TSLA Market Action: 2018 Investor Roundtable

[UnknownSoldier]

If Tesla has some tents up in Shanghai pushing 3's out in 2019, I think we'll be looking at $1,000 SP around then.

This is the first, last, and only SP prediction I will ever make in this thread. I'm no TT007 and VA.

 

[mltv]

Screw the wash sale rule. Unless you have such staggering losses that no amount of gains can offset them on your taxes, just buy in if you think your gains will easily outweigh the tax write-off. Of course if you don't think this will happen, you should probably hold back.

Not an advice etc.

You beat me to it. This is exactly what I did. Sometimes you eat the tax write off.

 

[Frank C]

The bear wins from the bulls, or the other way round, well, wathever, you know what I mean

Elon Bear across Europe (and beyond)

 

[wipster]

A typo Nick...

Well, you could have made up something ;-)

No worries, it's all good!

 

[Thekiwi]

EPS of 1.75. In probably 1 more year, the current valuation of $280 will be justified by fundamentals alone.

Currently PE is ~40x. If tesla manages to simply double production it will reach $280 at PE of 20x EPS.

I wonder when the shorts will realize this. They might need one of their own to repeat this for them to actually digest this fact since everything a long says are lies.

Are you assuming the EPS would only double if Tesla doubled production rate? Thats not how it would work - EPS would be drastically higher than a lowly double.

For instance todays Profit from operations was $414 million, which came from $1.524 Billion in Gross Profts less $1.107 Billion in OpEx.

All else being equal (Margins, ASP etc) If production doubled, Gross profit would be $3 Billion and if OpEx was still similar at $1.1 billion - then profit from operations would be almost $1.9 Billion.

So in that hypothetical a 2x increase in production leads to a 4.5x increase in operating profit.

(yes I know my hypothetical is not completely realistic - at higher production ASP is going to probably be lower, but margins are better etc, and the above includes TE & Services as well, and opex would be a little higher as well. But hopefully you get my point)

 

[wipster]

View attachment 346803
The bear wins from the bulls, or the other way round, well, wathever, you know what I mean

Elon Bear across Europe (and beyond)

You never know, a shot of single malt and a hit of that blunt (inhaling this time) and it could be:
Elon Bare across Europe!

 

[Fact Checking]

I remember 4 years ago, after the debut of AP1, back when it could read stop signs and lights, come to a complete stop, drive highway to highway; at the first customer demos, it actually stopped at the stop sign at the end of the track. And then shortly thereafter Musk made some comments that FSD was just a couple years out, with vision and no lidar. I was just a noob here at TMC during that time.

Then MobilEye screwed Tesla (and sold itself to Intel for ~$15b) which created a 2 years bump in the road for Tesla.

That bump in the road is now history: AP2 + V8 was apparently already smoother than AP1 and with V9 it went up a notch, and it's pretty clear by actual binary level tear-down of Tesla's new neural network that HW3 enables a revolutionary jump in cognitive capabilities. In these 2 short years Tesla has vertically integrated not just their own NN technology, but has also vertically integrated NN chip design ...

The biggest difference between the cognitive abilities of a common toad and a human is the count of neurons and the training of the network.

 

[CorneliusXX]

Elon should have stayed with saying service should be profit neutral. Deepak saved him by saying positive margins would come from used car sales.

I wonder if tesla will continue to resell used cars when the taxi service is up an running. Id assume they would make much more from increasing the network size.

 

[Fact Checking]

The biggest takeaway from Q3 conference call is that FSD and Tesla Network are still coming. Tesla’s FSD approach makes perfect sense. I think this part of the company should worth $100B today.

Tesla's FSD valuation should be much more than $100b IMO, Waymo is valued at around $175b, and they have inferior technology to Tesla's FSD technologies in several key aspects:

• Waymo is using LIDAR as a primary way to establish a 3D object space, which is expensive, weather sensitive and is also an ultimate dead-end compared to the camera based 3D object recognition that Tesla is using,
• Tesla has hundreds of thousands of cars they can run and validate their new NNs on in 'shadow mode' - no need for expensive in-person testing for most of the NN training and feedback,
• Tesla has their own custom NN-chip ASIC that is apparently faster and more power efficient than Google's TPU,
• Every Tesla made in the past ~2 years has the necessary sensor hardware to support FSD, and there's a plug-in HW3 module to upgrade their computing capacity to FSD levels,
  
• Tesla has a large customer base and retail channels to market their FSD solution to.

 

[Fact Checking]

I wonder if tesla will continue to resell used cars when the taxi service is up an running. Id assume they would make much more from increasing the network size.

