TSLA - Tesla Motors

[meiroy]

Who believes Bezos doesn't care about the returns he's getting on his invested capital?  ???

 

Since you asked, me.

 

AWS capital base is increasing just as fast if not more than its revenue and profit is growing. Its not a tech company, it gets the same margins and EBITDA with the same amount of PPE as a utility.

 

Sounds like a great short, then, no?

 

Guess he's just lucky to have gotten away with it for 20 years and personally made 95 billion in the process of not caring about returns on his invested capital...

 

The common ground to Amazon and Tesla is the tremendous future hidden intangible assets which you can not be found on the financial reports at any moment in the present (ah, what a BS way to phrase it, but hey.. it's COBF.)

 

Tesla might go down, but it's not going to get close to 0 or anything like it.  It will be bought out completely or partially by a rival auto company for the hidden intangible asset that guarantees competitive advantage for years to come.  That asset is the proven genius of Musk. It's practically priceless.

 

Having said that, I do own long-term puts because I like the risk:reward but his genius is a true risk to the thesis.

 

 

[randomep]

 

 

I suspect this company will succeed, given what I am seeing elsewhere in the market

 

 

Succeed at WHAT exactly? In a capitalist mindset the goal is to make a profit on each car. Right now they have never done so, and they have been around how many years?  If you think eventually they will make a profit per car, can we put a estimate on when? at the 400,000th Model 3?  or the next model, or the next model after that?

 

 

I'm sure Musk also wants Tesla to be profitable and sustainable. That's not proven yet, but I think that if the company can make it through to scaled production of Model 3, I don't see a reason why they'd lose money selling cars.

 

 

So what you are saying is that if they can deliver on their targets, they can be profitable. But have they delivered on any production targets for the Tesla 3? It isn't just that they haven't, Musk's reputation is very suspect to me and I have no faith in any promises he makes.  Anyway, 2018 is just around the corner, and we shall see if Tesla 3 production will be a fiasco.

 

 

[oddballstocks]

Who believes Bezos doesn't care about the returns he's getting on his invested capital?  ???

 

Since you asked, me.

 

AWS capital base is increasing just as fast if not more than its revenue and profit is growing. Its not a tech company, it gets the same margins and EBITDA with the same amount of PPE as a utility.

 

Sounds like a great short, then, no?

 

Guess he's just lucky to have gotten away with it for 20 years and personally made 95 billion in the process of not caring about returns on his invested capital...

 

The common ground to Amazon and Tesla is the tremendous future hidden intangible assets which you can not be found on the financial reports at any moment in the present (ah, what a BS way to phrase it, but hey.. it's COBF.)

 

Tesla might go down, but it's not going to get close to 0 or anything like it.  It will be bought out completely or partially by a rival auto company for the hidden intangible asset that guarantees competitive advantage for years to come.  That asset is the proven genius of Musk. It's practically priceless.

 

Having said that, I do own long-term puts because I like the risk:reward but his genius is a true risk to the thesis.

 

I agree/disagree.  I also own long dated puts.  The company produces nice looking vehicles.  I'm not convinced they have a secret sauce beyond selling cars below cost.

 

I think GM/Ford/BMW could capture the exact same market if they wanted to sell a six figure car below cost too.

 

I view Musk as the risk.  He doesn't have anyone to tell him to stop.  He needs someone who is excellent at execution to pull him back at times.  Instead as one thing craters he starts to hype something else.  It's unclear what he's even focused on now.  Is it rockets? Is it a tunnel? The Model 3?  I'm speaking for myself, but I know a lot of entrepreneurs have a lot of trouble doing tedious things.  It isn't exciting and it's boring.  I've learned to suck it up.  If the work sucks I might as well do it because I own the equity, others will view it as drudge work with zero upside.  I see this same thing with Musk.  As things go south he gets interested in the new exciting thing.  They need someone to suck it up and figure out their production issues for the Model 3.

 

Ultimately I think this goes to $0 for equity holders.  Whatever technological value there is will be purchased after it crashes.  They are over-levered and have execution problems.  They are racing the clock. 

 

This is part of my recession hedge.  I have a small option position on a number of high fliers that I think will crash if the market ever goes down.  If we never go down then I win because my longs do well.  But if we finally do go down at some point then these names should drop faster once momentum leaves the market.

[Liberty]

So what you are saying is that if they can deliver on their targets, they can be profitable. But have they delivered on any production targets for the Tesla 3? It isn't just that they haven't, Musk's reputation is very suspect to me and I have no faith in any promises he makes.  Anyway, 2018 is just around the corner, and we shall see if Tesla 3 production will be a fiasco.

 

They're always late, but mostly because they self-impose impossible deadlines (which probably make them move faster than if they had more conservative deadlines, which might be all that matters to Musk). That's different from "not delivering".

