TSLA Market Action: 2018 Investor Roundtable

[omgwtfbyobbq]

Tesla doesn't need the SP to be above 360, and Musk has made no attempt to ensure it. They'll settle the debt in cash.

Yup. Assuming the board does nothing, the maximum conversion rate is 3.9597, so as long as Tesla is above $252.54, they can settle the bonds in whole or in part through equity.

Notwithstanding the foregoing, in no event will the conversion rate per $1,000 principal amount of 2019 notes exceed 3.9597 or the conversion rate per $1,000 principal amount of 2021 notes exceed 3.9597, subject in each case to adjustment in the same manner as the applicable conversion rate as set forth under “—Conversion Rate Adjustments”.

424B5

 

[heltok]

I think the biggest thing Elon Musk brings to the table is his ability to question things. He is not okay with his engineers doing bad work. In so many other companies, and I have worked in the car industry, mediocracy is not actively discouraged. Elon can look at a problem, ask the relevant questions, when he doesn't get good enough answers he is unreasonable enough to push the engineers to do better work. And they can't really say that they can't work harder, because they know that Elon worked harder than they did. And if they are not competent enough, they are let go and some other that wants to work for a company that demands their best work and who is inspired by Elons mission to save the planet and colonize Mars is eager to get hired.

I think Tesla could stand without Elon today, but I think the rate of progress would slow down.

 

[MXWing]

For years we have been dealing with shorts who have ruthlessly attacked this company with no sense of right or wrong and no concern for our planets future. Elon shows some courage and fights the establishment and you abandon him, pathetic. Grow some balls and realize that the cute acronym shorts enrichment commission does no harm to anybody and only acknowledges what we all know is true - that the system is rigged against clean energy, against the status quo. you shouldn't be angry at Elon. You should be angry st the supposedly impartial SEC which magically made this lawsuit appear 4 days before the best delivery numbers in the companies history. That's no coincidence.

Would Rocky of abandoned Apollo Creed if he forced him to tap vs Drago?

Sure Creed would have been salty AF at Rocky for awhile but he would be alive.

Like defeating an ex, you win by living well, getting successful and making them regret leaving you.

You don’t win by playing games.

Everyone knows the SEC is bull *sugar*. However, you don’t let their bull *sugar* dictate self destructive responses.

All Elon needs to do is execute, nothing else. Longs would be defending 500... not 250.

Funding secured, talking to the NYT, shortselling enrichment commission - NONE of those even helped produce a single Model 3.

Growing balls is advice that doesn’t apply here. I ain’t no beatch but I know it’s better to live and fight another day rather than sacrifice with nothing to gain.

The people that need to grow balls are those closest to Elon that can encourage him when he needs to be encouraged and take him to the woodshed when he needs to be taken to the woodshed.

 

[CorneliusXX]

@DaveT: Nice piece. I'm going to ask that you elaborate on the possibilties for Tesla the company.

Because I don't actually care what happens to Elon. I mean, sure, I wish him the best personally, but it's not like he's my ex-husband or anything personal. I care about Tesla, not about Elon.

I think Tesla would be fine without Elon in active management. Elon got it through its crucial period, and Tesla's current crises (communications, and logistics) aren't actually within Elon's areas of expertise. His areas of expertise (cost engineering, switching corporate directions quickly) remain useful, but not necessary.

I've been following Tesla since the days when Musk was a non-management investor. It was achieving great things -- but then the company hit a key problem where Eberhard wouldn't do the necessary thing, and Musk's precise areas of expertise were right to fix that. They also couldn't find anyone else suitable to be CEO, and they tried. His precise areas of expertise were also important at several other key points in Tesla's history.

But now, I think Jerome Guillen would be a fine CEO -- at least as suitable than Musk for the current problems, and possibly better -- and he's already President of Automotive (thank goodness). And it doesn't matter much who's chairman of the Board.

So I just don't care about Musk's personal fate. Not to sound harsh. What's the future for Tesla?

I don't think I agree with this fully. Tesla does have a an excellent trajectory with the forecast product lineup, and with the M3 hitting volume it has room financially to make mistakes - Leading me to believe that Tesla will be fine now regardless of Musk. However Elon seems to be such a driving force that without him at the helm it may take Tesla 15-20 year that which would be done in 10 with Elon as CEO.

