TSLA Market Action: 2018 Investor Roundtable

[Waiting4M3]

sideshow stuff.

the discussion of bankruptcy in general is a sideshow, the fact that it is not effectively challenged, let alone readily and thoroughly debunked by the financial media is quite informative about the quality of media "coverage" of Tesla.

Tesla bankruptcy in the next year or so? My rough estimate, under 1 in 25 million.

1) Odds that Tesla needs funds before finishing ramp to 5K/week and generating funds to take care of debt? 15%

2) If 1), odds that Tesla could not raise such funds via a cap raise or debt offering if needed? 1%

3) If 2) odds that Elon Musk could not and would not use a small fraction of his over $10 billion in SpaceX holdings to pay finance Tesla's viability (something with far more extreme precedent)? under 0.05%

That is one in over a million right there.

4) if 3) odds that Tesla would not be bought out for at least $20 billion? 20%

So, less than one in 5 million that about $125 isn't something of a floor. I'd put the odds that all these events happen and no suitor comes other than a government bailout at less than one in 25 million. Odds of a Tesla bankruptcy in the next year or so under 1 in 25 million.

Again, the fact that "Tesla bankruptcy" chatter is not debunked by the financial media, and the confidence of those making such absurd claims is not called into question by the media are both quite informative about the quality of media "coverage" of Tesla.

I suspect in shorts' view, 1), 2), and 4) are all 100%. So it comes down to Elon using his SpaceX equity to bail out Tesla. This is why there is such a split between longs and shorts.

I think shorts also have a parallel path, If not 1), Tesla gets to 5k/wk without raising cash, what is the chance that M3 will provide enough cash for Tesla to continue borrowing for MY etc.

 

[SteveG3]

Also, when Barclays, UBS, Moodys & Jeffries all say that Tesla will need at least $2 billion in extra cash over the next 12 months, what are you seeing that they are missing?

The only one I've seen in any detail is Moody's. They are raising the possibility of Tesla not having enough money from operations to cover debt coming due and expenses and so needing to raise funds. They are not saying that is a certain outcome. I would be surprised if the the other 3 do not say the same thing. I agree with any of them (probably all of them) that say it is a possibility but not a certainty. As you can see in my post above, I estimate that possibility at 15%.

 

[CuriousSunbird]

I suspect in shorts' view, 1), 2), and 4) are all 100%. So it comes down to Elon using his SpaceX equity to bail out Tesla. This is why there is such a split between longs and shorts.

I think shorts also have a parallel path, If not 1), Tesla gets to 5k/wk without raising cash, what is the chance that M3 will provide enough cash for Tesla to continue borrowing for MY etc.

I do agree that the personal Musk bailout is a risk to bears (particularly as many of us are bearish via puts, not via shorting). I don't think it will save the company, since I think the company is structurally money losing, not merely illiquid, but I think it would certainly wipe out a lot of bear positions in the short/medium term.

 

[TradingInvest]

sideshow stuff.

the discussion of bankruptcy in general is a sideshow, the fact that it is not effectively challenged, let alone readily and thoroughly debunked by the financial media is quite informative about the quality of media "coverage" of Tesla.

Tesla bankruptcy in the next year or so? My rough estimate, under 1 in 25 million.

1) Odds that Tesla needs funds before finishing ramp to 5K/week and generating funds to take care of debt? 15%

2) If 1), odds that Tesla could not raise such funds via a cap raise or debt offering if needed? 1%

3) If 2) odds that Elon Musk could not and would not use a small fraction of his over $10 billion in SpaceX holdings to pay finance Tesla's viability (something with far more extreme precedent)? under 0.05%

That is one in over a million right there.

4) if 3) odds that Tesla would not be bought out for at least $20 billion? 20%

So, less than one in 5 million that about $125 isn't something of a floor. I'd put the odds that all these events happen and no suitor comes other than a government bailout at less than one in 25 million. Odds of a Tesla bankruptcy in the next year or so under 1 in 25 million.

Again, the fact that "Tesla bankruptcy" chatter is not debunked by the financial media, and the confidence of those making such absurd claims is not called into question by the media are both quite informative about the quality of media "coverage" of Tesla.

