TSLA - Tesla Motors

[CorpRaider]

I am being intentional about developing no strong opinion, but cannot fail to note that TSLA is not yet even really competing in the largest auto market in the world or the only growing and/or profitable segment in North America.

 

I noted the reversal of the build in working capital they called out as a negative to cash flow last quarter (and said would reverse this quarter).  Shorts I follow on twitter at the time said that was B.S., fraud, etc...  When it reversed this quarter, they screamed "it's a one time benefit."  Did not strike me as very rational...

[Dalal.Holdings]

I noted the reversal of the build in working capital they called out as a negative to cash flow last quarter (and said would reverse this quarter).  Shorts I follow on twitter at the time said that was B.S., fraud, etc...  When it reversed this quarter, they screamed "it's a one time benefit."  Did not strike me as very rational...

 

Exactly. Bears said at the end of Q1 that Elon's statement that cars were "in transit" which is why there was inventory build was a lie and it was surely a sign of demand cliff. Then Tesla actually sells the cars and generates a nice chunk of cash (while inventory comes back down) and the "it was only one-time" B.S. comes out. That "fascinating article" from "rapercapital" (not a great name, IMO) posted on here called it "liquidating inventory". LOL. You know what I call "inventory liquidation" like this? Sales.

 

Being a contrarian ain't easy, but such transparently bad arguments from the opposing side (behaving like lemmings) sure makes it a bit easier.

[JRM]

Dalal, you're right.  It is tough being a contrarian.  You're a good sport to play along.  You put your money where your mouth is, and I respect that.  On the top of page 204 of this thread I stated, right after the 420 funding secured tweet, that if I shorted stocks this looks like the perfect opportunity.  I wish I had the balls to put my money where my mouth is.

 

You seem like a smart guy, but don't let your emotions cloud your judgment.

 

[Ahab]

Tell me more about all the cash Tesla generated by raising capital this quarter. It's really the sole activity this company excels at. "Record sales" and couldn't even generate a non-GAAP profit. Yep, shorts are truly the lemmings here, not you astute bulls who are buying stock in a car company at 200x next years earnings.

[Gregmal]

Tell me more about all the cash Tesla generated by raising capital this quarter. It's really the sole activity this company excels at. "Record sales" and couldn't even generate a non-GAAP profit. Yep, shorts are truly the lemmings here, not you astute bulls who are buying stock in a car company at 200x next years earnings.

 

LOL dont be so harsh. Its really, like probably, like only 78x Elon's pixydust adjusted, non-GAAP earnings for 2020.

[Dalal.Holdings]

Tell me more about all the cash Tesla generated by raising capital this quarter. It's really the sole activity this company excels at. "Record sales" and couldn't even generate a non-GAAP profit. Yep, shorts are truly the lemmings here, not you astute bulls who are buying stock in a car company at 200x next years earnings.

 

Guess you don't know how to read a Statement of Cash Flows (or the cash item on a Balance Sheet). Good luck with that (must be interesting going short a company only looking at the Income Statment and GAAP numbers).

 

Edit: I'll help you out: that's $863M in op cash flow less $250M in capex to net over $600M in Free cash flow for the quarter. That's why cash went up about $3B quarter over quarter (2.4 capital raise + 0.6 FCF). Keep focusing on those headline GAAP figures though (and what CNBC tells you)--they'll really help you value companies like Amazon or Berkshire, let alone a company like Tesla that grew car sales 133% y/y.

[Ahab]

Note to self: growth companies invest in capex far below the rate of depreciation.

 

Before you start lecturing about knowledge of financial statements, I would note that you sir are invested in Tesla.

[Gregmal]

600M of pixydust FCF and 2.4B of dilution against a what? 70B-ish EV? Hooray value!

[Ahab]

Indeed! All it took was taking an axe to brand value and any chance of capacity expansion (to meet the exponentially increasing demand for the Model 3 of course).

[Dalal.Holdings]

We can go back and forth for eternity. I'm done with this thread until more material developments emerge.

