TSLA corporate outlook

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LTLFTcomposite said:
cwerdna said:
Can't see why a company would want to blow over $50 billion in cash or stock or borrowed $ to buy a currently overvalued company that's blowing thru cash like crazy and racking up major losses to boot (somewhere past $3.8 billion in cumulative net loss).
They wouldn't. But at $20 a share I can easily see them being a buyer. What the actual number is who know, but my guess would be something that would have current shareholders in tears.
cwerdna said:
It's probably less risky for a company to start their own EV program for several billion $, which would still be WAY cheaper than buying TSLA.
Wasn't that project Titan? How did that work out? As much fun as it is to bash the likes of GM, Ford, Nissan or whatever, building all that from the ground up is a daunting task when you consider design, engineering, marketing, compliance, manufacturing, distribution, a nationwide if not worldwide network of sales and service locations (even if you do hate dealers, you need something), and a bunch of other things I'm sure.

Why even buy it at $20? Just wait a little longer for the assets' 'fire sale' when Chapter 7 bankruptcy occurs, e.g. then buy cheaply
the basically unused M3 assembly robots.
 
lorenfb said:
Who would really want to buy Tesla, anyway? Basically, all of its technology is widely available and "off-the-shelf". The only real eco-system that's somewhat of value is the SC system, and that's not all that significant. There's no real barrier to entry to producing a BEV that buying Tesla would alleviate.
You're kidding, right? Having access to technology and intellectual property is great, and it was good PR for Musk to express willingness to share Tesla's patents, but it's another thing entirely to build a company, factories, supply chains, and actual products. The Model S came out over five years ago. We own a five year old Model S, and even at this age, it's still superior to any other non-Tesla EV.

lorenfb said:
Most importantly why would any company, Apple as an example, want to enter the automotive market where margins are low, e.g. compared to Apple's existing high gross margin product lines? Tesla's gross margins are now decreasing as exemplified in its Q3 report, and will continue to decrease.
Tesla indicates that they expect margins to improve with volume sales of the Model 3. We'll see. I'm cautiously optimistic. During this morning's drop below $300/share, I chose to buy some additional shares. I'm cautious in the sense that I won't invest more in TSLA than I'd be comfortable losing, and my time horizon on TSLA is long.

Tesla is a premium brand that has grown quite valuable and is now also associated with high-end solar products and energy storage, with the potential to expand into additional markets. Premium brands are often able to justify higher prices and higher margins. Apple is a case in point. Despite having a global smartphone market share below 15% in 2016, Apple took in an overwhelming majority of the profits earned by smartphone manufacturers. For the other manufacturers, smartphones are not a high margin product. In buying TSLA shares, I'm not just buying a car company, I'm buying a brand.

lorenfb said:
Why even buy it at $20? Just wait a little longer for the assets' 'fire sale' when Chapter 7 bankruptcy occurs, e.g. then buy cheaply the basically unused M3 assembly robots.
Now that's crazy talk! If you're that confident in Tesla's demise, you should be shorting the stock. Of course, no one can be that confident.
 
C'mon folks. Yes, Model 3 success is crucial to Tesla success.
This ER did not depict an existential threat to Tesla. It hurts their competitiveness as it gives other manufacturers time to compete.
It costs them a bunch of $ to have non-productive workers. It will take them longer now to get to positive GM on Model 3. Supercharger roll-out and Service Centers will be delayed to save $.
Manufacturing is a bitch. The Model 3 is a huge step change and Musk over-promised.

I listened to the conference call and questions from analysts.
I disliked Musk's initial harping about naysayers when Tesla had sold only 2500 cars and now has sold 250000. Quit whining. Wipe the egg off your face and work the problem.
However, I do appreciate the detail that Musk and JB go into about where the problems are and what progress has been made.
They are not aloof to investor concerns and have clarity on the problems it seems.
It sounds like the there's a 3 month slip although oddly, my own M3 delivery window only slipped one month to Nov-Jan.

Some online reports of talk with Tesla workers say the bottleneck has been resolved and it will turn out to be only a 1-month slip. I take those with the same grain of salt as online reports of GF power interruptions. Show me the VINs.

