TSLA Market Action: 2018 Investor Roundtable

[AZRI11]

Add Dana Hull to the list of people who are Tesla sensationalists that deserve to be forgotten.

Ever notice how the media and short-sellers are more obsessed with Tesla than Tesla fans are?

Who are the real cultists?

Cry HAVOK and let loose the ... AWD !

Patience grasshopper. 5k per week must be achieved before you are rewarded.

 

[Words of HABIT]

I never thought Steve Jobs would allow Apple to pay dividends, but once the cash starts rolling in there was only so many companies they could buy that made sense. Few seem to see what I really believe is coming. Tesla may never sell more cars that Toyota or GM, but it will sell most of the profitable cars on the market. Profits will then become unavoidable and then we will see the trolls switch from saying it can't be done to, it can't be done much longer. I guess Tesla could buy bankwupt GM and cannibalize their empty plants for building products people actually want. That isn't going to happen tomorrow, maybe not for 5 years, but it is coming.

Edit: I forgot to add that I am an anonymous idiot posting on the Internet so please trade accordingly.

You were right the first time. There were no dividends issued by Apple under Steve Jobs' watch. Only after his death and Tim Cook took over. Apple's innovation has been stagnant ever since. Job's ensured they had the best personal computers, tablet computers and smart phones and their moat is still wide.

There are so many more products for Tesla after Semi, MY and Pick-Up Truck. Everything that is currently powered by gasoline or diesel can be a Tesla. I don't see Tesla buying existing companies, instead they will create many more new markets that do not currently exist.

 

[Words of HABIT]

Tesla Inc. (TSLA), The Visionary Dream of Elon Musk [Futures & Risks]
A few weeks old, thought this was a good article, a couple of facts wrong and glossed over, but some good points captured for a general financial report.

 

[tlo]

Money obtained from subsequent offerings belongs to all shareholders. The pie grows; each shareholder owns a slice that is just as large as before, but a smaller percentage of the pie than previously. It would be a wash if the the new money were simply locked away in a safe. But if it is invested in rapid growth to disrupt long established capital intensive industries, then it can be a huge benefit making dilution a misleading term.

Curt, while I agree with your point overall, I feel uneasy every time this is brought up. Because there is something called Total Addressable Market, which is not infinite. Suppose there is a path for Tesla to achieve a $1T market cap in 10-15 years. Tesla can theoretically raise $50B by doubling the number of outstanding shares right now to accelerate the path towards that goal. In that scenario, we would still own the same size slice of pie as before (just like you said), but Tesla would need to achieve a $2T cap in the same timeframe for shareholders to have the same percentage gain.

Another way to look at it is, if we assume Tesla will be worth a lot more in the future, then it's not a good bargain for Tesla to sell shares at the present. Imagine if Tesla raised $1B when they were worth only $3B. It would be much less beneficial to shareholders than if Tesla raised the same $1B when they are worth $30B. Thus, as a shareholder, I view secondary share offerings as something that should be avoided as much as possible.

 

[CorneliusXX]

Curt, while I agree with your point overall, I feel uneasy every time this is brought up. Because there is something called Total Addressable Market, which is not infinite. Suppose there is a path for Tesla to achieve a $1T market cap in 10-15 years. Tesla can theoretically raise $50B by doubling the number of outstanding shares right now to accelerate the path towards that goal. In that scenario, we would still own the same size slice of pie as before (just like you said), but Tesla would need to achieve a $2T cap in the same timeframe for shareholders to have the same percentage gain.

Another way to look at it is, if we assume Tesla will be worth a lot more in the future, then it's not a good bargain for Tesla to sell shares at the present. Imagine if Tesla raised $1B when they were worth only $3B. It would be much less beneficial to shareholders than if Tesla raised the same $1B when they are worth $30B. Thus, as a shareholder, I view secondary share offerings as something that should be avoided as much as possible.

While I agree there shouldn't be any superfluous share offerings, the equation to figure out what is needed and what isn't is very complex. If Tesla didn't raise more capital and that meant they have to slow down their expansion plans it may provide enough time for competitors to take enough market share that the 1T figure is no longer possible. If a recession hit soon then Tesla may have to raise capital on less favourable terms. How low would cash reserves have to get before there were real concerns around liquidity/solvency and the short narrative gained enough strength to really damage the share price? These decisions at some level are just a judgement call as effects of market sentiment and the whims of the broader economy are impossible to know to a high degree of accuracy.