 

They still did something that everybody thought was impossible when they IPO'ed. The Model S is a beloved vehicle that has won tons of awards, smokes Ferraris while seating 7 and having a 5-star crash rating, and is changing an industry. Not bad for the first auto startup in the US in a while (which happens to not only have had to build a brand and vehicles from scratch, but is also doing it with a completely different technology platform than what was established -- that's way harder)... If Model 3 is late but helps make EVs a lot more mainstream, is that a win or a loss? I think Musk would be satisfied with that. Once Model 3 is ramped up, they won't have to invest billions in building out factories, right? Then we'll see what profitability looks like. But right now it's hard to tell because Model S/X might be profitable on their own, but they're not on their own, they're also investing billions for the next phase of the plan.

 

Personally, I have no interest in Tesla as an investment. I've just been interested in EVs for about 20 years. I think they're doing great things for the industry, and like how the iPhone pushed everyone else to change and up their game, they're making all other automakers better by lighting a fire under their bottoms. That has a lot of leverage to make the world move faster in the right direction, which was Musk's initial goal.

[Jurgis]

I am not interested in Tesla as investment. I believe they are doing great things and I believe they will do more great things if they don't implode. I support them a little via interest-free loan (M3 deposit  :D) and some shares that I hold.

 

My biggest concerns are that

 

1. If Tesla implodes, it could destroy other Musk companies due to various interrelationships, which would be sad.

2. Elon might drive himself to early death (or at least huge burnout, health consequences) with his overwork. This would be sad too.

 

Dum Vivimus, Vivamus!  8)

[rkbabang]

I am not interested in Tesla as investment. I believe they are doing great things and I believe they will do more great things if they don't implode. I support them a little via interest-free loan (M3 deposit  :D) and some shares that I hold.

 

My biggest concerns are that

 

1. If Tesla implodes, it could destroy other Musk companies due to various interrelationships, which would be sad.

2. Elon might drive himself to early death (or at least huge burnout, health consequences) with his overwork. This would be sad too.

 

Dum Vivimus, Vivamus!  8)

 

+1.  He should start a life extension company next so he can prolong his own life.

 

Dum Vivimus, Vivamus Sempiternum!

 

[Liberty]

+1.  He should start a life extension company next so he can prolong his own life.

 

Dum Vivimus, Vivamus Sempiternum!

 

It actually seems to be one of Musk's blind spots (well, can't hold it against him -- one man can't do everything). I was in contact with Aubrey de Grey (of the SENS Research Foundation) a few years ago and was suggesting to him some wealthy people that I thought might be inclined to support him (like Felix Salmon, before he passed, as he wrote about this indirectly in his book, and Chuck Feeney's Atlantic Philanthropies), and suggested Musk. He said he got in touch but Musk preferred to invest in tech hardware than biomedical research (of the diseases of aging, in this case). At least another part of the Paypal Mafia, Peter Thiel, has made big investments in the area.

[rkbabang]

+1.  He should start a life extension company next so he can prolong his own life.

 

Dum Vivimus, Vivamus Sempiternum!

 

It actually seems to be one of Musk's blind spots (well, can't hold it against him -- one man can't do everything). I was in contact with Aubrey de Grey (of the SENS Research Foundation) a few years ago and was suggesting to him some wealthy people that I thought might be inclined to support him (like Felix Salmon, before he passed, as he wrote about this indirectly in his book, and Chuck Feeney's Atlantic Philanthropies), and suggested Musk. He said he got in touch but Musk preferred to invest in tech hardware than biomedical research (of the diseases of aging, in this case). At least another part of the Paypal Mafia, Peter Thiel, has made big investments in the area.

 

I know, I've never heard a word about this from Musk.  Aubrey de Grey is truly doing God's work (or undoing it, depending on your point of view).  I've donated to SENS foundation in the past, I wish more people would pay attention to this.

 

[Liberty]

I know, I've never heard a word about this from Musk.  Aubrey de Grey is truly doing God's work (or undoing it, depending on your point of view).  I've donated to SENS foundation in the past, I wish more people would pay attention to this.

 

I've also donated to SENS multiple times, and sent some soil samples from a local graveyard to LysoSENS many years ago when they wanted to get some from around the world.

 

http://www.sens.org/research/introduction-to-sens-research/intracellular-junk

 

Another good way to help is to support computational protein design withy our spare CPU cycles (especially in winter when the dissipated heat just displaces heating from other sources). I prefer Rosetta@home: https://boinc.bakerlab.org

 

But anyway, this is off-topic...

[Jurgis]

http://www.businessinsider.com/elon-musk-just-met-his-100-day-deadline-on-a-50-million-bet-2017-11

[Liberty]

Pricing is out on the Semi:

 

https://www.theverge.com/2017/11/24/16695926/tesla-electric-semi-truck-price

 

150k to 180k, when most seemed to expect 200k-250k.