The SP is not going to $200 much less $20.
They're selling 100k S&X /year which is their so-called "sweet spot". Tesla Energy has excellent margins and seems to be a very timely product.

I have buy orders in at $290 & $282. I'll buy more when employees I know who have already configured cars get their VINs.
Seems like an opportunity as every one of these TSLA meltdowns has been for me so far.
 
abasile said:
Having access to technology and intellectual property is great, and it was good PR for Musk to express willingness to share Tesla's patents, but it's another thing entirely to build a company, factories, supply chains, and actual products.

The reality is that most in the automotive industry don't consider Tesla's "technology and intellectual property" all that significant.

abasile said:
Tesla indicates that they expect margins to improve with volume sales of the Model 3.

Wishful thinking, and not at $35K!

abasile said:
Tesla is a premium brand that has grown quite valuable and is now also associated with high-end solar products and energy storage, with the potential to expand into additional markets.

Neither of those provide the volume cash flow Tesla needs in the short term..
 
Trying to think of companies that have a similar brand love/loyalty/following to that of Tesla. Apple would have to be one. Maybe Disney? What about other luxury brands out there? Hard to think of too many that are as crazy for a company/brand as that of Tesla.
 
hyperionmark said:
Trying to think of companies that have a similar brand love/loyalty/following to that of Tesla. Apple would have to be one. Maybe Disney? What about other luxury brands out there? Hard to think of too many that are as crazy for a company/brand as that of Tesla.

That loyalty for Tesla hasn't 'transferred' to the bottom line of Tesla's P&L statement as is the case for Apple, Netflix, Amazon, Facebook, and et al.
 
lorenfb said:
hyperionmark said:
Trying to think of companies that have a similar brand love/loyalty/following to that of Tesla. Apple would have to be one. Maybe Disney? What about other luxury brands out there? Hard to think of too many that are as crazy for a company/brand as that of Tesla.

That loyalty for Tesla hasn't 'transferred' to the bottom line of Tesla's P&L statement as is the case for Apple, Netflix, Amazon, Facebook, and et al.
It took Amazon over 15 years to be regularly profitable. And their business isn't near as capital intensive as Tesla. Was Apple near as profitable only a decade into their existence as they are now?
 
hyperionmark said:
It took Amazon over 15 years to be regularly profitable. And their business isn't near as capital intensive as Tesla. Was Apple near as profitable only a decade into their existence as they are now?
Actually Amazon is extremely capital intensive (trucks and airplanes) but they outsourced that part. I've wondered if Tesla would have done well to do the same, outsource the manufacturing.

I could say I see a significant potential for similarities with Amazon's history, but I'd be repeating myself. Suffice to say my strategy is to be a buyer of the stock in single digits, and sell at $2000+ 15 years later.
 
LTLFTcomposite said:
hyperionmark said:
It took Amazon over 15 years to be regularly profitable. And their business isn't near as capital intensive as Tesla. Was Apple near as profitable only a decade into their existence as they are now?
Actually Amazon is extremely capital intensive (trucks and airplanes) but they outsourced that part. I've wondered if Tesla would have done well to do the same, outsource the manufacturing.

I could say I see a significant potential for similarities with Amazon's history, but I'd be repeating myself. Suffice to say my strategy is to be a buyer of the stock in single digits, and sell at $2000+ 15 years later.
True, I've wondered the same if they should be outsourcing more. Although by not doing so they stand to profit even more if/when they get it right.
 
lorenfb said:
The reality is that most in the automotive industry don't consider Tesla's "technology and intellectual property" all that significant.

The batteries are key. If Tesla gets the gigafactory (and future gigafactories) up to volume production, "most in the automotive industry" won't be able to touch Tesla's battery prices. In fact they'll be buying from Tesla. And as far as a practical charging network, so far Tesla stands absolutely alone in the US market. And future charging stations at even higher power levels are going to require significant on-site storage capacity. Batteries again, even if some other manufacturers ever see the light regarding infrastructure, or 3rd party charging becomes profitable they'll be buying components from Tesla.
 
Some phrases auto-translate more clearly than others, in this story about the German engineering firm, apparently acquired by TSLA in order to provide a functioning rescue force that could be rapidly airlifted to the gigafactory site.

