TSLA Market Action: 2018 Investor Roundtable

[Turing]

Tesla, in my opinion, hasn't made too many major mistakes. But the whole Autopilot, FSD thing has been a huge misstep. That should never have been something public facing. It's still a long way away, but for some stupid reason, it is on the build screen for a new Model S. They really should have kept the tech private until mature and marketed Autopilot like everyone else does, as driver assist. Now we seem to have too many confused drivers who think the car drives itself.

Everyday people drive distracted and run into stationary cars with no self driving or autopilot on. Now we have people driving distracted with autopilot on and on some occasions running into stationary objects and you think the problem is the name? The name doesn't matter, people will drive distracted no matter what. We have an epidemic of distracted driving in cars without autopilot or active driver assist already, so it seems pretty stupid to pretend like the name is causing distracted driving.

 

[TradingInvest]

Cash Consumption vs. Strategic Value: Target Cut to $291
MORGAN STANLEY & CO. LLC
Adam Jonas, CFA

Snippet:

Following 1Q18 results, we are making significant cuts to our near-term and long-term auto margin forecasts and allow for marginally greater equity dilution. We see Tesla as trading near fair value with a balanced risk-reward. We remain EW.

It seems the reduction in price target was mostly based on forecasting lower gross margins (27% vs. 34%), and the capital raise estimate increase (from $2.5B to $3B) which Adam Jonas believes will be in Q3 2018 (despite Elon saying no capital raise in 2018).

Most interesting question in the note though, I think is this:

In our view, the number one issue at the heart of the Tesla investment debate is whether the company is 1) currently operating at a low level of utilization of a very large industrial complex, where incremental revenue can bring large incremental gross margins and improvement of cash consumption, or 2) the next 50-100% of growth in revenue brings forth other calls on cash and does not materially move the company in the direction of a fully self-funding existence.

The "interesting" question Jonas wrote in the note shows he doesn't really understand Tesla. Jonas recently predicted Model 3 may have demand issue. That shows he didn't do proper research about the car, which is critical when analyzing Tesla.

I put him on my ignore list since long time ago. It's not that I don't read his views, I just don't give him much weight. I read every bull's and bear's views.

These guys more or less understand Tesla (order not ranked):
Pierre Ferragu, Romit Shah, Chamath Palihapitiya, Ron Baron, Gene Munster
Ferragu's latest video explained it clearly. Short term target $530, long term market cap likely to reach $300B.

Shorts can't push too hard, institutional buyers would take all the shares. Shorts also can't cover. They are in big trouble. Watch Q1 and Q2 large institutional shareholders' position change.

 

[stef]

Cash Consumption vs. Strategic Value

Brace for a good drop tomorrow—target cut by Morgan Stanley

Predictable, with the stock sitting on the low BB.
Interesting how he’s justifying based on Q1, as Q1 was actually a beat with good outlook.
There may be more coming this week...

 

[WarpedOne]

WAG: tesla will use future profits to buy back shares. If not tesla, Elon will.

Future Tesla is a private company.

 

[Phil Seastrand]

I appreciate the answer!

Would you say they work well for a lazy cleaner? Are they something you need to stay on top of or so they kind of keep track of themselves?

I think we've cleaned them maybe twice in two years and about 24k miles.

 

[NicoV]

Cash Consumption vs. Strategic Value: Target Cut to $291
MORGAN STANLEY & CO. LLC
Adam Jonas, CFA

Snippet:

Following 1Q18 results, we are making significant cuts to our near-term and long-term auto margin forecasts and allow for marginally greater equity dilution. We see Tesla as trading near fair value with a balanced risk-reward. We remain EW.

It seems the reduction in price target was mostly based on forecasting lower gross margins (27% vs. 34%), and the capital raise estimate increase (from $2.5B to $3B) which Adam Jonas believes will be in Q3 2018 (despite Elon saying no capital raise in 2018).

Most interesting question in the note though, I think is this:

In our view, the number one issue at the heart of the Tesla investment debate is whether the company is 1) currently operating at a low level of utilization of a very large industrial complex, where incremental revenue can bring large incremental gross margins and improvement of cash consumption, or 2) the next 50-100% of growth in revenue brings forth other calls on cash and does not materially move the company in the direction of a fully self-funding existence.

Adam Jonas was also one of the analysts pissed off by Elons behavior on the Q1 CC. This is his retaliation. I guess he hasn’t changed his lowball Model 3 production estimates yet. This gives him the opportunity to change his estimate upwards again in the near future when actual production numbers are released/confirmed, claiming new data to support a new price target.

