TSLA Market Action: 2018 Investor Roundtable

[ValueAnalyst]

I fully agree with your assessment of this situation

Thank you. Unfortunately, we are in the minority, because of the incredible echo chamber TMC/investor base has become, leaving all dissent to TSLAQ nonsense. This is a significant risk factor, in my opinion.

 

[Unpilot]

The thing is it is not a fact that Elon f$cked up..it is an opinion ....one that IMHO is wrong.

Just because one or another "feels" he made a mistake is no reason for all the pearl clutching and nonsense we see here.

I have lost a ton of money...like many here...but I DONT blame anyone but myself.

Perhaps we could all take a minute and look in the mirror.

 

[dqd88]

It reduces the per-share value of future cash flows, ceteris paribus.


This isn't investment income; it's pure dilution for existing shareholders that value the stock at more than current price: i.e. all investors.

It's clear to me at this point that no one stands up to Elon at Tesla, and this, in my opinion, is by far the most significant risk to investors.

My understanding is that the $20M fine to Tesla was because they did not have proper procedures in place for twitter/financial communications. So one could reasonably say that Tesla, Inc should be punished so... Elon buying $20M in new shares is essentially a show of goodwill, and implies the unforced error was primarily his fault. He's owning up. Tesla fining Elon wouldn't be appropriate as Tesla does have some culpability for not having the procedures in place. Anywho we're just splitting hairs at this point.

 

[SpaceCash]

Thank you. Unfortunately, we are in the minority, because of the incredible echo chamber TMC/investor base has become, leaving all dissent to TSLAQ nonsense. This is a significant risk factor, in my opinion.

TSLAQ types don't even talk about real issues though, only imaginary/spun ones. So their input is worse than worthless. I welcome your genuine critiques of the company and I am very glad this forum has become less tolerant of the FUDsters lately.

This week has been tiring and dramatic. I'm securing my own 420 for after work.

Much love, don't trip about a thing <3

 

[HG Wells]

Just as long as I'm part of the audience at the Oprah special with Elon as her special guest where everybody gets a model 3, I'm fine with that!

Sorry to say they will be Matchbox 1/20th scale cars.

 

[Fact Checking]

Tesla should have fined Elon, as I stated many times.

That would have been a terrible idea for two main reasons:

• There's pending litigation, and a "fine" would likely have been admission of wrongdoing, increasing the cost of litigation way beyond the cost of any dilution - and possibly also inviting other litigants.
• IMO the SEC acted unlawfully and essentially abused their regulatory powers to blackmail Elon and Tesla into settling under duress. That the SEC should not have sued and that Elon would have won the lawsuit was an opinion also voiced by a former SEC lead counsel. The main reason Elon settled was to avoid collateral damage to shareholders. Fining Elon for acting lawfully would have been manifest injustice.

 

[Thekiwi]

At the risk of sounding like a broken record... I don't think the tax incentive is all that meaningful to EV sales. And I'm not sure that many people here believe it either: Tesla purchases are facing a reduced incentive next year, that expires next year as well. And yet (other than some bears) people seem to think that M3 sales will continue to increase.

If the government really wanted an incentive it wouldn't be reserved for the wealthier part of the population.

Just sayin'

IF the 200k cap limit dissapears and the full $7,500 is available on all tesla sales in the US until 2022 (which is what the Dean Heller bill is aiming for I believe) - that will have a sizable effect on the demand for the lower cost model 3 SKUs. $7.5k might not be that important if you can already afford a $60k tesla, but $7.5k is a huge deal if you are stretching to buy the $35k model 3 (which could see you paying as little as $27,500 for a new Tesla)

 

[ValueAnalyst]

My understanding is that the $20M fine to Tesla was because they did not have proper procedures in place for twitter/financial communications. So one could reasonably say that Tesla, Inc should be punished so... Elon buying $20M in new shares is essentially a show of goodwill, and implies the unforced error was primarily his fault. He's owning up. Tesla fining Elon wouldn't be appropriate as Tesla does have some culpability for not having the procedures in place. Anywho we're just splitting hairs at this point.

