TSLA Market Action: 2018 Investor Roundtable

[FirebirdAlpha]

I think his 180,000 was referring to what he called a $4.5B budget shortfall. But either way his post is nonsense and his claim has been debunked at least a few times before.

Yes, it was in reference to the current bshortfallrtdall:
- Negative 2.2B net working capital (includes the 1.2B debt payment)
- 2.35B in planned CapEx

4,500,000,000 / 25,000 = 180,000

They need 4.5B. At a $25k contribution per car, that's 180,000 cars.

Link to a debunk post? I can't find it.

 

[ggr]

Mod: it's a fair cop, my calculation was indeed wrong... 8 digit calculator, when I entered 1.2B, it didn't take the last zero. --ggr

Falsehoods in the original post:
1. They don't have to pay off any of the other debt, it won't be current, so the correct number to use was only the $1.2B.
2. Depending on the stock price at the time, they could issue stock instead of repaying the debt, so they get a free capital raise without going to the market.
3. You're ignoring the revenue from S/X.
4. As @oneday said, your premise has been debunked before. There are other arguments beside the above ones.

 

[Skryll]

Or...maybe people expected more news out of Elon's trip to Beijing...

Or...maybe people expected other people to buy first.

 

[ZsoZso]

The more I think about this, the more I think you are right. We know so much about Tesla, that we see it as a positive that Tesla did not reach 200K in Q2 and was able to delay it to Q3. The rest of the market just sees that the phase out timer has been triggered on tax incentives for Tesla's customers, which is a negative. I think this probably did affect the stock negatively.

The Ontario government rebate ($14k) was also cancelled last night which has prompted some cancellations, not only reservations but also actual orders submitted recently and Tesla is willing to refund the full $3500 for those:

When I called last night they were willing to put a cancellation request through right away, with a full refund within 20 days. The sales rep said as long as a VIN hasn’t been assigned cancelling should not be a problem.

Of course, the number of customers in Ontario is much smaller than in the US, but it could also contributed some.

 

[mongo]

The Ontario government rebate ($14k) was also cancelled last night which has prompted some cancellations, not only reservations but also actual ordered submitted recently and Tesla is willing to refund the full $3500 for those:



Of course, the number of customers in Ontario is much smaller than in the US, but it could also contributed some.

In the interest of being a balanced commentator: refunds before VIN assignment are called out in https://3.tesla.com/assets/pdf/model3_order_agreement_en_US.pdf and one should not expect an issue in getting one at that point.

Your Order Payment is fully refundable only until your order is matched to a Vehicle, at which point it becomes nonrefundable.

 

[30seconds]

Here is my favorite thing today

RS Metrics on Twitter

 

[RobStark]

I agree that they'll ship the SR in that timeframe, but even then, Tesla appears likely to prioritize cars with more options. So we may see the $40K SR with premium interior, or the $44K SR with AWD and AutoPilot, before we see the $35K car. Again, though, it may be good to prioritize some $35K cars for "line waiters".

Tesla has never made AutoPilot mandatory.

The option is just to turn on the software.

All the hardware for AutoPilot is standard on the $35k car.

 

[Wooloomooloo]

You're a smart guy. So... that misconceived narrative about the tax break going away immediately starting with car #200,001 is a GREAT example of why "the market" (essentially more Smart Guys) often has so little factual info "baked in" to prices - that said, if you didn't mean for your bolded text to imply my bolded text, I totally misread your post. Which I read as you believe the tax credit just ...stops Cold Tucker after 200K vehicles (Narrator: "It Doesn't").

No, I understand how the tax credit phases out over time, but I don't think that fact changes the spirit of what I was saying. That is essentially regardless of how the tax credit diminishes or even when it diminishes, the fact that it does diminish eventually has definitely been baked into analyst price targets, and hopefully investors' valuation.

It might make some people feel better to assume that anyone selling out of Tesla must be a moron and not know what they're doing (and that might be occasionally true) but Tesla's price really hasn't changed that much in the last year if you average out the price month by month - most long investors have been holding. So far there has seemed to be a pretty solid ceiling and floor regarding price and the news isn't really affecting the long term trend.