This is the intelligent way to look at the situation, way smarter than those bankruptcy FUD. But why the media keep talking about this in a dumb way? Because SteveG3 is not paying them to publish. We don't need to wake up the shorts. Let them keep digging.

 

[madodel]

lose money on each additional S and X they make. intellectually disingenuous.

can't make money selling a $100,000 car, how will they make money selling the Model 3? intellectually disingenuous.

need for large amount of capital and no easy way of getting it? intellectually disingenuous (see post #8639 immediately above).

Perhaps this thread needs a pinned post listing all these points that are incessantly brought up (short/long) so people stop doing drive bys and declaring they have all the answers and the TSLA Market folks are too mean to play. We go through the same endless speculation (by both desperate shorts and desperate longs) every few weeks.

 

[SteveG3]

I suspect in shorts' view, 1), 2), and 4) are all 100%. So it comes down to Elon using his SpaceX equity to bail out Tesla. This is why there is such a split between longs and shorts.

I think shorts also have a parallel path, If not 1), Tesla gets to 5k/wk without raising cash, what is the chance that M3 will provide enough cash for Tesla to continue borrowing for MY etc.

I strongly suspect the bulk of shorts very much feel as if they want other people to believe those things, but, in fact, do not actually believe those things themselves. intellectually disingenuous. emotionally very honest... they feel as if they really really want people to believe this stuff- look at how hard they push it into media "coverage" of Tesla : )

 

[jhm]

I think most bears are saying that (i) Tesla is making a huge loss and has, in our view, little chance of making a sustainable material profit, and (ii) that Tesla is in need of a large amount of additional cash/capital and has no easy way of getting it.

How are those points disingenuous?

There are unfounded opinions here like "little chance of making a sustainable material profit" or "has no easy way of getting [capital]." In fact, Tesla has had very little difficulty attracting capital, and if you believe that is currently overvalued, that would just be proof of the point. Also fact is that Tesla has be growing revenue organically more than 50%/y as long as it has been public. A growth rate like that requires a lot of front loaded investment and spending. Once is slows revenue growth down, profitability is expected and quite doable. So the question is how sustainable is this high revenue growth rate? It is disingenuous to ignore this kind of organic growth and fixate on profitability.

 

[Curt Renz]

CNBC focused on the comments by Chanos about Musk leaving. This narrative seems ridiculous.

I think it more likely that Gwynne Shotwell will be promoted to SpaceX CEO so that Elon can devote nearly full time to Tesla. Elon has lately been singing high praise about Gwynne. Greater focus on Tesla by Elon could insure that it meets the established goals for his compensation package. Once those are triggered, he could then invest his personal receipts in SpaceX for quicker development of its Mars projects.

 

[ggr]

Mod: I am moving a lot of this discussion from now on to a separate thread: CuriousSunbird: Tesla must raise capital . The reason for this is simple: it's getting snippy on both sides, and we're getting complaints about phantom posts (where a member is being ignored and the replies don't make sense without context). Take all the back-and-forth there please. --ggr.

 

[viridi]

Love it! CEO of Dunkin’ Brands (another co. that Chanos ripped this a.m.) on CNBC right now debunking the Chanos negative thesis on Dunkin’ Brands. Nice to see someone fighting back against the self-serving negativity that Chanos spews. Hopefully, Musk/Tesla debunks the Chanos Tesla thesis next Wednesday.

 

[madodel]

Perhaps we need Chanos to declare Tesla heading for bankruptcy everyday to keep an upward momentum going.

 

[bdy0627]

Should be an interesting close today. Shorts aren't going to want us above $284.

 

[sweter]

I think it more likely that Gwynne Shotwell will be promoted to SpaceX CEO so that Elon can devote nearly full time to Tesla. Elon has lately been singing high praise about Gwynne. Greater focus on Tesla by Elon could insure that it meets the established goals for his compensation package. Once those are triggered, he could then invest his personal receipts in SpaceX for quicker development of its Mars projects.