And who’s been screaming at the top of their lungs to stop the tweets? [Raises hand] Yes, Tesla should have had the controls in place.

Another sign that the investor base has become way too conforming: the same investors who are making the independent chair deal to be a positive outcome today... voted against it in June!!

 

[pnungesser]

I thought Tesla couldn't be directly reimbursed either, but there is no prohibition for Elon buying more stock and indirectly reimbursing Tesla.

I"m not sure Elon could trade on the market this close to the release of the earnings. He surely knows the results and it could be considered insider trading.

 

[Krugerrand]

I think you overthink. Even this kind of floods happen, a couple days of production disruption at max.

Meh. They’ll just build it on stilts or better yet on a big raft so it can float - tethered/anchored to the ground of course.

 

[dqd88]

My comment does move the conversation forward by putting it into perspective. The issue is less than marginal and should be treated as such. However because of your inability to weight an issue we have had the thread derailed for several pages.

I have been a lurker here for a long time, and certainly since before you started posting. Initially you posted wildly optimistic posts around production of the M3 and ignored responses that tried to temper your enthusiasm - then you became cynically disillusioned with Musk and thought he was full of it because those expectations were not met. Several times there have been comments like today's where there seems to be no capacity to weight the outcome of an event to the event itself. I'm honestly starting to question whether you are an analyst and exactly where you supposedly find value.

At least you have stopped hawking your Seeking Alpha articles - so props for that.

it's getting heated in here... grabbing popcorn...

we're all on the same team, right? everyone to their room for 30 minutes to cool off.

I think Value Analyst has a fair point in that the Elon basically owns the board and that has been a theme/criticism on the street. In principal, yes the Board should be more independently critical of EM.
But also, VA is harping on this $20M fine too much as it's fairly immaterial from an economic standpoint.

There - you're both right and wrong.

On the upside - when the new board directors are brought on, that SHOULD help with board independence and all that formal executive management stuff that the street so desires. So VA be happy - the shape of the board will move in the direction you want.

 

[BioSehnsucht]

A couple of good reasons:

• The Model 3 expansion was very capital intensive, and when the ramp-up got delayed by 6 month future capex spending was a done deal.
• The Model 3 had to ramp up and start earning money, to pay for itself and to grow revenue.
• Tesla Energy on the other hand is a lot less capex intensive and thus was easier to mothball temporarily.
• Had they ramped up TE instead the Model 3 capex flow would still have happened.
• So they had to move the Model 3 to beyond the break-even point.
• They were also cell output limited, to about 20 GWh/year. The Model 3 is a +500% value-add to every 2170 cell made, so in the short run it was a much better platform to leverage revenue up.
• Tesla also has big, valuable, 100% profit margin software products (AutoPilot) with large, constant R&D overhead. The best platform to leverage this investment is Model 3 sales.
• Tesla Energy will have high growth, a lot of customers arrive over a car purchase. So the route to scale up PowerWall demand is via increasing automotive unit sales: I.e. the Model 3.
• Tesla being in part a "story" stock, a lot depended on scaling up the Model 3.
• About half a million reservations with half a billion in cash already paid - had the Model 3 not ramped up people would have requested the deposit back.
• Half a million reservations maps to at least 20 billion future revenue - this was a lot more certain than a TE scale up of demand.

Really, there was no other option but to make the Model 3 work.

Now that cell production expands dramatically by the end of the year I'd expect a lot more focus on Tesla Energy.

I'm not saying they should have ramped TE at the expense of Model 3, but that since TE is simpler to ramp, they should have bankrolled more cell production that they'd need for Model 3 eventually anyways (instead of having to hit the brakes on it, causing a shortage later when they needed it most), and in the mean time used the "excess" to make TE products (and just scale back TE as Model 3 ramped up, until more cell lines are brought online to bring TE up again).

The lead time on cell capacity is quite long, so doing it sooner would alleviate a future bottleneck and with the benefit of hindsight since they missed their earlier targets for 2017 and early this year, if they already had that cell capacity they could have churned out tons of TE.

