TSLA Market Action: 2018 Investor Roundtable

[BozieBeMe2]

what’s more, vincent also posted this;

View attachment 316142

maybe once the red tape is cut the construction will be more swift than by US standards.
we’ll see!

It most definitely will be all elbows and A-Holes, because China does not have all the hanger on's that America does.
They do not have to worry with OHSA, and the many of the little societies pet projects and members.
It will be as the picture shows, work or you will be removed. When your own society is controlled and you are raised with a focused mentality, that work force is a formidable thing to see.

 

[neroden]

I looked at the site that you linked and I see why you are asking. That's confusing to me. Here is the site I'm using, which is also used in papafox's thread:
tsla | Volumebot

There is probably an obvious answer for the difference between the sites, but I'm not sure what it is. I do see the trading volume is different. The site you are using shows double the volume that is shown for trading volume on SharpCharts and Yahoo. On the Volumebot site, the volume is half what is shown on SharpCharts.

I am damn sure that SharpCharts, TradingView, and Yahoo are correct -- they're consistent with each other, there is a standard methodology for calculating volume (total buys + total sales / 2), and they're big enough that they'd get in trouble if they weren't using it. "Number of times shares changed hands", as they said on the radio in the old days.

I think fintel and volumebot are multiplying mistaken factors in opposite directions. They're smaller and more specialty, and most people only watch the trend, so they're less likely to have had their errors noticed.

 

[Esme Es Mejor]

I'm more and more convinced that a lot of people here underestimate, what a recession, accompanied by higher interest rates and margin compression means for a low margin, highly capital intensive industry like the automotive industry.

Yeah, look what the Great Recession of 2008 did to iPhone sales:

S & X will take a hit during a recession— though, even then, it won’t be as bad as similarly-priced ICE cars. Model 3 will not take a hit. Model Y will not. The Semi will not. Getting those lines up & running will pay off immediately, even in the middle of a recession.

 

[neroden]

Tesla incorporated Tesla (Shanghai) Co Ltd in May.
What stops this China entity to issue new shares on china stock market to fund china GF?

I spent a while following a legal blog by a company which provides Chinese legal advice to foreigners operating in China.

In China, they follow the *old* rules for corporate formation. Companies have to have a specific purpose, stick to what's in their charter, and issue only the types of ownership which are specified in the charter. The US used to do this before it got all wild-west in the late 19th century; now in the US corporations are allowed to do anything willy-nilly. Not in China.

In short, unless it's incorporated in exactly the right way, it probably can't actually issue shares on the Chinese stock market. It probably *can* take out a Chinese bank loan or loan from the Shanghai government, most likely, however.

 

[neroden]

God bless you nero, but some people can't be saved and are destined to be separated from their money. Fudsters have been emboldened because the macros have been bailing them out. Every trade war scare, every Muller update.. the macros won't save them for ever.

It's important to note that fud on Twitter is having an impact on perceived solvency, as Galli recently coined it and @jesselivenomore has defined as a goal for shorts, and TMC members should take some time each day to counter fud on Twitter. We are starting to turn the tide with facts and it appears more and more are following our lead. Reach out to @MacRocket if you have any questions and want to help fight fud on Twitter. He has really done a great job organizing the fight against fud. I was personally inspired by people like @ValueAnalyst and Ross Gerber who where lone voices on Tweeter fighting the good fight, but now there are dozens of us making a few dozen tweets a day to counter fud. You will recognize many from TMC, but we need more. Many is these fudsters are paid full time to spread coordinated fud and it has an impact. It beats arguing the nuances of how great Tesla and Elon are in TMC all day. Not to bag on TMC, but it is a bit of an echo chamber with the occasional knucklehead wondering buy to spam the financial threads. You know the names.. mmd, myusername, curious sunbird or firebird or whatever bird they are this week.

Enlist today. Fight the good fight. Counter fud on Twitter with facts and humor.

I'm not really psychologically equipped to wade into the nest of FUD on Twitter, but please feel free to borrow any of my phraseology for the purposes of countering FUD. I won't sue for plagarism.

 

[Boomer19]

earnings history and price reactions
Mod: deleted copyright materlal :-( --ggr

 

[ggr]

You do not speak for everyone here.
I very much like considered bear arguments.

Actually, that's what he said. Just haven't seen very many recently.

 

[neroden]

Interesting story, and a question.