I don't know if the company would be as motivated, or attract the same level of talent (particularly those that are fresh out of uni and super motivated to change the world), or get China to change their foreign investment policy, or have several US States and European countries offer sweetheart deals for factory placement. It's very unlikely the battery plant in South Australia would have been constructed as it was basically arranged by two billionaires DMing eachother.

He also has unbelievable fortitude when entering new markets. Without him there may not be expansion into the secret master plan part trois - planes, trains and ships.

 

[AWDtsla]

I don't think I agree with this fully. Tesla does have a an excellent trajectory with the forecast product lineup, and with the M3 hitting volume it has room financially to make mistakes - Leading me to believe that Tesla will be fine now regardless of Musk. However Elon seems to be such a driving force that without him at the helm it may take Tesla 15-20 year that which would be done in 10 with Elon as CEO.

I don't know if the company would be as motivated, or attract the same level of talent (particularly those that are fresh out of uni and super motivated to change the world), or get China to change their foreign investment policy, or have several US States and European countries offer sweetheart deals for factory placement. It's very unlikely the battery plant in South Australia would have been constructed as it was basically arranged by two billionaires DMing eachother.

He also has unbelievable fortitude when entering new markets. Without him there may not be expansion into the secret master plan part trois - planes, trains and ships.

The goal is not for Tesla to be fine. It's to convert the world to clean energy at a 50% YoY growth rate. This cannot be sustained without further disruption than just Model 3.

 

[Buckminster]

A genuine and titanic Neroden "post storm". I feel blessed to be here right now!

As long it is not Ambien fuelled that is.....

 

[Fact Checking]

The one thing to point out though is, how many corporate bonds are currently yielding over 8+%?

What you are missing is that the Tesla 2025 bonds were issued in the summer of 2017, in a very good interest rate environment, with a very good auction. The current yields are mostly an expression of the relative rates deterioration since that date and the drop in the stock price.

Instead what you have to compare is the change in bond prices over the same time period. Here are a few other examples of corporate bond pricing for the last 12 months, from the automotive sector:

• Jaguar Land Rover has a yield of 7.2% on their 2027 bonds - those bonds are down 17% this year. Moody's rating of Ba1, investment grade:
• 
  
  
• Ford Motor Co: their long term bonds are down 18% this year, with yields of almost 7%. Moody's rating of BAA3, still investment grade:
• 
  
  
• Tesla: the 2025 bonds are down 13.2% this year, Moody's rating B3/CAA1, junk grade:
• 

I.e. Tesla's bonds are not an outlier, especially considering their August 2017 issue date and a favorable auction, and the March 2018 downgrade combined with a drop in the stock price.

 

[Esme Es Mejor]

how many corporate bonds are currently yielding over 8+%?
Make a list, and ask yourself, "Which of these names would I buy the common stock?"

I looked up a list of corporate bonds that were yielding over 8% in January 2010, then checked their stock performance over the past 8+ years and compared it to the market.

They were hit-and-miss, but about half the companies grew more than 5x—substantially outperforming the S&P 500, which grew about 2.5x. Overall, the entire group outperformed the S&P 500.

What does this prove? Not much. It disproves your suggestion that an 8% bond yield correlates with poor future stock performance.

 

[Tiger]

Fire at will:

Massive Layoffs And Reorganization Ahead At Tesla

 

[KarenRei]

Fire at will:

Massive Layoffs And Reorganization Ahead At Tesla

Doom, Gloom And Conspiracy Theories About Tesla At Seeking Alpha - Fixed that for you.

 

[Buckminster]

Fire at will:

Massive Layoffs And Reorganization Ahead At Tesla

 

[brian45011]

China has already lent him $650 million for the Shanghai factory, they are expected to lend him another 2 rounds.

Link? Are you thinking about registered capital?

http://www.lehmanlaw.com/fileadmin/..._of_Foreign_Invested_Enterprises_in_China.pdf

 

[MTL_HABS1909]

I'm not sure Musk is *capable* of continuously running Tesla right now. He's been under insane amounts of stress. and I know what that can do to people. You can't keep going at that speed indefinitely -- a company may be able to, but a human can't. He's been going all out for years, and the human brain and body simply isn't made for that. He ought to do what's necessary to take care of his mental health personally, and if that means a leave of absence, then we'd get him back better than ever. Also, Twitter is not healthy for him. He may like it, but it's not good for him.

