TSLA Market Action: 2018 Investor Roundtable

[Zaxxon]

At the end of a week like this one, I find it refreshing to put the stock, Elon's tweeting, etc out of my mind and check out what actual humans are experiencing related to Tesla.

Here's today's example.

Have a good weekend, all (even the bears).

 

[brian45011]

this includes agreeing to terms in a wording so lengthy and difficult to understand that it has its own name, legalese.

In legalese, it's a contract of adhesion.

 

[keydiver]

I'm not singling out Elon here too, everyone should delete their twitter. It's stupid. for real.

I don't know who posted it, but that Dilbert cartoon showing his workmate installing Twitter for the first time was HILARIOUS!
1) It seems I have opened some sort of portal to Hell. Demons are streaming through it.
2) I have never seen such horrible thoughts!
3) I'm already addicted.

I find Twitter to be a complete cesspool, and would never even consider installing it. But, I had to print out that cartoon and pin it to my bulletin board in front of my work bench.

 

[goinfraftw]

This quote by Elon Musk I keep coming back to over and over again the past 5 years:

"In terms of the Internet, it’s like humanity acquiring a collective nervous system. Whereas previously we were more like a collection of cells that communicated by diffusion. With the advent of the Internet, it was suddenly like we got a nervous system."

I'd say that a lot of these issues were happening consistently throughout human civilization. We're just finding out and surfacing the issues now. Frankly, think Twitter and all sorts of apps via the Internet are wonderful instruments to experiment with understanding the ramifications of this much knowledge about ourselves and the environment around us consistently. Glad to be a part of it this time in human history even though it's tumultuous...and really freaking weird to experience.

 

[Thekiwi]

On the bright side - at least the first step to fixing a problem is identifying that there is one

 

[Todd Burch]

Cars sold per service center is an absolutely worthless metric. What is more important is the number of annual unit sales and the amount of profit made per vehicle sold.

And, the local MB dealership I used to use averages 400+ new car sales per month, or roughly 5,000 per year. Multiply that times the number of MB dealerships, and then realize that they make money on each car sold.

Cars sold per service center is not a metric for capital efficiency of those service centers or how busy service centers are.

Got it.

 

[Off Shore]

Re: Twitter, now that @mayemusk has decided to weigh in the the tide is likely to turn.

 

[tslagreen]

I was worried about this, but it appears Elon's tweets are his personal opinion and will NOT affect the settlement with SEC - say former SEC chair. in other words they aren't illegal and this was nothing.
Musk's tweets are 'precipitous, mercurial and dangerous,' says former SEC chair Harvey Pitt

Now his venting is over I hope he can get back to work. On a more exciting news, Autopilot V9 is rolling out...

 

[tslagreen]

In a perfect world, I would prefer that Elon not comment on the menuscia, but Elon is Elon and Tesla would not be where it is without him.

I had thoughts of investing in GE today, but then I thought what fun would that be?

 

[tslagreen]

In a perfect world, I would prefer that Elon not comment on the menuscia, but Elon is Elon and Tesla would not be where it is without him.

I had thoughts of investing in GE today, but then I thought what fun would that be?

 

[tslagreen]

I meant minutiae.

 

[traxila]

That's very forward looking.
Likely no recession in 2020. Perhaps a small breather. The middle class across the globe is expanding. Poverty is declining. I don't see the trend ending. Bigger middle class equals more consuming and more earnings for a broad array of companies.
Capital flowing to many startups spurred by disruptive new enterprises. Even legacy OEMs are having to spend billions to transition. This isn't a one-time stimulus, will be a constant/steady stimulus over next 10 years.
If capital were sitting on sidelines, that would make us more susceptible to recession imo. But I see almost a renaissance type attitude occurring from both institutional money and billionaire's like Bezos who are spending on all kinds of projects. But of all the big projects and disruptors (weed, AI, space, crypto, biotech, etc) it seems the biggest beneficiary is auto.

That said, a recession would affect the entire auto industry, Tesla included. By then however I believe Tesla will have a stronger balance sheet.

Not one word about the tremendous debt overhang on a federal, state, local, corporate and consumer level. The rising interest rates are going to cause a recession. But that is their purpose in the end.

 

[larmor]

That's very forward looking.
Likely no recession in 2020. Perhaps a small breather. The middle class across the globe is expanding. Poverty is declining. I don't see the trend ending. Bigger middle class equals more consuming and more earnings for a broad array of companies.
Capital flowing to many startups spurred by disruptive new enterprises. Even legacy OEMs are having to spend billions to transition. This isn't a one-time stimulus, will be a constant/steady stimulus over next 10 years.
If capital were sitting on sidelines, that would make us more susceptible to recession imo. But I see almost a renaissance type attitude occurring from both institutional money and billionaire's like Bezos who are spending on all kinds of projects. But of all the big projects and disruptors (weed, AI, space, crypto, biotech, etc) it seems the biggest beneficiary is auto.

That said, a recession would affect the entire auto industry, Tesla included. By then however I believe Tesla will have a stronger balance sheet.

Unless of course Tesla has its own factory in China, in which case us recession will be moot. China middle class will be larger and India middle class going to come next and huge as well.

 

[nursebee]

Many people, but I ignore most of them. The word you're looking for is nauseated.

No, I used the word I intended.

 

[brian45011]

How much below par? That could just be down to changes in interest rates; they should trade enough below par to make the yield higher than the *current* T-bill yield for the same period.