A few months ago, Tesla issued bonds maturing in 2025 with a 5.25% coupon rate. I tried to buy some of them at issuance. It turned out the bonds are unregistered, and classified in such a way that only actual institutional investors can buy them. After buying them for me, my broker realized I couldn’t legally own them since I’m not an institution (I am high net worth, and usually that’s enough to get around these SEC restrictions, but not in this case), so my broker had to unwind the deal and essentially buy them from me, but by this time, the price had already started heading downhill, so my broker had to eat a nice sized loss. Needless to say, my broker had a few choice words with his compliance department!

Anyways, this continues to this day. Only institutional investors can own these bonds. Supposedly, the bonds can be sold on the open market but only after 6 months post issuance, and only after the bond owner files a 144, similar to the process a stock founder might go through to sell and register founder shares after an IPO.

My speculation and question is that if these had been registered bonds, my suspicion is that the price wouldn’t have declined so much and so quickly. I suspect that the 7.5% yield on these 7 year bonds is a bit artificial created by their liquidity restriction. Any bond gurus out there have any thoughts?

I'm no bond guru, but that's fascinating. It appears that this is "Rule 144A qualified institutional buyers" -- the primary requirement is that you have to have *$100 million* to qualify, but you also have to be within a list of things which are considered financial institutions. I suppose if you're rich enough you can set up your own captive investment company. (Also, under rule 144A apparently they can only be sold in units of half a million dollar face value each.)

 

[SteveG3]

[...snip]

The manipulative short-sellers were furious and tried to target Tesla, which is dumb because Tesla's a manufacturing firm and you can't use the same tactics. Tesla is also actively avoiding the financing side of the business -- all loans are third-party, and they're discouraging leases, and they prefer cash. This is to prevent the short-seller tactics from working.

[snip...]

Interesting point re Tesla minimizing their involvement with consumer financing of vehicles. Your reasoning makes sense to me.

As to Tesla being a manufacturing firm, and, so, such a short game targeting Tesla being dumb- I suspect in March/April, we were on the verge of seeing the tactics used with financing driven firms like Fairfax and Solar City being tweaked for an early stage disruptive manufacturer like Tesla.

I recall at the time, some chatter already being spread that suppliers will be antsy about doing business with "cash crisis" Tesla. Remember, Tesla has thousands of suppliers. For the vast majority of them, Tesla likely represents something on the scale of a fraction of 1% of their business to a few percent of their business... the rest of their business being with Tesla's competitors, who they generally have decades long relationships with.

I suspect the next move of this possible short "bigger game" would have been to get a Tesla supplier(s), among thousands of them (already extremely cozy with ICE mfgs, and potentially imagining Tesla as if it were an 'enemy' for reasons described above), to publicly bail on Tesla as being too financially unstable to continue doing business with, to set off a domino effect with more suppliers. That is the absurd flood of "cash crisis" "reporting" on Tesla, Moody's downgrade, analyst downgrades/sell reiterations, etc., giving cover for a supplier to balk on doing business with Tesla (or possibly tricking one into genuinely thinking this was necessary). A manufacturing play on the "run on the bank" "crisis of confidence" fabrication game done with financial firms in the past.

Of course, all of that is speculative. Having read Jesse's thread, and Taibbi's account of Chanos' past actions, I think it's worth considering. fwiw, I think there was a softer "bigger game" going on before Chanos (Tesla has always had an extreme far end of the bellcurve short position in the time since 2012 I've followed it, including during its massive upward run in 2013), to try to slow Tesla/the EV transition down... his crew seems like an added more aggressive layer to me starting somewhere around 2015/16.

 

[SteveG3]

(...snip)
S & X will take a hit during a recession— though, even then, it won’t be as bad as similarly-priced ICE cars. Model 3 will not take a hit. Model Y will not. The Semi will not. Getting those lines up & running will pay off immediately, even in the middle of a recession.

strongly agree... that's part of why I think Tesla is such a great long-term hold, the gap between supply and demand for their large revenue products looks very probable to be far larger than any dip in general consumer demand coming with a recession.

 

[neroden]

Interesting point re Tesla minimizing their involvement with consumer financing of vehicles. Your reasoning makes sense to me.

As to Tesla being a manufacturing firm, and, so, such a short game targeting Tesla being dumb- I suspect in March/April, we were on the verge of seeing the tactics used with financing driven firms like Fairfax and Solar City being tweaked for an early stage disruptive manufacturer like Tesla.

I recall at the time, some chatter already being spread that suppliers will be antsy about doing business with "cash crisis" Tesla. Remember, Tesla has thousands of suppliers. For the vast majority of them, Tesla likely represents something on the scale of a fraction of 1% of their business to a few percent of their business... the rest of their business being with Tesla's competitors, who they generally have decades long relationships with.

