TSLA Market Action: 2018 Investor Roundtable

[Krugerrand]

Any ideas on how Tesla will afford it?

Probably the same way they afforded the first one; bought a unicorn, collected and bottled its rainbow farts and sold each pint jar for $245,098.12. Just a guess.

 

[Krugerrand]

Partnerships, capital raises if necessary. Tencent has been in the conversation for awhile. The factory there does not need to be the same size as the US, 1/3 is good enough. Labor is cheap, land is cheap, and raw material are cheap in China. $1-2 billion can go a long way.

That seems a more plausible way than I suggested.

 

[mongo]

How is it an issue, it hasn’t even happened yet. Like literally.

Here’s another little fact for you, only US purchasers are potentially affected by that. And only those who are over reaching financially to purchase the car, who were never going to get the full credit anyway. That’s a small number of the current half million reservationists.

It’s reasonable to play the what if game as long as you keep things in context, possess a modicum of common sense, and realize worst case what ifs rarely happen.

I assure you Mr. Finance Guy, the tapering of the US EV tax credit program will not pose any kind of short or long term problem to Tesla. Tesla already won, you just don’t know it yet.

I realize you won’t believe what I just typed and will brush it aside. That’s okay. You’ll eventually come around or you won’t and are just part of the group of people who aren’t suppose to get it.

Hyperbole warning:
Yah.
By the time the credit expires, the competition will be in receivership. Taking 400k sales away in the next 6 quarters will really hurt their bottom lines. It's the last cars off the line that make the profit....

 

[neroden]

The Q2 net reservations number is going to be crucial.

Assume the average potential M3 buyer is not dumb (probably couldn't afford one if they were) and can understand the 200,000 issue and the taper on the tax credit. They can also read the website and see there's about a 6 month delay to get the car. Therefore the rational step to take is to order the car now - $1,000 temporary outlay now gets you $3,750 permanent saving soon. If there is a big pent-up demand out there, we should see a huge jump in net reservations this quarter, If so, maybe that's Musk's "three weeks" reference - net reservations are usually include in the update letter,

Oh geez. Hadn't thought about this. It's all public information.

In early July, Tesla will announce that they have delivered 200,000 cars in the US, delivering car number 200,000 in the first week of July. They will tell people that the window on the tax credit is closing -- and will explain the rules ($7500 if delivered in the back half of this year, $3750 first half of 2019, $1875 second half of 2019). They'll simultaneously announce the production rate of 5000/week and explain (again!) that they're certain they're going to reach 10,000/week by the end of the year. They'll point out that with the number of *US* reservations they currently have (guessed to be in the 250K-300K range), that you are still very likely to get the full tax credit if you order now, and almost certain to get the half tax credit, but you're more likely to get it if you order a more heavily loaded car, since they'll be prioritized...

Reservation deposits from the US will jump. Probably by several hundred million dollars. (More cash flow.) Margin on Model 3s will remain high. (More profit.)

This is entirely predictable, yet not really being noticed.

 

[neroden]

I got your point, and I think there is a chance you're right. But a small chance.
I think you overestimate intelligence of the crowd.
Individually, people are smart, but expecting many people on mass to exhibit such a shrewdness? I don't know about that...
That would require high level of being informed about Tesla production levels, about lifecycle of the credit, that you're interested in EVs, ready to buy a car, have disposable money ($1000) that you're putting down just to secure a discount, and that you care about discount. Intersection of all these requirements? I'd guess maybe few thousand people, if that. Most people just get car where they feel they need another one, or start wanting another one.
That you think differently, and internalize this behaviour as a normal one, is probably what made you successful in your life...

I totally agree with you. But! What if, starting next week, Tesla publicizes the tax credit phaseout?

The phaseout timing seems beyond most people's ability to understand... at this point. But once the magic 200K number is reached, the tax credit rules become very easy to explain, since it's strictly date-of-delivery based. I think it's something Tesla could publicize easily.

 

[Boomer19]

Cross posted this in the 'General Market thread:
.

@AIMc love your YouTube sizzle!

 

[neroden]

As an investor since 2012, I have kicked myself so many times for not taking a bit off the table after a nice runup.

I haven't regretted this at all. Given my low cost basis, why would I want to incur capital gains tax now when I can put it off? I mean, sure, if I could have timed the tops and bottoms perfectly, I think I could have made more than the losses due to paying taxes, but it's actually a pretty close thing. I suppose I could have swing-traded with my retirement account money where this isn't an issue, but most of my TSLA is in after-tax accounts.

