TSLA Market Action: 2018 Investor Roundtable

[Fact Checking]

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%.

Yes, I'm only guessing of course - but how would such a calculation look like? Maybe we can establish rough error bars and probabilities.

@luvb2b laid out the basis of his 16% estimate in this comment:

"agree it's an open question, and some of it depends on where you start your q2 estimate. but my gross margin walk would go like this:

4.5% q2 gross margin + 4.5% pickup from depreciation math + 1% from higher asp/mix + 6% efficiency gains = 16%

the 4.5% from depreciation math was outlined further back in this thread. efficiency gains in the past have been much better than 6% per quarter, but of course i would expect less efficiency gains over time. last quarter (18q1 to 18q2) i would rough out the efficiency gains in the range of 10-15%."​

I.e. he already included the positive factors you mentioned. Also note that there's some uncertainty about whether 4.5% was truly the q2 Model 3 gross margin. If we go into the Q2 report:

• $3,357m total automotive revenue and $2,666m cost of revenue: a gross margin of 20.58%, rounded up as "21%" in the report.
• If 18,449 Model 3's were sold with an ASP of ~$55.8k then that generated a Model 3 revenue of $1,029m. (Note that Tesla did not break out Model 3 revenue.) $2,328m revenue for S+X.
  
• If Q2 Model S+X gross margin was 28% like in 2017, then cost of S+X revenue was $1,676m, and this leads to Model 3 cost of revenue as $990m.
• $990/$1,029m = 3.8% gross margin for Model 3.

Not sure how @luvb2b's 4.5% Q2 gross margin was calculated.

 

[kbM3]

Another very positive tech development I haven’t seen discussed.

As part of Tesla releasing safety statistics, they pointed out that this capability comes from their connectivity in conjunction with the new sophisticated telemetry system. Something once again, no other automaker can do.

This will result in safer and safer vehicles as time goes on.

 

[aubreymcfato]

I don't think Elon's playing 4D chess now. I think he's able to do "dumb" things sometimes. A juvenile remark to SEC is one of them.

OTOH, I don't think this is a fatal blow to Tesla nor him nor the SEC deal: I just see no point in giving ammo for free to shorts and media. They will spin everything, at least make them work to find something. This is way to easy for them.

But the most important thing is this:
Musk is a human like everyone, albeit with a quirky mentality/chemistry/whatever.
He can't stop his mind spinning, but he longs for emotional relationships like everyone else.
Without a female companion, he gets very lonely: he's said this multiple times, he's even cried during interviews.
Like all humans, he needs others to refuel, to get a sense of purpose.

I'd hope he took a few days with his 5 sons, who need him like he needs them; he has a loving family, he should learn to tap that affection more often. I want him at the helm of Tesla, but he needs to mature more emotionally, to be able to ask for help. He could just take a few weeks with friends and family, work a little on "small" things (Neuralink, Boring comany), read some books, and above all avoid social media.

 

[SO16]

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.

Well....I hope this time he wins against the shorts because so far the track record of him taunting the shorts and the burn of the century hasn’t come to fruition. Fortunately, I can hold my long position indefinitely but I prefer he not taunt and instead just have it happen with stealth.

 

[shootformoon]

Imagine you are in Elon's position, when you achieved a milestone, mass production of tsla 3 will be the EV to end the ICE age, a real economically viable way to fight climate change and save potentially millions people's life and you are attacked by your transparency, and you are still constantly defamed by malicious lies and the market is manipulated to not recognize the fundamental upgrade of the tsla enterprise, and your supposedly supporters blame your "inappropriate words" for all the fallout instead of the real sabotagers, how frustrated you will be?!

He chose to play nice by agreeing with the SEC settlement, but all the malicious shorts upped the ante to attack tsla and him. Would you choose to be playing nice forever and pray you will be treated nicely? You HAVE to fight back.

But Elon can only do that much. He and his colleagues can only do their job. But he himself cannot protect tsla shareholders from the attack of the entrenched interests. As supporters, we do not fulfill our obligations by just holding the shares and wish everything gonna be fine, we have to defend our investment.

No matter how powerful your products are and how big your companies are, you are still vulnerable to the forces with illegal influences. Imagine apple, if all media reported all iphones were hacked and would be selling your personal or even financial data, would it still be a trillion dollar company? Illegal attacks should be stopped with the right force.

 

[Remus]

I am now fully convinced that this is a manifestation of the "manufacturing of consent" by ads dollars against the most innovative company in the world. No amount of profit from Tesla would change that.

 

[EVNow]

Stating that our society has racists doesn't make me one.

It’s just Fox News - pointing out racist actions is apparently racist.

 

[elasalle]

Max Pain is @290. So my only consolation for the tweets is that MM are also screwed today

 

[kelly]

In another words he has full intention to back out.

Not necessarily. Elon may simply have meant that he is not concerned with the SEC being upset that he referred to them as the Shortsellers Enrichment Commission, because he believes the SEC needs him right now more than he needs them. The SEC will very much want to convince the judge that the settlement was fair and balanced. But Elon may be viewing the situation as one where he is OK with either of the two outcomes. If the settlement is approved, he is OK because he did already agree to it. Or, if the judge doesn't approve it, he may be happy as well as it gives him a chance to either fight and/or renegotiate. On the other hand, the SEC only wants it approved.

I personally don't think the judge is considering NOT approving the settlement. As Brian##### pointed out earlier, she wants it off her desk. Judges LOVE settlements. But I think she is requiring the letter because this is a high profile case and some out there are complaining that this is just a slap on the wrist, no justice was done, etc, etc.

 

[Fact Checking]

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.

Yeah, I was always wondering how index funds are able to follow the indices with so little cost: "following" the price is almost always costly in the long run, as you always miss the biggest up-moves and the biggest down-moves...

