success and do what we can to ensure that the “normal” social dance doesn’t squash it in its infancy.

Fire Away

 

[dc_h]

Re Elon's tweets. He is making sure the cannon is packed full of gunpowder before igniting the fuse.

I’d prefer he let other people manage the canon.

 

[anthonyj]

Elon is doing two things:

Playing 4D Chess with short sellers. He’s creating a huge bear trap and will soon announce good news. You guys seriously think he is dumb? BOD is laughing with him.

Free and effective advertisement. He’s drawing so much free publicity, so many new memes, younger generation think he’s a badass, etc. Shortseller Enrichment Committee... cmon, that’s gold. And the new Tesla referral program... lmao.

I’ve never laughed so hard while losing so much money. Watch the epic squeeze people.

 

[X Fan]

another roller coaster day: premarket down 8 to 273.89