TSLA Market Action: 2018 Investor Roundtable

[SteveG3]

I'll quote you as you were the last to post...

I got pointed here from the 'Ban the Shorts' thread after pointing out I got down-voted into oblivion on an Ars Technica thread about the June numbers. The writer said the share price was rising on the news and the "market was responding favorably". I made the mistake of pointing out the price rose on very small volumes and that actually the market's expectations had not been exceeded and the price was definitely going down (I work in Finance, in risk specifically). It was $350 at that time, and ended the week at just above $300.

I can't read 900 posts, but as I'm sure everyone knows when they stop to think about it, shorting equity stock is a speculative bet on the share price in the immediate future (stock borrows are short term) and not a bet on the long-term viability of a company. In fact most trading done today (in terms of pure volumes) are very short term bets on the price, regardless of whether they're long or short. Given prices fluctuate significantly irrespective of fundamentals (which change very slowly and are highly predictable) no one should interpret this as the company being 'under attack' or people 'hating Elon'. It's not personal, it's just people trying to make money albeit in a rather negative way. Another way to think about it is, if you're really investing for the long term and want TSLA, the shorts are actually doing you a favor by keeping the price low.

Personally I would never recommend 'shorting' any stock, because it's actually extremely risky given losses can be theoretically infinite (although they never are) and the same is true of put or covered put options. It's risky enough if you're a hedge fund, but utterly cretinous if you're a day trader.

Anyway, sorry for the waffle... here was I really wanted to say. Tesla's real financial health is more accurately reflected in their bond price, particularly the spread against treasuries. now I can tell you bond traders are not in the game of short term bets. All they care about is their dividend and initial investment. Problems in the bond market are a much better leading indicator of a company getting into trouble than equities.

With that in mind, it's worth knowing that Tesla's spread is large but not dire... you definitely would not want to bet your mot Making cars is difficult. Making lots of cars is very difficult. Making lots of cars that are completely different from anything else currently being made is horrendously hard. And doing all of that while a trillion dollars worth of existing companies are chasing you, well... you can't blame people for being skeptical, can you?

appreciate your post, but, if this were all simply about reasonable skepticism, why would so many with short positions/critics, almost exclusively, present gross distortions of reality and falsehoods,

i.e.,

claiming: losing more money with each additional car sold (many, many shorts/critics), "Tesla killer" over and over and over, for a laughable wide and large array of vehicles out from 2013 to today that have had almost zero impact on Tesla (many, many), the X ramp would bankrupt Tesla (Bob Lutz), saying Tesla would be bankrupt by July 2018 (don't remember the guy's name, but said this on CNBC), worse for environment than ICE (many), heavily implying, if not outright stating, a danger vs. ICE (many, many), near last place in autonomous driving (several), poor workplace safety for an automaker (many), no rational basis for stock price, only reason to be long, cult of Elon believer (many, many), hydrogen fuel cells are the future (many),... I could go on

in other words, if this were simply about skepticism, why not present the skeptical case confidently based on facts and reason, rather than turn to falsehoods and gross distortions? this choice has been very widespread among shorts and has been going on for years.

 

[generalenthu]

Remember that Model 3 will have a pretty big market in Europe, where Gas prices are sky-high. Also super easy to homologate for the RHD market because of the symmetry. If Europe drops the tariff on US cars, the market there will be huge. Nevermind China, when the 3 is introduced there. And this is all for the Premium LR / Dual Motor / Perf Dual motor versions. People crying demand are insane

 

[Curt Renz]

The anti-selling for the model 3 is officially over. Bullish in my opinion. Means Tesla feels good about their production rate.

Indeed, this is seriously good news. It appears to imply that what had been Model 3 “production hell” is ending and production is expected to soon ramp to the point that fresh demand can be encouraged. Once a significant number of Model 3’s are in the hands of owners, they’ll be shown to a great many people unfamiliar with Tesla cars and test driven by them. The demand could soar upward exponentially. Let’s hope production can keep up.

 

[FirebirdAlpha]

why not present the skeptical case confidently based on facts and reason, rather than turn to falsehoods and gross distortions?

What's your explanation for Tesla not having a single quarter of positive net income?

Tesla claims to have industry-leading margins for the S and X, and yet they still can't get positive earnings?

This is the core source of skepticism for the shorts.

 

[RobStark]

Remember that Model 3 will have a pretty big market in Europe, where Gas prices are sky-high.

European electricity prices are also sky high.


Also heard they don't like sedans very much.

 

[Curt Renz]

What's your explanation for Tesla not having a single quarter of positive net income?

Tesla claims to have industry-leading margins for the S and X, and yet they still can't get positive earnings?

This is the core source of skepticism for the shorts.

As Elon has said, if only making Models S & X, profits would be large. Instead revenues are reinvested into development of other models along with expansion of service centers and Supercharger stations. If this were not done, expectations of future profits would be much lower, as would be the share price.

 

[SteveG3]

What's your explanation for Tesla not having a single quarter of positive net income?

Tesla claims to have industry-leading margins for the S and X, and yet they still can't get positive earnings?

This is the core source of skepticism for the shorts.

while I do not believe in ignoring anyone, I am not interested in spending time engaging with someone in a discussion I sense he or she is approaching with intellectual dishonesty.

this being the case, if there are other matters you would like to discuss, you can PM me.

 

[avoigt]

European electricity prices are also sky high.


Also heard they don't like sedans very much.

Agree to high energy prices in Europe but Gas is even worse so you have to see that in relation. Driving an EV is quite a big reduction of your bill so the cost benefit for an EV is obvious.

Sedans are popular here as SUVs and similar.

 

[BioSehnsucht]

The big issue with "financing a factory" is that the financer sees no upside. As a result, they need risk to be minimized. They need to know that the loan will be repaid. The maximum return they can get is below 10%.