Agreed, and note this new disclosure from yesterday's conference call:

Elon Musk: [...] I do know that Tesla will operate its own ride hailing service like Uber and Lyft. We will also have a way for customers to add or remove their car to the fleet. There will be a Tesla-owned fleet and a customer-owned fleet.​

That and their FSD bullishness is one of the biggest news items of the conference call IMHO:

• I fully expect Tesla to refurbish used Teslas that come back from lease or are traded in to the fleet, and add them to their taxi service fleet.
• This is why the plug-in HW3 upgrade computing module is such a big deal: every car that was made after ~December 2016 can go into the fleet, giving Tesla a very low capex path to quickly expand their ride-sharing fleet - and yet not cannibalize supply of new Tesla's.
  
• FSD ride-sharing should significantly reduce insurance costs and overall risks of both the Tesla and the customer ride-sharing fleet and should eventually also allow empty cars to drive to the next customer, or back home.
• Note another benefit: by taking used Teslas off the market they increase the relative demand of new Teslas and further increases the value retention of Teslas.

I.e. the "Tesla ride-sharing fleet" will feed back and provide advantages for their automotive sales ...

 

[LST]

Good Morning everybody !
still recovering from a long night reading all your posts and CC transcript etc.
Europe up +~7% to 278.90 (323.30 USD) on light volume (but more than usual at this time of day)
After using the dips to buy more at 255, 258, i am hoping for another attack in the morning to be able to buy some more to make a round number of shares ; ) If SP just shoots straight up, it's all good as well. Not gonna sell a single share (an advice).

 

[Fact Checking]

Housing sales is collapsing before our eyes as rising interest rates are killing the market which was already very overheated.

Note that even with yesterday's surprise weakening of the housing market it's still very, very far away from bubble levels that would get the Fed worried:

I.e. the housing decline isn't large (yet) in historic terms and it's very far from 'collapsing'.

Also note the currently very low Residential Investments percentage, there's been past recessions where the bottom of the recession had similar levels as we have today. I.e. housing has a lot of room to go up, and the economy is far from overheated (tech and finance kind of skewed growth up but that's easily fixed with sector specific market corrections) and it would be surprising to see a broad based economic downturn from here.

Also note the level of drop compared to drops before recessions:

In particular note the 80's and 90's drops that went deeper than the current drop and didn't result in a recession.

My expectation is that the Fed is probably going to slow down with the rate increases a bit to accommodate for the softening of the housing market - or at least tone down the hawkish language a bit, if inflation permits which it does currently.

Of course you never know with the Fed so a recession is still a possible outcome - but it's not a certainty at all at this point.

Also note that compared to traditional automakers Tesla possibly has a lot higher recession resistance - we might even go as far and declare Tesla's business model counter-cyclical: a recession would allow Tesla to grow even faster, because they are supply constrained, and because ICE carmakers wouldn't be able to invest into their EV conversion efforts as much, and because fire-sales of ICE car factory buildings and tens of thousands of expert auto workers to hire would speed up Tesla's growth as well.

Now that Tesla has earned enough cash in Q3 alone to pay back the $920m notes in March 2019 I think we can probably lean back and not worry too much about recessions.

 

[loco]

reading all your posts and CC transcript etc.

just reading the transcript you won't hear Elon nearly crying when reading his opening statement. Wow, must have been important moment for him. Nearly cried myself

 

[LST]

just reading the transcript you won't hear Elon nearly crying when reading his opening statement. Wow, must have been important moment for him. Nearly cried myself

i will do, before Nasdaq opens, be assured.

 

[heltok]

316.80 +28.30 (9.81%)
Pre-Market: 4:01AM EDT

Slowly increasing
320.00 +31.50 (10.92%)
Pre-Market: 4:04AM EDT

 

[Fact Checking]

316.80 +28.30 (9.81%)
Pre-Market: 4:01AM EDT

TSLA is trading at $320 levels in the NASDAQ pre-market now.

Note that NASDAQ futures moved up by about +1.0% overnight, and Dow futures are showing some robust moves up as well (+0.8%), so the macro environment might be green today.

But it's still too early to tell: dollar is stronger which is counter-indicative. We'll see as the day progresses.

 

[Buckminster]

Kevin O'Leary on Twitter

Another analyst that will have to change his tune..

 

[gora321]

Europe +10,87%

 

[Jayjs20]

Kevin O'Leary on Twitter

Another analyst that will have to change his tune..

I know Kevin O'Leary drives a Tesla, but he won't go near the stock until it can consistently turn a profit. He may come around in another quarter or two.

