TSLA Market Action: 2018 Investor Roundtable

[TradingInvest]

I don't get what you're saying. Hypothetically if you borrow to buy more shares, and the stock increases over time more than the interest rate, mathematically you win. If Tesla does appreciate at 30% per year, as seems likely, and you are borrowing at 3% interest rate, you effectively come out ahead at the appreciation rate - interest rate = 27%. Plus, you may be able to write off the interest.

I realize if the stock goes down, you would lose by the depreciation rate + interest rate. = 33%.

Am I missing something?

If you can identify and have the discipline to buy at the bottom, margin can be very profitable. Most people get aggressive at the wrong time. Then volatility can wipeout those margin users.

Warren Buffett recently said buying with borrowed money can impair our judgement at critical times (when truly amazing opportunities come, we are out of money and only worrying about margin calls). It does impact my judgement, so I totally agree with him.

 

[Todd Burch]

TSLA is roaring back, as expected. Once the report rained on the shorts’ parade and discounted their moronic theories, sense has returned.

Hope everyone bought back there. This has been one of the biggest TSLA gifts for those with granite testicles since that first run I enjoyed back in 2013.

 

[Waiting4M3]

TSLA is roaring back, as expected. Once the report rained on the shorts’ parade and discounted their moronic theories, sense has returned.

Hope everyone bought back there. This has been one of the biggest TSLA gifts for those with granite testicles since that first run I enjoyed back in 2013.

Based on early January price history after Q4 delivery report, where the run up didn't start until Jan 8 and continued to Jan 23, run up can be delayed while the street digest the info, and can continue for a week or 2. Coupled with the lack of resistance levels all the way up to $290s, this could go on for a while.

 

[elasalle]

Days like this, I like to go on a LONG hike in my SHORTS

 

[kbM3]

If you can identify and have the discipline to buy at the bottom, margin can be very profitable. Most people get aggressive at the wrong time. Then volatility can wipeout those margin users.

Warren Buffett recently said buying with borrowed money can impair our judgement at critical times (when truly amazing opportunities come, we are out of money and only worrying about margin calls). It does impact my judgement, so I totally agree with him.

Yeah. I was margined at $320, but not max. I actually almost sold at $250, but ended up buying more at $245 & today at $265.

Don't know if it will be worth it even if it really pays off in the long run, because all of this week I've been practically sick with worry and what if's.

Edit: It does seem like a crazy good price considering we've basically just received word they are still on target for numbers and gross margin. At whatever level of comfort anyone had when the price was in the $300's that this stock was a good long term buy, should be even higher that it is a great buy right now.

 

[dc_h]

Th

Nobody wants to buy Tesla products....

sales:
2012: $413m
2013: $1,998m
2014: $3,193m
2015: $4,046m
2016: $7,000m
2017: $11,759m

This year will probably be ~$20b, and $30b is likely for next year.

BMW sales are around $100b/y, so it'll be getting within spitting distance of big boys, amazing what has been accomplished in such a short time.

Think about it this way: tsla can pass 2015 revenue in q2 and possibly hit 2016 revenue in q4. Q4 at 7 billion is more of a stretch, but within reach.

 

[jhm]

Nobody wants to buy Tesla products....

sales:
2012: $413m
2013: $1,998m
2014: $3,193m
2015: $4,046m
2016: $7,000m
2017: $11,759m

This year will probably be ~$20b, and $30b is likely for next year.

BMW sales are around $100b/y, so it'll be getting within spitting distance of big boys, amazing what has been accomplished in such a short time.

This is foundational to Blind Faith. The essence is that Tesla will continue to grow revenue faster than 50% each year out into the mid 2020s.

Certainly, if Tesla maintains the grow rate witnessed over the last 4 years (56%/y), then it can reach $100B in 5 years, 2022.

 

[Richard007]

Ah relief! Pure joy. Confirmation being a long is the way to be.

Making the world a better place and making extraordinary amounts of money by getting early and sticking with it.

Margaritas all around tonite!

I’m also gonna donate money to TMC and you should consider doing so also.

 

[pz1975]

I am more in margin than I have ever been and am happy about it. I thought $315-325 was a good deal. I steadily bought more at $290, 275 and 260, and then really loaded up between $250-255. This is one of those times that a few years from now we will look back and lament why we didn't buy more!

As the share price climbs, I will slowly unload some of my J20 LEAPS until I am out of margin.

 

[brian45011]

As long as MS/X are production constrained, I don't see any problem in Q1's 24,728 production total. The low delivery total is just delayed payment for Deepak's Q4'17 financial maneuvers, refilling the inventory/showroom cars. Not great, but not unexpected. I'm sure the SA crowd will receive that negatively. I hope long term investors will not be so short sighted.

