TSLA Market Action: 2018 Investor Roundtable

[RobStark]

They will have money to spend. But they might delay their purchase, that's what I'm afraid of.
When a severe economic downturn arise, even people who still have money, prefer to save it : either they have a job but they're afraid to lose it, or get their paycheck to be cut by a lot. Or they might have a firm that see their revenues cut by a lot.

We might have a 30%+ decline in demand, I hope Tesla can survive it

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During the Great Recession that bankrupted GM and Chrysler auto sales fell 7%.

 

[Reciprocity]

Labor offers solar panels and Tesla batteries for 50,000 South Australia homes

A network of at least 50,000 home solar systems backed up by battery storage will create the world’s largest “virtual” power plant to cut energy bills, Jay Weatherillhas said.

The South Australian premier said a trial was already under way to install solar panels and Tesla batteries on 1,100 Housing Trust homes. The cost would be financed by the sale of electricity. The power generated by the solar panels and the batteries would not be owned directly by the households.

To me, this is where Batteries can really shine. Certainly the SA install is pretty cool and its a relatively fast way to balance the load and take advantage of the batteries ability to react quickly. But one of solar's greatest benefits is that it can be distributed and batteries complete the equation for a complete solution. The idea of a smart grid that can adapt like its a single power plant, yet provide electricity and backup right on site, is the ultimate in having your cake and eating it too. This is clearly a more expensive way to do it, but you make up for the additional costs by getting rid of transmission fees by having most of the consumption closer to where the power is generated. I think both types of solutions are required but a good mix of utility grade and distributed solar power solutions. To me, the SA install was a proof of concept and its going to be the thing that kicks open doors to many many large scale and smaller distributed installs like this that end up larger in total scale. I also think the cars can be included in this smart grid to charge on demand to help deal with duck curve and cheaper rates.

One thing that does concern me is that if these systems are to good, they actually lower the cost of the energy they save, thus making them less profitable and harder to justify. The SA battery can earn $2mil in a few days, but that wont last forever and at some point there will be so much clean energy that charging your car will always be free as long as you let the Utility decide exactly when it charges. I dont know enough to know when this might happen or even if it will. One thing is for certain that as energy gets cheaper and cheaper, there will be limitless numbers or new uses. Things that where not viable years ago will be cheap with nearly unlimited clean energy. If energy at my house was always 1c/KWh, I would leave every running all the time for example (not really, but you get the idea).

 

[RobStark]

.

One thing that does concern me is that if these systems are to good, they actually lower the cost of the energy they save, thus making them less profitable and harder to justify.

On an Australian news site discussing the new Tesla install they said a typical family in low income housing in South Australia was paying $300 AUS or $238 USD for electricity per month. I think it will be quite a while for 1 cent per kWh in Australia.

 

[Reciprocity]

On an Australian news site discussing the new Tesla install they said a typical family in low income housing in South Australia was paying $300 AUS or $238 USD for electricity per month. I think it will be quite a while for 1 cent per kWh in Australia.

I guess its not a huge concern.. Tesla can make a $1T or so before prices get to the point that they are so cheap that something better will need to be invented to keep prices going down, but there is also no reason prices must continue to go down. Utility rates are constantly on the rise, so its normal for them to go up with demand and with newer and newer equipment.

 

[Starno]

During the Great Recession that bankrupted GM and Chrysler auto sales fell 7%.

True, but when I read articles like that : Car Sales at 10-Year Low

It's a bit scary

 

[Intl Professor]

We don't know, maybe they are waiting for electric like me. That is one reason I think TSLA is a hedge stock and will go with the flow of energy change despite what might happen to the macro economy. To me and I'm sure most in this forum that change is good for the economy in the long run and we shall survive whatever economic wrong headiness Washington tries to do to solar energy in general and its applications. We all
know coal is threatened most, near term, by gas, not just solar. The real danger of solar to authoritarians is the democratic nature of distribution. So if they can't destroy it through the democratic process, what is the near term enemy?

I know, political, but starts with physics first principles. Also, I'll save any rebuttals on the democratic nature of the last election for the recently established political thread. Hint: Robert Dahl's five principles defining democratic systems should be read or reread (in my case) first.

