Tesla - next big lottery ticket ?

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Leif
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Re: Tesla - next big lottery ticket ?

Post by Leif » Sun Jul 30, 2017 12:58 pm

rob65 wrote:Can they ramp up production levels? Once the "cool" wears off, the car business is about volume. I don't know much about their technical side; Tesla may hold patents that make it worth the price. Otherwise, they risk being overtaken by the big car companies.
I think Tesla makes their patents public.

At the time I ordered my Model S I read some people were taking money they could have spent on software features not yet available (Enhanced AutoPilot, Full Self Drive) and putting that 8K instead in the stock. If the features really materialized they could sell the stock and probably have more then enough to buy those features at a higher price. If Tesla failed to delivery the features at least the stock would probably be worth something.

I wish I had done that.
Investors should diversify across many asset-classes so that whatever happens, we will not have all our investments in underperforming asset classes and thereby fail to meet our goals-Taylor Larimore

Valuethinker
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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Sun Jul 30, 2017 1:16 pm

Helo80 wrote:
vitaflo wrote:Telsa still has to make huge factories and build actual cars. The same thing lots of other car makers have been doing for decades. Other than making luxury vehicles and hype, there is no reason for Telsa to be valued as much as GM or Ford. These aren't phones they're making, they are $35k+ luxury vehicles.

Exactly.... to me, Tesla is still a novelty stock that is getting tons of money thrown at it b/c it's Silicon Valley's poster child. Alternatively fueled vehicles are surely the future. Now, whether that includes Tesla, we don't know. The internal combustion engine industry has many a makers that either got sidelined, bought out or folded. Tesla is worth more than GM or Ford --- and GM and Ford can ramp up production a heck of a lot better than Tesla (and has the supply industry to back it up). Toyota can roll a new Camry off the line every 65 seconds in Georgetown, KY. Tesla is not any of this. Plus, GM and Ford have the distribution network, and most car buyers are not going to wait months on end for a reservation for a future car.
I think it's important to note that industry incumbents have always argued along these lines, and have been disrupted and extincted. For example I know very few people that think that buying a car is a pleasant experience-- the hassle of haggling, the ways in which hidden prices (eg through the financing packages) are foisted on the buyer, etc.

EVs are genuinely disruptive in all the ways that disruptive technologies work. And the car OEMs themselves think so-- radically simpler power trains, fewer parts, etc.

But an argument that GM Ford etc. have real problems in a future world does not mean that Tesla does not have big execution risks. It does.
Over the last few years, Musk is full of talk and promises, but often misses deadlines. He has many loyal engineers and employees, but people know he's a demanding boss and you're going to work a lot of hours with him. I don't sit here and begrudge his success and wish him ill will, but you cannot build a company on wishful thinking and unfulfilled promises. If the big Tesla money backers don't get their ROI, they may take their money elsewhere (and put it in an index fund or some new venture capital project).
In the case of a listed company that translates as "they sell their shares to someone else, and the share price goes down". Debt holders can demand repayment under certain legal conditions. Shareholders cannot.

The problem is that Tesla needs *more* capital (debt and or equity) to fulfill its business plan. And it may need more capital just when it has a "whoopsie" moment and the stock price is down and that's impossible.
It's comical to read on reddit and LinkedIn every time Musk fails to deliver, he has a legion of supporters that have all sorts of excuses. That's totally fine, but I would not invest my personal money in Musk beyond what the index funds do. Again, I don't begrudge Tesla any more or less than Ford or GM or FCA or any other auto maker. Rather, I'm a realist and I'll be eager to see what Musk's throughput in 2018 on this low cost Model 3 is. Plus, Musk may end up fighting demons if common issues pop up and/or there are QC issues.
I agree with all of that and the implication of a "cult like" status for Musk which ignores criticisms (Confirmation Bias hard at work). Loving the product is not to love the company. Loving the product and the company is not to love the stock-- the stock price won't love you back.

One thing is that Musk has defied critics before. He is a visionary.