 

In the meantime, keep on rooting for this company's failure. Whatever brings you happiness on your Saturday.

[Ahab]

Fair enough, catch up on Friday when July estimates are out. Enjoy your weekend.

[walt373]

"Rooting" has nothing to do with it. This isn't like sports where you must always support your team through thick and thin. Good investors dispassionately and objectively assess the facts first, and then make a conclusion and invest accordingly - whether that is bearish or bullish, regardless of what you hope the outcome will be. My conclusion is that this company is very likely going to fail, that's all.

 

On a separate topic, it looks like service is taking a turn for the worse. Service infrastructure has not kept up with deliveries, especially now that capex is being cut to the bone. https://www.thedrive.com/tech/29162/tesla-execs-claim-service-problems-are-over-as-owner-frustration-boils-over

 

"Interestingly, Tesla seems to have recently changed their service appointment system. I just went through it yesterday and it seems to actually, really be impossible to schedule a service center visit by calling them now. Attempt to do so and you get an automated message saying to schedule via the Tesla app. Of course, if you go to the Tesla app, it automatically only gives mobile service options. If you want a service center appointment, that seems to only be possible now via your account on the website(which, bizarrely, doesn’t have an option for mobile service ). I assume that at some point, that final loophole will be closed and there’ll just be no way to schedule for a service center."

[Grant]

This isn't rocket surgery. Tesla built inventory in Q1 and liquidated in Q2 so they could sell as much as possible before the tax credit expired. This created significant OCF. It's similar to what happened in Q3 and 4 of last year, just with losses. Cash flow from operations is obviously an incomplete metric for a company with a lot of debt and capital.

 

The company has enough cash to launch the Shanghai factory and Model Y. Since the capital raise is over, robo-taxi talk has died down.

 

The Y is obviously going to seriously cannibalize the Model 3, so it's good they're going to build it in Fremont alongside the 3. Current sell-side expectations for the Y will certainly have to come down, but if they launch it right it should work out better for them than selling the Model 3 alone.

 

I really don't know how Shanghai will do. Labor will be much cheaper, but the cars will be cheaper too. They probably won't get a sweetheart deal on battery cells like Panasonic gave them (see Pana's filings on 'cylindrical cells'; they aren't making any money at Giga 1). The CPC is building them a factory, and are also going to try to steal their IP.

 

In the near-term, Q3 will have lower prices and lower trims than Q2. I don't see how Q3 earnings aren't significantly worse than Q2's. InsideEVs July estimates will be out Thursday, and should be telling.

 

Will the market give Tesla the benefit of the doubt until the Y launches and Shanghai ramps up? I don't know. I have some November puts for the same reason I bought May puts during Q1, but it's increasingly looking like the market is again looking further ahead.

[A Dhandho Investor]

Tesla hit by lawsuit claiming thousands of owners lost battery capacity after software update: https://www.reuters.com/article/tesla-battery-idUSL2N25418A

[DTEJD1997]

hey all:

 

Does anybody else get Barron's magazine?

 

I do.

 

There was a simply incredible article where they interviewed a "stock analyst" named Cathie Wood.

 

She evidently analyzes stocks, and one of the ones that she has crunched the numbers on is TSLA.  She has changed her mind on it, and her NEW price target is now $6,000.  That is not the price for a car, but for a share in the company.

 

 

[Jurgis]

I would like my next car to be electric.

 

I look at https://cleantechnica.com/2019/08/10/tesla-model-3-67-of-us-electric-vehicle-sales-in-2nd-quarter/ and pretty much despair.

 

Tesla is the only company that sells e-cars really.

 

Everyone else is just pretending.

 

I know about the Tesla issues. I might prefer to buy from established company with a wide long term service network. There's really nothing. Nothing.

 

Maybe the situation will change in coming couple years, but I could have expected the change "in couple years" in 2016-2017 and I would have been wrong.

 

I might have to buy Tesla regardless.