I'm willing to seriously consider the possibilty that Musk will be forced out or that he will resign -- though I think a leave of absence / vacation would be much better. It would be ideal for me if he could figure out how to take a break / delegate even more for a month and then come back stronger than ever. He clearly doesn't have a good enough team yet if he keeps having to micromanage *every day*. I really think Jerome can handle things for a month.

Come on man. Don’t fall for all the negativity being spewed. Elon has been tweeting stupid *sugar* for ever. It’s crazy how the TSLAQ cult is getting to people...

 

[Off Shore]

I spent years resisting the urge to set some people on ignore, but in the last few days some really foul and unpleasant characters have crawled out of the drains to post utter garbage on this thread, and a few of the regulars have just become too much. So here's my current ignore list - makes for some odd responses, but I can only recommend it to others:

View attachment 341610

You're making progress, @Lobo. My list just topped 90.

 

[Smokey4141]

What you are missing is that the Tesla 2025 bonds were issued in the summer of 2017, in a very good interest rate environment, with a very good auction. The current yields are mostly an expression of the relative rates deterioration since that date and the drop in the stock price.

Instead what you have to compare is the change in bond prices over the same time period. Here are a few other examples of corporate bond pricing for the last 12 months, from the automotive sector:

• Jaguar Land Rover has a yield of 7.2% on their 2027 bonds - those bonds are down 17% this year. Moody's rating of Ba1, investment grade:
• 
  
  
• Ford Motor Co: their long term bonds are down 18% this year, with yields of almost 7%. Moody's rating of BAA3, still investment grade:
• 
  
  
• Tesla: the 2025 bonds are down 13.2% this year, Moody's rating B3/CAA1, junk grade:
• 

I.e. Tesla's bonds are not an outlier, especially considering their August 2017 issue date and a favorable auction, and the March 2018 downgrade combined with a drop in the stock price.

Thank you for the thoughtful reply..
I'll be the first to say that the auto business is not looking good going forward, so not surprised by any of those charts...
And if the economy rolls over here, it gets worse......for ALL of them...

That said, you pulled up other auto-makers bonds, not other 8+% bonds that I mentioned...
8+% bonds are not a pretty list, and Tesla's on it... The two you compared Tesla's bonds to, aren't....

 

[AlMc]

You are seriously underestimating the challenges coming for Tesla in the next 2-3 years. Elon has a history of delivering where others could not, as recently as a couple months ago. Remember when he fired Doug Field and took over production of the Model 3?

To be more factual...When Doug left (was fired?) the person who came in and 'fixed' the existing manufacturing lines AND created one quickly so they had a chance of making guidance...was Jerome.....not EM.

 

[CorneliusXX]

Doom, Gloom And Conspiracy Theories About Tesla At Seeking Alpha - Fixed that for you.

 

[Smokey4141]

I looked up a list of corporate bonds that were yielding over 8% in January 2010, then checked their stock performance over the past 8+ years and compared it to the market.

They were hit-and-miss, but about half the companies grew more than 5x—substantially outperforming the S&P 500, which grew about 2.5x. Overall, the entire group outperformed the S&P 500.

What does this prove? Not much. It disproves your suggestion that an 8% bond yield correlates with poor future stock performance.

You went back 8 years, to make your argument? Interesting...
Could you do that for data as of now? Because that's what really matters to anyone.....today... No?

 

[Smokey4141]

. I should be gratefull if you could expand/clarify this so as to better understand the rest of your "facts" / hypothesis

Found it... Here's the last chart I saw on this..
Hopefully, this uploaded correctly... Thanks for asking...

 

[Esme Es Mejor]

You went back 8 years, to make your argument? Interesting...
Could you do that for data as of now? Because that's what really matters to anyone.....today... No?

Yes, unless you have a time machine & can see how these companies are performing in 2027, you need to go back in time to establish a historical track record.

I apologize to everyone else on the thread for responding to you.