TSLA - Tesla Motors

[Grant]

I hardly ever sell stocks short, usually preferring to buy puts or sell calls. However, after the #FundingSectured tweets I made an exception. The upside was $420, and the downside was much lower. Originally I was just planning on holding the short until the the fallout from the tweets was obvious, but now I'm thinking of holding long-term.

 

Guess what happens when you mostly use employees in CA and NV to test your cars? They aren't so great in the rain.

 

There are lots of reports of bumpers coming off in standing water: https://twitter.com/rithesh/status/1028437449318576128

 

Unless shut hard enough, water running down off the roof ends up inside the trunk:

 

Unless there's a lot of demand for ~$60k Model 3s (and I doubt there will be once the backlog is worked through), Tesla really can't afford to be fixing these things. These relatively simply problems this early in the car's life makes me think it'll end up being a lemon.

[rb]

Waymo has level 4 autonomous cars. Tesla doesn't have anything close to that.

Is that like a weissman score of 0.6?

[rb]

I was just going through the financials again. I was amazed, they have $11 billion in PP&E. By comparison BMW has $21 billion of PP&E. It's amazing how much capital they're eating.

[Spekulatius]

I was just going through the financials again. I was amazed, they have $11 billion in PP&E. By comparison BMW has $21 billion of PP&E. It's amazing how much capital they're eating.

 

I think what might tip this in BMW’s favor is that a lot of their plants and possibly equipment is depreciated. Some of their plants are  properties that they owned since and probably before WW2. but I think this is only part of thr equation. The fact is that Tesla operates terribly inefficient. That’s the issue with building the Gigafactory and producing many components by themselves as well as an inefficient manufacturing plant.

[rb]

I don't know if it's depreciation. Autos are constantly retooling their facilities. Capex consistently exceeds depreciation. So their PPE is pretty fresh. As for manufacturing components, Magna has a lot of factories making shitloads of components for loads of vehicles and they do it with $8 billion in PPE.

 

It just looks like Tesla is spending like a drunken sailor.

[Grant]

Does anyone have an informed opinion on how #FundingSecured will affect Tesla's ability to raise capital?

 

The SEC's job is to protect investors. They aren't in the business of wrecking real companies. I believe the worst possible outcome for Tesla's share price is Musk being bared from serving as a director or officer of a public company. If this happens I expect Tesla will call him Chief Product Architect, hire a new CEO, raise capital, and have a brighter future ahead of it.

[Gregmal]

Does anyone have an informed opinion on how #FundingSecured will affect Tesla's ability to raise capital?

 

The SEC's job is to protect investors. They aren't in the business of wrecking real companies. I believe the worst possible outcome for Tesla's share price is Musk being bared from serving as a director or officer of a public company. If this happens I expect Tesla will call him Chief Product Architect, hire a new CEO, raise capital, and have a brighter future ahead of it.

 

At worst you're looking at a de minimus fine and a consent decree IMO

[rb]

The outcome of the SEC investigation (whatever it may be) will not have any effect on Tesla ability or inability to raise capital in the future.

[TwoCitiesCapital]

Not even going private anymore - this f*cking guy!!!!

 

I stand by my "bizarre" comments earlier. His behavior is bizarre & erratic and the early reports on the new model leave a lot to be wanted and they haven't even scaled it up to the goal nor are they selling the higher end model to get the margins they need.

 

We MUST be nearing the end-game when people are going to realize it's not all that they thought it was under the hood.

[Investmentacct]

Waymo is years ahead of Tesla in fully autonomous driving. Tesla's Autopilot is a glorified cruise control that can't seem to stop crashing into firetrucks: https://twitter.com/SJFirefighters/status/1033440297089359872

Tesla autopilot works perfectly fine with combining level 5 human and Autopilot level 2-3.  Drove 20k miles or so on road trips on Tesla autopilot . No fatigue from travel or long distance journeys whatsoever. Allow effectively more miles to be driven.

[Grant]

At worst you're looking at a de minimus fine and a consent decree IMO

 

A slap on the wrist is what I'd expect under normal circumstances. Given how high-profile this is, don't you think the SEC might make an example out of Elon? This isn't a fraudster practically no one has ever heard of, like Barry Honig. Elon is a celebrity.

 

The outcome of the SEC investigation (whatever it may be) will not have any effect on Tesla ability or inability to raise capital in the future.

 

Does the SEC not take investigations into account when deciding whether or not to declare an offering effective?

[rb]

 

The outcome of the SEC investigation (whatever it may be) will not have any effect on Tesla ability or inability to raise capital in the future.

