TSLA - Tesla Motors

[hyten1]

this market is just wacky

 

take a look at MU vs TSLa

 

MU - consistently beat estimate, a bright future in terms of demand, tech (few competition), yes people are worry about the supply/demand issue (cyclical, capital intensive etc.), tons of cash (generate tons of cash), the stock is at a multiple of 6ish and the investment community continues to doubt it.

 

TSLA - consistently under delivery, a bright future with lots of competition, people somehow don't worry about supply/demand issue when they should (cyclical, capital intensive etc.), doesn't make money (losing lots of money), tons of debt, stock trading at wild multiple  and continues to defy gravity.

 

If i have 60 bil to spend I'll buy MU any day. You can do the same comparison with TSLA vs GM, i'll buy GM anyday.

 

imho crazy times.

 

 

[Liberty]

WSJ interview with Musk:

 

https://www.wsj.com/articles/elon-musk-races-to-exit-teslas-production-hell-1530149814

[Voodooking]

So, I have a reasonable long position in TSLA - around 5% of my portfolio.

 

I'm holding this for the long term, with a view to sit on it and hold for 20 years or more, ignoring what happens in between. I started buying at $175 and finished buying at $350, so my average cost would be somewhere in between.

 

I'm intrigued in this potential "Short Squeeze" position, and what I should do in the event that things get silly. I don't short stocks and haven't experienced being long in the middle of a serious 'short squeeze' yet either. From my understanding, Tesla is one of the most shorted stocks on the US market, and if the production results beat expectations, we could be looking at a substantial rise in price for the shares in the short term, with this being an artificial lift while Shorts try to find shares to purchase to cover their short positions.

 

Looking back at when VW experienced a short squeeze after news that Porsche had secretively been buying up most of the company, leaving very little shares for shorts to purchase to cover, the share price jumped up by 3x or 4x in the space of a day or two, and then dropped back down to similar levels to where it started.

 

My question is, at what point do I need to think about selling all or some of my Tesla shares in the event of a short squeeze, and when do I buy them again. Should I wait for a double, should I wait for a triple. Even if I plan to do nothing and it quadruples in the course of a day, would I be crazy not to sell and buy again a few days later? Are there any signs to look out for after the results that would signal an impending short squeeze, etc.

 

I guess I just have a few questions about what may or may not happen, and how I should react to it. I'd appreciate some input from others who have either had experience of this previously, or understand the situation a bit better than I do. Thanks

[rb]

I don't think you'll see anything like the VW short squeeze in the case of Tesla. Tesla's short interest is around 29%. If I remember correctly in the case of VW the short interest was >100%. The two situations are not comparable IMO.

[Cardboard]

What you are more likely to experience is a 3 to 4 baggers in reverse.

 

Cardboard

[DTEJD1997]

So, I have a reasonable long position in TSLA - around 5% of my portfolio.

 

I'm holding this for the long term, with a view to sit on it and hold for 20 years or more, ignoring what happens in between. I started buying at $175 and finished buying at $350, so my average cost would be somewhere in between.

...

 

My question is, at what point do I need to think about selling all or some of my Tesla shares in the event of a short squeeze, and when do I buy them again. Should I wait for a double, should I wait for a triple. Even if I plan to do nothing and it quadruples in the course of a day, would I be crazy not to sell and buy again a few days later? Are there any signs to look out for after the results that would signal an impending short squeeze, etc.

 

If TSLA were to TRIPLE in a short squeeze, it would be somewhere over $1,000 a share.

 

This is a company that is losing money, not hitting production #'s and so on...

 

What is incredible, is that they've set up a MASSIVE tent that is to help produce model 3's.

 

They have pulled up empty semi-trailers to block views into the tent.

 

HOWEVER, an intrepid vlogger sent up a drone with a camera to see what is going on in the tent...An auto executive described the situation as "stone age".

 

I just can't imagine that setting up a production line under a giant TENT is anything other than a desperate move.

 

Even assuming that this helps their production problem, it almost certainly does not help their PROFITABILITY & cashflow problem.