I think Musk's heart is in SpaceX more than Tesla. I think he said it multiple times in the past (maybe not directly). Tesla is on a good trajectory and has very solid foundations already, while SpaceX is still in its infancy and there are much more interesting problems to be solved there. Remember, Musk is an engineer, not a businessman, and a good engineer loves challenging problems.

Also, SpaceX's challenges are not the kinds you can throw money at. Tesla's challenges can be partially resolved with more money.

 

[Zaxxon]

That seems really irrational to me. Toys r us went bankrupt with 31,000 employees. I didn't hear anyone talk of them being too big to fail. Tesla had 37,500 employees at the end of 2017. Jonas is projecting that to be 50,000 by 2020. He uses the argument that auto-related jobs support up to 7 other jobs in the economy. GM in 2009 was considered too big to fail given the circumstances. It received about $50B in government assistance to make it through bankruptcy. GM is way way bigger than Tesla, with 180,000 employees. You also have to consider all of the GM dealers who would have been affected. I would not expect Tesla to be provided with $50B of government assistance, or whatever might be necessary, to help it through bankruptcy if that became necessary.

I don't think 'too big to fail' covers it, exactly. I agree that Uncle Sam would be unlikely to come directly to the rescue were Tesla to actually approach bankwuptcy. But Tesla also is not GM or TRU in another, more important IMO metric: customer interest. Neither GM nor TRU had by-a-wide-margin record-setting $1k down deposits for a sight-unseen vehicle. Neither GM nor TRU are upending a massive established industry. Neither GM nor TRU are considered in nearly the same light in terms of consumer fervor as Tesla.

So my view is that if Tesla were to come close to failing, someone like Google or Apple, or Tencent, etc, would scoop them up and largely continue with the plan. We know this was essentially lined up in 2013 with Google but never actually executed as Tesla recovered.

 

[K_Dizzle]

Should be an interesting close today. Shorts aren't going to want us above $284.

I wish the volume was larger but I’ll take a 2% green day anytime

 

[Iceman]

198 Teslas delivered in Norway in thelast 4 days. Averages out as 49.5/day. April '18 approaching being 10x YoY.

642 thus far in April.

Nicely done Norway...

 

[Todd Burch]

Strong close.

 

[Waiting4M3]

I think Musk's heart is in SpaceX more than Tesla. I think he said it multiple times in the past (maybe not directly). Tesla is on a good trajectory and has very solid foundations already, while SpaceX is still in its infancy and there are much more interesting problems to be solved there. Remember, Musk is an engineer, not a businessman, and a good engineer loves challenging problems.

Also, SpaceX's challenges are not the kinds you can throw money at. Tesla's challenges can be partially resolved with more money.

That may be the case, until the bears choose to pick a fight with Tesla, now Elon is getting serious about "placing your bets"

 

[vinvin218]

The Biggest Mistake Tesla Short Sellers Are Making Right Now


The Biggest Mistake Tesla Short Sellers Are Making Right Now

 

[RobStark]

That seems really irrational to me. Toys r us went bankrupt with 31,000 employees. I didn't hear anyone talk of them being too big to fail. Tesla had 37,500 employees at the end of 2017. Jonas is projecting that to be 50,000 by 2020. He uses the argument that auto-related jobs support up to 7 other jobs in the economy. GM in 2009 was considered too big to fail given the circumstances. It received about $50B in government assistance to make it through bankruptcy. GM is way way bigger than Tesla, with 180,000 employees. You also have to consider all of the GM dealers who would have been affected. I would not expect Tesla to be provided with $50B of government assistance, or whatever might be necessary, to help it through bankruptcy if that became necessary.

Any retail jobs lost in a community are made up by other retailers.

Local retail jobs lost to online retailers can't be saved.

Retail jobs are not growth engines.

Manufacturing and engineering jobs are because they bring in outside monies.

I don't expect a Federal bailout of Tesla if it came to that.

I do expect California and Nevada putting a package together if it came to that where 90% of the funds are from the California State government.

The vast majority of Tesla non-retail jobs are in California and Nevada.

At the time of the bailout the vast majority of GM Jobs were not in the US. GM had and continues to have vast engineering, manufacturing, and executive labor outside the US. It is really a Sino-American company now.