As they say, pigs get fat, hogs get slaughtered. Let's not be hogs and try and keep all the shares for ourselves to the point that Tesla could be hit by external factors outside its control.

 

[landis]

Because there is something called Total Addressable Market, which is not infinite.

Really?
I think Curt is spot on.

And there is something called time value of money.
Time stops for nobody.

Reaching 1T cap earlier is more valuable.

And i am not at all woried that there is a lack of imagination or motivation to identify whole other markets.

We are already talking autos, trucks, energy (generation and storage), transportation (as a service). ...

 

[Reciprocity]

Tesla needs 5k/w then they wouldn't need to raise capital. They could fund their operations fully and expand slowly. Don't forget that they have not just been spending capex on model 3, they have been investing or as fudsters like to say, incinerating cash on gigafactories. Solar roof and stationary storage should be high margin and high demand products. 100,000 solar roofs with power walls is an equivalent sized business to model s + x. 100,000 seems like a lot, but there are 5 million new roofs every year so 100,000 represents 2% of that potential total market, tough the realistically addressable market is probably only 20% if that 5m, due to the fact that you wouldn't put a $100,000 roof on a $200,000 home. But that's what traditional panels are for.

That being said, I expect and hope Tesla goes to the market often. They need to build atleast 4 more terafactories in the next 5 years. US, China, Europe and maybe India or Australia.

Edit: I also don't believe they will need a ton of capex to start building semis. My guess is that customers will pay to install solar and charging and Tesla has most of the equipment they need to build thousands of semis as they ramp up more automation. Semis will bring battery packs to Fremont and stamped, machined and manufactures parts back. They won't need to build out a nation wide mega charger network before selling semis because they can Target customers with local routes while they build out the network over time. California first, then major east coast corridors.

 

[tlo]

Really?
I think Curt is spot on.

And there is something called time value of money.
Time stops for nobody.

Reaching 1T cap earlier is more valuable.

For this to be worthwhile, for every % dilution, the market cap has to be at least that % larger at a given point in the future than if there were no dilution. This is already factoring in the time value of money. If Tesla gets to 1T cap somewhat earlier, but you own a lot less of that 1T, then for you it's less valuable.

Don't get me wrong. Some amount of dilution is well and expected. But if the dilution is due to a delayed production ramp causing a delay in cash generation, that is not good. I'm a longtime shareholder, and I don't think there's any way to spin that scenario as positive. I much rather see most of capex get funded by positive cash generation, as Elon had targeted.

Tesla can perhaps see a path to $500B or $1T. But to think they can just keep inventing new $100B markets after that? Let's not get ahead of ourselves. Just ask Apple and Google how hard that is.

 

[ggr]

Curt, while I agree with your point overall, I feel uneasy every time this is brought up. Because there is something called Total Addressable Market, which is not infinite. Suppose there is a path for Tesla to achieve a $1T market cap in 10-15 years. Tesla can theoretically raise $50B by doubling the number of outstanding shares right now to accelerate the path towards that goal. In that scenario, we would still own the same size slice of pie as before (just like you said), but Tesla would need to achieve a $2T cap in the same timeframe for shareholders to have the same percentage gain.

Another way to look at it is, if we assume Tesla will be worth a lot more in the future, then it's not a good bargain for Tesla to sell shares at the present. Imagine if Tesla raised $1B when they were worth only $3B. It would be much less beneficial to shareholders than if Tesla raised the same $1B when they are worth $30B. Thus, as a shareholder, I view secondary share offerings as something that should be avoided as much as possible.

While you're technically right about TAM, it simply isn't a concern for the foreseeable future. Last year 81.6 million cars were sold worldwide. Tesla managed just over 200k, which is 0.25%. They can double production every year for 7 years before they (and EV competitors) run out of addressable market. In the meantime, their stated goal is to accelerate the transition away from fossil fuel, so to achieve that goal they might just want to raise more cash. Not because they need to, but to accelerate.

 

[justvisiting]

While you're technically right about TAM, it simply isn't a concern for the foreseeable future. Last year 81.6 million cars were sold worldwide. Tesla managed just over 200k, which is 0.25%. They can double production every year for 7 years before they (and EV competitors) run out of addressable market. In the meantime, their stated goal is to accelerate the transition away from fossil fuel, so to achieve that goal they might just want to raise more cash. Not because they need to, but to accelerate.

