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Message
Tesla.....Tech vs Financial Realities.....Discuss The Investment Thesis
Posted on 8/24/16 at 5:28 pm
Posted on 8/24/16 at 5:28 pm
I've tried to discuss this with the OT and the money board and all I get is just a ton of its going bankrupt, the debts astronomical, electric cars are silly, etc. I want to discuss the realities of what tesla has, what competitors have, and whether you think its a worthwhile investment at this stage.
Obviously at $33b the market cap is up there for a company with continued losses,dilution, and now a ton of new debt coming from solar city and their losses. I obviously am intrigued by what tesla has because I believe margins on an electric car will be significantly higher than those of an internal combustion engine maker like ford or gm. I also am a big believer in solar panels, as I bought a system from solar city for just under $20k and my electricity bill went down almost 70%. The law in texas doesnt allow you to replace 100% of your electric needs with solar, up to 80% is allowed, but due to constraints of my roof, 70% or so was achievable.
The company is obviously building this gigafactory that will be the biggest building on earth when done, its still around 15% done. Bears say its nothing special, sure doesnt seem that way from watching vids and reading about it. The model 3 seems revolutionary in that 400k+ were reserved 2 years before its release, bears again say it wont come out on time and will cost well north of $35k advertised price. The company is led by obviously one of the greatest visionaries of our time in Elon Musk, he's overpromised alot, but always deliver albeit late more often than not. The master plan 1 sounded nuts, but he got through it, and now master plan 2 sounds crazy, and financially he doesnt have the money at tesla to get there today.
So my question is, is tesla tech that far ahead that it commands the type of premium people are paying for the stock? I mean can ford,gm,mercedes,etc come in and do the same stuff and if so, why haven't they to the scale tesla is doing it? Are all these companies really going to sit around and let one company scale electric cars the next few years while they catch up. Tesla is worth $33B and Ford is worth $48B, what do you see tesla becoming, Ive read the gamut from bankrupt POS to worlds largest company that goes well beyond cars into energy becoming a modern day Exxon so to speak.
The financials look awful, the story looks amazing, the new solar city bonds issued yesterday with elon musk buying a ton at 6.5% interest have raised tons of eyebrows on the basis the yield is so high due to risk + elon and his family buying a ton of them. I've read some bull thesis on the stock having 20x in it if all goes and obviously the near future involves more dilution and raising of capital. To me money is so cheap today that I dont mind all the borrowing tesla is doing, the demand is there but my fear is access to capital is running out with these new 6.5% solar bonds.
So thank you for taking time to read this long question and Id love to hear responses from the Tech guys on what this thing is today and what you think it can be in the future.
Obviously at $33b the market cap is up there for a company with continued losses,dilution, and now a ton of new debt coming from solar city and their losses. I obviously am intrigued by what tesla has because I believe margins on an electric car will be significantly higher than those of an internal combustion engine maker like ford or gm. I also am a big believer in solar panels, as I bought a system from solar city for just under $20k and my electricity bill went down almost 70%. The law in texas doesnt allow you to replace 100% of your electric needs with solar, up to 80% is allowed, but due to constraints of my roof, 70% or so was achievable.
The company is obviously building this gigafactory that will be the biggest building on earth when done, its still around 15% done. Bears say its nothing special, sure doesnt seem that way from watching vids and reading about it. The model 3 seems revolutionary in that 400k+ were reserved 2 years before its release, bears again say it wont come out on time and will cost well north of $35k advertised price. The company is led by obviously one of the greatest visionaries of our time in Elon Musk, he's overpromised alot, but always deliver albeit late more often than not. The master plan 1 sounded nuts, but he got through it, and now master plan 2 sounds crazy, and financially he doesnt have the money at tesla to get there today.
So my question is, is tesla tech that far ahead that it commands the type of premium people are paying for the stock? I mean can ford,gm,mercedes,etc come in and do the same stuff and if so, why haven't they to the scale tesla is doing it? Are all these companies really going to sit around and let one company scale electric cars the next few years while they catch up. Tesla is worth $33B and Ford is worth $48B, what do you see tesla becoming, Ive read the gamut from bankrupt POS to worlds largest company that goes well beyond cars into energy becoming a modern day Exxon so to speak.
