Thoughts on TESLA

[NW-Bound]

My bold... nope, not even close...

Dropping to 87 means the yield is about 6.1%... JCP is close to 14%... opps... sorry, just checked and it is now 20%....

OK. Comparison of Tesla to JCP is wrong.

However, the yield to maturity is higher than 6.1% though. The bond is relative short-term with maturity in 2025. At maturity, you would get back $1 for your 87c, and that enhances the yield. Not as high as 14% though.

 

[oneill225]

Kindof silly to compare a factory to a service company. Apples and oranges.

Infrastructure costs compared to infrastructure costs; apples to apples. Amazon was building huge distribution warehouses during their early years and Tesla is building factories. You do not have a grasp of what it means to grow a company. The profits are rarely instantaneous.

There is a story about a beer maker who was asked the cost to make one beer. He answered that the first beer cost him $10 million.

 

[corn18]

Infrastructure costs compared to infrastructure costs; apples to apples. Amazon was building huge distribution warehouses during their early years and Tesla is building factories. You do not have a grasp of what it means to grow a company. The profits are rarely instantaneous.

There is a story about a beer maker who was asked the cost to make one beer. He answered that the first beer cost him $10 million.

How do you know what I have a grasp of and don't have a grasp of? You ever run a company?

 

[NW-Bound]

There are already off-grid homes built that use mini-splits on solar & battery.

Mini-splits are so much more efficient than traditional split HVAC systems.

No way I can be completely off-grid when my highest daily usage is 100kWh. It would take a home designed from scratch to be off-grid. And even then, people would need a standby generator.

Once I finish my solar/battery system, I will install a supplemental mini-split to make use of the generated power, and to offload the 5-ton central AC. This system is all DIY and off-grid. It's an experimental and hobby thing. Monetary savings is not the ultimate goal, but still an important measure of success.

 

[oneill225]

How do you know what I have a grasp of and don't have a grasp of? You ever run a company?

Chill out. Maybe you are a business genius, but a business genius should know that losing money is common-place for growing companies.

Tesla is narrowing the profit gap and ramping up sales. Give them a little credit for moving in the right direction if you are going to highlight their losses with exclamation points.

 

[corn18]

Chill out. Maybe you are a business genius, but a business genius should know that losing money is common-place for growing companies.

Tesla is narrowing the profit gap and ramping up sales. Give them a little credit for moving in the right direction if you are going to highlight their losses with exclamation points.

Technically, they are generating profit from operations (EBIT). That’s the reason there is hope. As stated, if they get swallowed by debt, none of that matters.

 

[oneill225]

Technically, they are generating profit from operations (EBIT). That’s the reason there is hope. As stated, if they get swallowed by debt, none of that matters.

Being swallowed by debt would be a problem. So far, so good.

 

[aja8888]

Chill out. Maybe you are a business genius, but a business genius should know that losing money is common-place for growing companies.

Tesla is narrowing the profit gap and ramping up sales. Give them a little credit for moving in the right direction if you are going to highlight their losses with exclamation points.

Tesla has been around for well over 10 years. Actually since 2003.

 

[oneill225]

Tesla has been around for well over 10 years. Actually since 2003.

I've been around since 1964 and still growing.

 

[NW-Bound]

I've been around since 1964 and still growing.

Vertically? More like horizontally.

 

[oneill225]

Vertically? More like horizontally.

Out, not up. Sigh.

 

[Texas Proud]

OK. Comparison of Tesla to JCP is wrong.

However, the yield to maturity is higher than 6.1% though. The bond is relative short-term with maturity in 2025. At maturity, you would get back $1 for your 87c, and that enhances the yield. Not as high as 14% though.

Yea, forgot about YTM... but then JCP is even higher than 20%... but the issue I am looking at does not mature until 97, but trading at 8.70 with a 25.00 issue price...

 

[NYEXPAT]

They probably stole half of Tesla’s IP.

I would not doubt it! Their corporate office is in San Jose, Engineering in Germany and production in Shanghai.

 

[bobandsherry]

Fair enough. Risk aversion can be a very good thing.

I bought Tesla stock based on the following:
1) The inevitable shift (ongoing and accelerating) to electric cars/trucks;
2) The current and growing demand for high capacity batteries; and,
3) Tesla's innovation, leadership and intellectual property related to 1 and 2, above.

I would not bet the farm on it, but the biggest returns will be had for those willing to get on board early. Think Microsoft, Apple, Amazon, etc.

Go back through history, the innovators are usually left in the dust. Those who copy are rewarded.

 

[Chuckanut]

Hey guys, cool it with the 'you' statements. OK? They tend to inflame passions and it's getting boring. Besides, I still have plenty of popcorn left.

 

[kcowan]

Tesla has several bond issues. At least a couple of convertibles will need repayment soon, and the stock price is nowhere at the convertible price of $360. If it were, Tesla could just print stock certificates to repay the bonds I think. Now, it has to pay hard cash.

The most recently issued bond in 2017 (straight, not convertible), just one year ago, has a coupon rate of 5.3%. It recently drops to 87 cents on the dollar, and is said to have the yield same as that of JC Penney.

The stock price may be supported by Tesla enthusiasts, but the bond is priced more at arms length by institutional investors, who love only their money and not any company. It does not look good.

Thanks. I was not aware of the poor perception by the investment community. So they think the bonds must pay 5.3/.87 to justify lending them money. definitely in the high risk category.

I would love to have a Model S but can't plug it in in my apartment. Maybe BMW will pick them up at a discount someday soon?

 

[oneill225]

Not dead yet

Some good news for Tesla investors:

https://www.forbes.com/sites/brooke...eal-crushes-toyota-prius-others/#185096ee77f2

 

[aja8888]

I've been around since 1964 and still growing.