 

[TradingInvest]

WAG: tesla will use future profits to buy back shares. If not tesla, Elon will.

Future Tesla is a private company.

I have no doubt at some point Tesla will buy back large amount of shares like Apple did in recent years (I think Apple bought back ~40%). For Tesla, 100m probably will be the final share count after buy backs. This coming squeeze will last 10+ years.

 

[EinSV]

Courtesy of @vgrinshpun on Twitter:


$TSLA has new top institutional share owner - Price T. Rowe replaced Fidelity as #1. Half of the top 10 institutions reported ahead of tomorrow's deadline. These five increased their collective stake by 2.7 million shares. (link: https://whalewisdom.com/stock/tsla) whalewisdom.com/stock/tsla



Big addition by T. Rowe Price in Q1 — be interesting to see the rest of the data for Q1 and also to eventually see how institutional investors have been adding with the ~8-9M new shares available in Q2 (so far) due to shorting.

 

[SPadival]

Yeah, I made the mistake of reading her latest "article." There is obviously an agenda there. Garbage journalism. No more reads for me. That includes twitter.

Whoever reads Dana or Lora's article first, please go to archive.org and check if it is there. If the article is not archived, you can save the article and then put the link here.

For example:

https://web.archive.org/web/2018051...-and-burning-cash-at-a-critical-juncture.html

That way, they don't get the clicks from here

 

[LordAstinus]

$TSLA has new top institutional share owner - Price T. Rowe replaced Fidelity as #1. Half of the top 10 institutions reported ahead of tomorrow's deadline. These five increased their collective stake by 2.7 million shares.

Vladimir Grinshpun on Twitter

 

[yngwie_2012]

I think the real reason for yesterdays drop was MS downgrade.
Today the sp wont fall much im expecting

 

[yngwie_2012]

And now, some recent news about gasoline-car-fires:

Audi burns during driving:
Audi in Burweg ausgebrannt - Blaulicht - Tageblatt.de

Porsche burned out in A1 Highway Germany
Zwei Unfälle: Porsche auf A1 ausgebrannt – Pkw prallt gegen Baum

BMW fire in engine bay and inside the car
- Auto auf der A 81 komplett ausgebrannt - NQ Online - Die Neckarquelle

i can carry on with more News like These..But strangely, None of These get on Mainstream media, not in Germany, not in USA...

 

[Tslynk67]

And now, some recent news about gasoline-car-fires:

Audi burns during driving:
Audi in Burweg ausgebrannt - Blaulicht - Tageblatt.de

Porsche burned out in A1 Highway Germany
Zwei Unfälle: Porsche auf A1 ausgebrannt – Pkw prallt gegen Baum

BMW fire in engine bay and inside the car
- Auto auf der A 81 komplett ausgebrannt - NQ Online - Die Neckarquelle

i can carry on with more News like These..But strangely, None of These get on Mainstream media, not in Germany, not in USA...

Anything Tesla is news, doubly-so when potentially related to either autonomy or battery fires.

On one hand, it’s continual “free” exposure, as long as the idea that AP crashes and burning L-Ion packs doesn’t become the norm for the Joe Public.

 

[justvisiting]

WAG: tesla will use future profits to buy back shares. If not tesla, Elon will.

Future Tesla is a private company.

Elon pledges a significant amount of his shares to finance SpaceX, Boring and his lifestyle. Please explain how could he buy back shares when he has nearly no cash

 

[LordAstinus]

Elon pledges a significant amount of his shares to finance SpaceX, Boring and his lifestyle. Please explain how could he buy back shares when he has nearly no cash

Selling some of his SpaceX shares to an institutional investor?

 

[Reciprocity]

And this is just the tip of the iceberg if AP continues to have this limitation as model 3 hits the streets by the hundreds of thousands over the next year. I love using mine, but it may be wise for Tesla to do something about this until they are able to improve the technology regarding stationary objects. They need to figure this out ASAP. Three people have died over-relying on the technology. That could easily triple over the next 12 months. Yes, it's distracted driving. That's the reality but humans are proving that they think this technology is so good that they can virtually ignore the road and it's costing them dearly since it doesn't even recognize stationary objects.

Totally agree. We just ordered a Model X and, sure enough, FSD is still listed there as an option to purchase. Those of us who follow Tesla closely know that Musk recently said he thinks they should finally have the technology in place by the end of next year, which likely means quite a bit later. People who don't know the situation well could easily think they are purchasing something that will be made available to them soon. It seems odd to have it available as an option to purchase right now. Things were different when they first made it available to purchase about a year and a half ago I think. It seemed like it was coming soon. We now know that was extremely optimistic.