The financials look awful, the story looks amazing, the new solar city bonds issued yesterday with elon musk buying a ton at 6.5% interest have raised tons of eyebrows on the basis the yield is so high due to risk + elon and his family buying a ton of them. I've read some bull thesis on the stock having 20x in it if all goes and obviously the near future involves more dilution and raising of capital. To me money is so cheap today that I dont mind all the borrowing tesla is doing, the demand is there but my fear is access to capital is running out with these new 6.5% solar bonds.
So thank you for taking time to read this long question and Id love to hear responses from the Tech guys on what this thing is today and what you think it can be in the future.
7
Posted on 8/24/16 at 5:41 pm to dabigfella
Financials are a mess, hard pass.
Posted on 8/24/16 at 5:50 pm to Prosecuted Collins
that is true,but the stock market is a forward thinking vehicle and the stock has been basing over $200 for 3 years now with continued dilution. This isnt exactly a retail name, so im curious what is holding it up here and what they see this becoming. Amazon had the same things said about it for years as being not profitable,etc.
what I dont get is how solar city is such a black hole losing money when customers like me gave them nearly $20k to install a few panels, in my case 23, on my roof? I've read online tesla loses $19k/car? How is that possible? Are these accountants doing trickery with numbers or are these real genuine losses? Im a business owner myself and my accountant is a wizard and what I show as a profit is significantly less than I actually generate and Im curious if this is the case with tesla. I just cant see how elon musk would devote so much into all this forward thinking stuff, especially the gigafactory without plans for immense profits
what I dont get is how solar city is such a black hole losing money when customers like me gave them nearly $20k to install a few panels, in my case 23, on my roof? I've read online tesla loses $19k/car? How is that possible? Are these accountants doing trickery with numbers or are these real genuine losses? Im a business owner myself and my accountant is a wizard and what I show as a profit is significantly less than I actually generate and Im curious if this is the case with tesla. I just cant see how elon musk would devote so much into all this forward thinking stuff, especially the gigafactory without plans for immense profits
This post was edited on 8/24/16 at 5:57 pm
Posted on 8/24/16 at 7:51 pm to dabigfella
I'm real excited for Tesla. I can't quite wrap my head around how they could come in and build a better electric car in less than 10 years than any of the established players could. I don't think their stock price is justifiable at this point. But, what they've been able to do over the past 9 years is nothing short of amazing.
However, for them to really go mainstream IMO, they need a $20k car like a Civic. I also think 300 miles on a charge should be the minimum (at least for North America & Australia. They can get away with less in Europe and East Asia.)
ETA: I really think they need to drop their self rolled Nav/Entertainment/HVAC dash console and implement a QNX system. Pretty sure their current system is linux based, but it has too many bugs. I hear that you have to literally reboot it every couple months.
However, for them to really go mainstream IMO, they need a $20k car like a Civic. I also think 300 miles on a charge should be the minimum (at least for North America & Australia. They can get away with less in Europe and East Asia.)
ETA: I really think they need to drop their self rolled Nav/Entertainment/HVAC dash console and implement a QNX system. Pretty sure their current system is linux based, but it has too many bugs. I hear that you have to literally reboot it every couple months.
This post was edited on 8/24/16 at 7:55 pm
Posted on 8/24/16 at 8:18 pm to colorchangintiger
Im excited for tesla too, but will they survive to get there? This recent bond buying by musk and his cousins of solar city bonds just absolutely reeks of disaster. It seems like nobody wanted to buy those bonds so they stepped in and bought them. The product is incredible especially the new p100d with 0-60 of 2.5 which is unreal and the fastest car on earth. I just worry they wont get there bc of financial constraints but I dont know im not a stock analyst but I just see almost $20B in combined debt between solarcity and tesla and now these solar bonds are basically junk status at 6.5% and then musk and family had to buy up nearly all of them bc nobody wanted them.
Ive never really seen anything like this company before so I dont know what to make of it at this point
Ive never really seen anything like this company before so I dont know what to make of it at this point
Posted on 8/24/16 at 8:57 pm to dabigfella
You seem to be as well-informed as anyone. I think the investment thesis boils down to, "Do you believe in Elon Musk?" If you do, then you shouldn't be worrying about numbers and such.
Posted on 8/25/16 at 7:59 am to dabigfella
quote:
The company is obviously building this gigafactory that will be the biggest building on earth when done, its still around 15% done. Bears say its nothing special, sure doesnt seem that way from watching vids and reading about it.
