TSLA Market Action: 2018 Investor Roundtable

[wipster]

TMI

LOL! Sorry about that...

 

[Esme Es Mejor]

I don't know why you're looking for nits to pick here. I simply pointed out that Reciprocity's cash flow analysis relied on an assumption that 100% of reservations convert to orders, and that his results would be impacted by the use of a different assumption. Defining conversion rates and computing them are really beside the point. I took no position on what response Elon should make to boneheads.

As it happens, I have been a professional actuary for the past several decades. Small world, eh?

Y’all know conversion rate is irrelevant, right? Details of Reciprocity’s analysis aside, what matters is that demand for Model 3 is high enough that it can be produced profitably. If the conversion rate is high, but no one else wants one, it’ll be a failure within a couple years. If the conversion rate is low, but a million+ people want one every year, it’ll be a success. Conversion rate really doesn’t matter.

Demand is what matters. And what we know from Model S and Model X is that annual demand greatly exceeds the size of either of those waiting lists. If that holds true for the Model 3, annual demand will exceed 450k, and it will be very effing profitable.

Of course, maybe this time is different. But until there is some evidence to support that view, I’ll rely on history instead.

 

[SPadival]

After a couple of days, Dana finds something negative to write about Tesla

https://web.archive.org/news/articl...ion-builds-as-proxy-firm-slams-bad-governance

 

[schonelucht]

How about we have 450,000 reservation holders and the list grew by $130 million this quarter, totaling over $900 million as indicated by our earnings letter.

I did not. Most of the additional deposits were restatements within liabilities, trade ins plus monies received for increased cars in transit and the additional $2500 for configured invitees. The latter apparently enough for Tesla not to need additional invites for nearly 3 weeks and counting now.

 

[Esme Es Mejor]

D) The shorts believe that even at 5,000 per week, Tesla won't make material profit.

Is there any way to believe this without believing the current numbers are fraudulent?

 

[bambam4171]

D) The shorts believe that even at 5,000 per week, Tesla won't make material profit.

Any idea why that would be the case?

 

[avoigt]

Update about the Accident in Switzerland where a German driver died:

The Swiss firefighters deleted their previous Facebook headline that the Batterie may have been enforcing the fire. Instead they put a picture in and a text stating that the fire has been extinguished securely by using the online available procedure from the manufacturer and thank them for that.

Obviously they realized that their writing has been misinterpreted and did lead to a lot of media that they consider as wrong. Instead they corrected this now. I did see a first headline from a major German newspaper (FAZ) writing now a non biased balanced article.

Good to see but what sticks in the heads of many people will be unfortunately the fud that went out in the last days.

Deutscher tödlich verunglückt: Ursache nach Tesla-Unfall unklar

 

[phil0909]

Y’all know conversion rate is irrelevant, right? Details of Reciprocity’s analysis aside, what matters is that demand for Model 3 is high enough that it can be produced profitably. If the conversion rate is high, but no one else wants one, it’ll be a failure within a couple years. If the conversion rate is low, but a million+ people want one every year, it’ll be a success. Conversion rate really doesn’t matter.

Demand is what matters. And what we know from Model S and Model X is that annual demand greatly exceeds the size of either of those waiting lists. If that holds true for the Model 3, annual demand will exceed 450k, and it will be very effing profitable.

Of course, maybe this time is different. But until there is some evidence to support that view, I’ll rely on history instead.

Reciprocity's analysis addressed not profitability, but rather cash flow and solvency risk. You can believe those things are unimportant, if you wish. The problem with relying on history is that it always repeats itself. Until it doesn't.

 

[LordAstinus]

Gene Munster’s analysis is always good.

Tesla is 'moving in a good direction' with shutdown, says investor Gene Munster

At [00:00:47], Munster mentions a new kind of process implemented by Tesla Grohmann Automation, but I fail to understand the word. It sounds like "Nesting". Does anyone have more information on that? I'd really appreciate it if you share it with us.

 

[LordAstinus]

At [00:00:47], Munster mentions a new kind of process implemented by Tesla Grohmann Automation, but I fail to understand the word. It sounds like "Nesting". Does anyone have more information on that? I'd really appreciate it if you share it with us.