There is nothing to can do to stop people from killing themselves in their cars. It's human nature to game any system and think you know better. By adding things like eye tracking would make the system less safe by making used less and greater degrees of gamification.

Cars are dangerous, people are stupid. Put the two together and you have problems. This guess for every vehicle made ever and every future vehicle until full FSD can act like a ghost mode guardian angel to save your in almost every situation, no matter how dumb you are.

 

[Reciprocity]

Cash Consumption vs. Strategic Value: Target Cut to $291
MORGAN STANLEY & CO. LLC
Adam Jonas, CFA

Snippet:

Following 1Q18 results, we are making significant cuts to our near-term and long-term auto margin forecasts and allow for marginally greater equity dilution. We see Tesla as trading near fair value with a balanced risk-reward. We remain EW.

It seems the reduction in price target was mostly based on forecasting lower gross margins (27% vs. 34%), and the capital raise estimate increase (from $2.5B to $3B) which Adam Jonas believes will be in Q3 2018 (despite Elon saying no capital raise in 2018).

Most interesting question in the note though, I think is this:

In our view, the number one issue at the heart of the Tesla investment debate is whether the company is 1) currently operating at a low level of utilization of a very large industrial complex, where incremental revenue can bring large incremental gross margins and improvement of cash consumption, or 2) the next 50-100% of growth in revenue brings forth other calls on cash and does not materially move the company in the direction of a fully self-funding existence.

His number 2 is silly. If Tesla keeps growing at 50-100%, how they fund is meaningless because they can always cacoon up and wreap massive cash flows regardless of how they financed that growth. To be clear 100% growth in revenues at this point is both very consecutive but also comes at a point where any near future capex pays for itself before the ink is dry on the check to pay for it. Capex is all but paid in full for model 3 and gigafactory for model 3. At 5k/w it's all copy, paste and dominate. This is where the payment for the robots comes at the same time as the robots are producing cars for sale using parts where payment is not due until after the cars are delivered.

China will be interesting, but in general buildings are cheap and easy to finance. This might already be done. The financing that is, not the building. From there it's just about ordering the same equipment at Fremont and Nevada and installing it in China. Again, the bill is not due until the hardware is validated, which means it's producing soon after. Copy, paste, dominate.

 

[Stretch2727]

There is nothing to can do to stop people from killing themselves in their cars. It's human nature to game any system and think you know better. By adding things like eye tracking would make the system less safe by making used less and greater degrees of gamification.

Cars are dangerous, people are stupid. Put the two together and you have problems. This guess for every vehicle made ever and every future vehicle until full FSD can act like a ghost mode guardian angel to save your in almost every situation, no matter how dumb you are.

Given that the "Stationary Object" problem will need to be solved for FSD doesn't make sense to focus on this now. I get why the software ignores a stationary objects, but a lot of lay people have a hard time understanding how a car with some level of automation can run into something sitting still. To them this should be easy. It's like the software team justifying how something should work based on a technical difficultly rather than than meeting the users expectations. This problem needs to be solved eventually for FSD so why not now to avoid all the headlines.

 

[bhtooefr]

from various discussions here on TMC, and IIRC comments directly from Tesla, my understanding is that the reason stationary objects when traveling at considerable speed may not be picked up is that having the software designed to do so currently would result in false positives for the likes of highway overpasses to the point Tesla feels it would be a net reduction in utility to have AP react to this bucket of events.

It's also worth noting that other automakers' automatic emergency braking systems tend to go for a two-stage approach, and not necessarily avoid the collision, but reduce its intensity:

1. Alert the driver to brake immediately upon a detected imminent collision (whether or not it's a false positive)
2. If the driver doesn't respond, apply full braking

Note that some of these systems will see phantoms and end up alerting and applying full braking when there's nothing there, or just a sign, or especially steel plates in the road or railroad tracks with steel around them when going downhill. (Also, AFAIK, "respond" doesn't necessarily mean braking.)

 

[Starno]

Actually it's nice that all the FUD is happening now.

They need to go ALL IN right now, use all their ammo. So once real fundamental news start to come in, they'll be dry. And they'll get annihilated.

If they still have reserve, even when fundamental good news come in, they'll have some power. That's why all they have to say, they need to say it now. So they'll be out of excuses.