TSLA Market Action: 2018 Investor Roundtable

[replicant]

Look at the numbers of viewers of 60 minutes. (roughly 10 Mill)60 Minutes TV Show on CBS: Ratings (Cancel or Season 51?)

Then look at number of viewers of JR interview (17 mil so far)

Old media is dying.

The problem is that TV audience is probably the one that needs most convincing about the benefits of EV.

Fossil fuels might be irremediably dying, but they sure dies slowly with Trump in the White House.

 

[lascavarian]

OT premarket comment regarding heat shields.

Launch BFR empty, swing by moon and fill water tanks with moon water from moon orbit. Fill fuel tanks on swing around earth, add crew and then on to Mars. On way use water as protection from cosmic rays and over time move the water from internal tanks onto the surface of the ship as ice applied on a stabilizing matrix. Use the empty internal water tanks as human space and assembly space for other tasks during transit. Use ice as heat shield on Martian entry. There are several challenges unmentioned but I think doable.

If we can organize moon water without having to raise it from Earth's gravity well, then there are interesting possibilities for it's use.

 

[Krugerrand]

That article is more than 12 months old.. depends on your definition of new..

Ok, so as someone being critical of the written date of that information (and I assume data, otherwise no reason to point out the date), feel free to explain to us what exactly has changed in the 12 month period to make it now inaccurate. Take your time, I’m here for the rest of the year.

 

[printf42]

OT

OT premarket comment regarding heat shields.

Launch BFR empty, swing by moon and fill water tanks with moon water from moon orbit. Fill fuel tanks on swing around earth, add crew and then on to Mars. On way use water as protection from cosmic rays and over time move the water from internal tanks onto the surface of the ship as ice applied on a stabilizing matrix. Use the empty internal water tanks as human space and assembly space for other tasks during transit. Use ice as heat shield on Martian entry. There are several challenges unmentioned but I think doable.

If we can organize moon water without having to raise it from Earth's gravity well, then there are interesting possibilities for it's use.

Isn’t that a comet?
Are you suggesting comets are actually alien probs?

 

[Fact Checking]

I assumed remaining Autopilot deferred revenue was related to FSD and not EAP, so I assume this will start to be booked in March/April with AP3 hardware and traffic light/stop signs software. Are you sure there is still EAP purchases within deferred revenue?

I believe there's still significant non-FSD deferred AutoPilot revenue set aside, even from Model 3 sales. Tesla is (correctly) treating AutoPilot as part of the full-self-driving effort, and their revenue recognition language is somewhat ambiguous there.

I believe from a GAAP accounting point of view they probably have substantial discretion to declare milestones and recognize revenue - the benchmark is for people to not ask money back due to missing AutoPilot features, the the overwhelmingly positive reception of v9 makes that scenario unlikely.

Their FSD-option revenue was probably comparatively low anyway, because Tesla sales personnel actively advised against customers buying it. Anecdotally those who bought it did it to support Tesla and/or to future-proof their vehicles, not with any unrealistic expectations of meeting FSD feature completion estimates, which are subject to a significant Elon Time Dilation Factor.

 

[Krugerrand]

So the same guys who are criticizing Tesla for receiving government subsidies have been receiving subsidies themselves for decades? Sounds a bit sleezy, kinda like a car dealership.

Yes. That’s how many people work; do as I say, not as I do. Never mind me and what I’m doing, pay attention to what that person is doing. Judge his actions and words. Me, I’m good.

Basically: Look, squirrel!

 

[Fact Checking]

There may be some upside here, but I think part of the reduction in payables days in Q3 was due to reduced capex payables on lower capex (which i don't expect to reverse in Q4) and also due to Tesla delaying its payments as far as possible in 1H18 before it achieved model 3 targets/positive cash flow

This too is a bit murky and I'm basing most of my speculation on @luvb2b's excellent quarterly estimates thread.

I think capex outflows stayed comparatively flat from Q2 to Q3, and the surprise in Q3 was the lack of payables expansion despite the doubling of Model 3 production. Shorts invested a significant effort into trying to create a crisis of confidence on the Tesla supply chain side - for example the Washington Post article about "solvency" was I believe specifically targeted at the payables expansion in Q3.

That Tesla managed to generate so much cash in Q3 without a significant payables expansion and a comparatively significant bump up in receivables (thought to be a large bank) is a very robust result. In Q4 they could easily expand payables simply due to the much higher rate of production.

I.e. in Q2 they did 2k/week sustained, in Q3 4k/week - if in Q4 they get to around 5k/week they'd be fully justified to expand their Model 3 payables by a factor of 2.5x over Q2 levels.

 

[lascavarian]

Isn’t that a comet?
Are you suggesting comets are actually alien probs?

The moon is just a comet storage vessel it seems.

 

[bhtooefr]

A great personal lesson in my future endaevors too. No matter how brilliant and hard working your team is, design your manufacturing by only automating the heavy repetitive parts first. The slowly replace humans later with machines.

That said, design for automation is still important - a while back I saw a video on, of all things, IBM's ProPrinter dot matrix printer and the design for automation used there. They ended up using manual assembly anyway as it was significantly faster (IIRC 3 minutes per printer instead of 5 minutes), but because they designed it around highly automated assembly, it made manual assembly much faster and easier.