 

[avoigt]

They will have money to spend. But they might delay their purchase, that's what I'm afraid of.
When a severe economic downturn arise, even people who still have money, prefer to save it : either they have a job but they're afraid to lose it, or get their paycheck to be cut by a lot. Or they might have a firm that see their revenues cut by a lot.

We might have a 30%+ decline in demand, I hope Tesla can survive it

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Allow me to politely disagree:

Lets assume we see a downturn, something that I don't expect to happen soon to be honest! In such a scenario people will still buy cars even if the number is lower. Regardless if it will lead to 7% less sales or 30% of all vehicles the limiting factor on the increase on EVs and the impact is way smaller for EV producers versus ICE producers.

If you reduce 500k reservations by 10% or 30% its a number that Tesla will almost not impact at all. They still will struggle to get them delivered soon. If you are an ICE producer who has the production lines up an running already and a demand decrease of that order of magnitude is happening they suffer heavily simply because of cap ex and low utilization of factories.

ICE car producers would suffer and Tesla would only see a lower than "normal" amount of reservations. Given over the time lower production costs of batteries leading to lower costs of vehicles combined with lower TCO it will be more attractive for consumers to buy a EV in a downturn versus a ICE car.

 

[Words of HABIT]

True, but when I read articles like that : Car Sales at 10-Year Low

It's a bit scary

Starno, informative link article you plucked from July 2, 2008 during the height of the Great Recession.
Even at its ugliest, the article shows there were winners and losers.

"Even with some factories running at peak capacity, auto companies cannot meet the surging demand for small, fuel-efficient cars. At the same time, manufacturers are slashing production of slow-selling pickup trucks and sport utility vehicles." and "By contrast, Toyota executives said they could not meet demand for its Prius hybrid-electric car or its small, fuel-efficient Corolla and Yaris models."

If the past has any history of repeating itself, I strongly believe any significant recession will push people towards more fuel efficient or alternate fuel vehicles such as BEV. IMO Tesla has the least to lose and the most to gain. The future looks bright!

Edit: changed Depression to Recession.

 

[aubreymcfato]

One thing that does concern me is that if these systems are to good, they actually lower the cost of the energy they save, thus making them less profitable and harder to justify. The SA battery can earn $2mil in a few days, but that wont last forever and at some point there will be so much clean energy that charging your car will always be free as long as you let the Utility decide exactly when it charges. I dont know enough to know when this might happen or even if it will. One thing is for certain that as energy gets cheaper and cheaper, there will be limitless numbers or new uses. Things that where not viable years ago will be cheap with nearly unlimited clean energy. If energy at my house was always 1c/KWh, I would leave every running all the time for example (not really, but you get the idea).

The moment that electricity is that cheap, we will probably be very quick to electrify *everything*.
Heating houses, stoves, flights, ferries. We'll also be finally ready to cryptocurrency at a decent cost, without burning coal in China (mining farms are all there).
Electricity demand will grow enormously.
We will have disrupted the geopolitical importance of Middle East and Russia. Africa could leapfrog oil and become what they want to become.

To me, this looks as a beautiful world to live in and fight for.

 

[Manton]

True, but when I read articles like that : Car Sales at 10-Year Low

It's a bit scary

As @Words of HABIT pointed out, you're quoting a 10 year old article. Help us understand why you bring up such old information, without stating its age, and why its relevant at this point. Not trying to jump to conclusions, but...

 

[bdy0627]

Probably not good for macro:

Yellen Says Prices `High' for Stocks, Commercial Real Estate

On the other hand, she is headed out.

 

[Starno]

As @Words of HABIT pointed out, you're quoting a 10 year old article. Help us understand why you bring up such old information, without stating its age, and why its relevant at this point. Not trying to jump to conclusions, but...

Because I think we're 2-3 years away from a 2008 similar economic condition. And I'm just trying to gather more information concerning what that means for Tesla when " s*** hits the fan " (macro economically).

 

[Starno]

As @Words of HABIT pointed out, you're quoting a 10 year old article. Help us understand why you bring up such old information, without stating its age, and why its relevant at this point. Not trying to jump to conclusions, but...