 

[paulch]

Google certainly has strong advantage on AI talents and probably has the best AI Infra in the world. However, I found Tesla's FSD strategy very unique and I feel more and more confident that Tesla may win the self-driving competition. Sharing a number of points:

(1) Tesla AI chip: Google Tensor Processing Unit (TPU) is designed for cloud deep neural network computation, faster processing speed but more important greatly reduce power consumption so that it can scale in the data center. It's designed for neural network, however, it's still a general neural network chip, it has to support various type of neural network models. Tesla AI chip took a step further, build a highly customized chip for vision processing neural network which can leads to massive computation capacity and efficiency gain. This approach is brave and has its risk: what if the neural network software does not work and needs a different architecture? then the chip needs to be redesigned, huge cost. So I guess Tesla is pretty confident that they got neural network architecture right and double down on the AI chip. Nvidia would never take this approach because the risk will be too high. Google may be also developing their own self-driving chip, we don't know. However, given Google self driving cars only driven for 10 millions miles, they probably don't have massive amount of training data, thus not able to train such a huge neural network as Tesla's.

(2) Training data: it's obvious Tesla has a huge advantage over Google on amount of training data, 1.2 billion autopilot miles reported, probably more on shadow mode, compared to Google 10 millions miles, that's at least 100x more, and the gap is getting bigger with Tesla's fast growing fleet size. Another advantage people may overlook is the unbiased sampling of Tesla data due to the large fleet around the world on all weather conditions. Google's self-driving cars only operates in a few cities, probably not operate in snow or foggy weather condition. So Tesla's data can capture way more corner cases to help the neural network learn better.

(3) Validation, rollout, and faster iteration: Given the big fleet world wide, Tesla can validate the new software in shadow mode and rollout world wide in a few days, and can quickly iterate to improve the neural network using reinforcement learning. While Google has to deploy and validate its self-driving service city by city which is much slower than Tesla.

(4) LIDAR: using LIDAR may have given Google and other self driving companies a head start, however, it will become a big distraction and slow down investment on vision if it turns out camera + radar is sufficient and LIDAR becomes obsolete. I like Elon's first principle thinking, and think Elon could be right that LIDAR is not necessary for self-driving.

I'm afraid I agree with @diatz and disagree with @neroden regarding FSD: Tesla is way ahead in the FSD game today. It's just that not even competitors like Waymo appear to have realized this:

• The Tesla AI chip is a game-changer: designed for NN and only for NN processing gives them significant advantages compared to NVidia - and Tesla's first-principles design gives them an advantage even over Google's third generation Tensor Processing Unit (TPU).
• Tesla's chip was designed by two chip design legends: the guy who designed the first x86-64 CPU at AMD (Jim Keller) which CPU has beaten Intel at their own game, and by the guy who designed Apple's first own CPUs, including the first 64-bit Apple CPU (Pete Bannon). Bet against these guys in the AI chip design space like you'd bet against Elon in the reusable rockets space. (Note that after finishing the AI chip design Jim Keller went to Intel's server division, probably pursuing another dream job - Pete Bannon has productized the HW3 design, implementation and roll-out.)
  
• The next generation Tesla neural network layers are already in the V9 firmware, probably testing-only in shadow mode. Here's @jimmy_d's tear-down of that network: "I didn’t expect to see a camera agnostic network for a long time. It’s kind of shocking." Note that V9 includes that new network but it's probable that only HW3 can run it efficiently. I think the new network was included to support field-test units of Tesla HW3 with v9 firmware as-is, and perhaps to run it in shadow mode on HW2.5 at very low frame-rates.
  
• Another quote from jimmy_d:
  • "This V9 network is a monster, and that’s not the half of it. When you increase the number of parameters (weights) in an NN by a factor of 5 you don’t just get 5 times the capacity and need 5 times as much training data. In terms of expressive capacity increase it’s more akin to a number with 5 times as many digits. So if V8’s expressive capacity was 10, V9’s capacity is more like 100,000. It’s a mind boggling expansion of raw capacity. And likewise the amount of training data doesn’t go up by a mere 5x. It probably takes at least thousands and perhaps millions of times more data to fully utilize a network that has 5x as many parameters.
    
    This network is far larger than any vision NN I’ve seen publicly disclosed and I’m just reeling at the thought of how much data it must take to train it. I sat on this estimate for a long time because I thought that I must have made a mistake. But going over it again and again I find that it’s not my calculations that were off, it’s my expectations that were off."
• The unnecessary and uneconomical LIDAR detour the others are taking might take 1-2 years for them to undo. Elon correctly saw it that the LIDAR approach is a dead end and Tesla now has a significant head start with 8 cameras in every consumer car, and probably up to 30 in the Tesla Semi.

I expect FSD and transportation-as-a-service to become major drivers of Tesla revenue and valuation.