[rukawa]

Musk seems to be fully aware of this issue, which is why he makes statements like this (from yesterday's call): "there's tremendous amount of desire to buy our cars, but people obviously they don’t have enough money to buy them, they cannot. So, we have to make the cars more affordable."

 

What Musk is really saying here is that there isn't sufficient demand at the prices TSLA is attempting to charge -- so prices will have to come down.

 

Huh? My impression was that there were waiting lists for Tesla cars and the problem wasn't that people couldn't buy them...the problem was Tesla was not producing them fast enough. I looked at situation now...it appears waiting list is a thing of the past but is it really the case that there is insufficient ability to buy them?

 

[Foreign Tuffett]

Musk seems to be fully aware of this issue, which is why he makes statements like this (from yesterday's call): "there's tremendous amount of desire to buy our cars, but people obviously they don’t have enough money to buy them, they cannot. So, we have to make the cars more affordable."

 

What Musk is really saying here is that there isn't sufficient demand at the prices TSLA is attempting to charge -- so prices will have to come down.

 

Huh? My impression was that there were waiting lists for Tesla cars and the problem wasn't that people couldn't buy them...the problem was Tesla was not producing them fast enough. I looked at situation now...it appears waiting list is a thing of the past but is it really the case that there is insufficient ability to buy them?

 

That was the status quo last year when Tesla was in what Musk called "production hell." The deposit scheme effectively front-loaded demand.

 

I think the reality of the situation is that there is a relatively limited amount of demand for $50K+ electric cars. In an attempt to keep growth going Tesla is pivoting towards China by building a massive new factory there.

[Dalal.Holdings]

I would like my next car to be electric.

 

I look at https://cleantechnica.com/2019/08/10/tesla-model-3-67-of-us-electric-vehicle-sales-in-2nd-quarter/ and pretty much despair.

 

Tesla is the only company that sells e-cars really.

 

Everyone else is just pretending.

 

I know about the Tesla issues. I might prefer to buy from established company with a wide long term service network. There's really nothing. Nothing.

 

Maybe the situation will change in coming couple years, but I could have expected the change "in couple years" in 2016-2017 and I would have been wrong.

 

I might have to buy Tesla regardless.

 

 

Haven't you read most of the comments on this thread? Tesla has NO MOAT and ZERO BRAND EQUITY. Hence, it follows that there are no barriers to entry into the EV space and Tesla will be very, very easy to disrupt. Sure enough, the Chevy Bolt and Jaguar I-Pace have proven themselves worthy competitors in the same sense as the Microsoft Zune and Palm Pre: quirky products that are being sold by the DOZENS!

 

And surely all of the "problems" Tesla is having are not exaggerated like vehicle fires (surely driving around with a tank of gasoline under you is a lot less of a fire hazard). We all know that the "established companies with a wide long term service network" are great and will surely face none of the problems Tesla has faced in the EV space because their talents in the internal combustion engine and doing service work like oil changes, etc will be easily transferrable to the EV game. Just wait until they produce EVs at scale (only "5 years away" from today), there will surely be no hiccups when these experienced, seasoned companies take a swing at EVs (I mean, it's not like Jaguar and Audi haven't already issued recalls on the I-Pace or E-tron or anything...https://www.businessinsider.com/audi-jaguar-recalls-e-tron-i-pace-tesla-competitors-2019-6).

 

And surely these established companies will be able to make software with intuitive, attractive UI as they have already done with their "infotainment" systems (sure, consumers are using Apple CarPlay and Android Auto now, but just wait until Audi, et al. release their next software update, it's gonna be sexy!). Software, as we know, is not that important and not a relevant part of selling luxury products anyway.

 

Remember, Tesla has no moat or brand equity and there are no barriers to displacing the company, so your post makes zero sense. The fact that there are no other viable, attractive EV products available now or in the near future is a figment of your imagination, not a reflection of reality (just another Elon Reality Distortion Field).

 

Also, Tesla = Enron = Ponzi scheme. Elon is a fraud and his rocket "launches" were all done at the same studio that did the moon landings. QED.