There's too much going on there, at far far too high a valuation, to take the risk-- and i am sure I posted similar words here when the share price was 1/3rd of what it is now ;-). The odds that he's the next Jeff Bezos (you could have said similar things about Amazon say in 1999 and for quite a few years, on the stock price, you would have been right) are long and the big car OEMs are arguably a lot less asleep at the switch (or the steering wheel ;-)) than the industry incumbents in books, music, DVDs and every other product category Amazon has launched into.

The main issue, as you discuss, is that Tesla has to make things. And making things means all kinds of execution risk, supply chain dependencies etc.

carguyny
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Re: Tesla - next big lottery ticket ?

Post by carguyny » Sun Jul 30, 2017 1:23 pm

Tesla's share price is propped up by Owners turned "Investors" who are convinced the product is so great the company can't fail.

Tesla has a lot of challenges coming at it, off the top of my head, so there might be some inaccuracies:
1) Competing products across the whole spectrum of the market (Take a look at Mercedes new Battery/Fuel Cell combination SUV as an example)
2) Unknown risk of car Residual Values/Buyback guarantees on the balance sheet
3) Continued access to capital to keep building production capacity
4) Unproven Business model and difficult path growing Energy Business
5) Execution ramp and continued problems there
6) Not developing currently deployed self-driving technology (owned by Mobileye who has a Partnership with BMW and Intel going forward) and delays in developing own in-house solution (sold as Enhanced Autopilot and Self Driving).
7) Self driving solutions from Mercedes, BMW, Google are already of the same or better standard
8) Aging infrastructure - the current superchargers are half the speed of what others are about to start to roll out

These are just what comes to mind in a few minutes, I'm sure there are more if I focus on it.

I don't have a position in Tesla now other than marketweight, I have shorted it a few times in the past with success.

nukewerker
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Re: Tesla - next big lottery ticket ?

Post by nukewerker » Sun Jul 30, 2017 1:38 pm

I bought tesla stock in summer of 2013 when it was $85 ish a share. It proceeded to jump to almost $200/share in short order. Sold it and admit the timing was pure luck. I was hoping for that kind of return in a year or two. But in those cases you take what the market gives and don't look back. I thought it was expensive then and I wouldn't buy shares with your money much less mine at $300+

When the next crash comes and it will, tesla will be under $50/share if they aren't insolvent. My new name for him is Enron Musk.

Do yourself a favor and buy some more shares of VOO or something. I am as I get older and wiser. :beer :moneybag :moneybag

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Sun Jul 30, 2017 4:42 pm

carguyny wrote:Tesla's share price is propped up by Owners turned "Investors" who are convinced the product is so great the company can't fail.
That is unlikely to be true? Tesla has a market cap more than either of the 2 leading US car companies. Most of the shareholders will be institutional investors? There cannot be that many fund managers in New York and Boston who so love the car, that they have driven the share price to this level. Let alone in Europe or Asia.

Tesla has sold fewer than 200k cars in total? How much stock would those owners have bought? And of course once they've bought, they are no longer marginal buyers, so they can't drive the share price up further.

Note Tesla always has a very high level of short interest-- there's a lot of hedge funds who hate this one.

The "hype bubble" is there, and the fan base. But it's at best a second order effect in driving the share price. What I think his happening is a bit like tech got in 1999-- everybody was afraid to get off the escalator. It's also one of the few pure plays on the "even newer economy". I mean one can buy Dong Energy (wind power) or GE (all sorts of new energy, but buried in a huge conglomerate), but pure plays (especially on Electric Vehicles, self guiding vehicle technology) are few and far between amongst listed companies.

I suspect what happens is the momentum crowd is following this one so the price rises have become self fulfilling-- these are institutional investors and hedge funds. The cheering from individual shareholders I suspect only a secondary factor.
Tesla has a lot of challenges coming at it, off the top of my head, so there might be some inaccuracies:
1) Competing products across the whole spectrum of the market (Take a look at Mercedes new Battery/Fuel Cell combination SUV as an example)
2) Unknown risk of car Residual Values/Buyback guarantees on the balance sheet
3) Continued access to capital to keep building production capacity
4) Unproven Business model and difficult path growing Energy Business
5) Execution ramp and continued problems there
6) Not developing currently deployed self-driving technology (owned by Mobileye who has a Partnership with BMW and Intel going forward) and delays in developing own in-house solution (sold as Enhanced Autopilot and Self Driving).
7) Self driving solutions from Mercedes, BMW, Google are already of the same or better standard
8) Aging infrastructure - the current superchargers are half the speed of what others are about to start to roll out

These are just what comes to mind in a few minutes, I'm sure there are more if I focus on it.