Rescue from the Eifel Experts from Prüm are to bring production to work at Tesla

Actually, it is engineers and electrical engineers that the medium-sized company Tesla Grohmann Automation from Prüm in the Eifel regularly sends to the Nevada desert. There they are to help in the production of battery cells in the Gigafactory of Tesla and Panasonic. Meanwhile, the employees also feel a bit like firefighters, because the tree literally burns in the desert near the city of Reno.

The production of the middle-class model 3 does not get going properly...

On-site staff even speak of a "heap of rubble". Among other things, a team of Grohmann from Prüm is now working under pressure to get the lines up and running. Tesla founder Elon Musk had bought the mid-sized company from the Eifel last year for around 150 million euros. The owner-managed company founded in 1983...
https://www.rundschau-online.de/wirtschaft/rettung-aus-der-eifel-experten-aus-pruem-sollen-produktion-bei-tesla-zum-laufen-bringen-28761354?dmcid=f_feed_K%C3%B6lnische+Rundschau
 
In the financial Q3 report given the other day, Elon mentioned that the sub-par code they found and have almost finished rewriting with Tesla people is estimated at 30 engineer-years worth ... in a matter of a month or two. Even if Elon is being generous in his estimate of the work, that is insane.
 
SageBrush said:
In the financial Q3 report given the other day, Elon mentioned that the sub-par code they found and have almost finished rewriting with Tesla people is estimated at 30 engineer-years worth ... in a matter of a month or two. Even if Elon is being generous in his estimate of the work, that is insane.
That sounds like the best example of a Mythical Man-Month that one could ever want.
 
Nubo said:
lorenfb said:
The reality is that most in the automotive industry don't consider Tesla's "technology and intellectual property" all that significant.

Nubo said:
The batteries are key. If Tesla gets the gigafactory (and future gigafactories) up to volume production, "most in the automotive industry" won't be able to touch Tesla's battery prices.

Really, that's a big "If"? Have you forgotten that there're other sources for batteries, e.g. LG? And Tesla needs battery volume internally
to 'push' the prices down. Besides, there's only so much price reduction that can be achieved via volume. If they don't get that from
M3 and it fails to generate a positive cash flow, Tesla won't be a factor in batteries.

Nubo said:
In fact they'll be buying from Tesla. And as far as a practical charging network, so far Tesla stands absolutely alone in the US market. And future charging stations at even higher power levels are going to require significant on-site storage capacity. Batteries again, even if some other manufacturers ever see the light regarding infrastructure, or 3rd party charging becomes profitable they'll be buying components from Tesla.

Yes, and more Elon hyperbole!
 
lorenfb said:
Nubo said:
lorenfb said:
The reality is that most in the automotive industry don't consider Tesla's "technology and intellectual property" all that significant.

Nubo said:
The batteries are key. If Tesla gets the gigafactory (and future gigafactories) up to volume production, "most in the automotive industry" won't be able to touch Tesla's battery prices.

Really, that's a big "If"? Have you forgotten that there're other sources for batteries, e.g. LG?

No. But I doubt LG provide their batteries to carmakers at cost.
 
Nubo said:
lorenfb said:

Nubo said:
The batteries are key. If Tesla gets the gigafactory (and future gigafactories) up to volume production, "most in the automotive industry" won't be able to touch Tesla's battery prices.

Really, that's a big "If"? Have you forgotten that there're other sources for batteries, e.g. LG?

No. But I doubt LG provide their batteries to carmakers at cost.

That assumes that Tesla's battery process would include sourcing & starting with raw materials and doesn't rely on a battery supplier,
e.g. Panasonic, to do basic cell production. The former would require a huge up-front investment which wouldn't be practical
until late 2020 given Tesla's reality production plans.
 
The giga-disaster in the desert continues...

In all likelihood this massive factory in a terrible location designed to produce obsolete cells at above-market cost that no vehicle manufacture expect TSLA will ever use, will turn out to be one of TSLA's largest liabilities, after the forensic auditors complete their autopsy.

Tesla's Director Of Battery Engineering Is Out

Tesla is currently working to address manufacturing issues at its Gigafactory in Nevada, which led to a three month delay in the production schedule of the Model 3 sedan. At the same time, Jalopnik has learned the company’s director of battery engineering left the company in recent weeks.