I suspect the next move of this possible short "bigger game" would have been to get a Tesla supplier(s) (already extremely cozy with ICE mfgs, and potentially imagining Tesla as if it were an 'enemy' for reasons described above) to bail on Tesla as being too financially unstable to continue doing business with, to set off a domino effect with more suppliers. That is the absurd flood of "cash crisis" "reporting" on Tesla, Moody's downgrade, giving cover for a supplier to balk on doing business with Tesla (or possibly tricking one into genuinely thinking this was necessary).

Of course, all of that is speculative. Having read Jesse's thread, and Taibbi's account of Chanos' past actions, I think it's worth considering. fwiw, I think there was a softer "bigger game" going on before Chanos (Tesla has always had an extreme far end of the bellcurve short position in the time since 2012 I've followed it, including during its massive upward run in 2013), to try to slow Tesla/the EV transition down... his crew seems like an added more aggressive layer to me starting somewhere around 2015/16.

Interesting. This adds an added layer to Tesla (a) vertically integrating as much as possible, (b) purchasing the entire companies of its most important suppliers, (c) getting other suppliers who are heavily dependent on Tesla (factory co-located in a Tesla building for instance), and (d) lining up multiple suppliers for commodity-type items.

I think you're actually right. These are financial defense moves, among other things.

 

[Moderatefan]

Re: @Wooloomooloo

The only emotions I feel seeing posts like yours are boredom and annoyance. Do you have any idea how many posts just like yours we've seen over the years? New members telling us TSLA may be risky, we're blind kool-aid drinking fanbois, bull echo chamber, blah blah blah. You aren't original, you aren't helpful, and you don't know more about the company than we do. We don't need your advice or concern trolling. IF by some rare chance you actually had some piece of data which we didn't already know that would be useful, but anything short of that is simply noise.

And

TMC members should take some time each day to counter fud on Twitter. We are starting to turn the tide with facts and it appears more and more are following our lead. Reach out to @MacRocket if you have any questions and want to help fight fud on Twitter. He has really done a great job organizing the fight against fud. I was personally inspired by people like @ValueAnalyst and Ross Gerber who where lone voices on Tweeter fighting the good fight,

When I look at these posts, what comes to mind?

@Wooloomooloo didn't say anything extreme, definitely does not exhibit trolling behavior(like Firebird), and for saying there's an atmosphere of extreme intolerance and over-defensiveness got scolded with a pretty mean dose of bullying from somebody claiming that b/c I've been here for years I("we"???) know better and don't need any newbies around on the forum, essentially claiming rights of ownership of the forum?
This is indeed very toxic and appaling for new members joining the forum to see. He gets bunch of loves and likes. So, this raises question of how many people here are just like him. No disagrees there.

Then there's a bunch of people going around handing out "disagrees" without any explanations (warranted for trolls, but also mean otherwise). Btw, thanks to those who explains their disagreement based on facts. Zuckerberg:

A “dislike” button on Facebook would dissuade people from posting, liking, and sharing as freely as they might otherwise.

Then someone says lets go on twitter and fight FUD. So, if I'm(or anybody) is on twitter and see those people fighting FUD, am I to think they are decent people or one of those who say "eff.. out of TMC, we know better"?

I support Musk and his mission, but I question myself whether I want to have anything to do with "we know it better" fanboy-bullies and whether it'd be right to "like" on twitter anything they say. There's, of course, the problem of separating the bullies and non-bullies, but what ones do reflects on others with the silent approval or "loves", and "surprisingly", no disagrees.

I think maybe the way to deal with this on TMC for me personally is put on Ignore everyone who gives disagrees w/o explanation or says mean things. Hopefully, it will be more enjoyable experience to read TMC after that.
I believe still not as extreme a difference as Fox/NYT after the fact, hopefully just friendlier people.

 

[SteveG3]

Interesting. This adds an added layer to Tesla (a) vertically integrating as much as possible, (b) purchasing the entire companies of its most important suppliers, (c) getting other suppliers who are heavily dependent on Tesla (factory co-located in a Tesla building for instance), and (d) lining up multiple suppliers for commodity-type items.

I think you're actually right. These are financial defense moves, among other things.

All the points you made re defensive moves by Tesla re suppliers, and,

Tesla lawsuit with German supplier for Model X re events during its very rough ramp, and likely some games played re Model 3 ramp by some suppliers Elon was smart enough to know he'd be hammered if he'd named in the midst of trying to fix the Mod3 ramp- yes, I think this is at least a real issue in the sense that Tesla considers it necessary to factor this possibility into their strategies, even if what actually goes on may not be so easy to establish to take it public, let alone pursue legally.