Finished Goods Inventory dropped $405 million in Q4, from $1.4 billion at the beginning of the quarter to $1 billion at the end. Assuming most of the decline was generated by clearing "new" S & X vehicles, rather than used cars or inventory write-downs, that should have prov ided about $540 million in Cash from Operations ( @25% GM).

In 1Q18, 24,728 Ss & Xs were produced and 21,800 delivered for a difference of 2,928 cars, but during the same three month Ss & Xs in-transit increased from 2,520 to 4,060, so the net new "un-sold" Ss & Xs added to Finished Goods Inventory is about 1,400 cars. Ceteris paribus, that uses (reduces) Cash from Operations by about $120 million in 1Q18.

 

[Waiting4M3]

Finished Goods Inventory dropped $405 million in Q4, from $1.4 billion at the beginning of the quarter to $1 billion at the end. Assuming most of the decline was generated by clearing "new" S & X vehicles, rather than used cars or inventory write-downs, that should have prov ided about $540 million in Cash from Operations ( @25% GM).

In 1Q18, 24,728 Ss & Xs were produced and 21,800 delivered for a difference of 2,928 cars, but during the same three month Ss & Xs in-transit increased from 2,520 to 4,060, so the net new "un-sold" Ss & Xs added to Finished Goods Inventory is about 1,400 cars. Ceteris paribus, that uses (reduces) Cash from Operations by about $120 million in 1Q18.

Sounds about right, in Q4, Tesla delivered 28,320 MS/X, while producing 22,140, so they "borrowed" about 6k cars into their inventory. "Paying back" about 1400 cars is only about 1/4 done, and could likely continue into Q2/3 or more.

On a related note, inventory car sales count towards the US 200k car threshold right? so this "borrowing" and "paying back" of inventory car should not be tweaking the 200k threshold timing, right?

 

[Zaxxon]

On a related note, inventory car sales count towards the US 200k car threshold right? so this "borrowing" and "paying back" of inventory car should not be tweaking the 200k threshold timing, right?

Correct. Inventory vehicles are sold as new, so they count against the 200k total.

 

[dc_h]

Good to see shorts advertising on CNBC today. Many updates
Best quote to me:
DeCaprio called Tesla's production numbers "irrelevant" to him because the company has not proven it can "build a car without incinerating boatloads of cash in the process."

I think this is bullish bi get worried when the bulls are too cocky and we will be at $1000 in six months and bullish when bears can’t see any logic putting them at risk. Intellectual certitude is often a sign of hubris or laziness.

 

[Irishjugg]

Ok, dipped my little toe into the pool and picked up a whopping two shares today! Tried to grab it at $252 but didn't go until $259. Using it partially as a teaching tool for my 10 year old son who is my "investment partner".

First time buying stocks direct, have only done funds in the pass. Does somebody have a little Kool-Aid to pass down?

Welcome!

Don't freak out when the stock tanks hard someones in the future. We just experienced that and we will experience it again. As an indep person you probably realize that already, but the volatility here is much higher. If the fundamentals of the company and your positive impression of that doesn't change, then selling into gear would be bad.

Congrats to your investment partner as well

 

[Reciprocity]

The math is not easy, but I think everyone recalls that Tesla showed a profit in one quarter. This was right before they started to ramp the spending for Model 3. If Bears are confused, that would be a good thing to study. How did they possibly do that? I mean, they were not even delivering 100,000 S/X at that time, though that might have been the first 24k+ quarter. Tesla has the ability to make 2400 Model X and S per week but they cut back from 24 hours to 20 hours in terms of shifts. This was impart because those two models are very mature at this point and they can squeeze just a bit more while cutting 4 hours a day from production. They could ramp that back up at anytime. That time might be at the end of Q2, just in time to maximize the tax credit phase outs. I think after the phase out is when you will see the 2170 cells in S/X. This will allow them to cut the price while updating the interior and maybe some minor updates to the exterior, like fancier lights.

My main point here is that Tesla is currently just positioning itself for July 1. That is when the clock will start ticking on the tax credits. They will want to be hitting their stride a few weeks before that. They will then flood the US market with as many S3X cars as they can. This might be why Canada is getting taken care this quarter. They can only sell as many as they have reservations for so I would guess that Europe would come shortly after they start to run out of the second set ($3,750). That would more then likely be Mid 2019.

This July 1st quarter (Q3) is also a good time to start to become more cash flow positive. I could see them ramping up Mode S/X while also ramping model 3 so that they can be doing upwards of 7500 total vehicles as week, 2500 S/X and 5000 3s. The revenue from that volume would be about the same as 5000 model S a week or more then 450M a week and more then 20% GM. Its going to be a crazy 12 months as they crank out 350-400k cars from the start of Q3 2018 to the end of Q2 2019. I could imagine them showing a profit during that time period.

