TSLA Market Action: 2018 Investor Roundtable

[RobStark]

In all respect Rob. I have no problem you call me that. But, EV are and will make better cars. Some have mission to save the world, I admit that is more noble than what I do. And I do respect that. I won't pretend I am one but I do back your mission.

If you back the mission the you do give a *sugar* about something other than yourself.

I am not saying everyone needs to have the mission as their number one priority or even second in order for the transition to a decarbonized economy to be successful.

Some people will place it first, some second, others fifth.

I said that is half the battle because the other half is convincing the consumer that an EV is at least as good as an ICEv.

Some will buy a Tesla because they are hypebeast plus they can feel good about doing the socially responsible thing, others because of the high tech plus they get to feel good about doing the socially responsible thing, some because they are speedfreaks that get to feel good about driving the top dog without getting 12 MPG. Some may buy Tesla because they are patriots who want to further their country's energy independence and get a cool car too.

Saying that EVs superior environmental or geo political impact is irrelevant to further EV market share misses the reality on the ground. The reasons people buy one product and not another are varied and complex.

 

[ZachShahan]

Yeah, news rooms used to pride themselves in their credibility. So sad that they just care about clicks.

Is it just them holding a mirror to the society at large? I wish we went back to advertising light, subscription based journalism models.

Many media outlets are trying to. Subscribe to the ones you appreciate.

 

[EngRyan]

I'm kind of a newbie here, I bought my M3 not because I am socially responsible. I am not responsible for anything, I just love the car. I think more and more new Tesla owners will not be doing the responsible thing. Just buy the car because it is better.

I get where RobStark is coming from but at the end of the day I agree with you because each individual is insignificant in the equation. I worked for a large oil company and every efficiency I found saved more CO2 than multitudes of people could make a difference in their lifetime.

I love Tesla's because of their technology and performance. They are better cars than almost all in those categories. This is how you save the world (Elon), you make a compelling car for everyone of every belief. This is why I believe in Tesla and invest in it. This is why I will be buying the AWD version with my dirty oil money.

 

[glen thomson]

any body worried about the affect of poor tech performance recently first Netflix now Facebook down 20%. Now would be a terrible time for tesla for a bear market to start

 

[Papafox]

Everyone’s tagging this post as “funny”. It isn’t satire, CNN actually posted that headline. The article’s current headline is toned down slightly to: SpaceX’s latest rocket recovery gambit misses.

Real journalism is just dead, dead, dead, if it ever was alive. If all the news you know about is reported with such slanted coverage, you can be pretty sure the rest of the news is the same.

Crazy.but true.
Here's the link: https://money.cnn.com/2018/07/25/technology/spacex-fairing-recovery-iridium-7/index.html

 

[Causalien]

any body worried about the affect of poor tech performance recently first Netflix now Facebook down 20%. Now would be a terrible time for tesla for a bear market to start

It's what I've been watching a well. 20% means a margin call event will happen tomorrow.

The tech rise is nearing its peak. Timing is too close to comfort.

 

[YasB]

It's what I've been watching a well. 20% means a margin call event will happen tomorrow.

The tech rise is nearing its peak. Timing is too close to comfort.

That is one of the reasons i'm short. I probably wouldn't have been brave enough to do that, if i was optimistic regarding macro economy and general stock market development during the next years. Should we enter a correction, Tesla seems to have quite a bit of downside and the current valuation has some leverage built in. A lower stock price alone, even if it's not caused by Tesla but external factors, might cause fears of reduced growth or increased dilution, which reduces the upside and may lead to a lower stock price, which might cause ... Should something really bad happen, a short position in Tesla may hedge 2, 3 or 4 times the amount of my long positions. Well, at least that's the theory - we'll probably see how wrong i have been later. :-D

 

[schonelucht]

any body worried about the affect of poor tech performance recently first Netflix now Facebook down 20%. Now would be a terrible time for tesla for a bear market to start

Don’t worry. According to well known shorts, Tesla should be valued as a car company, not a tech one

 

[YasB]

Don’t worry. According to well known shorts, Tesla should be valued as a car company, not a tech one

Of course, the only exceptions are, when the auto cycle is going down or there is talk about tariffs on cars. Tesla should be valued as an energy and tech company in those circumstances.

 

[Hogfighter]

i thought i was smart buying in at ~310 and ~320. felt like an idiot when it went below 300.

that said, i now think a lot of FUD will be thrown at the company in next week or month that could sink it solidly below 300 a bit. we'll see.

You’d only be an idiot if you planned to hold this investment for a month or so. FUD can pummel this stock in the short term, but in the long run the truth always comes out....and the SP always follows. Remember the analyst who said “There’s no way Tesla will sell 20,000 cars in 2013”?

This company was worth $3B when all they produced was the Roadster. $20B when they produced 50k S’s per year, and $40B when the X followed suit. My personal opinion is that adding 300k 3’s per year is worth more than an extra $10B.

