TSLA Market Action: 2018 Investor Roundtable

[neroden]

Followup: I think the majority of that production capacity for cars and batteries will come from China (CATL is an example). I think it is basicalky Tesla and China and Tesla brand value means Tesla gets the most profits. And there may be a pause as mines get financed but it will be no more than 3 years and compensated for afterwards.

 

[RobStark]

March 19, 2018 News of the Day: Sila Nano Announces Partnership With BMW for the Next Generation of Lithium-Ion Batteries, Mercedes Benz Working on Car Subscription Program for the U.S. - FutureCar.com.

Tesla did not make a deal with Sila nano, not because they did not like the technology, but because they want something available in large scale now, not in 5 years. So the Germans are taking EVs seriously, but their time-line is still long in the future, i.e. Tesla still has a 5+ year moat against them.

Pretty much every battery scientist working on SuperBattery says their tech is five years away.

If they say much longer they lose their funding. It is perpetually five years away.

 

[ValueAnalyst]

Not widely reported, but even Seth Klarman of baupost group took a small stake in Tesla notes.

BAUPOST GROUP LLC Top Holdings

IIRC Seth Klarman was previously praised by Buffett as a great value investor. This is an interesting development. Thanks for sharing.

ValueAnalyst on Twitter

 

[Cosmacelf]

The answer to your question requires a deep dive into several layers across dozens of global oil demand and supply factors, but in short, global oil supply is significantly below global oil demand, and the current price has not yet led to any narrowing in that gap.

Have we run through the storage glut we had? Ie, a year ago, there were lots of stories saying that there was a huge amount of oil just being stored.

 

[ValueAnalyst]

Have we run through the storage glut we had? Ie, a year ago, there were lots of stories saying that there was a huge amount of oil just being stored.

Yes, the "glut" is gone, and now the reverse is happening:

 

[SteveG3]

I'm running a naive extrapolation of the current exponential growth trend in production. There is some evidence that production may accelerate. I have reason to believe it won't slow down before 50% and probably not before 90%. The naive extrapolation gives 2030. Everyone always underestimates adoption, so I hedge my bets by saying that it might happen up to 5 years earlier.

To be clear, this is only new vehicles; sadly it will be at least a decade, probably more, to replace the installed base of vehicles on the road.

sounds a bit like what @jhm is doing in his forecasting of EV supply. I think it is very likely that this sort of extrapolation greatly overestimates the rate of future increase in production as 1) it’s so heavily based on China and Tesla while the 15 or so incumbent global automakers EV growth rate is tremendously less than Tesla and China, 2) if you actually look at the quality of the specific vehicles that are part of China’s contribution, so many of them are of a size and quality not likely to sell much at all in established auto markets. I can’t say anything specifically convincing on this point now as I only have a general memory of a deep dive I took a few months back on what these vehicles actually are, but, at the time it was apparent to me that more substantial vehicles (more time consuming and expensive to create production capacity) will be needed for the bulk of the Chinese automakers to keep that growth contribution going into established vehicle markets.

Followup: I think the majority of that production capacity for cars and batteries will come from China (CATL is an example). I think it is basicalky Tesla and China and Tesla brand value means Tesla gets the most profits. And there may be a pause as mines get financed but it will be no more than 3 years and compensated for afterwards.

agree. door is being left quite open for China and Tesla to have very very outsized role in this transition.

 

[GaryW]

Have we run through the storage glut we had? Ie, a year ago, there were lots of stories saying that there was a huge amount of oil just being stored.

Here is the far less readable data from the US government. You can see the glut is disappearing.

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCESTUS1&f=W

 

[ValueAnalyst]

Specifically, looks like the buy side wants 330 strike calls for March 2019. Their sell side strategy desk is suggesting long converts and selling 330 calls. Who in their right mind would sell these when Tesla is going to pivot hard towards profitability in H2.

Those who don't believe your last sentence? The current bear thinking is that 2H18 is temporary, which I believe is false.

 

[ZachShahan]

Oh man, can you imagine what this graph will look like in July? Oooooooh boy.