HAHA..good comeback!

I'm a bit older than you (I have been called "old as dirt" from time to time), but I am done growing and now just aging gracefully.

 

[NW-Bound]

Speaking of people in old age, er, in the mature phase, a bit of shrinking would be advantageous.

Growing would be generally bad. Just sayin'...

 

[ERD50]

Some good news for Tesla investors:

https://www.forbes.com/sites/brooke...eal-crushes-toyota-prius-others/#185096ee77f2

Well, it certainly isn't bad news, but objectively, I don't see how you can call it 'good news'.

The article estimates they shipped 17,800 in Aug. That's close to the promised 5,000/ week run rate. But Musk told us we would be there by the end of 2017, and followed that up with a few more missed promises.

So not hitting that run rate in August 2018 would be bad news.

And with production delays, there sure ought to be a lot of pent up demand. So if they couldn't sell all they could make, that would be very, very bad news.


Musks's next prediction is 10,000/week in 2018. It looks like their 15%~20% gross margin estimates depend on that run rate. I don't know enough about their financials to know where they need to be to actually make a profit overall, but both the gross margin and volume play together to come up with a $ amount to offset other expenses. If volume is low, gross margin % will be lower. Lower volume times a lower gross margin % is a double-whammy.

I see that last April, Musk predicted profitability in Q3 and Q4. So we will see.

-ERD50

 

[aja8888]

Sooner or later, Tesla is going to run out of buyers who want to pay $50,000 + for an electric car. That may be soon when the federal and state energy credits disappear. For $50K, I can buy a new Camry and a nice sailboat to tow.

One thing that is not mentioned often is the lack of repair facilities for these cars, and BS me on they don't need repairs or maintenance baloney. They are machines and have thousands of parts that are subject to failure. This will come back to bite Tesla as more of these cars are on the road. Lack of brick and mortar dealer/repair facilities will be a problem.

 

[Fedup]

I’m waiting patiently before I take up my next short on TESLA. If earnings don’t come close to what ELon Musk has been tweeting. It will be down big.

 

[oneill225]

Trend is positive

Well, it certainly isn't bad news, but objectively, I don't see how you can call it 'good news'.-ERD50

An objective take on Tesla's production and sales needs to be made relative to actual market performance, not on meeting optimistic or pessimistic predictions. Musk over promises, but the real production trend is up and the competition is not competitive (so far).

Ignoring Musk's overly optimistic predictions, it is clear that Tesla is building and selling impressive numbers of EVs and there is no reason to think the trend won't continue as the manufacturing become more efficient.

If Musk had under promised and exceeded the predicted production, I would say the same. The actual production and sales numbers stand on their own; good or bad.

 

[DaveInMi]

Elon Musk need to remove himself from the day to day operations at Tesla and recruit some good Plant Management from the Big 3 or Japanese transplants here.

He is a Tech guy, not a car guy.

Of course smoking pot on a web podcast is not a recipe for success.

 

[Running_Man]

An objective take on Tesla's production and sales needs to be made relative to actual market performance, not on meeting optimistic or pessimistic predictions. Musk over promises, but the real production trend is up and the competition is not competitive (so far).

Ignoring Musk's overly optimistic predictions, it is clear that Tesla is building and selling impressive numbers of EVs and there is no reason to think the trend won't continue as the manufacturing become more efficient.

If Musk had under promised and exceeded the predicted production, I would say the same. The actual production and sales numbers stand on their own; good or bad.

What do the three heads of the accounting department of TESLA that have left for other companies know that you don't know, as they gave up MILLIONS in free Tesla shares for another job. For starters they know:

1) Scrap rate of production line
2) Warranty costs
3) Ability to finance the company and what financing is necessary
4) Long term projections for Tesla Car Market
5) Actual safety record of the production facilities

When multiple heads of accounting who have access to detailed numbers that you have no ability to understand, leave a company where they would become one of the most respected finance people in the world if TESLA were to succeed along with an unbelievable compensation package, that is a giant red flag. The biggest promoters of Tesla are Elon Musk and people who have joined the Musk hype brigade who have no financial knowledge only a "belief" that this is how all small companies start,(10 years after they begin). Without government paying for 1/2 of the capitalization Elon would never have made it this far. And this is with paying their workers $8.00 an hour less than the average autoworker makes(Line workers make $17.53 ($36,000 a year), imagine if they actually had to pay a competitive wage. Detailers of the Teslas make $15.21 an hour ($31,000 a year), imagine the quality you are going to get on detailing when the factories really start churning them out. OF course they are requiring 15 hours a week of overtime. Musk has addressed this saying in an interview

In a phone interview about the conditions at the factory, which employs some 10,000 workers, the Tesla CEO conceded his workers had been "having a hard time, working long hours, and on hard jobs", but said he cared deeply about their health and wellbeing. His company says its factory safety record has significantly improved over the last year.

Musk also said that Tesla should not be compared to major US carmakers and that its market capitalization, now more than $50bn, is unwarranted. "I do believe this market cap is higher than we have any right to deserve," he said, pointing out his company produces just 1% of GM's total output.

"We're a money losing company," Musk added. "This is not some situation where, for example, we are just greedy capitalists who decided to skimp on safety in order to have more profits and dividends and that kind of thing. It's just a question of how much money we lose. And how do we survive? How do we not die and have everyone lose their jobs?"

The head of accounting can research and determine what is going and make judgments on how this will all affect his reputation, wealth and future. When they leave it is a very bad sign, and no cheer-leading can change that, maybe Tesla can continue to build it's cars with a pay rate just over that at Starbuck's but I think that is unlikely