TSLA Market Action: 2018 Investor Roundtable

[Unpilot]

It's called divesting - or "making an exit" as the kids say...

Or being stuck between a rock and a hard place.

 

[cheshire cat]

It's even closer to both the Chicagoland area, as well as the Indiana/Michigan/Ohio tripoint, making it not too far from some major automotive manufacturing.

And component manufactures ?

 

[heltok]

BMW management to BMW customers:

"BMW Exec: 85% Of Our Cars Will Still Have Engine In 2030"
​

BMW customers to BMW management:

"By 2030 85% of us are going to buy new cars elsewhere, thank you very much."
​

Brilliant business plan!

So which car brand do you want to own? The one that tried to save the planet and forced the other car manufacturers to become environmentally friendly, or the one that didn't think saving the planet was that important and and last minuted decided that they had to make EVs to win back their customers.

 

[bhzmark]

from the article you linked:

"The shorts’ tactics, however, extend well beyond the trading room. As the nonprofit advocacy group Citizens for Responsibility and Ethics in Washington (CREW) lays out in a recent white paper, shorts are active in anonymously feeding false and misleading information about their target companies to friendly analysts and bloggers while using social media to attack the intelligence and motives of those who view the company favorably."

Let no mistake be made; the smokey bird gang and their affiliates in this forum do exactly this stuff. One of them the other day capitalized on TrendTrader's absence to make baseless assertions about him being a naive trust fund kid with no life experience. TrendTrader is a damn doctor. Medical type. One example of many. These people are not hard to spot after a while. Remus is also one of them. Not all of them are blatantly negative. The personas work in concert to keep discussion banal, misdirected, off-topic, useless, overly personal, irrelevant, exhausting... you get the picture.

Remember it's Fear, Uncertainty, and Doubt. Watch these guys closely. Imo ban them all. They contribute nothing and actively work against the interests of all longs.

I disagree with banning the people who run the bear arguments on this forum. It is good to have the best possible challenge to your views to test them. If anything watching, and sometimes participating, in the communications with bears here and on twitter is useful evidence that their arguments are pretty weak. One issue is the ad hominem nature of many of their arguments -- they are clearly often just trying to make themselves feel better by demonizing their nemesis. But even when they try to make rational fact based arguments, they are pretty weak.


In communcating with them directly, I find it easy and effortless to apply facts and reason to their arguments, or even ask simple questions which reveal their weaknesses. I even get a little joy from doing so. shrug. I say let them stay and if you really don't like to read what they write then put them on ignore.

 

[Joe F]

Did you hit the Kancamagus too?

Did that last year, sadly it was a bust for fall foliage. Might head out today, or might head over to Vermont. Up in the air, kind of like Tesla’s SP.

 

[ZachF]

I believe a prospective Camry customer has not just two behavioral states ("buy Camry" or "buy Model 3"), but an important third state as well: "keep old car, defer purchase of a new Camry, wait one more year to see how these newfangled EVs work out").

I believe it is this third state of consumer demand that will bankrupt a lot of ICE companies, not EV sales directly: EV supply is limited and cannot expand fast enough - but consumer distrust of ICE cars and deferred purchases can spread arbitrarily broadly in the market...

Just witness 2008-2009: there was a ~50% drop in new car sales within 12 months, mostly due to economic uncertainty.

That your new ICE car is slow, uncool, loud, dirty, stinky, expensive to fuel, expensive to maintain and has a much steeper depreciation curve than in the past is a pretty significant "economic uncertainty" factor as well, affecting the ICE automotive segment.

According to surveys 20% of all Americans already want their next car to be an EV, up sharply from 15% in 2017. Could easily be 30% in 2019.

During this period, IMHO, the depreciation rate of ICE automobiles will plunge ICE sales before EV sales completely take off... This will collapse the current collateralization model and force the cost of a new ICE automobile up. (higher interest rates, down payments, lower trade-ins, etc.)

Will be an interesting form of market reflexivity.

Autonomous cars will also reduce the average new vehicle demand in the US, since one aEV can replace many individually owned cars. I think US sales will eventually fall to a new equilibrium of 8-10m units a year.

 

[Fact Checking]

Duration of this management? max. 1 year

Well, BMW and most other ICE makers are in an impossible economic scenario: they have a pipeline of investments focused on making millions of ICE cars, which investments must earn back their costs, i.e. all those ICE cars must all be sold, and at the expected profit margins.

That pipeline of ICE investments has expected depreciation schedules of 5-10 years.