 

[shrspeedblade]

How is it an issue, it hasn’t even happened yet. Like literally.

Here’s another little fact for you, only US purchasers are potentially affected by that. And only those who are over reaching financially to purchase the car, who were never going to get the full credit anyway. That’s a small number of the current half million reservationists.

It’s reasonable to play the what if game as long as you keep things in context, possess a modicum of common sense, and realize worst case what ifs rarely happen.

I assure you Mr. Finance Guy, the tapering of the US EV tax credit program will not pose any kind of short or long term problem to Tesla. Tesla already won, you just don’t know it yet.

I realize you won’t believe what I just typed and will brush it aside. That’s okay. You’ll eventually come around or you won’t and are just part of the group of people who aren’t suppose to get it.

My single, anecdotal data point is that getting the full tax credit is what spurred me to go ahead and spring for autopilot. I think that's what it will do for a lot of buyers: we won't cancel our reservation if we don't get it or the full amount we'll just leave off EAP/AWD/premium package/LR battery/takeyourpick to stay within our budget.

I guess I'm one of the dumb ones-because what I really should do is drive the car myself and buy 14 more shares of TSLA!

 

[Dan Detweiler]

The tax credit issue is getting ready to be real simple.

Take delivery before the end of the year...get $7500 credit.
Take delivery before July 1, 2019...get $3750 credit.
Take delivery before October 1, 2019...get $1875 credit.

Simple, easy lemon squeezy.

Now, can we get on with the business of changing the world? LOL!

Dan

 

[mongo]

They'll simultaneously announce the production rate of 5000/week and explain (again!) that they're certain they're going to reach 10,000/week by the end of the year. They'll point out that with the number of *US* reservations they currently have (guessed to be in the 250K-300K range), that you are still very likely to get the full tax credit if you order now, and almost certain to get the half tax credit, but you're more likely to get it if you order a more heavily loaded car, since they'll be prioritized...

I don't follow your math. Agree people will get at least half credit, but even if Tesla hit 10k/wk July 1st and ran non stop H2, that is only 260k more cars for full credit. On a linear ramp from 5k to 10k, it's 195k.

I'm also hoping that new P/D orders don't bump Day 1 reservations out of the full credit delivery dates, not as good for bottom line, but come on....
Hopefully, production rate (or US reservation count) is high enough that that is not an issue.

 

[Words of HABIT]

....As an investor since 2012, I have kicked myself so many times for not taking a bit off the table after a nice runup..."

As an investor since 2012, I have kicked myself so many times for not staying fully invested after a nice runup. I'd be sitting on 25% more shares that I am today.

 

[Words of HABIT]

...Tesla already won, (they) just don’t know it yet....

This 100%. The amount of consistent FUD against Tesla and Musk has gone plaid. The more I read, the more I am convinced of Tesla's success. IMHO none of the bear arguments are compelling for me to change my position even in the least. M3 has cemented Tesla's position as maker of the best passenger car in history, not EV but all cars. It is a strange feeling, standing at the finish line waiting for the competition to stop fumbling and falling down over each other, and they haven't even crossed the half way point. This is the Tesla Factor.

EDIT: (they) referring to FUDsters. Tesla knows it.

 

[jelloslug]

Market action. What are we looking af Monday morning? We have another full trading week until we get q2 delivery and finally see deliveries ramp hard start of q3. Meanwhile we may be exposed like a broken nose all next week.

Been going through lots of forums and lots of people with questions related to short interest, short squeeze, mechanics of short interest, etc.
Tracking short interest

Time to stop bickering over politics and trumps trade war bs and focus on how we get through this vulnerable period so Tesla can do their thing and execute their plan. Strength in numbers people.

It will be unpredictable chaos as normal.

 

[TrendTrader007]

I haven't regretted this at all. Given my low cost basis, why would I want to incur capital gains tax now when I can put it off? I mean, sure, if I could have timed the tops and bottoms perfectly, I think I could have made more than the losses due to paying taxes, but it's actually a pretty close thing. I suppose I could have swing-traded with my retirement account money where this isn't an issue, but most of my TSLA is in after-tax accounts.