Except for a brief few days around the end of March 2018, the last several days are the first time since early 2016 those notes have traded below par. It could be anything, but recent prices seem to correlate better with the perception of the value of the embedded Call, rather than T-bill yields

The last trade on 9/27 was $103.250 (before SEC Complaint filed)
The last trade on 9/28 was $99.355
The last trade on 10/1 was $103.322 (Settlement announced over the weekend)
The last trade on 10/5 was $99.005 (Several trades during the day at $98.000)

 

[Ocelot]

I think releasing Mod Y too soon will cannibalize M3. I think next step should be Semi+Roadster. Mod 3 sales are providing good cover while developing these. Part of the battle against ICE, actually a huge part of the battle, is changing perceptions. If the perception of EV is not there, they won't sell. It's kinda like inception. There's needs to be this deep rooted seed of a belief in each consumer that EV is cooler and better than ICE. May sound trivial but it's probably the biggest component to the game plan. Perception ultimately determines where the buyer's money will go. The Leaf/Prius, while good cars, are not good for perception in the long run. They aren't moving the needle for EV fast enough. They aren't sexy. They aren't badass. They are pragmatic. EV must be seen as badass.
And the ironic thing is that, the strengths of EV are torque, interior space, low center of gravity (lending to safety, performance) etc. Leaf/prius don't exploit these inherent strengths. It's value left on the table. And that's why it's not the right path for mass adoption.
Elon exploited the inherent strengths, changing the narrative from boring EV to badass EV.

Roadster and Semi will finalize that narrative. The neck breaking speed of Roadster will end the debate around which system is better for performance; and it will force the ferrari's and lambo's of the world to pivot aggressively to EV or prob die.
Re Semi, it's seems that's the first step in going down the truck route. First Semi, shifting the perception that Tesla can't make tough/brawny vehicles, then further exploiting the perception shift, release the pickup.

Then the Model Y. But idk, I haven't follow the product release map to a T. These are just high level thoughts.

I hear you. I have debated this before. I think the initial decision was flawed and Y should of come first. Bit easier to see in Canada though, as with weather patterns, the shift to SUV/CUV seemed earlier than the states.

I dunno, the CUV segment is on fire right now. Conventional wisdom would be to get an offer into that market ASAP. You might end up deferring a some Model 3 reservation-holders who really want an CUV but Model 3 is not demand constrained right now so you'll pick up repalcements and the upside is you will also pick up a bunch of potential new buyers for whom a sedan was a non-starter.

agreed.

 

[30seconds]

I hear you. I have debated this before. I think the initial decision was flawed and Y should of come first. Bit easier to see in Canada though, as with weather patterns, the shift to SUV/CUV seemed earlier than the states.
.

A sedan allows for better drag coefficient and lower weight - leading to better range and performance for a given battery cost.

By building the Y after the 3, Tesla can use the additional time for battery performance and cost improvements to offset the negative effects of the larger form factor

 

[Causalien]

luvb2b model isnt meant to be used for forward PE. it's used to prove Tesla is at a starting point of profitability and no longer losing money or going bankruptcy. and let's not forget that the large number of shorts in Tesla right now believe in this bankruptcy thesis.

In addition, applying a PE of 20 is a very poor measurement of Tesla valuation at best. This is what the short trolls have been using to compare to GM/Ford. Try using growth instead, that's how the stock price is measured at present stage and rightly so. I don't have the data offhand but according to this site, Tesla has been growing revenue of 266% per year on average. With GF3 in china, high demand cars, a huge line of future products, growth rate should keep going. This growth is what Tesla valuation is based on and it is therefore, cheap at this price.

Let's not also forget that only some weeks ago, Saudi investors and some other automakers were willing to pay $420/share, not for a 20 PE, but for the future growth and cash generation (and some other reasons). This is almost 40% fire sale. Once this blows over, the stock should come back to the norm in the $300ish.

Happy shopping!

The reason why i used that is because of pessimism. By removing the elon premium, we see that the fundamentals have a long way to go to affect price. Until the day we can draw a line and show increasing earnings that deserves a pe if > 20, fundamentals do not affect sp. So we are left with the elon premium. The twits and flip flops destroys that premium.

It is also what ppl will use when recession hits.

 

[KarenRei]

The reason why i used that is because of pessimism. By removing the elon premium, we see that the fundamentals have a long way to go to affect price. Until the day we can draw a line and show increasing earnings that deserves a pe if > 20, fundamentals do not affect sp. So we are left with the elon premium. The twits and flip flops destroys that premium.

It is also what ppl will use when recession hits.

I think this is a major misconception. It's not an Elon premium. It's a Tesla premium. Whenever we defend Tesla against shorts, do we go off on a rant about how amazing Elon is? No, of course not - we go off on a rant about how awesome Tesla's fundamentals and growth potential are. That's why Tesla's market cap is so high. These days, Elon only drags it down.

Not that I want to get rid of him; I just want him filtered. I like his aggressive moat bridging strategies. But Tesla does not live or die based on whether he's there to micromanage it.

 

[RobStark]

it will force the ferrari's and lambo's of the world to pivot aggressively to EV or prob die.

I doubt this very much. At least as long as GenXers are alive.

People still buy Rolex despite the fact Apple Watch is superior. Even Seiko is better at telling time.

People still buy thoroughbred horses.

People pay ~30% premium for "real diamonds" over more environmentally friendly synthetic diamonds.

It may be that GenXers are the last generation where there is significant buyers for smelly poisonous outdated transport machines. Or maybe not.