 

I would put the chances of a short squeeze being very low...OR perhaps we are even in one right this second. 

 

How this company is valued at $350/share is simply beyond me.

 

If you really think the company will go significantly higher, why not sell 1/2 at something like $700/share, and then sell the rest around $1,000/share?  Then maybe you can buy back in for like $400/share a month later?

 

I think there is a going to be a problem with TSLA going "busto" or getting taken over by another company OR getting taken under by management.

[benhacker]

Note that Tesla also have a lots of convertible debt.  This short position is likely (certainly not all of it!) much less than it looks because convert holders are shorting to offset their equity component of the debt position.

 

Good luck with your long!

 

I would also echo that a VW style short squeeze is unlikely.  Notably, that VW squeeze was also illegal by US laws.  Although, laws seem not to matter much these days for famous and rich people, so maybe that won't matter.

[Cardboard]

Finally saw a Model 3 the other day on the road. Honestly, it looked like a total POS. The designers did a terrible job on this thing.

 

It is one thing to make electric cars but, you also have to care for esthetic especially at this price range.

 

And now deposit more money so that Elon can keep his boat afloat:

 

Tesla is asking Model 3 reservation holders for another $2,500 to order their cars

http://www.cnbc.com/id/105300687

 

Cardboard

[Lakesider]

I personally think the model 3 looks great. Now the concepts for the Telsa pickup on the other hand... Looks like some kind of shitty moon buggy from a cheap sci fi.

 

I think asking for further money looks a desperate but I'm sure the customers will pay up.

[tombgrt]

 

 

And now deposit more money so that Elon can keep his boat afloat:

 

Tesla is asking Model 3 reservation holders for another $2,500 to order their cars

http://www.cnbc.com/id/105300687

 

Cardboard

 

This is crazy. I'm not sure whether customers will keep accepting this. They are really pushing it. Once you have paid, all the power goes to Tesla. Zero control over delivery. Fun!

 

I need all my willpower to restrain myself from shorting this. Really feel like dropping some money on those overpriced puts.  ::)

[boilermaker75]

Yesterday I received an email that my model 3 was ready to order.

 

Today I canceled my reservation. I would have probably gone ahead with the order, but during the wait I went ahead and bought another car.

[Liberty]

Yesterday I received an email that my model 3 was ready to order.

 

Today I canceled my reservation. I would have probably gone ahead with the order, but during the wait I went ahead and bought another car.

 

Out of curiosity, what did you end up buying?

[boilermaker75]

Yesterday I received an email that my model 3 was ready to order.

 

Today I canceled my reservation. I would have probably gone ahead with the order, but during the wait I went ahead and bought another car.

 

Out of curiosity, what did you end up buying?

 

I had a 14 year old Passat and it needed a lot of work. So I couldn't wait for the Tesla and I got a 2014 BMW 335i.

 

My next car will be electric and probably a Tesla, but that is a few years away and things could change.

[tombgrt]

Comparing BMW to Tesla is comparing Blackberry to Apple 10 years back. They are not same or similar products. Tesla is vertically integrated(own battery factories/research)  EV/IOT smart car manufacturer. None of legacy makers are not having any product with combination of EV/IOT category with vertical integration.

 

Tesla Model 3 at 5k a week / 20k a month, will be doing 4 times  BMW 3 and 4 series sales for comparable  month in North America. As, model 3 scales to 10 k a week, 40k a month, Tesla will be doing 1 year BMW 3 and 4 series sales in 2 months. BMW 3/4 series is toast in California currently, soon will be in USA. As, Tesla Model 3 scales up, margins which are questionable now, as supply trying to chase demand, eventually, margin will be far higher on Tesla model 3. Tesla model 3 will be doing Honda Civic volume and bmw margin in less than a year. Rear view mirror always clear than what’s coming.  Schedule your visit in California’s growing cities and see transformation. From sales standpoint, Snowball just started rolling down the snowy mountain. From market standpoint, there is huge ground to cover as it is new horizon.