I don't have a position in Tesla now other than marketweight, I have shorted it a few times in the past with success.
Ahh the market can remain irrational longer than you can remain solvent ... ;-).

I think the stock is priced for perfection in execution-- only way to justify the valuation. And the industry incumbents are not asleep at the switch - e.g. BMW's efforts.

My analogy is Amazon in 1999. It could be Musk is another Bezos-- he has that megalomaniacal streak that you need to dominate a new industry. And Amazon was priced for perfection, and it executed. But it wouldn't have felt that way say 2000-06 (or later?). Tesla has a lot less ability to reposition and redirect itself in the way that Amazon has done with blinding rapidity in the last 17 years.

EVs are a thing, and I think what has become clear in the last 5 years is they are going to be A Big Thing*. Really only hydrogen fuel cell technology offers a solution to the same problems-- and the predominant means currently for making hydrogen (i.e. from Natural Gas) is not clean and hydrogen fuel cell vehicles are a long way behind. Maybe there is some other technology out there I don't know about, but we will have zero emission cars and we can have zero emission electricity generation-- so EVs are a big potential part of the way out of the box.

But just as The Internets turned out to be big, and bigger probably than consensus foresaw in say 1998 or even 2000, the winners are not obvious. In 2000 you had leading internet companies like AOL, Yahoo, Netscape (can't remember when it was taken over), ICG (?)-- B to B ecommerce companies name escapes me... Google, Alibaba, Apple (as an Internet company) just weren't on the radar.

* I have seen a couple of Teslas in London (in fact a friend of mine had one of the first ones), but BMW i3s are very much in evidence. And I saw a Tesla in the Austrian Alps. London will go to zero emission vehicles sometime in the next 20 years**, we have the worst urban air pollution in Europe. It's happening.

** UK government says all new cars post 2040 will be electric or hybrid electric or other (zero emission). We shall see how it plays out, but it is playing out.

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badbreath
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Re: Tesla - next big lottery ticket ?

Post by badbreath » Sun Jul 30, 2017 6:20 pm

When the big car companies develop the same technology and offer it in mass production which they are good at, Tesla will soon become a Tucker.
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

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Re: Tesla - next big lottery ticket ?

Post by Mordoch » Sun Jul 30, 2017 6:50 pm

badbreath wrote:When the big car companies develop the same technology and offer it in mass production which they are good at, Tesla will soon become a Tucker.
That's not really a comparable situation at all at this point given Tucker Corporation only made 51 cars before going belly up. (They really did not even have an assembly line full ready before effectively ceasing operations while Tesla was able to buy much of a full fledged assembly plant very much on the cheap and obviously is getting it really running at this stage.)

At this point Tesla has already gotten its costs down to a point where it is unlikely that cheaper costs for other automakers would be entirely decisive even if this occurs. (Its perfectly possible for Tesla to be a successful car company without having products on the lowest end of the electric car market in the future.) Basically most people do not purely buy specific cars purely due to rational reasons and Tesla definitely has a brand mystique at this point.

Having said this I do think there are a variety of issues with Tesla stock at this point, including its current valuation, and merely staying around as a viable car company by no means ensures buying Tesla stock at its current price will be a good investment.

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Re: Tesla - next big lottery ticket ?

Post by prettybogle » Sun Jul 30, 2017 8:09 pm

FoolMeOnce wrote:Prettybogle, you were worried about a $100/month (and even a $30/month) increase in your rent, but now you have $5k of play money to throw at a popular stock?

Sorry, but you missed the party. If you could go back five years and buy at 18, sure. But an overheated 350? There just doesn't seem to be much portfolio-altering upside left.

