TSLA Market Action: 2018 Investor Roundtable

[defc0n]

I mean, try flipping a coin. Heads — buy. Tails — sell. Do that 100 times, and chances are good you’ll get a hot streak. You could easily be right 7 times in a row. That’s just statistics.

Also, when you have untold thousands or millions of people trading in the stock market, you are going to get a small number of people who have uncannily long hot streaks. Again, that’s just statistics.

Has @option_sniper had all their predictions tracked and benchmarked against the S&P 500 or the total stock market?

For TSLA I find it useful for determining local tops and bottoms not spanning more than a few weeks. It’s human psychology. Why did I think 250 would be a likely bottom when the stock was dropping? Because it was a bottom not long ago. It can save you a few bucks. I definitely don’t use TA beyond that. And yes it often won’t work because real news events trump it every time (cough SEC cough WSJ cough DOJ cough).

Trading off candles in TSLA can definitely help. It works only because traders agree to adhere to it, sometimes making it self fulfilling.

To date I’ve made more on TSLA when I first started trading it rather than buying and holding. I can provide proof if you’re really curious. Obviously doesn’t guarantee that will be the case in the future for me.

Admittedly, a lot of that was just trading off known upcoming news events (earnings & deliveries). But was in combination with very crude TA.

 

[ValueAnalyst]

Ok market action. When can we expect Moody's to upgrade? If there's at least some chance they won't (which I have no idea about) then when they do that would be an event.

It's a shame that Moody's hasn't upgraded Tesla already, frankly. Maybe they are waiting for Tesla to pay down/off the converts, or their valued clients who are caught short to cover first before the upgrade pushes the stock higher? Difficult to know which one.........................................

 

[Remus]

I like to wander into lion’s dens and tell people what they don’t want to hear. Because I hate myself

I actually agree with you that before further evidence we should not take full self driving capabilities into account when evaluating the company. Although even as a convenient feature it has lots of value. I also agree that nobody should bet their entire life saving on one company. I think quite a few people here share that view.

Arguing Tesla's biggest potential is to get the size of Toyota is where got people pissed.

 

[mongo]

Yes, exactly. It’s just spitballing. Like, back of the envelope math.

I don’t like that you were dinged for being “too pessimistic” in a scenario... where I imagine Tesla still increases its valuation since you said it’s still a great case? I think it’s good to consider all kinds of scenarios, from worst case (bankruptcy) to bad case to meh case to good case to best case. Considering all the possible outcomes doesn’t make you (gasp) a traitor.

It’s a bit disconcerting when I see people posting about buying more shares than they can afford. And then attacking anyone who thinks Tesla will be worth less than $17 trillion. It reminds me too much of the crypto community. Where people mortgage their houses to buy Bitcoin and then send death threats over max block size. Or where even among enthusiasts and people who bet a lot of money, there is very little discussion or understanding of the technology and almost zero discussion of valuation modelling. I’ve talked to someone who had most of their net worth in crypto (which was far more than my net worth) and didn’t know what delegated proof of stake is. The online crypto communities are mostly just people obsessively watching the price and hyping each other up. Hoddddddllllllllllll....!

Ethereum has a market value of $20 billion and, when I was researching it, I couldn’t find a single valuation model on the Internet. I searched pretty extensively and asked around. It’s crazy that something could be valued at $20 billion and apparently no one is talking about how much it’s worth. I dived pretty deep into the topic and then I realized with shock that the value of 1 Ether could end up being inversely correlated with the success of the Ethereum platform, which is a hell of a realization. If you value Ether like a currency rather than like equity in a company, the result totally flips. When I tried to discuss this idea online, the reaction was mostly dismissive and hostile, as (unfortunately) you’d expect. I could be totally wrong, and I’m still holding about 30% of the Ether I bought in case I am (it’s a very small amount), but I was a little shook by that experience. It feels like scary irrational exuberance. Ether holders might make lambo money, but if they do, it will be by luck. Because it seems like no one is trying to figure out how to even value it.