 

https://www.cncda.org/wp-content/uploads/California-Covering-1Q-2018.pdf

 

It appears, Tesla is in competition with lots of auto manufacturers. Considering product innovation and differentiation, there is no direct competition in complete new product category. Where other EVs struggle to grow, and Tesla sales grows  leaps and bounds. That’s one of the point out of 7 , Peter Thiel mentions in Zero to One.

 

 

Eeeh, whatever.

 

Here is a fun comparison:

 

BMW: market cap 55B, produced +- 100.000 EV cars and is considered a technological leader in the field.

 

TSLA: 57B market cap, barely on a 120.000 EV production run rate and you can't argue their other businesses are worth anything near the rest of BMW's business.

 

 

Not to mention many other factors like debt, leadership, ...

 

Makes sense!

 

https://aswathdamodaran.blogspot.com/2018/06/twists-and-turns-in-tesla-story-boring.html

 

 

Not to gloat or boast but Damodaran is comparing Tesla to BMW as well and looks at what would be a plausible (but very unlikely) path to $400 share price: revenues to >120b and operating margins to 12%. Much like I said here:

 

I'm not simply comparing market caps. I'm clearly stating that you have the same market caps on one hand, but entirely different assets at the other hand. While they have nearly equally large EV businesses, Tesla promises the moon and BMW (and others) have actual tangible assets that produce returns and provide a safety net. If you want to talk growth, you can't just drag in the legacy business and make it look like BMW isn't growing in the EV space. My entire point is that the market seems to think only Tesla is growing a future EV business.

 

We'll see whether Musk keeps delivering. I honestly don't know. I do know that business is brutal and that the market valuation is counting on future successes.

 

Sure, what he has done is impressive. But if you want an 8% CAGR over 10 years in this stock, you need 25%+ revenue growth per year and some insane margin improvement to 10%+. Leave aside stock options etc for simplicity. Not impossible if he can differentiate with technology (otherwise completely out of reach) but one hell of a bet considering the alternatives.

 

Longs are trying to jump over 100 foot bars. The above doesn't require higher math, being an auto sector expert or digging into 10-K's but simple common sense. How are there longs on this board?!

 

[alwaysdrawing]

Longs are trying to jump over 100 foot bars. The above doesn't require higher math, being an auto sector expert or digging into 10-K's but simple common sense. How are there longs on this board?!

 

Most people don't do any rudimentary analysis of financial statements, and we are in a 10 year bull market.

 

I personally think TSLA is currently insolvent and even if they don't go bankrupt for awhile, they will eventually get there.  Even in the most bull cases, it's impossible to project the current equity doing well from this price.

 

If I had to guess, TSLA will blow up in spectacular fashion similarly to Chesapeake Energy from June to December 2008, with Elon Musk similarly getting crushed during margin calls all the way down.

[Liberty]

Man that would be a big battery:

 

https://electrek.co/2018/06/29/tesla-pge-giant-1-gwh-powerpack-battery-system/

[Spekulatius]

Note that Tesla also have a lots of convertible debt.  This short position is likely (certainly not all of it!) much less than it looks because convert holders are shorting to offset their equity component of the debt position.

 

Good luck with your long!

 

I would also echo that a VW style short squeeze is unlikely.  Notably, that VW squeeze was also illegal by US laws.  Although, laws seem not to matter much these days for famous and rich people, so maybe that won't matter.

 

Yes, but it wasn’t illegal by German laws at this time, which the doofus hedge funds shorting VW didn’t realize, because they didn’t do their home work apparently.

 

However, TSLA is an entirely different situation, the company is loosing a lot of money, which means that they will have to issue more equity and float isn’t exactly narrow either.

[Investmentacct]

Man that would be a big battery:

 

https://electrek.co/2018/06/29/tesla-pge-giant-1-gwh-powerpack-battery-system/

Liberty, any idea on revenue potential for this business? Do we know other so called traditional car manufacturers making battery packs with similar revenue streams? One comes to mind Byd. Looks like we might be comparing baseball players with cricket players ; thinking both uses balls and bats. Question to ponder is offered technology is 10x better, what financial model should we be using against an incumbent versus upcoming.