I created an estimate for May as well:

And I gave the larger automakers a hand by combining models:

Tesla Model 3 vs Small & Midsize Premium Car Competition (New Sales Figures & Charts) | CleanTechnica

Now, though, it's a little unclear whether or not Tesla is shipping a ton of cars to Canada till July. But, yeah, won't be long till I create a July chart.

But I think more interesting will be comparing the Model 3 to the top selling cars in the US: Tesla Model 3 = #21 Best Selling Car In USA. #15 In May? #6 In June Or July? | CleanTechnica

 

[wipster]

Hey, QTR just posted a Seeking Alpha article about JB's absence from the latest 10Q. A noted short, he's basically asserting JB may be on his way out. Anybody heard anything?

 

[Waiting4M3]

Hey, QTR just posted a Seeking Alpha article about JB's absence from the latest 10Q. A noted short, he's basically asserting JB may be on his way out. Anybody heard anything?

Totally false, JB was in the Q1 conf call, see the transcript

Tesla (TSLA) Q1 2018 Results - Earnings Call Transcript | Seeking Alpha

and JB also usually doesn't appear in the 10K or 10Q SEC filing. Deepak signs them.

 

[ZachShahan]

At this point, given GS's history of suspected "Chinese wall" violations, I think this is intended to give GS the chance to buy more TSLA stock cheap.

hey, nice seeing you here. that was my first thought.

 

[wipster]

Totally false, JB was in the Q1 conf call, see the transcript

Tesla (TSLA) Q1 2018 Results - Earnings Call Transcript | Seeking Alpha

I know, I listened to it (quite entertaining), but read the article... seems like he's saying this just occurred in the ongoing reorg. I rarely believe anything this guy says but...

 

[ZachShahan]

To put the situation in the car industry in the right prospective:

In April 2018 3171 BEVs were sold in Germany. This was 1% of total car sales in that month.
Out of these 3171 BEVs only 106 were made by Tesla. Tesla sales went down 36% in Germany and 31% in Switzerland during Jan-April 2018.

You see the need for urgency for German car manufacturers ?

— The German car market is not the global car market.
— Germans are more likely to stick to German brands.
— Yes, these brands are certainly feeling the pressure outside of Germany.

But hey, denial till collapse is also a strategy.

 

[mongo]

I know, I listened to it (quite entertaining), but read the article... seems like he's saying this just occurred in the ongoing reorg. I rarely believe anything this guy says but...

There was a wording change, but both version have a separate entry for Elon making the sentence semi-redundant, so it may have been a word smithing clean up, and not significant. Or else J.B. has a protegee and is less critical.

Q4 2017:

The loss of the services of any of our key employees could disrupt our operations, delay the development and introduction of our vehicles and services, and negatively impact our business, prospects and operating results. In particular, we are highly dependent on the services of Elon Musk, our Chief Executive Officer, and Jeffrey B. Straubel, our Chief Technical Officer.

None of our key employees is bound by an employment agreement for any specific term and we may not be able to successfully attract and retain senior leadership necessary to grow our business. Our future success depends upon our ability to attract and retain executive officers and other key technology, sales, marketing, engineering, manufacturing and support personnel and any failure to do so could adversely impact our business, prospects, financial condition and operating results

Q1 2018:

The loss of the services of any of our key employees could disrupt our operations, delay the development and introduction of our vehicles and services, and negatively impact our business, prospects and operating results. None of our key employees is bound by an employment agreement for any specific term and we may not be able to successfully attract and retain senior leadership necessary to grow our business. Our future success depends upon our ability to attract and retain executive officers and other key technology, sales, marketing, engineering, manufacturing and support personnel and any failure to do so could adversely impact our business, prospects, financial condition and operating results.

from SEC Filings | Tesla, Inc.

 

[wipster]

There was a wording change, but both version have a separate entry for Elon making the sentence semi-redundant, so it may have been a word smithing clean up, and not significant. Or else J.B. has a protegee and is less critical.

Q4 2017:
Q1 2018:

from SEC Filings | Tesla, Inc.

Good to hear from you Mongo! I just get a little concerned if anything points to JB no longer being part of the company. Hopefully this is just the Raven stirring the pot as usual. I say Nevermore!