I really like your thinking and I would like to know how long would you consider holding your Tesla stock before you sell it . And can you think of some better investment opportunity like space XIPO which would make you liquidate your tesla stock several years down the road. What are your thoughts about space X coming as an IPO
Also do You think that Stock going up 10 to 15 times over the next 3 to 5 years is a realistic probability
thank you

 

[TrendTrader007]

I was reading the book Trend trading by Michael Covel and it struck me that the reason shorts are going to lose big time is simply because they are going against the trend

If you look at the long-term trend in Tesla it is clearly up and if you believe in some sort of symmetry in the stock market then I would expect at least another 2 to 3 years of price appreciation not counting the current year

I cannot wait for the week of July 4
Should be fun for short sellers
If we do get a 10 to 20% gap up that will cause a huge upset in short sellers’ portfolios and ignite a chain reaction Precisely what Elon was talking about said that their short position is about to explode in about three weeks

 

[Reciprocity]

I think Tesla may be more consistent than you anticipate.

In Q3 they produced 222 M3s and lost $620 million.
In Q4 they produced 1,542 M3s and lost $620 million.
In Q1 they produced 9,766 M3s and lost $710 million.
In this quarter they will produce about 20,000 M3s and will lose about$700 million.
For Q3/18 they may be able to pull some income forward or push some losses back, but in the medium term the trend will reassert itself.

Tesla only pays for kuka robots once. Your equation is missing the fact that Tesla laid out billions to increase capacity, which will be realized in 2H2018 and beyond, the cost of which will be amortized on a per unit basis. You should how that though, which makes your post deceptive.

Any New capex will be for China and European gigafactories which will ramp at light speed compared to prior production facilities due to the fact that Tesla won't be inventing anything new, just duplicating what works with some iterations to get even more out of that capex. New capex will also be for model Y, which will be based on existing tech with a few exceptions. This will have some bumps in road, but Tesla is nearing a point where they can finally delicate everything they have learned on a massive scale.

My estimate is that the cash position will be dangerously low at the end of this quarter but Tesla will explain that they have 20,000 vehicles to be delivered in the first week of Q3 and over 7k per week after that, which will dramatically improved the cash position. They will also state that production is on Pace for 10,000/w S3X by the end of the 3rd qtr to fully optimize the tax credits.

But what will they do when the tax credits go away.. what oh what will they do. All that capacity and nothing to do with it. Well, there will be world wide pent up demand from the focus on the US. Lower tariffs in China and a refresh for S/X to spur demand. Don't worry your pretty little head because by the time that demand is satisfied and causes issues, Tesla will release free supercharging again and lower prices by $5k due to cost savings from the scale of 2170 and cost savings from the newly implemented refresh that is more highly automated, like the model 3. Oh and if that's not enough, FSD should be available about the same time, which will erase and lowered prices and loss of margin, not to mention a million cars able to turn on FSD for $4k-$9k.

At this point the cash machine will be more of a perpetual engine and Tesla will have a hard time spending it all. You can't put factories on every corner like they are Starbucks.

 

[Reciprocity]

I don't think they have the tax credit taper issue.

It's not an issue when you make cars people want.

 

[Reciprocity]

The whistleblower thing does sound a little unlikely. If you're a whistleblower (a smart one at least), you don't go to the press, you go to the SEC. That way you get 10-30% of any fines or penalties assessed.

While we do not know that Mr. Tripp hasn't gone to both the press and the SEC, it seems unlikely because the SEC strongly encourages its whistleblowers to keep quiet while the investigation is ongoing.

The security and exchange commission doesnt investigate punctured battery cells, so 30% of 0 is still 0. The dude had a better chance of being in jail then profiting from his deeds.

 

[Reciprocity]

I think you miss the point. What I am saying is that if you are a potential M3 buyer it makes sense to make a reservation this quarter in order to retain the ability to access the full tax credit.

Not that tax credits actually matter, because Tesla makes cars people want and are priced properly in their respective segments. But there is a good chance that tax credits will be extended for those that actually meet them early. Giving German and Japanese and Chinese autos a competitive advantage vs Tesla and GM might but sit well with the maga wing of the Trump party. And I'm sure the Dems will support an extension.

 

[Reciprocity]

By reserving now you get the ability to access the full credit eve if you subsequently choose not to exercise that ability (e.g. by holding out for the $36k model in return for a half tax credit). If, on the other hand, you reserve next quarter you lose that optionality.

The Curious sunbird show is getting tedious. All this crap had been addressed here 100 times. People who can use a $7500 tax credit don't typically buy $35k cars. That tax bill requires people make $100k+. The other issue is that people don't want the 35k car. Every thing I have seen points to about 20%. For most of them $3850 will be much more inline with their tax burden.

Has anyone noticed that curious dodo bird disappears when the stock is up and reapers when it's down? Very fudtastic. All in a day's work I guess.