[rb]

Here's a video that talks about the model 3. In it is a guy who tore a couple to bits and really know what he's doing. Would recommend if you wanna know about the 3 or are into cars in general. Really interesting stuff.

 

 

A few takeaways:

 

1. The electronics and the battery are really, really good.

 

2. The suspension and balance is really good.

 

3. The mechanical and FFQ bits suck.

 

4. The manufacturing is bad. The bottom line is that this was a well thought out car put together by people by people who don't know how to make cars.

 

4.1 I'm sure I'm gonna confuse people a bit here about the design bit but stick with me. One part talked about that if Tesla were to have just designed the car - as in thought out the car. But then went to Magna and let them design and manufacture it. -- Design here refers to the physical design from an engineering and manufacturing point of view. Then they would have had the output they desired, the quality would be impeccable, and it would have been a phenomenal vehicle that would be hard to match in today's market.

 

5. There's no way they can make a model 3 for $35,000 and make money on it.

[gfp]

Thanks for the link. Fascinating video

 

[Investmentacct]

Here's a video that talks about the model 3. In it is a guy who tore a couple to bits and really know what he's doing. Would recommend if you wanna know about the 3 or are into cars in general. Really interesting stuff.

 

 

A few takeaways:

 

1. The electronics and the battery are really, really good.

 

2. The suspension and balance is really good.

 

3. The mechanical and FFQ bits suck.

 

4. The manufacturing is bad. The bottom line is that this was a well thought out car put together by people by people who don't know how to make cars.

 

4.1 I'm sure I'm gonna confuse people a bit here about the design bit but stick with me. One part talked about that if Tesla were to have just designed the car - as in thought out the car. But then went to Magna and let them design and manufacture it. -- Design here refers to the physical design from an engineering and manufacturing point of view. Then they would have had the output they desired, the quality would be impeccable, and it would have been a phenomenal vehicle that would be hard to match in today's market.

 

5. There's no way they can make a model 3 for $35,000 and make money on it.

. For your own take on the car; take a test drive for half an hour and drive yourself. You will learn more about it than any other way.

[walt373]

By my calculation, TSLA will need to raise at least $5B in the next 12 months, optimistically assuming they stop the cash burn in Q3. Yet Musk denies they will need or even want to raise capital. What am I missing?

 

There's a working capital shortfall of $2.3B. $6.4B current assets vs $8.7B current liabilities. ($2.7B cash. $2B debt maturing within 12 months. $1B customer deposits.) Planned capex of $3B in 2018. FCF in Q1 was -$1.1B and I expect Q2 to be worse as they go all out on Model 3 production. Next major debt maturities are $83M in August and $230M in November. I am not sure they have the cash. They are cutting it awfully close if they plan to raise, and if they don't, where are they getting the cash?

[Liberty]

Man that would be a big battery:

 

https://electrek.co/2018/06/29/tesla-pge-giant-1-gwh-powerpack-battery-system/

Liberty, any idea on revenue potential for this business? Do we know other so called traditional car manufacturers making battery packs with similar revenue streams? One comes to mind Byd. Looks like we might be comparing baseball players with cricket players ; thinking both uses balls and bats. Question to ponder is offered technology is 10x better, what financial model should we be using against an incumbent versus upcoming.

 

I don't know, never really looked into the business side of it. With Tesla Motors and Tesla Energy, I'm mostly interested in the products/technology, I've long ago put the business side in the too-hard pile and let it to others to burn brain cells trying to figure it out.

[stahleyp]

This was an interesting read:

 

http://adventuresincapitalism.com/2018/07/01/ivar-kreuger-goes-green/

 

I have no position.

[benhacker]

Yesterday I received an email that my model 3 was ready to order.

 

Today I canceled my reservation. I would have probably gone ahead with the order, but during the wait I went ahead and bought another car.

 

Out of curiosity, what did you end up buying?

 

I had a 14 year old Passat and it needed a lot of work. So I couldn't wait for the Tesla and I got a 2014 BMW 335i.

 

My next car will be electric and probably a Tesla, but that is a few years away and things could change.

 

Boilermaker,

 

Any delay on getting your refund?