200k? I think you hit the wrong button there. But since you calculate a market share of 0,25%, maybe not..

 

[CuriousSunbird]

200k? I think you hit the wrong button there. But since you calculate a market share of 0,25%, maybe not..

200k sounds about right to me. How many do you think?

 

[Waiting4M3]

200k sounds about right to me. How many do you think?

I think @justvisiting got confused by the words "Last year 81.6 million cars were sold worldwide." thinking that @ggr meant that Tesla sold 200k cars last year (2017) which obviously isn't right. I don't think 200k sales is right for 2018 either (too low), so I'm a little perplexed as well.

 

[sundaymorning]

Question: both factories should be online tomorrow right?

I can also see a situation where one factory comes online before the other as well if more time is needed to resolve bottlenecks.

 

[JRP3]

Tesla's Model 3 production problems are continuing. How hard can it be to make a car? | WIRED UK

A worthwhile read with input from some industry insiders.

 

[Skryll]

... Solar roof and stationary storage should be high margin and high demand products..

Is it correct to assume that they were able to divert the committed battery cell consumption of lower model 3 production runrate to panasonic into the different chemistry cells for powerwalls and powerpacks?

With more than 600 temporary pro-bono installations in puerto rico that have not yet resulted in a sale, how does margin look then in the next earnings call for the energy division.

 

[dc_h]

For this to be worthwhile, for every % dilution, the market cap has to be at least that % larger at a given point in the future than if there were no dilution. This is already factoring in the time value of money. If Tesla gets to 1T cap somewhat earlier, but you own a lot less of that 1T, then for you it's less valuable.

Don't get me wrong. Some amount of dilution is well and expected. But if the dilution is due to a delayed production ramp causing a delay in cash generation, that is not good. I'm a longtime shareholder, and I don't think there's any way to spin that scenario as positive. I much rather see most of capex get funded by positive cash generation, as Elon had targeted.

Tesla can perhaps see a path to $500B or $1T. But to think they can just keep inventing new $100B markets after that? Let's not get ahead of ourselves. Just ask Apple and Google how hard that is.

I’m sure we all have our own nuance to raise don’t raise balanced raise.
I agree raising due to delayed production is bad and enabling of missed targets. Elon has had a hard time delegating his production vision. He needs to solve that before being more full time Boring or SpaceX.
Long term if Tesla starts hitting targets they seem able to grow about 50-60% year over year without raising more capital. Without a gwynne shotwell stepping up, I'm not sure how much faster they can grow organizationally. It’s not always money, it’s people and process.

 

[Reciprocity]

Is it correct to assume that they were able to divert the committed battery cell consumption of lower model 3 production runrate to panasonic into the different chemistry cells for powerwalls and powerpacks?

With more than 600 temporary pro-bono installations in puerto rico that have not yet resulted in a sale, how does margin look then in the next earnings call for the energy division.

Who says they are probono? What if they are just charging normal rates for electricity their. I honestly don't know, but I do know that Tesla helped when others didn't and I know that island needs solar and batteries because it's cheaper than diesel. I also know what billions will pour into pr to fix this stuff. Eventually. Tesla will be remembered.

 

[Waiting4M3]

Who says they are probono? What if they are just charging normal rates for electricity their. I honestly don't know, but I do know that Tesla helped when others didn't and I know that island needs solar and batteries because it's cheaper than diesel. I also know what billions will pour into pr to fix this stuff. Eventually. Tesla will be remembered.

FYI, other similar micro grids systems in PR after the hurricane seem to be donated, Most of PR is pretty poor, their main utilities is bankrupt. I wouldn't be surprised if Tesla is not receiving much financial compensation at the moment.

Solar Plus Storage Microgrids Bring Relief to Puerto Rico

“The microgrid is donated, but had they had to cover the total cost of project it would probably take 2.5 to three years"

 

[CuriousSunbird]

200k sounds about right to me. How many do you think?

My mis-recollection - 103,000 was the delivery number, so production was about the same. If you believe Elon, should be close to 300,000 this year.

 

[ggr]

Stay on topic pls. Can easily create another topic to discuss military spending or call, Facetime each other

Mod: Agree. Moved to market politics thread, continue discussion (if you can call it that) there please. --ggr.