So, my point being, money and the feeling that you’re part of a righteous cause can make people act in shocking ways. You can be right that Ethereum will be an incredibly disruptive, world-changing technology and wrong that the value of Ether will increase over time. You should at least check, and be open to the idea that you’re wrong. With Ethereum I had that moment of, “oh my god, my whole thesis is wrong.” With Tesla, I want to explore any counterargument I find. If I’m wrong, I want to know as soon as possible, so I can sell while I’m up or at least minimize my losses.

The idea that if you’re part of the Tesla tribe you have to cheer all ideas about Tesla being a multi-trillion dollar enterprise and boo all ideas about Tesla being potentially overvalued... that’s unhealthy. That’s irrational exuberance.

We should thank the skeptics because they’ll either a) show us our error, saving us money or b) increase our alpha.

Bitcoin and Eth are wacky because their value is somewhat tied to how hard they are to mine now (acquisition cost) but have no value outside that unless someone wants it to unlock your ransomware computer...

I wasn't dinged much, but it may be helpful to say if you are doing a worst case, optimistic, theoretical or realistic model when putting out numbers. That way people know if you are illustrating or predicting.

 

[MXWing]

Not relevant actually. The refund of the $5K to the car still makes it worth less. I am willing to bet that the seller, if they got the refund, would still try to sell the car for the same price as those who did not. Transferable or not. The car was purchased for 5K less. In my mind it is worth 5K less.

Are you telling me that you are going to pay the same resale price for a car that you now know is worth 5K less?

Actually asking that question has made me rethink my position. Elon just made the resale value of all performance model 3 worth less because the true price is now questionable. It seems all the buyers that paid the extra $5k should take the refund because all the cars will be valued 5K less without the free superchargers.... which goes away once the original owner sells it. He just tacked on an immediate $5k loss. Everyone should get their Tesla rebate now.

You are over complicating it. Price is market conditions at the moment of sale. Not one variable dictates resale value.

I suggested to Elon / Tesla to make FUSC stick with the car and all will be well.

 

[Freder Reeve]

They changed it after that. My 2018 spec sheet says “Free unlimited supercharging will only apply to the original vehicle owner and only for the duration of original vehicle ownership.”

free supercharging is only transferred with 2016 or older vehicles

 

[Matias]

Holy heck... still catching up on the comments, so maybe someone else already pointed this out, but.... has anyone else done the math on how much money Fred bullied Tesla into giving up? They may have sold, what, 15k performance upgrade packages thusfar (Q3 plus the start of Q4)? 15000 * 5000 = 75 million dollars.

Fred just cost Tesla four times what the SEC settlement did.**

** - At least in the short term. In the long term, the lack of free supercharging will benefit them, but Tesla has a huge time-value to money; a little money invested in infrastructure today earns them a massive amount of money in the future.

It was Elon’s decision to refund 5k.

 

[KarenRei]

It was Elon’s decision to refund 5k.

Yes. To stop the "media" attack launched by Fred.

 

[UnknownSoldier]

It was Elon’s decision to refund 5k.

The fact that a $20 billion CEO kowtowed to some guy on the Internet with a blog sending him tweets absolutely should be questioned at this point. Elon needs to know who he is at this point. He should have told Fred "Free Roadster" Lambert to go pound sand. Every other Tesla owner since the first original Roadster left the manufacturing facility (they didn't even have a factory then!) has had to deal with sudden price changes and if you've been around Tesla long enough it's very likely you've gotten screwed by a sudden price or feature or package change yourself. Everyone else isn't a big name with a blog though so we all just ate it because last I checked saving humanity from climate change still takes priority. Except if you're Fred Lambert apparently, we now know that in the mind of Fred Lambert, only Fred Lambert takes priority.

 

[Matias]

Yes. To stop the "media" attack launched by Fred.

If Fred’s article was groundless, why Elon decided to refund? Electrek is not that powerful.

Does Elon refund 5k every time some blogger criticises something?

 

[S3XY]

Exactly, Tesla is generating twice as much cash from revenue as Amazon, and Tesla is growing into a new EV market that is 10-30 times larger than Apple's markets (!): global automotive is 2-3 trillion dollars annual - and well above 10 trillion dollars with Energy, Autonomy and Ridesharing included, a substantial percentage of world GDP.

