TSLA Market Action: 2018 Investor Roundtable

[CorneliusXX]

Exactly my point (emphasis above mine) ......the rates are only part of the decline in the bond price, not the sole reason for the decline. And FWIW everyone here should be monitoring TSLA bond prices too. Critical indicators. Thank you for the chart.
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what your chart shows is that majority of the drop in excess of interest rate movements can likely be attributed to the Moody's downgrade - a rather spurious event not followed by S&P. And given that the bonds never traded at par, another couple of points can be attributed to investor enthusiasm at issuance - Investor mispricing should hardly be considered reflection in the changing credit quality of Tesla.

I agree that the bond price is worth watching, however the current price does not cause too much concern.

 

[SO16]

I’m not much on how corporate finances work but I imagine Tesla will need money to build additional lines to finance things like the model Y (the one we think would suit us) or even the semi. With all of the negativity surrounding the Tesla and Musk name in the USA is their even any hope of the company finding this money? How would it be done. What financial instruments could be used.

I can’t help but wonder if it wouldn’t be a good idea on the part of Tesla to start a separate company based out of europe and simply export vehicles to North America. It would avoid the hostility and ever increasing corruption of the US political environment as well as provide easier logistics to a very large customer base in Europe. Would investors be easier to find? No idea but I can’t help but wonder if bailing on a very unwelcoming society might not be going thru his head right now. Interesting times.

I think by this time next year, Tesla will be in a vastly different situation. I predict the short thesis will all but disappear. Once they are making money and show that they are able to pay off their loans, the sky is the limit. (Provided the economy doesn’t tank.)

 

[beachbum77]

In your original post, you go on about how it’s stupid to buy and hold forever and then go on about Elon possibly wanting to get fired, etc. You know what you implied.

Of course they constantly evaluate. But to automatically assume they would sell based on this situation, is also mistaken.

LOL...If Buffett owned a big stake in Tesla Musk would have already been taken out behind the woodshed and this Twitter nonsense would have been OVER months ago!

Either Buffett or Mark Cuban should be the new Chairman. Both have the cojones to tone down Musk and take control of the BoD.

 

[SO16]

LOL...If Buffett owned a big stake in Tesla Musk would have already been taken out behind the woodshed and this nonsense would be OVER!

LOL, buffet admitted missing out on google because he didn’t understand it. If he is still alive and has his faculties in 5 years, he will be saying the same thing about Tesla. (My prediction.)

Warren Buffett: I was wrong on Google and Amazon, Jeff Bezos achieved a business 'miracle'

 

[KarenRei]

Karen, S & X sales have peaked at about 100K annually. I see Model 3 at 500K in about 2 years for all variations. Your opinion?

Yes, S+X are capped due to battery supply at ~100k/yr, and they've made clear (for obvious reasons) that they won't be increasing the 18650 production capacity.

Musk has talked about eventually getting Model 3 up to 700K/yr (with advertising), but can't picture them starting that within 2 years; they'd much rather invest the money into scaling new model lines. I do see 500k as sustainable, after a global launch, full option availability, and with occasional opening up of new markets (India, Brazil, etc). I can't say when they'll hit 500k on the capacity side, but they're not going to build capacity that they believe they're going to have to idle. Further investment will go to Y, to Pickup, to Semi, etc.

 

[beachbum77]

LOL, buffet admitted missing out on google because he didn’t understand it. If he is still alive and has his faculties in 5 years, he will be saying the same thing about Tesla. (My prediction.)

Warren Buffett: I was wrong on Google and Amazon, Jeff Bezos achieved a business 'miracle'

Considering Berkshire has nearly doubled in the last five years I doubt his investors are complaining. No one bats 100%. Hitting .300 will get you into the Baseball Hall of Fame.

 

[Unpilot]

I’m not much on how corporate finances work but I imagine Tesla will need money to build additional lines to finance things like the model Y (the one we think would suit us) or even the semi. With all of the negativity surrounding the Tesla and Musk name in the USA is their even any hope of the company finding this money? How would it be done. What financial instruments could be used.