Even Tesla's announcement earlier this year regarding predicted gross margins (from 34% to 27% or so) which led to price target downgrades (for example Morgan Stanley who were bullish on the stock) didn't actually have a long term effect on the price.

 

[Wooloomooloo]

Sorry for being retarded (=late) but sometimes I pretend to have a "life" beside here
But that bold passage did actually trigger my response. As a self-confessed troll, don't expect much of a response from the bigger goatees.
On the other hand, trusted member bdy ran to the defense so the invisibility button is only hovered over. (Dosh Garn, meant to write something hoovered. Anyway. Suck is life.)

OK I owe the Enron comment some justification - it wasn't to trigger anyone and wasn't intended to be a troll comment - Enron was mentioned very deliberately for 2 reasons.

Firstly, Enron is a classic example of a company being and misleading it's shareholders, whom it was supposed to protect first and foremost. Every PLC is obligated to do that, and every PLC is obligated to maximise profits (yes even companies that are claiming they want to save the planet).

Even companies that have reputations for being amazingly well run and make a lot of money (like Apple) go into PR overdrive when they're criticized. They'll distort things, spin things, deny things (perhaps fix them in the background) or greet you with a wall of silence. However, even though Apple is one of the most secretive companies out there, and exceptionally sensitive to criticism (especially under Jobs) I don't think there is any time in their history you can accuse them of trying to mislead the SEC or their shareholders (like Enron did). Yes they might mislead Gizmodo and they might wait too long before replacing MacBook keyboards, but they dont' mislead anyone about their financials. Enron on the other hand, made lying their entire culture.

So the question is really, is Tesla more like Apple or is Tesla more like Enron (hence the original comment).

Obviously I think they're more like Apple.

Sorry for the misunderstanding.

 

[Lessmog]

OK I owe the Enron comment some justification - it wasn't to trigger anyone and wasn't intended to be a troll comment - Enron was mentioned very deliberately for 2 reasons.

Firstly, Enron is a classic example of a company being and misleading it's shareholders, whom it was supposed to protect first and foremost. Every PLC is obligated to do that, and every PLC is obligated to maximise profits (yes even companies that are claiming they want to save the planet).

Even companies that have reputations for being amazingly well run and make a lot of money (like Apple) go into PR overdrive when they're criticized. They'll distort things, spin things, deny things (perhaps fix them in the background) or greet you with a wall of silence. However, even though Apple is one of the most secretive companies out there, and exceptionally sensitive to criticism (especially under Jobs) I don't think there is any time in their history you can accuse them of trying to mislead the SEC or their shareholders (like Enron did). Yes they might mislead Gizmodo and they might wait too long before replacing MacBook keyboards, but they dont' mislead anyone about their financials. Enron on the other hand, made lying their entire culture.

So the question is really, is Tesla more like Apple or is Tesla more like Enron (hence the original comment).

Obviously I think they're more like Apple.

Sorry for the misunderstanding.

Misunderstanding comes from trying to stand on two legs at same time.
Ooops.
One makes profit, maybe spin (or lie, or fix, or silence). Another loses megabucks on each item sold, by reinvesting all money into future development. Both sell essentially all they can produce. That may be the source of your confusion.
So I'll just lie down and sleep on my verdict (past midnight here). Have a good one. Or perhaps another one?
(Smögen, the home of committed silly / inlagd sill)

 

[neroden]

Mod: @FirebirdAlpha complains about his posts never being seen. Here is a beautiful example of a post that would never have seen the light of day. $1.2B / $25k = 4,800. Just slightly less than the claimed 180,000 above. Just over a week's current steady state production. --ggr.

How do I mark the moderator's contribution as "informative" and "helpful" and Firebird's contribution as "dishonest"?

 

[neroden]

I think his 180,000 was referring to what he called a $4.5B budget shortfall. But either way his post is nonsense and his claim has been debunked at least a few times before.

For one thing, Firebird has the debt schedule wrong. Basically none of his numbers are right. How does he turn $920 million (in *convertibles* no less) into 1.2 billion? Is he adding the $230 million due in September and then *rounding up* by 50 million? Nooo, that can't be, because he used two significant digits elsewhere in his numbers ("2.35 bilion") and there is a difference between 1.15 billion and 1.2 billion.