My highest, top end valuation for $TSLA, if everything goes perfectly in the next 5-15 years and every competitor messes up, has thus six digits per share.

Which is obviously and admittedly a low probability outcome at this stage, but between $330 and that figure there's a lot of pathways to really big numbers.

 

[AWDtsla]

Not relevant actually. The refund of the $5K to the car still makes it worth less. I am willing to bet that the seller, if they got the refund, would still try to sell the car for the same price as those who did not. Transferable or not. The car was purchased for 5K less. In my mind it is worth 5K less.

Are you telling me that you are going to pay the same resale price for a car that you now know is worth 5K less?

Actually asking that question has made me rethink my position. Elon just made the resale value of all performance model 3 worth less because the true price is now questionable. It seems all the buyers that paid the extra $5k should take the refund because all the cars will be valued 5K less without the free superchargers.... which goes away once the original owner sells it. He just tacked on an immediate $5k loss. Everyone should get their Tesla rebate now.

That fact that you guys think the resale value was affected by 5k is laughable. It's like you have no idea how used car pricing works, or are somehow obsessed with the present value of a car you own now, which you won't sell for years.

 

[Right_Said_Fred]

Holy heck... still catching up on the comments, so maybe someone else already pointed this out, but.... has anyone else done the math on how much money Fred bullied Tesla into giving up? They may have sold, what, 15k performance upgrade packages thusfar (Q3 plus the start of Q4)? 15000 * 5000 = 75 million dollars.

Fred just cost Tesla four times what the SEC settlement did.**

** - At least in the short term. In the long term, the lack of free supercharging will benefit them, but Tesla has a huge time-value to money; a little money invested in infrastructure today earns them a massive amount of money in the future.

- No way did Tesla sell 15000 Performance packages. They didn’t even makes that many Performance models. According to the Q3 statement the percentage of people taking Performance is the same as for Model S and X (that must be the reason why they are now including the package for free, to make the Performance model more attractive).

- They sold probably a few thousand packages max (it wasn’t cheap!).

- Not all those people are going to hear about the offer to get the $5000 back.

- Not all of those that hear about it will want to give up free supercharging.

- From those giving up free supercharging Tesla will get income in the coming years, making the refund cost less.

All in all I think max 2000 to 2500 people will ask the $5000 back and that will cost Tesla maybe $3000 per person. So total ‘damage’ will be $6 mln to $7.5 mln. Not $75 mln.

 

[AWDtsla]

You are over complicating it. Price is market conditions at the moment of sale. Not one variable dictates resale value.

I suggested to Elon / Tesla to make FUSC stick with the car and all will be well.

No I suggest they don't, because I don't want to wait at a supercharger when traveling because somebody wants their free electricity.

 

[Matias]

It's because he acted like a petulant spoiled brat. Obviously Tesla could have made the change less abrupt. But he basically got Elon to quit twitter.

One blogger is more powerful than CEO?!

 

[Buckminster]

Just looked up Electrek on Youtube. Last week's podcast got 3000 views and 10 comments only. Most will watch direct from the website but that is a pretty poor showing for Youtube. He should include more cats.

 

[Artful Dodger]

FYI: Somebody just 'liked' my comment from 94 pages ago...
That's two days worth.

 

[MXWing]

No I suggest they don't, because I don't want to wait at a supercharger when traveling because somebody wants their free electricity.

Travel chargers are always going to be safe.

I live by chargers where people argue over line cutting and I have mediated disputes personally.

I am not a fan of FUSC and prefer it be taken from everyone despite having two cars that have it.

It incentivizes bad behavior per Elon even. At this point it’s a lesser of evils that take doesn’t sap capital from Tesla and solves the PR mess.

 

[strangecosmos]

Arguing Tesla's biggest potential is to get the size of Toyota is where got people pissed.