Hell, even if they didn't ramp cell capacity early, wasn't the existing cell capacity being underutilized in 2017 and early 2018? They could have been making more TE during that time that Model 3 couldn't use it, which would have encouraged Panasonic to keep increasing supply, and we might not have the bottleneck we do now while we wait for new lines to come up, as that would have already happened..

 

[MarcusMaximus]

Tesla should have fined Elon

Honest question: how would this work? Tesla is a private business. How would they be able to enforce such a fine? It seems legally dicey to me to send out a bill for $20 million for no services rendered. The only way I'd think they could do this would be for Tesla to sue Elon.

 

[Krugerrand]

I don't remember it at all. I don't believe it's related to any SP movement today.

Definitely before your time (here). But seriously, he just disappeared out of all Tesla news way back...like 2013 sometime might have been the last time I’d heard his name.

 

[ItsNotAboutTheMoney]

tt's not about the money (not to be funny) but about the WHY for the trivial announcement. Frankly, if I were paying for the companys' fine based on my rogue action, I'd probably just try and slip it into the federal filing and be done with it.

Musk buying 20M of stock is really trivial, the company accounting of that too is trivial. to me at least (and only apparently) it almost seems like they're trying to indicate some interest or confidence in the stock and therefore lets make some announcement.

It's literally equal to the amount that Tesla was fined!

If SEC had fined them $21,098,765 he'd have bought $21,098,765 in shares.
It's a public apology to Tesla for the harm he caused the company.

 

[omarsultan]

$7.5k is a huge deal if you are stretching to buy the $35k model 3 (which could see you paying as little as $27,500 for a new Tesla)

I see that argument a lot, but I have to wonder, if you are stretching to buy a $35K car, the credit is not going to help you with monthly payments and are you going to be owing enough taxes to be able to redeem the full $7,500 anyway?

 

[BioSehnsucht]

I see that argument a lot, but I have to wonder, if you are stretching to buy a $35K car, the credit is not going to help you with monthly payments and are you going to be owing enough taxes to be able to redeem the full $7,500 anyway?

In my experience, married filing jointly without kids for deductions it's easy to end up owing enough.

 

[MarcusMaximus]

I see that argument a lot, but I have to wonder, if you are stretching to buy a $35K car, the credit is not going to help you with monthly payments and are you going to be owing enough taxes to be able to redeem the full $7,500 anyway?

For the latter part, we shouldn't make any assumptions. Before buying my S, the most I had ever spent on a car was $9k(not a typo). There's a lot of people who might make a fairly good amount in federal taxable income without necessarily typically spending $35k+ on a car. Especially if you live in a high-cost state like CA.

 

[ValueAnalyst]

That would have been a terrible idea for two main reasons:

• There's pending litigation, and a "fine" would likely have been admission of wrongdoing, increasing the cost of litigation way beyond the cost of any dilution - and possibly also inviting other litigants.
• IMO the SEC acted unlawfully and essentially abused their regulatory powers to blackmail Elon and Tesla into settling under duress. That the SEC should not have sued and that Elon would have won the lawsuit was an opinion also voiced by a former SEC lead counsel. The main reason Elon settled was to avoid collateral damage to shareholders. Fining Elon for acting lawfully would have been manifest injustice.

Could you please provide support/link for “Elon would have won the lawsuit was an opinion also voiced by a former SEC lead counsel?” - thanks in advance.

 

[MissAutobahn]

The thing is it is not a fact that Elon f$cked up..it is an opinion ....one that IMHO is wrong.

Just because one or another "feels" he made a mistake is no reason for all the pearl clutching and nonsense we see here.

I have lost a ton of money...like many here...but I DONT blame anyone but myself.

Perhaps we could all take a minute and look in the mirror.

All longs, that do not mess with options, puts, calls or shorting but just "invest" their money for Tesla to become bigger and bigger had surely an exciting time this year but didn't lose anything except nerves with all the fud.

As for all the @KarenRei discussions about earthquakes and all other disasters that could happen:
IMO it is 10x more likely that some oil-idiots would take a plane to bomb Fremont and all other GF.
The disaster discussion is typical german angst ( that's why they need years and years to take decisions)