TSLA Market Action: 2018 Investor Roundtable

[CuriousSunbird]

Seriously, WHAT cash hole? If they kept spending as much on capex each quarter as they have been -- which they will not, they've said they're spending less -- and they don't make *any* improvement in car sales, which they certainly will -- they have enough cash to get into the first quarter of 2019.

That's why we're saying 12 months - we are including the $900 million due in February.

 

[neroden]

I cannot believe this call...

This guy is Chairman and CEO of a 50B+ company. He's taken like 7-8 questions from a YouTuber? While scolding press and real investors?

Not real investors. Analysts.

I'm a real investor and I'd like to get a question in. These guys employed by investment banks probably don't actually own a single share of TSLA themselves.

 

[CuriousSunbird]

Seriously, WHAT cash hole? If they kept spending as much on capex each quarter as they have been -- which they will not, they've said they're spending less -- and they don't make *any* improvement in car sales, which they certainly will -- they have enough cash to get into the first quarter of 2019.

Moody's reiterating today: “We continue to expect that Tesla will need to raise new capital approximating $2 billion — in the form of equity, convertible notes, or debt — in order cover a cash burn during 2018, and to refund a total of $1.3 billion of convertible debt that matures in late 2018 and early 2019.”

 

[ggr]

The basic problem is that we don't understand how he covers his cash needs over the next 12 months and he won't give any credible explanation.

a) What cash needs? He has 5 houses in LA, one in San Diego, and some number in the Bay, so no accommodation costs. (Well, property tax I guess.) His travel is expensed to one of the companies. He paid cash for his cars. Ummm...
b) none of (y)our business.

 

[22522]

Not real investors. Analysts.

I'm a real investor and I'd like to get a question in. These guys employed by investment banks probably don't actually own a single share of TSLA themselves.

Another way to think of it is: Elon sees these people as car dealers. Another limited value add distribution channel that should actually have no voice. The YouTuber is a surrogate for retail investors.

You know how Elon feels about car dealers.

Elon did the right thing.

 

[copyhacker]

Moody's reiterating today: “We continue to expect that Tesla will need to raise new capital approximating $2 billion — in the form of equity, convertible notes, or debt — in order cover a cash burn during 2018, and to refund a total of $1.3 billion of convertible debt that matures in late 2018 and early 2019.”

Jonas, referencing a cash raise this year: “You don’t need to, or don’t want to?”
Elon: “No.”

My favorite moment of the call.

 

[Waiting4M3]

Jonas, referencing a cash raise this year: “You don’t need to, or don’t want to?”
Elon: “No.”

My favorite moment of the call.

The next line is better

"I specifically don't want to"

 

[Sudre]

This is actually fantastic. I love what Elon did because the report was actual not bad compared to expect and many of us were hoping for this dip to buy more. Most likely if Elon had not done what he did we would not have got a dip this deep to buy more and we’d be buying at higher prices. Plus some shorts might have started covering. Now they are going all in too.

I picked up more shares and calls. Now I just have to sit back and ignore the noise for a few quarters.

 

[ggr]

The real traders are starting to come back from lunch. If there is a pop, I think it will begin soon. Also macros are improving.

 

[NicoV]

That's why we're saying 12 months - we are including the $900 million due in February.

Isn’t it common to replace due loans with new loans in the business world? If not, we would have nothing but companies that repay their loans, there’s no banking business to be built around that.

 

[Causalien]

There's no such thing as bad publicity IF Tesla recognizes it and uses it to his advantage. A 1 hour long conference call where one word in a 2 minutes worth of content involving "Next" generated I don't know how many views. You can't buy this.

 

[phil0909]

Isn’t it common to replace due loans with new loans in the business world? If not, we would have nothing but companies that repay their loans, there’s no banking business to be built around that.

Sure it's common. The other options are simple repayment, and default.

 

[CuriousSunbird]

Isn’t it common to replace due loans with new loans in the business world? If not, we would have nothing but companies that repay their loans, there’s no banking business to be built around that.