 

[SteveG3]

In the longer term, I expect Tesla to drop ASP per its mission, but only after profitability is proven and shorts are squeezed. Until then: 3Q: $60,000+ ASP, $30,000 COGS (German third-party estimate), 5,000 to 6,000 weekly avg, no incremental OpEx needed.

appreciate your sharing your assumptions VA.

 

[neroden]

Then there's a bunch of people going around handing out "disagrees" without any explanations (warranted for trolls, but also mean otherwise).

That's why it's called "disagree" rather than "dislike". It's not mean at all, I've given them to some of my favorite posters. Sometimes it doesn't need an explanation. When TrendTrader gives a *wildly* optimistic assessment and I disagree, I think it's clear what I disagree with.

Btw, thanks to those who explains their disagreement based on facts.

 

[Intl Professor]

My impression is that GF3 will mostly only supply the Chinese domestic market. Unless there is a strong appetite for exporting from China, there is no need to grow production at GF3 any faster than Chinese demand. Last quarter that stood at 15k vehicles. At 79% annual growth, you get to 500k by 2023.

However, the agreement announcement contains language permitting export of vehicles. Given China's growing influence through infrastructure and consequent agreements with adjacent countries, that could easily grow into an equal-sized market. (Border with Russia, too!)

Edit: This assumes, of course, that he Chinese government has interest in exports, in contrast to some countries I have heard of.

 

[SteveG3]

You're way low.

The German tear down of the 3 LR estimated 28k in parts and assembly cost, Elon was asked about this:
Twitter


That's 28k cost on a 49k vehicle. 43% margin (at 10k/ wk). Applying that cost to SR, the GM is 20%.

Assume base LR is break even at 5k/wk:
EAP is 5k, that is 9% GM on 54k
P is 4k for AWD (assume at cost) and 11k for P upgrade. 11k on 64k is 17% GM.
P-EAP is 16k on 69k: 23% GM.

(On mongo's planet, Q2 numbers come out early, and they're a (good for longs) doozy...)

Yes, the German tear down was interesting, and thanks for reminding me of Elon's precise twitter response when asked about it.

I nominate the following as a non-boneheaded question for the earnings call in ~3 weeks,

"In the past you've stated expectations of steady state net margins for the Model 3 from 10% to the low teens, and, recently there was a professional tear down of a Model 3 done in Germany suggesting parts and labor costs for a Model 3 come to about $28K. Elon tweeted that those numbers are "definitely" doable with volume ramped up. This seems to indicate previous guidance on net margins was quite low... can you update us on projected Model 3 net margins or explain the disparity?"

fwiw @mongo- I was stating the guidance Tesla has given on calls up to this point... so, Tesla's guidance may be low (or not), but, I do not believe I was low (or "way low") in my recollection of the guidance they've stated, lols : )

 

[Boomer19]

Interesting. This adds an added layer to Tesla (a) vertically integrating as much as possible, (b) purchasing the entire companies of its most important suppliers, (c) getting other suppliers who are heavily dependent on Tesla (factory co-located in a Tesla building for instance), and (d) lining up multiple suppliers for commodity-type items.

I think you're actually right. These are financial defense moves, among other things.

here is supply chain relationship between tesla and it’s suppliers (well the biggest ones anyway)

sorted by revenue to the supplier
also the last column shows tesla’s % of cogs
Mod: deleted copyright material :-( --ggr.

sorry it’s hard to see

 

[neroden]

Yes, the German tear down was interesting, and thanks for reminding me of Elon's precise twitter response when asked about it.

I nominate the following as a non-boneheaded question for the earnings call in ~3 weeks,

"In the past you've stated expectations of steady state net margins for the Model 3 from 10% to the low teens, and, recently there was a professional tear down of a Model 3 done in Germany suggesting parts and labor costs for a Model 3 come to about $28K. Elon tweeted that those numbers are "definitely" doable with volume ramped up. This seems to indicate previous guidance on net margins was quite low... can you update us on projected Model 3 net margins or explain the disparity?"

fwiw @mongo- I was stating the guidance Tesla has given on calls up to this point... so, Tesla's guidance may be low (or not), but, I do not believe I was low (or "way low") in my recollection of the guidance they've stated, lols : )

I think the difference is net vs. gross.

 

[jhm]

You mean last year demand was 15k vehicles?

That is at S and X American prices plus trans Pacific shipping cost plus 25% import tax .

Demand at standard Model 3 prices without import tax/trans Pacific shipping cost should be much more robust.

Ah, yes, last year, not quarter.

Certainly, the combination of China built cars and the Model 3 suggests that we may see a serious step up in Chinese orders. Even so, getting to 500k early, say by 2022, would involve both ramp up of both production and demand. I'd love to see it happen.