These ICE companies have huge inertia, with an annual new capacity of maybe 5%. They cannot convert to EVs faster, especially if there's a collapse in ICE demand. And they absolutely must not write off hundreds of billions of dollars worth of obsolete ICE factories...

Another problem ICE manufacturers like BMW have is that they have one core competency, one big competitive advantage: the internal combustion engine and powertrain and patent moats around them. They are outsourcing even the assembly line for premium cars, not to mention R&D.

So if you take away the ICE powertrain, what is left? Not much ...

That's the "ICE paradox", in a nutshell.

 

[ZachF]

Should also add, I expect most other western countries will see the average new vehicle demand drop by half. Since aEVs could potentially reduce the cost of transportation, lower income countries should see less declines because the lower cost will allow more people to purchase autonomous ride services.

In the US, since we are a net importer of autos (17m sales vs 12m manufactured) and Tesla could make us a small net exporter of EVs, I think overall the US auto manufacturing sector wont get hurt as bad.

Large exporters of ICE automobiles could (Japan, Germany) see huge economic problems during this transition, with auto manufacturing declining by 60-80%

 

[jeewee3000]

NOV 2 350-380 calls are pretty affordable. Not advising, but damn they’re cheap...

They're cheap 'cause they're extremely risky. Might as well put all your money on red at the nearest roulette table and you'll at least have a decent chance of doubling your money.

Yes, this is an advice to those that are new to options and ponder the Nov 2 350 calls.

 

[ZachF]

Well, BMW and most other ICE makers are in an impossible economic scenario: they have a pipeline of investments focused on making millions of ICE cars, which investments must earn back their costs, i.e. all those ICE cars must all be sold, and at the expected profit margins.

That pipeline of ICE investments has expected depreciation schedules of 5-10 years.

These ICE companies have huge inertia, with an annual new capacity of maybe 5%. They cannot convert to EVs faster, especially if there's a collapse in ICE demand. And they absolutely must not write off hundreds of billions of dollars worth of obsolete ICE factories...

Another problem ICE manufacturers like BMW have is that they have one core competency, one big competitive advantage: the internal combustion engine and powertrain and patent moats around them. They are outsourcing even the assembly line for premium cars, not to mention R&D.

So if you take away the ICE powertrain, what is left? Not much ...

That's the "ICE paradox", in a nutshell.

Yep.

There are many auto manufacturers now that basically outsource everything but the engine... And the weak compliance EVs they push out outsource the batteries to companies like LG/Samsung/etc so there they outsource practically everything.

The short's argument that ICE auto manufacturers are going to be able to throw out huge amounts of competitive EVs at will is silly.

 

[shlokavica22]

They're cheap 'cause they're extremely risky. Might as well put all your money on red at the nearest roulette table and you'll at least have a decent chance of doubling your money.

Yes, this is an advice to those that are new to options and ponder the Nov 2 350 calls.

The IV is very high these days - Tesla Inc. (TSLA) Implied Volatility Chart
That adds even higher risk to the short term bets.

 

[BenPrice]

They're cheap 'cause they're extremely risky. Might as well put all your money on red at the nearest roulette table and you'll at least have a decent chance of doubling your money.

Yes, this is an advice to those that are new to options and ponder the Nov 2 350 calls.

Hell yeah they’re a risk, lol. If somebody is so new to options that they don’t understand that then they need to watch 1 4 minute YouTube video called Options 101 instead of buying anything.

But lower than ATH and post earnings for $100? Yes Sir, I like those odds. In the money is 10 to 1 plus. My belief is that it is higher than 10% chance the SP crosses 360 post earnings.

You play poker ever? If not...winning poker involves finding the better odds and betting it. For example, if you have a 1 in 8 chance to win a hand and the bet you have to call is $10 into a $200 pot...

Gambling is gambling, but to compare a blind 50/50 to an option purchase is in genuine.

 

[Right_Said_Fred]

Anyone know of some large abandoned facilities in that area?

The Studebaker Museum is located in Mishawaka, Indiana. Is it a coincidence that SF Motors bought the shuttered Hummer-plant in that town to start production of its electric SF5 and SF7 models in 2018/2019?

'Trial' production to start in 2018 at Mishawaka car plant

What is the status of those plans? Did they perhaps fall through and will Tesla take over the plant? Just some unfounded speculation.

There are also ofcourse several shuttered car plants in southern Michigan (Lansing, 100 miles away).