It could be this: Nesting (process) - Wikipedia

"In manufacturing industry, Nesting refers to the process of laying out cutting patterns to minimize the raw material waste. Examples include manufacturing parts from flat raw material such as sheet metal."

 

[justvisiting]

Don't try to backpedal already. The logic I laid out is clear and simple.

You said, "Shorts help to expose fraud".
All companies have shorts, therefore, all companies are fraudulent.

You can't say something, then try and pretend that you didn't say it. If you walk this back, then it just sounds like you're trying to parade around your own self righteousness, and you don't want to do that, do you?

You try to twist my words. The original statement was "longs build things, shorts tear things down"
i responded that that is a very narrow minded view. Shorts can help to expose fraud and misuse of capital by correcting valuation
this does NOT mean that every short position HAS TO be about fraud. It was just an example that short are not just trying to destroy good companies.

I hope you understand it now.

 

[justvisiting]

More than twice that and growing rapidly.
At least post factual info.

"some 100k" means "some * times 100k" which can be anything from 300k-700k depending on your definition of "some". Sorry you did not understand that

 

[justvisiting]

It's actually doubtful that shorts help to make capital allocation more efficient. Experimental economists have studied bubble and crash phenomena that occur where the value of the stock is constructed and known by all participants to decline. This experimental bubble are replicable. What is interesting is that they are able to vary the design of the market to include or exclude short trading. The hypothesis many would like to believe is that the presence of short traders would reduce the peak of the bubble and lessen the severity of collapse. But these experience have failed to show that the presence of short traders makes any difference in price dynamics. Short trading fails to reduce risk to other traders, but even though they may cash in on an entirely predictable decline in value.

So if short trading really does not reduce volatility and the risk of bubbles, how is it that capital is better allocated. In fact, short traders must deploy substantial capital for their operations, while longs must deploy incrementally more capital to counter the position of the shorts. So ultimately the market is tying up incrementally more capital for a given stock than would be needed without the side bets of the shorts. Thus, we've got more capital deployed with no real improvement in accuracy of pricing or reduction of volatility. This is seems to be a very inefficient use of capital.

The basic problem is that in an efficient market long have just as much motivation and information upon which to sell shares when they are over priced. The presence of shorts does not really add any new information or improve upon motivation to act that would not otherwise be there. Ultimately, shorting is just a side bet against an efficient market that add no real value.

Moreover, the reason why shorts engage in misinformation is that an efficient market works always against them. That's why they have to keep fighting real information and sound reasoning with a whole lot of propaganda.

I dont know that study, would be great if you could give me a link to that if its not too much work, sounds interesting.

Like i said, i dont know about reducing bubbles and such, but shorts do add value to the discussion about a company. Shorts did help expose Enron and other frauds. Most put tremendous amounts of time and research into their positions, because you have to be right when youre going against the market that in average goes up not down. And helping to expose and shut down fradulent companies before they do more funding rounds and rack up more liabilities that cant be paid later on does indeed save capital. Nobody can say whats the net result for all of it, but i believe its positive.

Another good example would be Einhorns short against Allied Capital. They did hundreds of millions of fradulent loans, which got reimbursed by the government after they defaulted. Einhorn and other guys, motivated by their short position, worked for years to expose and shut down the company, which probably saved hundreds of millions because they would have continued with it if no one had shut them down.

Therefore i think the view of Short Sellers as "destroyers" is entirely wrong. And the ones that spread lies and misinformation certainly exist, but the do on both sides (penny stocks, and the aforementioned companies like enron, worldcom, allied capital and so on). Its important to have people that argue for the other side.

 

[WarpedOne]

Nesting ... I am a total outsider but would guess this technique would be a standard way of stamping parts from the get of stamping process.
I guess there are lots and lots low hanging fruits left to pick.

 

[serverguy247]

More than stamping... a video I found that explains it:

An example: Software staging all the cars that requested white body colour together, so the paint shop can do many more cars before needing to clean out the paint kit and switch colours.

Some of these concepts could really improve throughput (depending on their challanges).