If you want some new upstart stock for fun money, look into Redfin. But really, when you are worried about rent and in a squeeze for the down payment for the house you want, don't risk the 5k.
+1. Thanks for hitting our gambling instincts on the head :D

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Re: Tesla - next big lottery ticket ?

Post by prettybogle » Sun Jul 30, 2017 8:18 pm

arcticpineapplecorp. wrote:great posts everyone. Really enjoyed them. The one thing I was wondering was for the prettybogle:

how did you come to determine that the price that's worth $350 now will be worth $1000 in 10 years? What kind of valuation models did you run? Do you know econometrics? (would that even help)? Have you studied the balance sheets of the company? Read the annual and quarterly reports? I'm just curious how you determined that the stock will be worth $1000 in 10 years. Was it something you heard a talking head say?

The reason I ask is because you've made an assumption. It may be wrong or right. But how did you come to that assumption?

By the way, even Elon Musk thinks the price of the stock is overpriced. That's not a screaming buy recommendation if ever I've heard one.

https://www.google.com/search?q=elon+sa ... 8&oe=utf-8
Very good post. Honestly, I did not analyse (nor am I capable) tesla from valuation stand point. Only 2 reasons are - 1. Elon Musk and 2. Amazon went from 200s to 1000s in less than 3 years even when everyone have been screaming it is way overvalued all along.

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Re: Tesla - next big lottery ticket ?

Post by arcticpineapplecorp. » Sun Jul 30, 2017 9:29 pm

prettybogle wrote:
arcticpineapplecorp. wrote:great posts everyone. Really enjoyed them. The one thing I was wondering was for the prettybogle:

how did you come to determine that the price that's worth $350 now will be worth $1000 in 10 years? What kind of valuation models did you run? Do you know econometrics? (would that even help)? Have you studied the balance sheets of the company? Read the annual and quarterly reports? I'm just curious how you determined that the stock will be worth $1000 in 10 years. Was it something you heard a talking head say?

The reason I ask is because you've made an assumption. It may be wrong or right. But how did you come to that assumption?

By the way, even Elon Musk thinks the price of the stock is overpriced. That's not a screaming buy recommendation if ever I've heard one.

https://www.google.com/search?q=elon+sa ... 8&oe=utf-8
Very good post. Honestly, I did not analyse (nor am I capable) tesla from valuation stand point. Only 2 reasons are - 1. Elon Musk and 2. Amazon went from 200s to 1000s in less than 3 years even when everyone have been screaming it is way overvalued all along.
These are not great reasons to invest. I love Elon Musk but you do realize that he had to sink his life savings into his companies to avoid bankruptcy, right? source: https://www.google.com/search?q=elon+pu ... 8&oe=utf-8

Also just because a company goes up after a few years doesn't mean it can't come crashing back down to earth, especially once everyone realizes they paid too much or people want to get out while the getting's good. I actually have no idea whether Amazon will crash or continue it's upward trajectory and the same goes for Tesla.

But what I do know is when you own the total stock market index fund, you get to own both but you're not taking more risk than the market is.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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Re: Tesla - next big lottery ticket ?

Post by iamlucky13 » Sun Jul 30, 2017 10:14 pm

MN Finance wrote:Second, nobody objects to holding it. They think the market has priced it correctly.
Kind of a nitpick in the context of this thread, but I don't think the market has priced it correctly. However, I do think the market has at least as much info on it as I do, and I'm not inclined to go out on my own seeking funds that exclude Tesla, even if it were possible to do so without abandoning the rest of my index strategy.

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Re: Tesla - next big lottery ticket ?

Post by wbrianwhite » Mon Jul 31, 2017 12:39 am

hicabob wrote:Always loved DEC since starting my career banging on PDP-11's, I still name variables foo from the indoctrination. ... then there was Sun microsystems, also a fine corporation in its heydey. Even very profitable, inventive, seemingly well run corporations can have a surprisingly short lifetime. I agree with the OP who said they enjoy holding TSLA in their total stock market fund/etf.
Foo/bar/baz are fine variable names for demo code, not production!

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Re: Tesla - next big lottery ticket ?