Ray Dalio is the founder and CEO of the largest hedge fund in the world.

 

[Manton]

Because I think we're 2-3 years away from a 2008 similar economic condition. And I'm just trying to gather more information concerning what that means for Tesla when " s*** hits the fan " (macro economically).

Fair enough. I think we're all trying to figure out when the next big dip is. Keep in mind, 2008 was quite literally a giant heist, i certainly hope we won't go through that again so soon.

I think the biggest risk is to TSLA SP. As we've seen, actual financials have little baring on the SP. I would think that a recession would half the SP, with heavy influence of shorts, etc. Hoping for another year or two of growth!

**edit** Great interview of Ray Dalio. Completely agree that we're heading for a downtown. Especially when such people openly comment. Almost as if its a disclaimer for the idiots out there. A way to say, "hey, people have warned you economy would go down, your own fault you lost all your savings."

So if Ray says 1-2 years, how long do you really think we have until market starts to go down purely on expectation? Can't be more than 8-12 months i think.

 

[anticitizen13.7]

Because I think we're 2-3 years away from a 2008 similar economic condition. And I'm just trying to gather more information concerning what that means for Tesla when " s*** hits the fan " (macro economically).

2008 was a near epic collapse driven by bad debt that had been securitized.

Do you see any factors in the macro economy that could have similar substantial effect? In the US, student loans are at record levels and consumer debt via credit cards is pretty high, but is the risk in this debt positioned to damage the structure of the economy?

 

[BornToFly]

I feel like the spring is compressing with all the good news lately, including TE in Australia, Model 3 VINs, dual motor VINs, etc. We could have a really nice pop in SP after ER Wednesday, especially if there is finally news on new Gigafactory locations, confirmation that Model 3 ramp is on track, and that Tesla Semi production line is already being built.

 

[RobStark]

especially if there is finally news on new Gigafactory locations

I don't think this will be viewed positively by the market.

It is simply more financial burden to the company i.e. "cash burn."

If Tesla shows a profit for a few quarters,that the sale price of Tesla products surpasses cost to build them, then the market may view GF as future source of increased profit.

 

[GoTslaGo]

Tom Brady Super Bowl win could hurt stock market

Why Stock Market Investors Should Root For a High-Scoring Super Bowl

In summary: Eagles win will be bullish for the stock market. Second article points out the total score by the two teams need to be 46 points or more.

Eagles dethrone Tom Brady, Patriots for first Super Bowl title in stunner

Eagles over Patriots 41-33

Stay invested...

 

[SteveG3]

During the Great Recession that bankrupted GM and Chrysler auto sales fell 7%.

From pre-recession to recession low years, Chinese vehicle production shot up from about 5-6 million to 18 million (in a global market of about 80 million vehicles). So, while, it may be that global sales were down only about 7% those years, it's worth thinking about how this massive differences between US and Chinese sales changes impacted the two companies that went bankrupt. GM and Chrysler were right at the top of those impacted by a 40% drop in vehicle sales in the U.S.. Though they both undoubtably benefitted from the growth in China, it wasn't of the same scale as the hit they took from the drop in US sales.

 

[TSLAopt]

So the definitive answer is this.

IB has the ability to front run their customers. Part of it is the right you signed away on your margin account so that they can lend your shares and better offset risk.

I forgot where I found the research. But it was on HFT when one of them caused a flash crash with the first recorded use of spoofing.

The research went into tick by tick replay of how it happened and discussed what kind of structure allows a brokerage to front run customers and spoof as well.

If I remember correctly, Charles schwab is one of the ones that cannot do this. In general, any brokerage that allows smart routing is basically front running you. Smart routing is basically asking for it.

But in a sense. Since there are so many HFt doing front running and spoofing now, I believe the benefit for them fron these activities are close to zero. The most they might get is a cent or two, which for most retail investors who's trading at the fastest is in the 5 second interval, is negligible. Especially so if you buy and hold more than a day.

Disclaimer: all anecdotal evidence of course. I tend not to save links to researches because there are too many and just incorporate it to my knowledge. If anyone wants to rebut me by askibg for proof, I have none and I am not in the business of proving my theory so that others can make money competing against me.

This is bunk