[Jurgis]

I really hope Tesla can work out production issues and actually produce M3, semi, roadster, etc. up the wazoo.

[marcosc]

From the article: "Tesla says the prices are "expected" leaving the company some wiggle room on the final pricing".  ::)

[rb]

Interesting article about production issues at Tesla.

 

https://www.reuters.com/article/us-tesla-quality-insight/build-fast-fix-later-speed-hurts-quality-at-tesla-some-workers-say-idUSKBN1DT0N3

[Liberty]

http://www.motortrend.com/cars/tesla/model-3/2018/exclusive-tesla-model-3-long-range-first-test-review/amp/

[Liberty]

2008 interview with Musk, talks about Paypal, Tesla (before even delivering Roadsters to customers), SpaceX, etc..

 

https://www.youtube.com/watch?v=ADtb45FKmrs

[DooDiligence]

Did anyone see Musk at the end of Young Sheldon last night?

 

https://youtu.be/A_T0C7HtzZY

 

The context for this is that the schoolboy Sheldon douched out a NASA engineer & did all the theoretical work years before the technology was available to do it.

 

It's totally OK to admire Musk the man even if you wouldn't touch Tesla with a ten foot pole.

[Jurgis]

https://www.npr.org/sections/thetwo-way/2017/12/01/567710447/worlds-largest-battery-is-turned-on-in-australia-as-tesla-ties-into-power-grid

[Spekulatius]

Interesting article about production issues at Tesla.

 

https://www.reuters.com/article/us-tesla-quality-insight/build-fast-fix-later-speed-hurts-quality-at-tesla-some-workers-say-idUSKBN1DT0N3

 

Keep the line moving. LOL. Sounds like the Chrysler quality system from the 70’s.

[Liberty]

So is anyone buying long-term out of the money puts on this? With the current -1B negative operating cash flow a stock dilution seems a likely probability down the line.

 

If you issue equity at an overvalued price, are you diluting value or creating value for remaining shareholders? Have past equity raises made the stock tank?

 

Seems to me there are many ways Tesla could fail, but raising more cash is a way for them to reduce risk, not increase it.

[Jurgis]

TSLA should issue shares. Elon made a mistake by not having supervoting share class and I think that's what's stopping him from issuing shares. I still think he should but /shrug.

[Liberty]

So is anyone buying long-term out of the money puts on this? With the current -1B negative operating cash flow a stock dilution seems a likely probability down the line.

 

If you issue equity at an overvalued price, are you diluting value or creating value for remaining shareholders? Have past equity raises made the stock tank?

 

Seems to me there are many ways Tesla could fail, but raising more cash is a way for them to reduce risk, not increase it.

 

There's this http://schwert.ssb.rochester.edu/f423/jfe86_am.pdf which says:

 

This study investigates the effect on stock prices of seasoned equity offerings. The results

demonstrate that the announcement of equity otlerings reduces stock prices significantly. For

industrial issues, regression results indicate that announcement day price reduction is significantly

and negatively related to the size of the equity offering. The results appear not to be explained by

changes in capital structure associated with the equity offerings. The findings are consistent both

with the hypothesis that equity issues are viewed by investors as negative signals and with the

hypothesis that there is a downward sloping demand for a firm’s shares.

 

I think it's a case of psychology rather than fundamentals that would be driving the effect on a stock price due to a dilution.

 

I'm sure that's correct on average. But most industrial equity issuers aren't valued like Tesla (or growing like Tesla) at all, so I'm not sure that's useful. A better base rate would be to look at past equity raises for Tesla.

[Liberty]

Chanos thinks Tesla is a zero:

 

https://www.cnbc.com/2017/12/14/jim-chanos-we-think-tesla-is-worth-zero.html

[Liberty]

Took Aswath Damodaran's spreadsheet for valuing companies and put TSLA into it.

 

Assumed a rise to 10% operating margin, 35% growth in revenue, and no probability of distress and got a value of $85.60 a share vs $337.89 as it currently trades.

 

I think these are even fairly preferential assumptions given what the auto industry is like and Tesla's relative lack of technological advantage.

 

How did you get the 35% growth rate? They've been growing much faster than that in the past few years with their premium-priced vehicle, and are expecting to grow even faster once they transition to their more mass-market model.

[frommi]

Here are some drone shots from yesterday of Tesla's Fremont plant. Seems the production bottleneck on the model 3 has been fixed to some extent.

 

https://imgur.com/gallery/bDp8b

 

Thats roughly 1k cars on the pics, how can you know that these are not handmade? Going by their guidance they have to produce this amount of cars EVERY day.