 

Too funny. This will be my final post on this forum, but hope everyone on here keeps on spreading that knowledge about moats, brand equity, easy shorts (TSLA) and easy longs (SHLD, VRX). Adios, muchachos.

[Cardboard]

Must be short sellers fault?

 

https://finance.yahoo.com/news/rental-firm-walks-away-tesla-171405527.html

 

Cardboard

[CorpRaider]

Battle of the cliches:  Base Rate vs. Software Eating the World

[Cardboard]

A friend of mine has asked me to look at a call strategy on TSLA: he is bullish. So it is a bull call spread with different expiries.

 

He wants to buy really deep in the money 2021 Jan $105 calls and to finance them by selling shorter term calls along the way. First one is Nov $235.

 

Deep in the money option is relatively cheap at 4.4% above intrinsic value ($105 + $132 divided by $227) for 1 1/2 years. Similar breakeven cost to buying stock in margin account.

 

The short call strike seems really close to current price for my liking but, he gets $18.75 and volatility is right around 50% or not a bad sale of volatility.

 

Reason why he is doing this is to double position with same initial capital invested. A risk is that he could be assigned if stock goes above $235 but, does not mind. Still a good return. I also don't like the bid/ask spread on long dated/out of the money calls. Obvious risk is if stock falls off a cliff.

 

What do you guys think? It is a long time that I have played with options.

 

Cardboard

[A Dhandho Investor]

I would advise your friend to give his money to a charity instead of spending it on call options...

[SHDL]

A friend of mine has asked me to look at a call strategy on TSLA: he is bullish. So it is a bull call spread with different expiries.

 

He wants to buy really deep in the money 2021 Jan $105 calls and to finance them by selling shorter term calls along the way. First one is Nov $235.

 

Deep in the money option is relatively cheap at 4.4% above intrinsic value ($105 + $132 divided by $227) for 1 1/2 years. Similar breakeven cost to buying stock in margin account.

 

The short call strike seems really close to current price for my liking but, he gets $18.75 and volatility is right around 50% or not a bad sale of volatility.

 

Reason why he is doing this is to double position with same initial capital invested. A risk is that he could be assigned if stock goes above $235 but, does not mind. Still a good return. I also don't like the bid/ask spread on long dated/out of the money calls. Obvious risk is if stock falls off a cliff.

 

What do you guys think? It is a long time that I have played with options.

 

Cardboard

 

That strikes me as an odd strategy given that your friend is bullish.  Shouldn’t he be selling short term puts (as opposed to calls) given his beliefs?  Or does he have a reason to be short term bearish despite being long term bullish? 

[coc]

A friend of mine has asked me to look at a call strategy on TSLA: he is bullish. So it is a bull call spread with different expiries.

 

He wants to buy really deep in the money 2021 Jan $105 calls and to finance them by selling shorter term calls along the way. First one is Nov $235.

 

Deep in the money option is relatively cheap at 4.4% above intrinsic value ($105 + $132 divided by $227) for 1 1/2 years. Similar breakeven cost to buying stock in margin account.

 

The short call strike seems really close to current price for my liking but, he gets $18.75 and volatility is right around 50% or not a bad sale of volatility.

 

Reason why he is doing this is to double position with same initial capital invested. A risk is that he could be assigned if stock goes above $235 but, does not mind. Still a good return. I also don't like the bid/ask spread on long dated/out of the money calls. Obvious risk is if stock falls off a cliff.

 

What do you guys think? It is a long time that I have played with options.

 

Cardboard

 

I don't see the point of a strategy like that if he's bullish. Personally I would simplify and pay up a little on options that are a little less deep and skip on financing them by selling calls -- in other words, replace his position at something like 20-25% of the cost, even if his implied borrowing cost is higher. If he's right, he's going to make a lot of money, and if he's wrong he's going to save himself quite a bit versus owning the shares outright.

 

And for god's sake, don't sell puts. Especially not on a highly levered company that loses billions of dollars.