 

[mongo]

Good to hear from you Mongo! I just get a little concerned if anything points to JB no longer being part of the company. Hopefully this is just the Raven stirring the pot as usual. I say Nevermore!

Thanks
J.B. is core, but I never hear of him taking a break. Hopefully, he is getting some quality non-Tesla time in the near future.

 

[sweter]

I would like to approach the stock side from a different angle and would like your honest input. I realize responses will be all over the map but I am interested in your thoughts.

Let's assume a reservation holder had say, $20,000 saved for a down payment on his Model 3. The money saved isn't necessarily do or die when it comes to getting his car so if he lost all of it he would still get the car (just not be very happy about it!). He was late to the reservation line and doesn't expect his invite to configure to come before August. With the current state of the stock price and everything we have heard regarding production increases, China opening up, etc. etc. Would it be wise to invest some/all of that money in Tesla stock at this point? If so, how much would you put on the line?

Curious to see what people would do.

Dan

This is pretty much what I'm doing, but more than a year ago. I've put in the whole expected price of the car ($55k) over the last 18 months. At average price of ~$230. It's not really that far from today's price, if you compare today's price against ATH which I think we'll see sometime in Q3 and fly past in Q4. As an Eastern European I will be getting my car no earlier than 18Q2 (wishful thinking), so probably around the same time as an American that reserves today.

My plan is to finance the car and pay it off monthly by selling 1 or 2 shares each month. By the final payment I hope the SP will be enough for 1 share to finance 3 months of payments. This way I get to buy the car and also enjoy some wealth.

My reasoning here is that if Model 3 succeeds and I get to buy it in 18Q2 then the SP will obviously sky rocket and it's worth to keep any share as long as possible. If Tesla fails by that time then I'm not getting the car anyway and just sell at my entry price or even a little bit of loss and be safe.

If you keep the $20k and use it to buy the car, keep in mind that in long term the car might actually end up costing you $200k if you don't invest... ($20k x 10, taken from Elon's incentive plan). That's a pretty expensive car.

Obviously not an advice, just my uneducated strategy.

EDIT: Ah, sorry, I just re-read your post and saw expected config in August, which pretty much makes my whole post totally off topic...

In such case tbh I'd stay away, it's a too short time frame and $TSLA is $TSLA so you can't predict it short term plus current macros are not steady yet (I think). I think there's a 50% chance of reaching ATH by August config date which would net you ~$7k if you invested $20k. It might be a lot or might not, depends on your monthly income. I'd only risk it if it's more than 3x your salary.

 

[wipster]

Thanks
J.B. is core, but I never hear of him taking a break. Hopefully, he is getting some quality non-Tesla time in the near future.

I hope that a lot of the Tesla crew can take some much deserved downtime during the upcoming downtime and refit... those folks have been working their butts off and richly deserve it. Then crank it up to at least 5K a week in June!

 

[Dan Detweiler]

This is pretty much what I'm doing, but more than a year ago. I've put in the whole expected price of the car ($55k) over the last 18 months. At average price of ~$230. It's not really that far from today's price, if you compare today's price against ATH which I think we'll see sometime in Q3 and fly past in Q4. As an Eastern European I will be getting my car no earlier than 18Q2 (wishful thinking), so probably around the same time as an American that reserves today.

My plan is to finance the car and pay it off monthly by selling 1 or 2 shares each month. By the final payment I hope the SP will be enough for 1 share to finance 3 months of payments. This way I get to buy the car and also enjoy some wealth.

My reasoning here is that if Model 3 succeeds and I get to buy it in 18Q2 then the SP will obviously sky rocket and it's worth to keep any share as long as possible. If Tesla fails by that time then I'm not getting the car anyway and just sell at my entry price or even a little bit of loss and be safe.

If you keep the $20k and use it to buy the car, keep in mind that in long term the car might actually end up costing you $200k if you don't invest... ($20k x 10, taken from Elon's incentive plan). That's a pretty expensive car.

Obviously not an advice, just my uneducated strategy.

Thanks so much for your input. Very interesting strategy. I like the sound of a free Model 3 (sort of)!

Dan