 

[FirebirdAlpha]

Falsehoods in the original post:
1. They don't have to pay off any of the other debt, it won't be current, so the correct number to use was only the $1.2B.

This ignores accounts payable, which is a liability that's almost the size of their entire cash position. It also ignores other obligations under the "Other Current Liabilities" bucket (2.3B).

2. Depending on the stock price at the time, they could issue stock instead of repaying the debt, so they get a free capital raise without going to the market.

First, Elon said they won't do this.

Setting that aside, would love more explanation here for what you were trying to say. Are you saying they issue stock on the market to raise money to pay the debt? Or they can give shares to the creditor?

If they issue stock to the market to raise funds, that's certainly not a "free capital raise."

If you mean issue stock to the creditor, I highly doubt the creditor will hold onto their shares and would just dump them on the market.

Either way, you're diluting existing shareholders.

3. You're ignoring the revenue from S/X.

That's true. I'll drop down to 120,000 and I think my point still stands. Also, the $25,000 contribution per car is pretty generous.

4. As @oneday said, your premise has been debunked before. There are other arguments beside the above ones.

Would love a link.

 

[Duffer]

Nice runup into the close. Usually this is people getting wind of some good news before it's officially released. My guess is a press release to do with funding the Shanghai Gigafactory. Anyone heard anything?

I haven't seen anything other than regurgitated FUD aka "news" stories.

On a related note, I would be remiss if I didn't say Thank You to the Bears. I revised my bid and was able to add shares at a slightly increased cost. As a Long I'm not going to quibble over a few dollars per share. However, it's always nice to save money.

 

[Wooloomooloo]

Misunderstanding comes from trying to stand on two legs at same time.
Ooops.
One makes profit, maybe spin (or lie, or fix, or silence). Another loses megabucks on each item sold, by reinvesting all money into future development. Both sell essentially all they can produce. That may be the source of your confusion.
So I'll just lie down and sleep on my verdict (past midnight here). Have a good one. Or perhaps another one?
(Smögen, the home of committed silly / inlagd sill)

I don't think I'm confused. I am certainly not comparing Apple to Tesla as companies - I'm just opining on the narrative that Tesla is deliberately misleading investors, as something I don't think is true - and the broader narrative that all of this negativity on Twitter, CNBC or wherever, is driving down the price is objectively not true.

 

[ggr]

and every PLC is obligated to maximise profits (yes even companies that are claiming they want to save the planet).

This is often stated, but is somewhat incorrect.
In this NYT article: Corporations Don't Have to Maximize Profits - NYTimes.com:

Serving shareholders’ “best interests” is not the same thing as either maximizing profits, or maximizing shareholder value. "Shareholder value," for one thing, is a vague objective: No single “shareholder value” can exist, because different shareholders have different values. Some are long-term investors planning to hold stock for years or decades; others are short-term speculators.

 

[JRP3]

First, Elon said they won't do this.

This year. He didn't say they would never do it.

 

[ggr]

This year. He didn't say they would never do it.

And to enhance this point, he wouldn't be raising capital, because it is already raised! It would just be converting existing capital from bond to stock.

I'm really sorry that I let someone troll ME... I thought I knew better.

 

[FirebirdAlpha]

I find it humorous that you refute one point out of several and then rejoice calling it a "troll."

he wouldn't be raising capital, because it is already raised! It would just be converting existing capital from bond to stock.

Either way, it's a dilutive hit to shareholders that will negatively impact the stock price, especially given the 2.8 conversion ratio. Certainly not a "free raise."

 

[Wooloomooloo]

This is often stated, but is somewhat incorrect.
In this NYT article: Corporations Don't Have to Maximize Profits - NYTimes.com:

I completely agree with you, and it's a terribly over-used and over-simplified comment. I shouldn't really have used it, it's a stupid thing to say and not remotely what I intended to convey. Quite aside from the question of corporate law, there's the question of corporate values and purpose.

I guess I was trying to make the simple point that publicly traded companies are expected to repay their shareholders at some point or another, morally if not legally.