Post by TomatoTomahto » Mon Jul 31, 2017 4:54 am

wbrianwhite wrote:
hicabob wrote:Always loved DEC since starting my career banging on PDP-11's, I still name variables foo from the indoctrination. ... then there was Sun microsystems, also a fine corporation in its heydey. Even very profitable, inventive, seemingly well run corporations can have a surprisingly short lifetime. I agree with the OP who said they enjoy holding TSLA in their total stock market fund/etf.
Foo/bar/baz are fine variable names for demo code, not production!
And, who can forget microfortnight, attributed to Dick Hustvedt?
In the VAX/VMS operating system the parameter "timepromptwait" was specified in microfortnights (one millionth of a fortnight, or approximately 1.2 seconds).
iirc, it also had application when slowing the clock during stupid "spring forward, fall back" operations.

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Re: Tesla - next big lottery ticket ?

Post by Dendritic Tree » Mon Jul 31, 2017 5:18 am

I had this thought in 2013 (shortly after Model S came out) and put 1k of play money into TSLA (before I was a Boglehead). I'm still holding it, still just for fun. I didn't have more than 1k (of play money) at the time but of course there's the wistful thinking of wishing I had put more in. It's the only single stock I own. But like many others have said, I'm more happy to own it in VTSAX.

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Mon Jul 31, 2017 6:25 am

Dendritic Tree wrote:I had this thought in 2013 (shortly after Model S came out) and put 1k of play money into TSLA (before I was a Boglehead). I'm still holding it, still just for fun. I didn't have more than 1k (of play money) at the time but of course there's the wistful thinking of wishing I had put more in. It's the only single stock I own. But like many others have said, I'm more happy to own it in VTSAX.
A piece of advice from an (ex) dot com millionaire (USD terms, anyways). Who shrewdly bought Nortel at $25 (it was down from $125 and was cheap) and sold it (in a charity share sale) for $0.01.

Take half of it off the table. Or at least take your initial $1000.

It's not money until you have taken it off the table at the casino. RIght now, it's still sitting on the roulette table. Plastic chips are not money.

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Re: Tesla - next big lottery ticket ?

Post by animule » Mon Jul 31, 2017 7:13 am

I am surprised that nobody seems to have mentioned Solar City in this thread. Solar City is a mess, and it seems to be getting worse.

http://buffalonews.com/2017/06/23/750-m ... anel-jobs/
Then SolarCity, which had built a dominant market share as the nation's largest installer of residential rooftop solar, saw its market slow. While company officials initially expected to install about 1,200 megawatts of generating capacity in 2016 – which would have been enough to easily absorb the expected production of the Buffalo factory – it instead installed less than 900 megawatts.

The company, which relied heavily on money it raised from investors to support leases that allowed homeowners to install solar panels with no money down, then saw its borrowing costs rise and concerns increase that its ever-growing appetite for new capital was becoming more than the market would bear. SolarCity's losses also swelled, totaling more than $1.5 billion in 2015 and 2016 combined.

As SolarCity's financial health weakened, Musk stepped in, with Tesla buying SolarCity in November.
Elon Musk is this generation's PT Barnum. You have to give the guy credit, though. Nobody seems to have better luck building his company's factories with government (i.e. taxpayer) money than this guy.

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just frank
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Re: Tesla - next big lottery ticket ?

Post by just frank » Mon Jul 31, 2017 9:11 am

Thomas Edison and Henry Ford were also Hucksters.

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Re: Tesla - next big lottery ticket ?

Post by Nate79 » Mon Jul 31, 2017 9:31 am

Tesla's valuation is by far out of line with it's industry. As it matures in such a capital intensive industry it's valuation must come down. Today it is being judged as a tech startup. Tomorrow if still in business it will be judged as an auto manufacturer.

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Re: Tesla - next big lottery ticket ?

Post by Texanbybirth » Mon Jul 31, 2017 9:53 am

Put that $5k in McDonald's if you want to "play" with money. :beer

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Leif
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Re: Tesla - next big lottery ticket ?