 

Does the SEC not take investigations into account when deciding whether or not to declare an offering effective?

I was being a bit coy. As things stand right now, there are no offerings to be made for Tesla. So what the SEC may or may not do is really irrelevant.

 

Edit: Just to clarify. For Tesla the bond markets are closed tighter than a nun's knees. And they're gonna need billions in capital. It would be hard for them to raise that amount in the equity markets under the best of circumstances. But after the recent antics, forget about it, SEC or no SEC.

 

So that leaves private placements for them. Particularly investors with more money than brains and some that may be "strategic" such as the Chinese. It should be noted that Tesla has been pretty good at getting these sort of placements in the past. So I think they'll be ok. But the terms may be more sucky this time around.

[Grant]

I was being a bit coy. As things stand right now, there are no offerings to be made for Tesla. So what the SEC may or may not do is really irrelevant.

Well I'd assume Tesla would have some way of knowing if an offering could be declared effective, so they wouldn't just throw out S-3(/A)s and hope, like RIOT and its ilk.

 

Tesla can lower the 2019 convertible debt conversion price as low as $253 if they want, so I'm not sure their immediate cash needs are as dire as most shorts think.

[Liberty]

https://www.nytimes.com/2018/08/28/business/elon-musk-tesla.html

[gary17]

Two thoughts:

 

1 he is very muc liken trump

2 he needs a Tim cook much like Jobs did

 

glta

[Grant]

From the NYT article:

At 6:30 a.m. on Aug. 18, three robots in the paint shop at the Tesla factory in Fremont, Calif., started malfunctioning. The incident forced a production halt on the Model 3, the key to the company’s future.

 

Made aware of the stoppage, Mr. Musk went to the factory and worked into the night. The problem was resolved, but Tesla reached a troubling conclusion: The robots had been infected with malware in an act of industrial sabotage. And though they could not prove it, executives suspected they knew the culprit: a rogue employee, working at the behest of short-sellers.

 

Sounds to me like they're already on top of excuses (force majeures?) for a Q3 miss. Note the paint shop is one area shorts have said cannot support more than 5,000 cars per week.

[rb]

From the NYT article:

At 6:30 a.m. on Aug. 18, three robots in the paint shop at the Tesla factory in Fremont, Calif., started malfunctioning. The incident forced a production halt on the Model 3, the key to the company’s future.

 

Made aware of the stoppage, Mr. Musk went to the factory and worked into the night. The problem was resolved, but Tesla reached a troubling conclusion: The robots had been infected with malware in an act of industrial sabotage. And though they could not prove it, executives suspected they knew the culprit: a rogue employee, working at the behest of short-sellers.

 

Sounds to me like they're already on top of excuses (force majeures?) for a Q3 miss. Note the paint shop is one area shorts have said cannot support more than 5,000 cars per week.

It should be concerning that conspiracy theories constantly circle the Tesla world.

 

Also why does the CEO have to go down to deal with a robot malfunction? All of this is not normal.

[benhacker]

The article is kind of amazing.

 

My fav:

 

In the interview with The Times, Mr. Musk said his work had been so consuming that he nearly missed Kimbal’s wedding in Spain this summer. “I got there two hours before the ceremony,” he said. “I left directly from the factory. And then I went straight back.”

 

But while Mr. Musk is clearly working hard, his recounting paints an incomplete picture of his travels. He was away for five days during his trip to Spain, and on the way back, he stopped with his children in Belfast, Northern Ireland, to tour the “Game of Thrones” set.

 

But yea, that super meaningless comment was a lie.... but the malware sabotaged robots by "the shorts"... def not a lie.... definitely not.

 

Trying to get in front of a huge production miss with such obvious lies is only worth trying if you know you really believe your shareholder base is a big pile of church going rubes.  I guess he knows his audience.

 

It's almost as if Elon is really really really really worried about something in his business....

 

Ben

[pcm983]

I don't get what they mean by him working 100+ hour weeks. What does it mean when he goes down to the factory when the robot is malfunctioning? I'm assuming he's not programming, so is he working the assembly line? Stapling on the bumpers? It just seems like such an artificial mythology that he is working so hard when there is seemingly nothing practical for him to be doing other than doing meetings and helping with strategy. Additionally, if he is working so much, how does he have so much time to tweet about random stuff?

[JRM]

I don't get what they mean by him working 100+ hour weeks. What does it mean when he goes down to the factory when the robot is malfunctioning? I'm assuming he's not programming, so is he working the assembly line? Stapling on the bumpers? It just seems like such an artificial mythology that he is working so hard when there is seemingly nothing practical for him to be doing other than doing meetings and helping with strategy. Additionally, if he is working so much, how does he have so much time to tweet about random stuff?