 

[shlokavica22]

As Tesla slides into consideration for a person, a couple of OEMs will likely slide out of consideration.

Exactly. It is a process- What's the Baader-Meinhof phenomenon?

Thanks for explaining also the Jaguar motivations in that context. I haven't considered that angle.

 

[W84M3]

maybe off topic but

rofl

 

[Tslynk67]

Elon's back on Twitter

Elon Musk on Twitter

 

[Tslynk67]

A big fudster is MontanaSkeptic and he has disappeared.

The drones are still buzzing around though...

 

[neroden]

The brief puts a gloss on why " on track" is frequently used when discussing Tesla Time. This filing is for a Motion to Dismiss hearing on 8/24/18 (likely to be delayed multiple times if the Hoerbiger litigation is any indication of the urgency in Californian federal courts).

If the motion is not granted (likely, since most judges are reluctant to grant summary judgments without giving the parties some leeway to develop their factual basis of the controversy), the continuing litigation will divert executive time into un-productive activities, and discover battles will incur large legal bills--which are charged to SG&A, partially explaining why operating leverage has been difficult to achieve. Tesla "self-insures" product liability risk but buys Directors & Officers Liability coverage--but the limits and retentions have not been disclosed.

Yeah, I think we haven't really thought about the amount Tesla will have to permanently devote to legal bills due to the constant (largely unjustified) attacks on it. They're going to have to keep playing legal defense indefinitely, even if they win all the cases. I wonder if someone can estimate the ongoing legal expense which will be charged to SG&A? Maybe we could look at companies in industries where high legal expenses are the norm, like the chemical industry or the pharma industry?

 

[Seesaw]

Further tweet about Montana

 

[neroden]

I've stated on this forum before (but admittedly forgot where) that the single most important variable for stock price appreciation is operating margin expansion -- particularly margin expansion that beats consensus forecast. In this respect, I don't think Tesla is different than any other stock and I'm not surprised that it has not moved much this year thus far.

Over the years I've found the best risk/reward opportunities are the situations where a very compelling case can be made that operating margins are set to expand. If the projected expansion is significant and will take place for years to come, all the better. For whatever reason, the Street -- and in particular the Sell Side -- tends to low ball projected operating margin expansion even when all the relevant variables tend to point to margin expansion. Stocks rise on the ensuing surprise that margins and consequently earnings are going to be better than expected. Management talking about margin expansion can move a stock up a bit, but the big moves almost always happens only after a company has demonstrated operating margin improvement. I find that I constantly need to remind myself of this point when investing. One would think the stock margin would be clever enough to anticipate margin expansion when it is likely. But almost always, companies need to demonstrate margin expansion before seeing significant appreciation (some special situations are notable exceptions where stock prices move on other news like an early stage biotech company receiving FDA approval and/or showing strong clinical data).

I hadn't thought about it exactly this way, but now that you say it, this does match my experience. Thank you.

There's some stocks for which operating margin is wildly misleading (specifically, railroads, where you can juice operating margin by deferring maintenance, and you drive operating margin down by improving track and signal quality -- as you can see, this makes last quarter's operating margin a contrary indicator of future performance in these cases) and the stock movement *still* operates this way -- up on positive operating margin surprises, down on negative operating margin surprises.

Huh. You seem to have found a major behavioral trend on Wall Street.

 

[neroden]

Using customer batteries as a power source saved Vt. utility $500K - Granite Geek

This report is going to have utility companies falling over themselves to do the same thing. The program paid for itself in ONE EVENT.

Tesla now has a supply problem. The demand for Powerwalls and Powerpacks is far, *far* higher than the amount they can currently supply.

I'm really angry at the dishonest disinformation-spreaders who have made it hard for Tesla to access finance capital. It means that Tesla has to focus on being cash-flow-positive for the next two quarters rather than deploying the capital to ramp up Powerwall/Powerpack to meet demand.

 

[neroden]

And how about when a critic or short says something that turns out to be wrong?

Maybe it's similarly a mistake, rather than a malicious lie.

Sure, but when given corrections on points of fact, "Montana Skeptic" refused to update his articles with the corrections, and attacked the people giving corrections by trying to get them banned from commenting on his articles. So, in *his* case, it was malicious lies.

 

[neroden]

No. That's not the case. I think with this particular exchange, the defense is plausibly going to say that the quote about the few hunderds was looking forward towards the rest of the quarter. The question that Elon replies to provides this context. See here

Oh, you're right, that is at most a forward-looking statement. If that!

And it's not even about a specific machine, it's a hypothetical generic statement about machines in general! Saying that when you start a production ramp, you always have a machine designed for 5000/week which is only producing a few hundred a week. No specific machine was mentioned!

I am sure that Tesla had at least one machine designed for 5000/week which produced a few hundred parts per week when they started the Model 3 production line. It probably then sat idle until the rest of the production line caught up. :eyeroll: