TSLA Market Action: 2018 Investor Roundtable

[neroden]

I honestly could not believe SA allowed this crap to be published until I realized the only reason was because they were making money off it.

Yep. It's called "clickbait". SA gets money from ads, I think -- anyway they make more money when people click on the articles. So, despite *violating the terms of service repeatedly*, "Montana Skeptic" was encouraged to keep publishing hit pieces, because he'd managed to figure out how to get lots of clicks. All the management cares about is clicks, and they don't care whether they're committing libel or harassment or whatever. As long as they make money from clicks.

Frankly I think Business Insider has the same business model.

 

[neroden]

Wouldn't it be more effective to give to an appropriate charity?

Larry Page Lays Out His Plan for Your Future

"Rose asked him about a sentiment that Page had apparently voiced before that rather than leave his fortune to a cause, that he might just give it to Elon Musk. Page agreed,"

 

[neroden]

OK, but, if I follow Mongo's thought to its logical conclusion, wouldn't it be better for Tesla's mission if the company could stride into the future, unencumbered by liens or liabilities, looking purely to maximum penetration of the auto/solar market.

Well, *yes*, but do you see a reasonable path to that, other than making a profit?

 

[neroden]

I think it would take a while for any conceivable profit or capital raise to cover $21 billion of liabilities,

This is arrant ignorance. Mods, this is grounds for banning CuriousSunbird.

This guy doesn't seem to understand how assets and liabilities work but acts like he does. In short, Tesla never needs to "cover" its entire liabilities from profits; that's ludicrous and no company ever does that.

First point: Tesla has greater assets than liabilities. That's called "positive book value". So from a long-term point of view, the liabilities are already covered.

Here's some lessons on how to interpret a balance sheet when you're looking at what actually has to be "covered" by mid-term profits.

Current assets - current liabilities is -$2,266,439. That's about one year's gross profit from Model 3 at 250K/year, 20% GM, and 44K ASP. Which is pessimistic. Four more years pays off the rest of the long-term debt, assuming no growth, which is again pessimistic.

The resale value guarantees are for the most part not real liabilities at all (they only pay out on a few of the highest-optioned cars), and the deferred revenue isn't going to be paid in cash -- so both will never be paid off, they'll evaporate as Tesla executes.

This actually means that $1,165,000 of the current liabilities doesn't get paid off, it just goes away -- so about *half a year's* gross profit from Model 3 settles the current liabilities.

Chapter 11, on the other hand, would accomplish the objectives of both the profit seeking shorts and the charitable longs.

No, it wouldn't. It's not even legal; the bankruptcy petition would be denied!

While Chapter 11 is heavily abused, it's not usually abused by companies which have billions in cash and no problem paying their creditors! Any court would reject that!

 

[neroden]

This is where I have a little difficulty. I don't regard my self as "against" Tesla. I think Tesla is over-valued, so I am short. Once it falls to a level which I regard as under-valued, I will go long. So am I for and against simultaneously?

Sorry, that was intended as a reply to Krugerrand - not sure why it didn't show as such.

Oh, well, valuation arguments are legitimate. But why are you making complete nonsense arguments like the one about "covering" their entire liabilities with profits? Because that *is* nonsense, and it makes you look like a FUDster.

 

[neroden]

If emotion isn’t coming into play then a) you’re not actually human, b) you’re human but have a mental issue, or c) money means nothing to you in the scheme of things (ie., Elon Musk).

Nobody all about money on Wallstreet can be in the c) category because duh. That leaves a) or b).

On a tangent, I think there are way too many computerized traders on Wall Street in the (a) category and they make really huge mistakes. Sometimes understanding human emotions is the only way to make good trades... because all corporate managements are human. Understanding their psychology is how you predict corporate management behavior, and the computerized traders can't do it.

 

[Seesaw]

I thought total debt was around $10 billion? Where is the extra $11 billion in liabilities coming from?

I assume accounts payable would be a few billion.

 

[electracity]

I think Nissan is doing good things with the Leaf and they have other plans, no?

The next Nissan EV should be quite impressive, although still without a charging network. My "dark horse" choice for a good upcoming EV is the Ford announced for 2020.

As far as pickups, Tesla hasn't shown a realistic path forward yet. I would rather Tesla focus on the model Y and the semi, followed by the model 2.

 

[neroden]

The FUD tide is suddenly going out - doesn't mean it won't come back in again in a few days, but for the moment... Maybe they've just run out of creative ideas and they're on an off-site, residential brain-storming together...

Well, they did manage to release a FUD article essentially *every day* since the July 4th bear raid -- that must have used up a lot of their pre-prepared FUD.

 

[Seesaw]

The next Nissan EV should be quite impressive, although still without a charging network. My "dark horse" choice for a good upcoming EV is the Ford announced for 2020.

I think it’s the Euros and in particular the Germans that are the ones to watch. So much national pride is resting on them transitioning to EV.