The two big risks for China are...

1. Creditors would need to be certain that Tesla's US finances are sound (they aren't).
2. Creditors would need to be certain that, when the factory was fully operational, demand would be there. Tesla already has competitors in China that are well ahead of them, so this is unknown.

I think financing for a Gigafactory is off the table until Tesla proves it's not at any risk of default.

China has the political ability to make long term plans (on account of basically never having real elections that lead to massive shifts in direction). This means they don't care about the financial costs now, if the costs are for the greater good of the nation. They're doing massive expensive projects all over to clean up their environment, everything from pushing EVs to replacing coal power plants and doing nuclear research that get NIMBY'd in most other places.

China isn't worried about Tesla being competition for domestic BEV producers. China wants to be 100% EV as fast as possible, faster than is possible even with their own aggressive incentivization of EV's and disincentivization of ICE vehicles. It would be probably another decade before Tesla is eating Chinese BEV market more than it's eating the ICE market.

By then, even without the (not entirely far fetched) conspiracy theory of China stealing Tesla's trade secrets (spoiler: Tesla/Elon won't care too much since the goal is faster transition to sustainable future, not profits for profits' sake), China BEV makers should be mostly caught up in everything but brand popularity (and perhaps even that, too).

There's is room for Tesla in China, for quite some time. By the time China's domestic BEV brands are fighting Tesla for market share in China (versus eating the ICE market), they'll be doing it outside of China too, and it will be international automotive business as usual.

 

[EVMeister]

I drive an EV in Europe (well... just... UK) I pay very little for my "fuel" as it mainly comes from free public charging. Even paid rapid charging or Tesla Supercharging here is vastly cheaper than petrol or diesel.

 

[RobStark]

Agree to high energy prices in Europe but Gas is even worse so you have to see that in relation. Driving an EV is quite a big reduction of your bill so the cost benefit for an EV is obvious.

Sedans are popular here as SUVs and similar.

Sedans sales are less than SUVs in Europe.

Take all the different type of hatches and they dwarf sedan sales. MPVs SUVs hatchbacks etc.


Driving electric in Europe does not reep higher savings than in the USA.

Model 3 will not have free Supercharging.

Like everywhere, once BEVs become significant in number free charging at government buildings and places like shopping centers begin to evaporate.

 

[dc_h]

FYI. Linette Lopez is looking for people who know about the model 3. I’m guessing she’s not looking for positive, but she didn’t make that clear. Please go to twitter and share your knowledge.

Linette Lopez on Twitter

 

[WarpedOne]

This china announcment .. .any info/guess on timing?

 

[EVMeister]

People here may prefer hatchbacks, all else being equal. But they aren't going to be against a sedan that there is no equally attractive hatchback alternative to. Which is the case with the Model 3. I own an EV hatchback now, the fact the Model 3 is a sedan makes no difference as it is such a unique and appealing product.

(Sorry, OT for Market Action).

 

[generalenthu]

Sedans sales are less than SUVs in Europe.

Driving electric in Europe does not reep higher savings than in the USA.

.

Electricity is 2-3x more expensive in europe. Gas is probably 2-2.5X more expensive. Given that the $ or Euro savings from driving an EV are significant. Eg: 80kWh on 3 ~ $10, and gas for 300 miles is say $35. a 25$ saving. Multiply electricity by 3, and gas by 2 to tilt the economics in your favor. Savings is $40.

 

[MP3Mike]

FYI. Linette Lopez is looking for people who know about the model 3. I’m guessing she’s not looking for positive, but she didn’t make that clear. Please go to twitter and share your knowledge.

Linette Lopez on Twitter

Actually she is asking for people that know about a single specific Model 3. (The one that was reported as broken down on the day it was delivered.)

 

[sweter]

Seeing if I should go for the TSLAQ play. I'm waiting for someone to convince me that the Twitter Shorts are spreading FUD, not facts.

But sadly no one wants to discuss a critical perspective.

Example: luis carruthers on Twitter

Supplier is suing Tesla for $200k. What do you make of this?

You are the best example of a short spreading FUD. Just one lazy click to see that tweet and I see it's not a supplier suing but a consultant for some unpaid invoices from 2015.

What's your explanation for Tesla not having a single quarter of positive net income?

Tesla claims to have industry-leading margins for the S and X, and yet they still can't get positive earnings?

This is the core source of skepticism for the shorts.

1Q13
3Q16

I recently read in a smart book that a goal of a business should not be bring profit, but to grow. It makes sense if you think about it.

 

[Zhelko Dimic]

Sedans sales are less than SUVs in Europe.

Take all the different type of hatches and they dwarf sedan sales. MPVs SUVs hatchbacks etc.


Driving electric in Europe does not reep higher savings than in the USA.

Model 3 will not have free Supercharging.

Like everywhere, once BEVs become significant in number free charging at government buildings and places like shopping centers begin to evaporate.

Gas in Germany is between $6.3-$6.7/gal last 30 days.
I didn't search UK, but if remember correctly, it was worse.

 

[wipster]

Actually she is asking for people that know about a single specific Model 3. (The one that was reported as broken down on the day it was delivered.)

Love this reply to her request:
Model 3, VIN 2,0XX, I keep experiencing the following issue: Every time when I accelerate (by pressing right pedal), I get a large smile on my face. Everything I tried, including the latest OTA did not fix this issue.

 

[Boomer19]

FYI. Linette Lopez is looking for people who know about the model 3. I’m guessing she’s not looking for positive, but she didn’t make that clear. Please go to twitter and share your knowledge.

Linette Lopez on Twitter

she’s asking about 1 specific car to write a hit piece. follow the link and see if we can investigate the real problem with this particular vehicle

Model 3: Breakdowns