 

[TradingInvest]

Yeah. I was margined at $320, but not max. I actually almost sold at $250, but ended up buying more at $245 & today at $265.

Don't know if it will be worth it even if it really pays off in the long run, because all of this week I've been practically sick with worry and what if's.

Edit: It does seem like a crazy good price considering we've basically just received word they are still on target for numbers and gross margin. At whatever level of comfort anyone had when the price was in the $300's that this stock was a good long term buy, should be even higher that it is a great buy right now.

$250~260 is a crazy good price for long term buy without too much downside risk. I think the situation is similar to 2012 when Model S was ramping production, shorts claimed Tesla will bankrupt. In both cases we know Tesla has zero chance to bankrupt, because in the worst case the company can be sold for higher price.

If I used full margin, I would try everything to raise cash from outside, work harder, take a second job, work as a bartender, sell stuff online... dramatically reduce spending. Use extra cash to bring down margin when I can. I don't want to sell TSLA shares. These will reach several thousand dollars a share within 10 years.

For those who have the discipline to work hard and save like crazy to bring down the margin, I think buying as many shares as possible is smart, even if they used margin. They will gain a lot in the long run.

My concern is some people just buy with full margin, sit there hoping they will get rich. One big temporary drop they get a margin call, then they panic and sell everything.

 

[brian45011]

Ok.. Franz is the Fonz because he brings the cool factor to Tesla. Elon is Richie because he is basically a kick-ass director and Apollo 13.. duh. And Kimball is Ron Howard's creepy brother Clint Howard. JB is Chachi. Sorry JB.

If Google buys Tesla, the Fonz is gone because Franz ain't putting all that crap lidar and on his beautiful designs. Richie aka Elon is off to direct the Apollo sequel,. Apollo 2021 BFR FTW. Kimball, aka Ron Howard's creepy brother will still be creepy and JB will start his own new EV company (Joanie loves Chachi spin off) which is basically what every one does when they leave Tesla.

This is about as likely a scenario as had been discussed here.

What has "Chachi" been up to lately? He's seems to be flying under the publicity radar since buying into the re-cycling company, Redwood Materials, about a year ago.

 

[Waiting4M3]

$250~260 is a crazy good price for long term buy without too much downside risk. I think the situation is similar to 2012 when Model S was ramping production, shorts claimed Tesla will bankrupt. In both cases we know Tesla has zero chance to bankrupt, because in the worst case the company can be sold for higher price.

If I used full margin, I would try everything to raise cash from outside, work harder, take a second job, work as a bartender, sell stuff online... dramatically reduce spending. Use extra cash to bring down margin when I can. I don't want to sell TSLA shares. These will reach several thousand dollars a share within 10 years.

For those who have the discipline to work hard and save like crazy to bring down the margin, I think buying as many shares as possible is smart, even if they used margin. They will gain a lot in the long run.

My concern is some people just buy with full margin, sit there hoping they will get rich. One big temporary drop they get a margin call, then they panic and sell everything.

Like @dc_h mentioned above, the "bulls" who hope for $1000 PPS in 6 months will probably get crushed in a margin call. The ones who waits for $2000 in 5 years will get rewarded, as long as they stay patient and don't over leverage.

 

[gene]

Well, I picked up another 1,000 shares during this dip with my SEP IRA account (no tax liabilities). I still have my 1,500 core shares from 2013. I'm missing my Model S that I sold when I got my Model 3. The cargo carrying of an S or X is very handy for my business, and I love the smooth ride on long trips. I'm made myself a game that if TSLA goes up to $360 before April 30th, I'll order a new S or X almost paid for by the shorts! Insures me free Supercharging, and most likely insures full incentives. I was waiting for a refresh but the more I think about it, I think Tesla is only going to be making incremental upgrades to the S for a while to come. That and the fact I'm already 62 years old, I want to enjoy it now, not when I'm dead!

 

[brian45011]

The math is not easy, but I think everyone recalls that Tesla showed a profit in one quarter. This was right before they started to ramp the spending for Model 3. If Bears are confused, that would be a good thing to study. How did they possibly do that?

It was thoroughly discussed and reasonably well explained here. That was the "pie in Wall Street's face" quarter.

Net income for 3Q16 was $21.9 MM which included a contribution to the bottom line of $169.2 MM from regulatory credits. In the immediately preceding quarter (2Q16), the net loss was $293.2 MM with only a $20.2 MM contribution from regulatory credits. In the immediately following quarter (4Q16), the net loss was $219.5 MM with only a $40.9 MM contribution from regulatory credits.

Average those three quarters, and you will have a more realistic perspective of TSLA's performance before "they started to ramp the spending for Model 3."