Jon Wagner, who joined Tesla in 2013, worked as the team leader for battery pack design engineering at the automaker and helped develop technology in the Model S, X, and 3, according to his LinkedIn profile. He also served as Tesla’s interim director for battery manufacturing, body engineering and computer aided engineering, his LinkedIn page says.

Wagner couldn’t be immediately reached for comment. Tesla declined to comment.

Sources said he officially left the company within the past month, but the circumstances of his departure aren’t immediately clear...
https://jalopnik.com/teslas-director-of-battery-engineering-is-out-1820179362
 
When Musk promised ~5 k a week of model 3 deliveries by next month, he was also promising his shareholders and creditors ~$1 B of model 3 monthly revenue.

It is now a near certainty that model three revenue will not arrive in time to prevent TSLA from running out of cash...again.

The recent price decline of TSLA junk bonds indicates Musk's next appeal for fresh capital may not be as well -received as in the past.

Tesla Sparks Fresh Cash Concerns After Model 3 Rollout Stumbles

Tesla Inc.’s delay in getting mass production going is increasing the likelihood that Chief Executive Officer Elon Musk will need to turn to Wall Street for more capital.

With battery bottlenecks holding up output of the cheaper new Model 3 sedan, Tesla may need more funds in 2018. While Musk has brought in more than $3 billion this year from equity, convertible bond and debt offerings, his electric-car maker has burned through about $2.6 billion in cash during just the last two quarters.

“We worry that another capital raise may be necessary,” Toni Sacconaghi, a Sanford C. Bernstein & Co. analyst, wrote in a report to clients. He estimates Tesla will have burned through more than $10 billion in cash by year-end since its founding and that it may be the biggest public company ever to have never generated annual profit or positive cash flow.

“There is a dose of reality for Tesla and the market’s reaction is reflecting that,” said David Kudla, chief executive officer of Mainstay Capital Management LLC. “This raises the question: Can they ever get positive cash flow? Will they ever get there?”

While Tesla exited the third quarter with about $3.5 billion cash in hand, the company is pouring money into its assembly lines and toward the buildup of battery production it needs to deliver more cars and bring in cash...
https://www.bloomberg.com/news/articles/2017-11-03/tesla-sparks-fresh-cash-concerns-after-model-3-rollout-stumbles

Tesla’s junk bonds are trading under water — and it could spell trouble for Elon Musk

Tesla Inc. first-ever pure corporate bonds are trading under water, boding ill for the Silicon Valley car maker’s next attempt to tap capital markets.

Tesla TSLA, +0.07% sold $1.8 billion in the senior notes in August at a yield of 5.300%, at the height of excitement about the Model 3 and expectations the sedan’s production ramp would run as smoothly as Chief Executive Elon Musk had predicted.

That same month, Tesla shares rose 10% to mark their last monthly gain this year so far. The stock lost 4.2% in September and 2.8% in October.

The stock is down 9% so far in November, on the heels of a quarterly miss earlier in the month and news that the company has further pushed out its Model 3 production targets.

“Third-quarter results put some pressure on the cash flow needs,” said Efraim Levy, an analyst with CFRA Research. The wider-than-expected quarterly loss and production delays “makes it harder for them to get a sweeter deal than they had in the past,” on capital raising, be it when selling bonds or equity, he said.

The 5.300% notes, which mature in 2025, were trading at 93.81 cents on the dollar on Friday to yield 6.320%, according to trading platform MarketAxess. On a spread basis, they were trading at 393 basis points above comparable Treasurys. The bonds fell under par within a week of issuance, but were holding above 97 cents for much of October.

...the weak performance of the bonds may be a sign that bond investors, at least, are starting to disbelieve Tesla’s growth story and will be looking for higher premiums to take on higher risk, said Trip Miller, a managing partner at hedge fund, Gullane Capital LLC. That higher cost of borrowing will have its own negative implications, he said.

“Maybe the dam is starting to break for Tesla,” Miller said. Gullane does not have a position in Tesla because “their balance sheet is very, very troublesome for us,” he said...
https://www.marketwatch.com/story/teslas-junk-bonds-are-trading-under-water-and-it-could-spell-trouble-for-elon-musk-2017-11-10
 
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