Wouldn’t surprise me if BMW, Volkswagen and Mercedes with backing from German Govt created a charging consortium.


One of the most interesting comments about the Chinese firm CATL spending hundreds of millions in setting up a battery factory in Germany came from Angela Merkel “it’s a good first step, but I would not be upset if we did it ourselves”. She definately sees the German carmakers as a ‘we’

 

[neroden]

Therefore, it is IMPOSSIBLE for Tesla to run out of demand. As long as there are still ICE cars sold in Model 3's price range, it cannot run out of demand. The only scenario that would cause Tesla to be demand limited would mean bankruptcy for all legacy carmakers from the complete elimination of all ICE production of Tesla car's price ranges.

I will caution that we will, sooner rather than later, see the complete elimination of all ICE production from the price ranges of Tesla's cars. At that point (or really, shortly before), Tesla *will* face a demand issue. Their notorious communications problems, if not fixed by then, may well catch up with them. And this may happen as early as 2025.

So Tesla may not be a "forever" stock. Should be fine for several years though!

 

[jelloslug]

I think it’s the Euros and in particular the Germans that are the ones to watch. So much national pride is resting on them transitioning to EV.

Wouldn’t surprise me if BMW, Volkswagen and Mercedes with backing from German Govt created a charging consortium.

What they need to create are compelling cars....

 

[neroden]

I'm genuinely interested in which traditional auto makers are actually investing in EV technology, more than just as a compliance vehicle. Does anyone know of a good recent analysis of the EV manufacturing landscape outside of Tesla?

Well, a good place to start is with *volume numbers* at ev-sales.blogspot.com. If they're not manufacturing in volume, they're not serious. The carmakers to look at, according to that, are Nissan, Renault, BYD, BAIC, SAIC, and maybe BMW and GM.

 

[Boomer19]

I thought total debt was around $10 billion? Where is the extra $11 billion in liabilities coming from?

I assume accounts payable would be a few billion.

see tesla investor relations and look at latest 10q
Financials & Accounting | Tesla, Inc.

 

[generalenthu]

Further tweet about Montana

This was tasteless. Damn Elon, you need an editor for Twitter.

 

[mutle]

First point: Tesla has greater assets than liabilities. That's called "positive book value". So from a long-term point of view, the liabilities are already covered.

I tried that argument a few times on shorts when they talk about 21 billion debt and they always said some BS like "well, my model only looks at liabilities and not assets". This of course means that their model is wrong, or at least has no correlation to reality and therefore is useless.

 

[madodel]

It’s a generational shift anyone under 25 years old will only consider an electric car specifically anyone under 18 years old when will buy an electric car.

The young people don’t answer surveys.

I think Tesla is going to have to build maybe a dozen factories....

Either way I think what we all care about is the stock price which in 2020 will be higher than we ever thought possible.

These are really exciting days.

Actually you hit the nail on the head in regard to surveys. Young people in particular don't have land lines any more and at least in Pennsylvania it is illegal to knowingly robocall a cell exchange, so huge swaths of people who have cut the cord are left out of surveys unless they have actively sought out and opted into them. And online surveys are usually extremely sketchy as even when identity is checked people find ways to cheat. But it is interesting that so many people today seem to at least know what an all-electric car is and will consider one if they can afford it. That bodes well for Tesla and the environment even if people are buying for other reasons.

 

[Seesaw]

To be fair though assets don’t pay the bills, cash does.

If you have to sell all your equipment and factories to pay your liabilities you are not going to be a business for long.

The difference is Model3 is generating huge amounts of cash, especially with such high margin vehicles at the moment - that’s what matters.

 

[YasB]

I thought total debt was around $10 billion? Where is the extra $11 billion in liabilities coming from?

I assume accounts payable would be a few billion.

TSLA Balance Sheet | Tesla, Inc. Stock - Yahoo Finance

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For comparison: Total assets have been 27.271 billion in Q1 / 2018

 

[neroden]

I for one do read the financials. It was necessary to read them in order to understand Tesla’s need for Secondary Offerings as well as Debt Offerings to finance new product lines and facilities.

I also did much research on SolarCity’s debts and repayment schedules during the merger drama almost 2 years ago.

I did an insane amount of analysis of SolarCity during the merger drama, including reading the *entire* annual report including *all* the referenced documents (even the redacted ones), and then following up with a news media search to find analysis of the securitization deals from the buy side, followed by checking all of the past management presentations trying to explain them, followed by reading presentations given to other solar companies on how to set up securitizations, tax equity financing, and loan equity financing, and so on. (Oy.) It was *not* easy to understand, but it was worth it.

By understanding what was really going on financially at SolarCity, which was *totally obscured* by the GAAP reporting and therefore not understood by most of Wall Street, I was able to confidently buy large amounts of stock and sell large numbers of put options for substantial profits.