 

How many investors or money managers have ever worked in a factory a day in their life?  They have no frame of reference to realize that Musk's statements are total B.S.

[Spekulatius]

The article is kind of amazing.

 

My fav:

 

But yea, that super meaningless comment was a lie.... but the malware sabotaged robots by "the shorts"... def not a lie.... definitely not.

 

Trying to get in front of a huge production miss with such obvious lies is only worth trying if you know you really believe your shareholder base is a big pile of church going rubes.  I guess he knows his audience.

 

It's almost as if Elon is really really really really worried about something in his business....

 

Ben

 

Yep, he knows his audience :

[Gregmal]

I don't get what they mean by him working 100+ hour weeks. What does it mean when he goes down to the factory when the robot is malfunctioning? I'm assuming he's not programming, so is he working the assembly line? Stapling on the bumpers? It just seems like such an artificial mythology that he is working so hard when there is seemingly nothing practical for him to be doing other than doing meetings and helping with strategy. Additionally, if he is working so much, how does he have so much time to tweet about random stuff?

 

From what I've heard, Musk is one of those on the floor guys. He's at times been said to be too involved. Kind of like the opposite of the Steve Jobs quote about how he can do pretty much anything anyone else at Apple can do but doesn't waste his time because he rather do things that everyone else can't. Musk has struck me as much more of a delegater of tasks, who then happens to tag along to boost morale. While also doing his own stuff. He is definitely trying to do too much.

 

And as far as posting on Twitter, that's kind of irrelevant. It seems to come up a lot with Musk, or even Trump, but the reality is it takes next to no time or effort to do. It's just kind of a silly talking point for detractors. I mean I probably post on this site more than most, and it literally takes next to no time out of my day to do so. Nothing. Musk probably spends a lot of time reading and following the news. All his tweeting together might take up a few minutes of his time per day.

[randomep]

From the NYT article:

At 6:30 a.m. on Aug. 18, three robots in the paint shop at the Tesla factory in Fremont, Calif., started malfunctioning. The incident forced a production halt on the Model 3, the key to the company’s future.

 

Made aware of the stoppage, Mr. Musk went to the factory and worked into the night. The problem was resolved, but Tesla reached a troubling conclusion: The robots had been infected with malware in an act of industrial sabotage. And though they could not prove it, executives suspected they knew the culprit: a rogue employee, working at the behest of short-sellers.

 

Sounds to me like they're already on top of excuses (force majeures?) for a Q3 miss. Note the paint shop is one area shorts have said cannot support more than 5,000 cars per week.

It should be concerning that conspiracy theories constantly circle the Tesla world.

 

Also why does the CEO have to go down to deal with a robot malfunction? All of this is not normal.

 

So the market has to listen to a car CEO complain about rogue employees and price-gouging contractors.  Well, if they are indeed true, do you suppose his competitors have the same type of problems? or does this bad luck only happen to Musk?  Maybe his so-called inefficient competitors are inefficient because of these they regularly have to deal with unforeseen problems like this?

 

I think the world is spending tens of billions of dollars giving a genius a crash course on car manufacturing in the real world.

[JRM]

I don't get what they mean by him working 100+ hour weeks. What does it mean when he goes down to the factory when the robot is malfunctioning? I'm assuming he's not programming, so is he working the assembly line? Stapling on the bumpers? It just seems like such an artificial mythology that he is working so hard when there is seemingly nothing practical for him to be doing other than doing meetings and helping with strategy. Additionally, if he is working so much, how does he have so much time to tweet about random stuff?

 

From what I've heard, Musk is one of those on the floor guys. He's at times been said to be too involved. Kind of like the opposite of the Steve Jobs quote about how he can do pretty much anything anyone else at Apple can do but doesn't waste his time because he rather do things that everyone else can't. Musk has struck me as much more of a delegater of tasks, who then happens to tag along to boost morale. While also doing his own stuff. He is definitely trying to do too much.

 

And as far as posting on Twitter, that's kind of irrelevant. It seems to come up a lot with Musk, or even Trump, but the reality is it takes next to no time or effort to do. It's just kind of a silly talking point for detractors. I mean I probably post on this site more than most, and it literally takes next to no time out of my day to do so. Nothing. Musk probably spends a lot of time reading and following the news. All his tweeting together might take up a few minutes of his time per day.

 

I guess Jobs didn't much need Wozniak.

[Cardboard]

https://www.cnbc.com/2018/08/28/tesla-owner-frustrated-so-fixes-his-own-model-s-easy-as-legos.html

 

Cardboard