But modern index funds have miraculously low maintenance costs. It appears, based on Elon's tweet, that this is so because they manipulate the price:

• price moves against them they mostly missed the big up-move (and no, HFT doesn't help them there)
• no problem, they buy shares too late, lend them out to shorts, who fade the biggest price movements to below the purchase price of index funds.
• index fund has now 'followed' the index by actually hurting the price (!), and earns a nice lump of money via the share lending interest
• because share prices are generally moving up, increasing volatility this way increases the income of index funds

If you think it through, this is true market manipulation and fraud in essence:

• the index funds knowingly lent out shares to help depress the price, to make it cheaper for them to "follow" the index,
• in the process the index fund not only hurts the income of their own customers (whose return is partially transferrred to the shorts), but hurts the income of every single long on the market,
• the shorts also measurably increase volatility, which is another cost and risk for the system.

Shorts are true anti-investors.

Maybe another entry for @Papafox's price manipulation thread?

 

[KarenRei]

Setting buy points for today starting around $260 down to around $248. No point to setting any sell orders in this market - I doubt we'll get to a good sell point until after the Q3 report.

 

[tivoboy]

Another very positive tech development I haven’t seen discussed.

As part of Tesla releasing safety statistics, they pointed out that this capability comes from their connectivity in conjunction with the new sophisticated telemetry system. Something once again, no other automaker can do.

This will result in safer and safer vehicles as time goes on.

Well to be fair Mercedes has rolled out two series vehicles with full connectivity and telemetry between cars and the network communicating about road conditions and vehicle conditions in Europe only though. Certainly not in the USA yet though.

 

[LoveTSLA]

I remind myself again not panic sale nor frustrated sale. Remember we will be fine long term as informed. Not an advice.

 

[gora321]

Last ratings-improving:

 

[Causalien]

Not necessarily. Elon may simply have meant that he is not concerned with the SEC being upset that he referred to them as the Shortsellers Enrichment Commission, because he believes the SEC needs him right now more than he needs them. The SEC will very much want to convince the judge that the settlement was fair and balanced. But Elon may be viewing the situation as one where he is OK with either of the two outcomes. If the settlement is approved, he is OK because he did already agree to it. Or, if the judge doesn't approve it, he may be happy as well as it gives him a chance to either fight and/or renegotiate. On the other hand, the SEC only wants it approved.

I personally don't think the judge is considering NOT approving the settlement. As Brian##### pointed out earlier, she wants it off her desk. Judges LOVE settlements. But I think she is requiring the letter because this is a high profile case and some out there are complaining that this is just a slap on the wrist, no justice was done, etc, etc.

With the stock price back to the low of tye sec lawsuit. Settling has lost its meaning and you might as well fight. The only problem is if it is worth getting distracted from ramping.

 

[mrdoubleb]

So looking ahead a bit, barring any negative news on the SEC settlement side, the next big news to impact the stock is Q3 ER. I think we were all a bit disappointed that the deliveries report did not have any positive impact, but it just reinforces my belief that TSLA is seriously depressed by sentiment and big funds being cautious until they see numbers in the black. It would have been interesting to see how the report would have impacted the stock in absence of the whole "funding secured" / SEC investigation / SEC settlement drama, but we`ll never know.

Looking ahead, thanks to the amazing job some of our members do modelling financials, i think we can all agree that profits are all but certain in Q3. Probably not in the hundreds of millions, but even if it`s only a few tens of millions it is a huge turnaround from -700m the past 2 quarters and reaffirms the longs` narrative, that with economies of scale Tesla should start printing money.

Having said that, I now see the chances of TSLA shooting up after the ER as 50-50. I see the short narrative and even some analysts` and firms` narrative shifting to sustainability of the sales numbers & profits. If Tesla can address this by sharing some details on the backlog and how it`s not simply down by 70k cars, but new orders are coming in, that could help. But it may be, that we need at least 1 more quarter to convince the world this is not a one time event.

Thoughts?

 

[traxila]

The company that is dominating EV sales in the world will probably find some aggressive buyers at some price point based on the fact that the EV market is due to double every year or so for the foreseeable future. I do not know what that price point is. Maybe we are there. Maybe 200. Maybe lower. But there is no reason for bottom feeders not to be jumping into this market leader at some point, all the other crap be damned.

 

[Remus]

he believes the SEC needs him right now more than he needs them.

You have better wording . Fully agree

The SEC will very much want to convince the judge that the settlement was fair and balanced.

We don't know that, do we? And does ElonZ's tweets change that? I guess even the "erroneous" Elon would take into account the possibility that the SEC back out.

But Elon may be viewing the situation as one where he is OK with either of the two outcomes.

Combining the above, I THINK he is saying he is perfectly OK with backing out of the deal, more so than SEC is willing to. And he just gave them a perfect reason to back out. So I am guessing he is actually leaning toward backing out.

 

[KarenRei]

What's black and white and read all over?

Tesla's financial statements, 2010 - 2020.

RIP

Okay, enough of this. I'd been giving you the benefit of the doubt, but there's no way an actual person who's been actually invested in the company would have written anything like that; nobody would actually have invested if they saw Tesla's past finances as a sign that the company was in trouble.

You showed up out of the blue (first comment last night) pretending to up be an "upset long" and stoking fear, with all sorts of concern trolling like "Please tell me Tesla is not the next GTAT. I don't want to wake up tomorrow bankrupt." But now you make it clear that you're just astroturfing. Another Mike117.

Go crawl back under the rock you came from.

Note To Mods: Don't just block this person; get their IP so we can report this bear raid tactic to the SEC. We need to do this with each and every astroturfer.

 

[Xenius]

Report him, please.