 

[KarenRei]

Well, BMW and most other ICE makers are in an impossible economic scenario: they have a pipeline of investments focused on making millions of ICE cars, which investments must earn back their costs, i.e. all those ICE cars must all be sold, and at the expected profit margins.

That pipeline of ICE investments has expected depreciation schedules of 5-10 years.

These ICE companies have huge inertia, with an annual new capacity of maybe 5%. They cannot convert to EVs faster, especially if there's a collapse in ICE demand. And they absolutely must not write off hundreds of billions of dollars worth of obsolete ICE factories...

Another problem ICE manufacturers like BMW have is that they have one core competency, one big competitive advantage: the internal combustion engine and powertrain and patent moats around them. They are outsourcing even the assembly line for premium cars, not to mention R&D.

So if you take away the ICE powertrain, what is left? Not much ...

That's the "ICE paradox", in a nutshell.

I think it's simpler than that: they don't want to stop paying dividends. Investors would riot. Meanwhile, Tesla not only pays no dividends, investors would riot if they did pay them. Old-school car companies like BMW simply don't have investor support for spending the sort of money it takes to transform themselves.

Their investors are turkeys who vote for Thanksgiving.

 

[cheshire cat]

On the other hand, if in the future Tesla pursues "tent" approaches heavily, along with modular production lines, they very well could relocate facilities at a fraction of their construction costs should the geopolitical environment for a given facility become unfavourable.

Exactly, advice from my hero (1) Robert Townsend (approx 1964?) if the whole thing is too much trouble -- leave town, just as true today

 

[gora321]

That's important!

These ICE companies have huge inertia, with an annual new capacity of maybe 5%. They cannot convert to EVs faster, especially if there's a collapse in ICE demand. And they absolutely must not write off hundreds of billions of dollars worth of obsolete ICE factories...

If you add recession around a corner (sooner or later), repeated sales story of Tesla from USA and ICE car-makers resistance to transform...only few of them will survive (if any).
I can tell you walking dinosaurs are around.

 

[Cohiba]

What would be the most interesting ICE manufacturing stock to short?

 

[Chocochip]

THIS is the real problem with short sellers - collectively they're a bunch despicable liars and FUD-spreaders, supported by a corrupt media, desperate for clicks and advertising revenue.

Two things I'd add here, which may be relevant for perspective:

1. Many (possibly a majority of) private short-sellers don't create and aggressively push FUD, at least not with the knowledge it's FUD. If we as longs hear some good news reg. Tesla we will happily disseminate that news. The same goes for many shorts - they hear some negative news which reinforces their position on the stock, so they'll be happy to disseminate it. The exception is the creators of said FUD. Our main problem is with them.

2. Info coming from the shorts doesn't carry the same weight as info coming from a company's management. That's why the stock price is typically not in the gutter completely (never mind the past week). I fully understand your frustration with the lack of accountability for whatever is put out by people with a short interest in the stock, but that is partly compensated by the weight that info carries. For instance, whenever Bob Lutz shows up on CNBC to let everyone know that based on his extensive experience there's no way Tesla doesn't lose money on every car they make, some people take it at face value and short the stock, some others simply ignore it. But when EM tweets something regarding Tesla, everyone takes it at face value (except Marky-boy and his psycho pals) and accountability becomes important.

 

[Drax7]

BMW management to BMW customers:

"BMW Exec: 85% Of Our Cars Will Still Have Engine In 2030"
​

BMW customers to BMW management:

"By 2030 85% of us are going to buy new cars elsewhere, thank you very much."
​

Brilliant business plan!

Time to Consider shorting ICE manufacturers , possibly with puts.

Those with the lowest free cash flow to sales ratio and highest debt burdens.

 

[Chocochip]

Well, Elon did tweet from the Studebaker Museum in South Bend, Indiana yesterday. That's real close to a 'tri-state area' as he mused about a while back for potential Model P production, so he could be looking around for a new production site.

That right there is whatever anti-FUD would be. If FUD is all about making logical jumps to come to a negative conclusion about the future of the company, this is a logical jump to come to a positive conclusion.

You might well be right about your assumption. I hope you are. But it's still a logical jump. So if we as longs do this without clearly stating it's just a WAG, we become guilty of the same sin.

My point is, we cannot have the moral high ground to attack shorts for spreading FUD while we're spreading anti-FUD. Anti-FUD is not true facts. Anti-FUD is positive assumptions that are not fact-based, meant to get people excited about the stock.