In my opinion...this will be the make or break factor for Tesla. Right now, they are saying they will be producing battery cells in early 2017. If they can start cranking out high capacity batteries for significantly lower costs than the current producers over the next 5 years, I believe the demand will be there.
Posted on 8/25/16 at 8:13 am to madmaxvol
the problem isnt the fact they will do that, the problem is will it be on time? They just cant ever seem to get anything done on time and always need more and more money even though musk said they wouldnt ever go back to the capital markets a few rounds ago
Posted on 8/25/16 at 8:43 am to dabigfella
its an extreme case of love the company, hate the stock
im a new model s owner, but honestly wouldnt put much of my future on the table for this stock
the tech and vision are awesome and potentially world changing, and Musk is a guy that makes things happen obviously
im a new model s owner, but honestly wouldnt put much of my future on the table for this stock
the tech and vision are awesome and potentially world changing, and Musk is a guy that makes things happen obviously
Posted on 8/25/16 at 8:53 am to TigerRad
quote:
im a new model s owner
Must be nice. I'd love to have the SUV but I can't drop 75k on a vehicle.
Posted on 8/25/16 at 9:47 am to DoubleDown
quote:
I'd love to have the SUV but I can't drop 75k on a vehicle.
that thing looks like a hunk of dog shite
Posted on 8/25/16 at 9:59 am to Hermit Crab
quote:
that thing looks like a hunk of dog shite
What?
LINK
Looks pretty nice to me. What looks good to you?
Posted on 8/25/16 at 10:02 am to dabigfella
quote:It's pretty well-known that Musk sets aggressive schedules, and that the targets are often missed. It's better to set a 2 year target that gets delayed to 3 years than it is to set a 4 year target and finish right on time, isn't it? This is all priced in. Then every now and then Musk hits a target on the schedule he set and he accomplishes shite twice as fast as anyone else ever could. Imagine what the stock will do if they actually start doing stuff "on time" regularly.
the problem isnt the fact they will do that, the problem is will it be on time?
Posted on 8/25/16 at 10:44 am to Korkstand
Lol I agree korkstand and your analysis is always spot on. I guess what worries me most is the combined nearly $20b in liabilities now between solar city and tesla post merger and the continued cash burn and what seems like solar bonds nobody wanted to touch which basically got junk status at 6.5% yield and musk had to save it again. I wanna be long the stock, I just can't grasp wtf this thing is gonna do. Look at 2018 options the $20 puts are expensive lol they're literally pricing a potential bankruptcy. I have a hard time seeing it bc the product and company are so cool but the financials are a disaster and I don't get how or when there is a profit
Posted on 8/25/16 at 10:46 am to DoubleDown
it looks like an old mazda cx9 but $50k more expensive. that front end is terrible.
Posted on 8/25/16 at 10:54 am to dabigfella
I always seem to be pumping sunshine when it comes to Tesla/Musk, but I think it's for good reason. This post will be more of the same.
But first, wtf is this about?
Meanwhile, Tesla is all-in. What other company has even hinted that they might start building a network of charging stations? Tesla has 700 of them. Do you think each company will build out their own proprietary stations, or will they end up paying Tesla to use theirs? The latter seems more sensible. Tesla is on the brink of having their cars drive themselves to a charging station to get charged by one of these:
Meanwhile, I haven't heard a peep from the big boys about a single station, much less a network of automated robotic ones. In a couple years, Tesla owners will be able to drive for 4 hours, stop for lunch while their car drives itself to get charged up, then returns as they're paying the check before getting right back on the road. Can you imagine another manufacturer doing that? I can't, but maybe they'll surprise me.
Also, what other manufacturer could eschew 3rd party dealers at this point? Think of the uproar. Is it even possible? That's a lot fewer hands in Tesla's pockets.
What other manufacturer would attempt something of the scale of the gigafactory? Probably none of them. What manufacturers will end up buying Tesla batteries for their electric cars in the future? Probably all of them.
How many billions are the big boys spending, in 2016, trying to eke another mpg out of gas, knowing full well it can never match the efficiency of electric? Lots and lots of billions. They have all this inertia going this direction, multiplied by the inertia of big oil, that I can't see any of the big boys doing what's necessary to compete with Tesla for the foreseeable future.
But first, wtf is this about?
quote:Why the hell not? How is this even enforced?
The law in texas doesnt allow you to replace 100% of your electric needs with solar
quote:Well, most of them have dabbled in electric cars with varying degrees of success, but most of their offerings seem like they only built them as good faith efforts toward government incentives. They seem more interested in maintaining the status quo, as if they are tied to big oil interests.