 

[viridi]

And, here comes CNBC - talked about 60 minutes interview. Focused on SEC comments and comments on new Chair. Jim Cramer - “this guy is his own worst enemy.” Made it seem like Musk said he would not follow the deal with the SEC. As anyone knows who watched the interview, Musk never said that - he said he did not respect the SEC, but would follow the deal because he respects the justice system. Musk not respecting the SEC is completely understandable. At a base level, the SEC comes after him for being open and honest regarding his thoughts about the company, yet the SEC does nothing about the blatantly false narratives used by the short sellers to manipulate Tesla’s stock. Again, his disdain is completely understandable, and his voicing this disdain once again shows that Musk is open and honest about what he is thinking. I for one would not want him to be any other way.

CNBC, being an alleged financial news network, should be focused on how unbelievably successful Musk and Tesla have been in changing the auto industry (and now turning a profit), rather than being a shill for the shorts.

 

[Right_Said_Fred]

I am under the impression that the term OT is being used more and more as a license to post stuff that is completely unrelated to market action or even Tesla. Please stop.

 

[Fact Checking]

• $920m convertible bond hedges: With Tesla informing bondholders it will satisfy conversion with 50% cash, It can now choose to close option hedges on $460m notional of debt. Depending on stock price/implied volatility, this could be a further cash boost to Q4.
• China bank loans: Tesla IR appears to be messaging that Tesla will fund GF3 with $1.3bn local debt paying 3-5% interest. The first tranche of this may be signed in Q4, boosting cash position and reducing average cost of debt.
• Service and other business upside: Service revenue should continue to scale with auto revenue and total fleet size and better leverage the cost base leading to reduced gross profit losses. Increased outsourcing of vehicle trade ins may also improve profit and working capital of this business.

Interesting point on closing half of the hedge contracts - their counter-party bank might even give them a premium to do that, to reduce the risk of a significant stock price breakout. Nevertheless I believe Tesla would be wise to keep those hedges, as they will eventually pay big bucks - but this could indeed be one way to improve Q4 results.

Regarding China bank loans: good point, although calling in a credit line wouldn't count as cash flow from operations I think- but it would improve their cash position.

Good point on service - although I suspect they'll still keep those around 0% margin so no significant bottom line impact, but maybe some cash position improvement?

 

[Todd Burch]

ON-topic:

Premarket went from approx. +7 pts (at least as far as I saw) to now +0.79.

Shorts trying to distort things before open? Maybe MMD is early today.

Edit: Now back up to +2.

 

[tivoboy]

"We don't think so?"

I did not watch the entire interview, but did they show this?

View attachment 359775

The first image shows scale.

View attachment 359776

This second image shows economies of scale through standardization.

Great charts. Best thing about these charts is they are going to look the same or BETTER even for Tesla and certainly WORSE for most of the others for most likely the next 12 months

 

[Fact Checking]

ON-topic:

Premarket went from approx. +7 pts (at least as far as I saw) to now +0.79.

Shorts trying to distort things before open?

I don't think so: $TSLA almost exactly followed NASDAQ futures into a big spike up of about 1% (which $TSLA typically follows in a magnified fashion) - then NASDAQ futures gave back all of those gains and are now roughly flat.

 

[Krugerrand]

What upsides/downsides do you see that would make it "better than Q3 in every metric"? Here's what's driving my forecast:

Downsides:
- Lower Model 3 ASP (~$3-4k)
- Lower Model 3 margin (MR and less P/AWD)
- Impact of tariffs (mentioned in guidance)
- Higher SGA
- Potential drop in S/X margin due to very high margins in Q3, low sales in China, and Q4 discounting

Upsides:
- 5-10,000 more Model 3 deliveries, which should help (labor hours, depreciation benefit, etc.) offset the margin impact of downsides above
- Continued improvement in production efficiency

And here’s what drives my forecast for the future; the guy walking his talk, dragging the likes of every naysayer, OEM, short, ugly inside, judgemental prig kicking and screaming like little girls who’ve lost their dollies.

Elon Musk is for real. If a 10 year reflecting back doesn’t illuminate that for you then you’re one of the described above. And your slow witted. Don’t get down on yourself, though, not everyone gets to be smart and a good person.

Short term market action: white noise. How much value you place on white noise and how closely you pay attention I suppose depends on if you’re looking for a poltergeist. I assume they’re among us, but TSLA isn’t one of them.

 

[EVNow]

Look at the numbers of viewers of 60 minutes. (roughly 10 Mill)60 Minutes TV Show on CBS: Ratings (Cancel or Season 51?)

Then look at number of viewers of JR interview (17 mil so far)

Old media is dying.

But what is the demo of the viewers ? How many are likely to buy a Tesla in each group ?

TSLA has been up in pre-market. Once as high as 365, going down almost to 258 10 minutes back.

On open, up $2. NASDAQ almost flat (down 0.1%).

 

[Krugerrand]

Speaking of Bob Lutz, where on earth is he right now? Shouldn’t he be cheerleading the Volt 2, You know, the next Tesla killer?

I’d love to sit down with him, replay the 60 Minutes Overtime reputation comment along with every Tesla sucks comment he’s ever made and then look him in the eye and ask him; How’d that work out for you? Are you going to your grave proud of being a total asshat?

 

[SOULPEDL]

$TSLA resisting news crap. Still up.

 

[EVNow]

Looks like TSLA is getting resistance at 364.