I can’t help but wonder if it wouldn’t be a good idea on the part of Tesla to start a separate company based out of europe and simply export vehicles to North America. It would avoid the hostility and ever increasing corruption of the US political environment as well as provide easier logistics to a very large customer base in Europe. Would investors be easier to find? No idea but I can’t help but wonder if bailing on a very unwelcoming society might not be going thru his head right now. Interesting times.

I worry about this in the sense of a general "brain drain" in the USA.
We saw company's move manufacturing over seas in a heartbeat.

Given the current climate of MAGA and distrusting Elites along with the fact clean energy tech is a growing field that Mr trump seems happy to ignore.
Well smart people might conclude it is better to leave than stay.

 

[Webeevdrivers]

I think by this time next year, Tesla will be in a vastly different situation. I predict the short thesis will all but disappear. Once they are making money and show that they are able to pay off their loans, the sky is the limit. (Provided the economy doesn’t tank.)

Encouraging to hear. But does the company have the resources to start a new line? Can the existing factory be used to save costs building another factory. Has ELon mentioned this at all? (Model Y location I mean).

Could the 1000 dollar deposit scheme be used again to pay for the hardware? I think I read that R and D has been ongoing on the Y so I’m assuming they are at an advanced point in the development of the Y. Seems to me someone mentioned mid March next year. A crystal ball would be cool right about now.

 

[beachbum77]

Enjoy the rest of this weekend. See you all on Monday.

 

[KarenRei]

Enjoy the rest of this weekend.

You too!

 

[Intl Professor]

Show me the math supporting it as normal....even back of the envelope is OK since it's Saturday.

What you want to consider for all bonds, when the trend is for increasing rates, the bond value drops to match the market rate in terms of value to match the increased rate. The reverse is true for decreasing rates. Our wealth manager has sold a bunch so we are at about 30% cash on the promise to invest in corporate bonds, two year terms, when we discussed it @ 2.75 interest. If he does it now and rates go up, their value depreciates. He has not done so, I guess anticipating purchase at a higher interest rate. If he hits the peak, not guaranteed, but if he did, when rates drop say at the next recession (predicted here anywhere from 18 to 24 months) we will make a killing and it will be time to sell the bonds and invest in equities.

 

[Artful Dodger]

I want to thank Fact Checking for over 1000 high quality posts in barely 2 months. I can only think of one other person who would be capable of doing this, and it is Elon Musk. Having said that, maybe FC and EM are the same person: they used the same abbreviation for the SEC, and since the Model 3 production hell ended end of july EM has had a lot more time available since august.

Oh, CLOSE but not how it works! In fact, FC and EM are connected via NEUROLINK running v9.1 FSD beta software. Worried that EM is in California, and FC is in Vienna? Not a problem. Why do you think SpaceX launched those first 2 STARLINK test birds earlier this year?

Please, don't ask about how I know this. You will have to wait for the Exclusive Report, coming soon to the Shortsville Times.

 

[Intl Professor]

Well we don't know what, or even if, any investigation is ongoing. Which is of course the Uncertainty part of spreading FUD. The rumor spreading is the investigation is about Fall 2017 production, the dismissed civil case. "if you lose in court once, try try again with a different investigation". As I've commented before, the GOP is still trying to undo FDR's New Deal from 85 years ago. And some of them would like to reopen negotiations on the Emancipation Act, ffs.

At times like these, I recall the words of a personal hero, savior, and role model George S. Patton Jr.:

"Never take councel of your fears".

But at the level of colonels, they worry about the unseen enemy everywhere. At the ministerial level they waste whole armies in pursuit of a "higher interest."

 

[MarcusMaximus]

Where on earth did you get that from my remarks? The growth PACE was what I was referring to not overall sales. Look at Model S and X sales growth over the last 5 quarters. They only spike as a result of discounts and incentives but for the most part are flat. I see Model 3 production globally peaking at about 8-9,000 per week. Model Y will seriously eat into that number so we can expect to see both built on the same production lines like S & X.

NO need to get emotional. It is just an opinion.

They’re maxed out on S/X production at Fremont and it doesn’t make any sense to try to expand it while still ramping the 3. Over the same time period you cite, delivery timelines on custom S/X builds have spiked up to 3+ months(just ask my referral, who ordered their X in December ‘17 and received it in March).