So my question is, is tesla tech that far ahead that it commands the type of premium people are paying for the stock? I mean can ford,gm,mercedes,etc come in and do the same stuff and if so, why haven't they to the scale tesla is doing it? Are all these companies really going to sit around and let one company scale electric cars the next few years while they catch up.
Meanwhile, Tesla is all-in. What other company has even hinted that they might start building a network of charging stations? Tesla has 700 of them. Do you think each company will build out their own proprietary stations, or will they end up paying Tesla to use theirs? The latter seems more sensible. Tesla is on the brink of having their cars drive themselves to a charging station to get charged by one of these:
Meanwhile, I haven't heard a peep from the big boys about a single station, much less a network of automated robotic ones. In a couple years, Tesla owners will be able to drive for 4 hours, stop for lunch while their car drives itself to get charged up, then returns as they're paying the check before getting right back on the road. Can you imagine another manufacturer doing that? I can't, but maybe they'll surprise me.
Also, what other manufacturer could eschew 3rd party dealers at this point? Think of the uproar. Is it even possible? That's a lot fewer hands in Tesla's pockets.
What other manufacturer would attempt something of the scale of the gigafactory? Probably none of them. What manufacturers will end up buying Tesla batteries for their electric cars in the future? Probably all of them.
How many billions are the big boys spending, in 2016, trying to eke another mpg out of gas, knowing full well it can never match the efficiency of electric? Lots and lots of billions. They have all this inertia going this direction, multiplied by the inertia of big oil, that I can't see any of the big boys doing what's necessary to compete with Tesla for the foreseeable future.
quote:Whoever phrased it that way was trying really hard to give Tesla a black eye. That makes it sound like they lose $19k on each car they sell, as if selling more cars would lose them more money. That $19k figure just comes from dividing their losses by the number of cars they sold. The margins per vehicle are obviously in the positive, so they just need to sell more cars. Which, if the Model 3 reservations are any indication, that's going to happen.
I've read online tesla loses $19k/car? How is that possible?
This post was edited on 8/25/16 at 10:56 am
Posted on 8/25/16 at 10:56 am to Korkstand
korkstand, on the tech side, is tesla tech really that far ahead that nobody can compete anytime soon? I fully understand all the hot young engineers wanting to work there vs volvo,gm,or ford but overall other companies can and will catch up soon right? I know theyll never have the tesla brand which alone is worth a ton, but everyday i feel like tesla is just gonna go bankrupt and someone is gonna just buy the brand and gigafactory for pennies on the dollar. The financial picture is a huge disconnect from the product and its so interesting to me because most every other product the more popular it is, the more they make. Tesla just seems to be investing in future growth with all its money but it may not survive to see it materialize
Posted on 8/25/16 at 10:58 am to Korkstand
quote:
Why the hell not? How is this even enforced?
wow you replied to what i was posting as i was posting it lol thanks. I dont know how but when solar city came to my home to do the install they said by law I have to keep 20% of my energy needs on the grid, apparently cant go all solar, but that was irrelevant because my rooftop due to some skylights didnt allow for more than 23 panels which has replaced about 70% of my electric bill. I paid $19,000 and it has a 20 year warranty and my electric bill has gone from $1000 or so in the summers to about $350 so Im a happy man
This post was edited on 8/25/16 at 11:01 am
Posted on 8/25/16 at 11:12 am to dabigfella
quote:The financials look bad when you compare them to 100-year-old car companies, but they look par for the course when compared to other high-growth tech startups. Besides, their liabilities aren't that far out of line vs. revenue when compared to other car companies. But that's just my layman's analysis.
I have a hard time seeing it bc the product and company are so cool but the financials are a disaster and I don't get how or when there is a profit
You just have to keep in mind that the other car companies are only spending for single-digit growth, whereas Tesla is spending for 25-50% growth. The financials are going to look shitty for a while.
Posted on 8/25/16 at 11:16 am to Korkstand
thanks for the insights man, so you dont forsee bankruptcy on the horizon? I guess I just get scared when I see where 2018 puts are priced and then when I see solar city bonds having no interest and getting that 6.5% yield when interest rates are at record lows. I guess I thought it meant capital markets had no more interest in loaning them money. So would you be a buyer up here? I love the story and want to be in on it!
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