It certainly is. But the problem is that the worsening of Tesla's credit position since August, the downgrade into the C range and the performance of the Reg S bond over the last 6 months means, in my opinion, that the unsecured debt market for Tesla is either closed or prohibitively expensive. Convertible issues generally only work when there is some momentum around the stock. That leaves equity, which makes sense but which Musk is saying he won't do.

Combine that with a working capital deficit of negative $2.3 billion and contracted payment obligations running at about $5 billion per year for the next few years, and the liquidity position looks scary. Musk's refusal to address it is bizarre.

 

[Irishjugg]

The basic problem is that we don't understand how he covers his cash needs over the next 12 months and he won't give any credible explanation.

Literally everyone else here knows how they will cover their cash needs over the next 12 months.

By already having more than they need for that time frame, and by being cash flow positive in 3 months.

It's actually really simple math.

 

[RobStark]

Mod: No betting in this thread. Ruthless enforcement. --ggr.

 

[ZachF]

The next line is better

"I specifically don't want to"

I think the most positive thing about this earnings call was the implication that Tesla was going to take a slower, safer route to increasing production.

Tesla has been growing revenue by about 75% per year since 2013, but in order to do that it's had to go in the red pretty deep, and the biggest risk to Tesla was tripping over itself while it tries to run too fast. Tesla has gone from $2 billion in revenues in 2013 to likely $20+ billion this year.. Five years from $2b to $20b... It took Amazon about ten years to accomplish that!

Once M3 revenues/production stabilize next year, going for a more modest 25-30% growth rate that could be funded with current revenues makes sense. That gets Tesla to ~$100b/y in revenues by 2024. That's roughly the growth rate Amazon has taken since it got in the double digit billions of revenue.

For comparison to other US auto OEMS.
Ford is $156b last year, and has had a 20 year CAGR in revenue of 0% (lol)
GM is $146b with a 20 year revenue CAGR of.....(drum roll).... -1%

 

[SunCatcher]

a) What cash needs? He has 5 houses in LA, one in San Diego, and some number in the Bay, so no accommodation costs. (Well, property tax I guess.) His travel is expensed to one of the companies. He paid cash for his cars. Ummm...
b) none of (y)our business.

And besides, if he needed cash, he could rent all those places out for a few months, as he's sleeping on a crowdsourced sofa at the factory...

 

[SteveG3]

[snip]

The only remaining bear case is believing that Musk is psychotic or lying through his teeth. Neither is plausible.

yes. nearly all the financial media now is implicitly just Seeking Alpha repetition of these with some polish.

 

[Causalien]

Disclaimer: In kind of a surly mood.

I'm so tired of random thoughtless bearish posts on here. Sunbird is one of the few bears I haven't yet ignored so hes the winner of todays Tenable free money give away!

I've never thrown out a bet on an internet forum, but given that I play a ton of poker this is how I handle annoying arguments in person. Everyone has an unshakable opinion until money is involved, then suddenly they run out of things to say. So Sunbird, I have an open offer for you. You think TSLA will run itself into the ground, I feel otherwise. I will bet you up to 100k at 1 to 1 that TSLA closes at $300 a share or above on Jan 15 2020. We place the money into escrow immediately, I'll cover the escrow fees and just for fun we can post the proof here.

If you want to bet a smaller amount thats completely fine as well, the amount is fairly irrelevant. But please put your money where your mouth is. The only caveat is that if you wish to wager a small amount, we split the escrow fees. Consider this a juice free short with a significant edge. Your welcome.

Edit: If interested please PM me and we can make arrangements for the escrow.

Edit 2: I'd like to add one additional stipulation. The loser of the bet has to post a very brief video clip apologizing for their poorly researched position, sincerely expressing regret over the money they have lost while explaining what they should have done differently. Offer expires in 24 hours.

I kind of need Sunbird here so I don't have to waste time going to other forums to hear what the shorts are saying.

 

[Tenable]

I kind of need Sunbird here so I don't have to waste time going to other forums to hear what the shorts are saying.

Fair enough. Though, If he takes the bet he's certainly not going anywhere.