I mean, I didn’t argue that. But even if I did, why should people get pissed? Toyota is a $200B company. That’s 4x growth, which is great. And if even if someone argues that Tesla’s valuation should be no more than GM’s or Volkswagen’s, why should people get pissed? Why would it make you angry if people disagree with your investment thesis? Shouldn’t you welcome disagreement, since it helps sharpen your thinking?

I actually agree with you that before further evidence we should not take full self driving capabilities into account when evaluating the company. Although even as a convenient feature it has lots of value.

I’m invested in Tesla primarily because of self-driving (even though I can’t say with certainty it will arrive; no one knows the future) so my view is kind of the opposite.

Lately, I’ve been thinking about Benedict Evans’ argument that an EV company isn’t any more intrinsically disruptive or valuable than an ICE vehicle company. Without autonomy, what makes Tesla deserve a tech company P/E ratio or P/S ratio (or other valuation multiple)?

The infotainment system is nice, but Apple CarPlay and Android Auto can do the trick in other cars. Tesla is competing against Apple and Google in infotainment software. In newer cars that have big juicy new touchscreens, using CarPlay is like using an iPad. It’s great. Even Fiat Chrysler’s Uconnect is pretty good. A car’s infotainment system also just matters a lot less than a phone’s OS because in a car you’re just driving and using the infotainment for a limited set of apps: maps/nav, podcasts, music, radio, heat/AC, backup camera, etc. Pretty good is good enough.

There is a difference between **a)** Tesla is a wonderful new car brand with great software, great design, a great ADAS, and a lead in electrification that can have sustainable success and **b)** Tesla is a should be valued like a software company with an OS duopoly or cloud triopoly.

(b) is only true if Tesla launches the Tesla Network. (a) increasingly feels to me like the best scenario if Tesla doesn’t launch the Tesla Network. Software companies with duopolies/triopolies have such high valuation multiples because 1) making software doesn’t use up much capital and producing a unit of software costs none, and 2) their market share and thick margins are relatively safe because of their duopoly/tripoly status, thanks in large part to network effects.

I’m not sure about this. I could be wrong. But I think if you subtract autonomy from the equation, it’s hard to argue why Tesla should be valued like a software company. Without autonomy, cars don’t have network effects or duopolies/triopolies/software-like market share consolidation. Car factories use up a ton of capital, and a car (unlike a unit of software) costs a lot to produce.

Maybe Tesla will have outsized market share of the global car market. Okay, but why? What’s to stop incumbents like GM, Volkswagen, Toyota, et al. and upstarts like Lucid, Faraday, BYD, NIO, Dyson, and possibly Apple from **eventually** catching up on batteries and electric drivetrains? Being first doesn’t make you a winner. Palm was making smartphones before Apple. Even if you gain outsized market share in car sales, there’s no reason that will stay entrenched.

I read about a study that found, surprisingly, most of the time there is no such thing as a first mover advantage. First mover advantages tend to be in winter-takes-all or winner-takes-most markets like OS software or social networks or ride-hailing. In manufacturing / consumer goods, there isn’t really a mechanism to support them.

Some argue that ICE automakers will go bankrupt and Tesla will take their sales. Okay, but bankruptcies have happened before. I can see the U.S., Germany, and Japan bailing out their automakers. China is supporting its electric automakers. Governments will bankroll these competitors even if private investors won’t. It’s also possible that private investors will turn over a new leaf and fund electrification / tolerate a temporary transition phase of losses and negative free cash flow. Changing investors’ mind is kind of the point of Tesla, isn’t it?

I think the idea that Tesla will just bankrupt all the other companies and take over the global auto market overlooks a) how willing governments are to bail these companies out and b) the trillions in capital sloshing around looking for new opportunities — the bigger and more attractive the EV opportunity for Tesla turns out to be, the more investors will want a slice of that pie.

This isn’t to say that Tesla can’t achieve 1.5x or 2x or 4x growth. That would still be a great outcome. But 20x, or 30x... or 340x... that is harder to plausibly model.

 

[Anstandswauwau]

Reminder: Tesla put Lambert on their sh*tlist for leaking the 2019 interior refresh. Per pure coincidence that's also when all the (subtle) negative articles started to pop up on Electrek.

Classy guy.