I personally think this shutdown is to bring online the new battery line at giga, lots of tweaks (like nesting) to get to 6k burst and also adding the full capability for AWD / P, so they can start running them through when ready.

 

[LordAstinus]

More than stamping... a video I found that explains it:

An example: Software staging all the cars that requested white body colour together, so the paint shop can do many more cars before needing to clean out the paint kit and switch colours.

Some of these concepts could really improve throughput (depending on their challanges).

I personally think this shutdown is to bring online the new battery line at giga, lots of tweaks (like nesting) to get to 6k burst and also adding the full capability for AWD / P, so they can start running them through when ready.

Thanks! That's quite useful for Tesla investors, including myself. Now this is for Tesla short-sellers, Bertel Schmitt-like journalists and Tamberrino-like analysts:

More mainstream-thinking-friendly!

 

[juanmedina]

shorts are scum

we have regulations to protect the public we don't need anyone else. Yeah sometimes they work and sometimes they don't.

 

[Dan Detweiler]

shorts are scum

we have regulations to protect the public we don't need anyone else. Yeah sometimes they work and sometimes they don't.

I will never begrudge anyone for pursuing financial stability and wealth. However, not at the expense of entire companies, thousands of workers and the positive impact that company may have had. Yeah, I agree. Wouldn't go so far as to call them scum, but certainly don't approve of their methods.

Dan

 

[22522]

Thanks! That's quite useful for Tesla investors, including myself. Now this is for Tesla short-sellers, Bertel Schmitt-like journalists and Tamberrino-like analysts:

More mainstream-thinking-friendly!

Thanks, but I don't see it.

There are two ways to make parts: a large lot sizes and "Just in time" with a lot size of one.

Nesting all same gage parts for a given vehicle on one sheet produces a parts kit for that vehicle. It works well if yield is 100%. If there are any yield problems, you need small buffers of make up parts (and a way to manufacture make up parts as individual parts).

Batching through the paint shop and nesting (or automatically/intrinsically kitting) the parts are sort of opposed, unless coordinated.

For a non-job shop environment nesting can result in less counting and sorting and thus a larger fraction of value added work. If it allows you to preserve orientation all the way to final assembly the robots will love that...

So the way I would guess is, nesting reduces inventory and its management. It works better with pace matched feeder processes.

 

[YasB]

Finally, as always, Morgan Stanley attributes zero value to Tesla Energy.

Hey, he makes up for that by assigning value to some mysterious thing called "Tesla Mobility". I think i've never read about that in Teslas official reports. He also has some ideas about collecting and using user-data and collaborating with Space-X to somehow leverage that in the rumored TAAS network. Unfortunatly i don't have access to the full report, but i'm really curious what he assigns for that. On the other hand i don't care much about multi-year projections so ... whatever.

I myself suspect, but don't have the numbers to prove it today, that energy storage will be a low margin business. There are a lot of old and new players competing for market. The range of potentially usable battery types and cell chemistries for stationary storage is not as limited as with cars. You basically have to go with NCA or NMC for those because of energy density today. Why not go with LFP for stationary storage as BYD and others do? Maybe redox flow batteries will be a thing? Guess we'll have to wait some more years and see how this will develop.

Is there any way to believe this without believing the current numbers are fraudulent?

Yes. The average net margin in the car industry seems to be around 6% in good times (low interest, lots of car sold, lots of money around, low unemployment) and close to 0 or even negative in bad times. If you assume Tesla performs only slightly worse in manufacturing than companies building cars for decades, there is a downturn in the car market, a spike in interest, a bigger than planned cost in service or a recall, then a positive net margin isn't a sure thing anymore. No need for fraud there. I'm pretty confident Tesla can and will try to break even in Q3 / Q4, especially when they continue to sell the high ASP cars, but it definetly isn't a sure thing.

Like i said, i dont know about reducing bubbles and such, but shorts do add value to the discussion about a company. ... Nobody can say whats the net result for all of it, but i believe its positive.

Of course. I often feel like a noble knight hurrying to rescue as many retail stock princesses as possible! This has nothing to do with me trying to make some money. What an embarrassing thought! :-D