 

[Unpilot]

The "lack of demand" issue is so strange and hard for me to comprehend.
From the ...tons of cars in parking lots to the...bringing in experts to reduce inventory...this is a myth that is a zombie...it never dies.

Name another car company that does not advertise...go to car shows or pulls any other levers...and has a demand like Tesla. And I know why...drive one..it is a better car..and not in a small way. My Model S is better at being a car than anything I have ever driven or sat in. I am sure the model 3 is even better.

Yet we still get people here who insist Tesla has a demand problem...it is a real head scratcher.

 

[RobStark]

How do we know it's Tesla related? Got any link where the prince says that?

"Tesla showrooms probably will open in Saudi Arabia in one or two years, as foreign companies are now allowed to fully own operations they build in the kingdom, Prince Mohammed said."

...Bloomberg...

CC @KarenRei

 

[Gavyne]

The "lack of demand" issue is so strange and hard for me to comprehend.
From the ...tons of cars in parking lots to the...bringing in experts to reduce inventory...this is a myth that is a zombie...it never dies.

Name another car company that does not advertise...go to car shows or pulls any other levers...and has a demand like Tesla. And I know why...drive one..it is a better car..and not in a small way. My Model S is better at being a car than anything I have ever driven or sat in. I am sure the model 3 is even better.

Yet we still get people here who insist Tesla has a demand problem...it is a real head scratcher.

They first started yapping about "lack of demand" back around end of June/early July. First the narrative was "Tesla would go bankrupt before they ramp up, they will never become profitable". So June came and ramp up happened successfully, they changed the narrative to "look at all those cars in the parking lots, demand dried up!", "Quick, sell Tesla stocks, they will never become profitable with lack of demand!"

July flew by, Tesla had another record production & deliveries month. August came, dual-motor trims started to sell extremely well. Uh oh, the higher margin Model 3's are capturing the enthusiast market and selling just as well as the LR version. So the narrative changed to "well they will never be able to keep this demand up". September came, Model 3 became the best selling EV, and #4 best selling sedan in the United States. Tesla is now outselling competing luxury car makers in the U.S. while at the same time capturing the Camry/Civic/Accord market. Yet somehow they're now circling back to the "demand is drying up" narrative.

When people start having to rehash old narratives, you know they've begun to run out of things to say. I suppose with Tesla having no issues producing and delivering record # of vehicles, and the inevitable profitability, they really do have nothing else to say other than "demand is drying up" or "Elon is crazy you guys should ditch him and get rid of Tesla stocks".

To the rest of the world, the REAL WORLD reactions to Tesla is extremely positive. Just watch the increasing number of youtube videos coming out from more and more happy Model 3 owners. There's one thing that hasn't changed one bit during this market mess...people are all extremely happy and amazed by Model 3's. Watch more and more P3D beating muscle cars at drag strips and getting more car enthusiasts interested in a P3D. The more Model 3's are out there, the more people are getting to know about them, and want them.

2 neighbors flagged me down today to ask me about my Model 3. I was surprised at their lack of any knowledge for the Model 3 or Tesla at all. This is how it really is in the real world, still tons of people out there that know next to nothing about electric cars. But word of mouth is spreading, people are seeing more and more Model 3's out there. Demand will continue to rise because out in the real world, people really really want this car.

 

[MarcusMaximus]

"Tesla showrooms probably will open in Saudi Arabia in one or two years, as foreign companies are now allowed to fully own operations they build in the kingdom, Prince Mohammed said."

...Bloomberg...

CC @KarenRei

That was on a separate topic(he was asked specifically about opening Tesla stores) than the upcoming announcement. All that we know about that is that it’s in 2 weeks, is “far from oil” and he seemed rather coy when asked about cars(but it could also just be not saying yes or no to anything).

 

[RobStark]

That was on a separate topic(he was asked specifically about opening Tesla stores) than the upcoming announcement. All that we know about that is that it’s in 2 weeks, is “far from oil” and he seemed rather coy when asked about cars(but it could also just be not saying yes or no to anything).

That was my point.

That the announcement in two weeks can't be about the stores.

Because he has already discussed the Tesla stores.

 

[Artful Dodger]

Lettuce drop it. It’s been beet to death already.

Now It's BEAN beet to death once more...