Post by Leif » Mon Jul 31, 2017 11:14 am

animule wrote:I am surprised that nobody seems to have mentioned Solar City in this thread. Solar City is a mess, and it seems to be getting worse.
I never had a good feeling about this acquisition. Even if it was profitable Tesla has enough on its plate IMO. Notice the principals have bailed from Solar City/Tesla? They owe a lot to Elon for bailing them out and getting a large chuck of money instead of bankruptcy.

Elon Musk plans crazy 2017 for Tesla, but SolarCity may be the biggest headache
Investors should diversify across many asset-classes so that whatever happens, we will not have all our investments in underperforming asset classes and thereby fail to meet our goals-Taylor Larimore

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Tue Aug 01, 2017 3:19 am

Leif wrote:
animule wrote:I am surprised that nobody seems to have mentioned Solar City in this thread. Solar City is a mess, and it seems to be getting worse.
I never had a good feeling about this acquisition. Even if it was profitable Tesla has enough on its plate IMO. Notice the principals have bailed from Solar City/Tesla? They owe a lot to Elon for bailing them out and getting a large chuck of money instead of bankruptcy.

Elon Musk plans crazy 2017 for Tesla, but SolarCity may be the biggest headache
I am vague on the details but wasn't Musk bailing out his own position? He had a large loan to Solar City?

The whole thing stank. The strategic logic was marginal and it seemed to be for the interests of the inside shareholders.

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Tue Aug 01, 2017 3:24 am

animule wrote:I am surprised that nobody seems to have mentioned Solar City in this thread. Solar City is a mess, and it seems to be getting worse.

http://buffalonews.com/2017/06/23/750-m ... anel-jobs/
Then SolarCity, which had built a dominant market share as the nation's largest installer of residential rooftop solar, saw its market slow. While company officials initially expected to install about 1,200 megawatts of generating capacity in 2016 – which would have been enough to easily absorb the expected production of the Buffalo factory – it instead installed less than 900 megawatts.

The company, which relied heavily on money it raised from investors to support leases that allowed homeowners to install solar panels with no money down, then saw its borrowing costs rise and concerns increase that its ever-growing appetite for new capital was becoming more than the market would bear. SolarCity's losses also swelled, totaling more than $1.5 billion in 2015 and 2016 combined.

As SolarCity's financial health weakened, Musk stepped in, with Tesla buying SolarCity in November.
Elon Musk is this generation's PT Barnum. You have to give the guy credit, though. Nobody seems to have better luck building his company's factories with government (i.e. taxpayer) money than this guy.
You might mention Samuel Insull. Whose leveraged utility holding company in the midwest collapsed in the 1929 crash, and he eventually went to prison (?would have to check). But the electricity grid *was* created.

If you look at the early pioneers of aircraft, cars etc. (perhaps radio?) most of them failed. The line between success and failure is often very thin, and we only remember the successes (and Henry Ford was a great success, didn't change with the times, and nearly failed). Nicolai Tesla anyone?

In a new market things move very quickly, and early movers often get crushed. BMW is pursuing a "fast follower" strategy on electric cars. The i3 has been a disappointment, not sure about the i8. They've got to be a big threat. And there are the Chinese who, for example, have lock ins on the supplies of "rare earths" that this technology needs.

Musk is undoubtedly skating the edge on financial engineering -- and I think he will skate off.

But he's also done something quite amazing, produced a desirable electric car. And, in that, driven the frontier out.

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Tue Aug 01, 2017 3:24 am

Texanbybirth wrote:Put that $5k in McDonald's if you want to "play" with money. :beer
Ahhh... now they are in trouble, no?

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Tue Aug 01, 2017 3:26 am

just frank wrote:Thomas Edison and Henry Ford were also Hucksters.
This is forgotten. They also infringed patents (at least Edison did, apparently, there was a debate in the letters page of The Guardian yesterday).

And we only remember the winners. Tesla just gets a mention. Lots of people failed.

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Re: Tesla - next big lottery ticket ?

Post by wrongfunds » Tue Aug 01, 2017 6:36 am

TomatoTomahto wrote:
wbrianwhite wrote:
hicabob wrote:Always loved DEC since starting my career banging on PDP-11's, I still name variables foo from the indoctrination. ... then there was Sun microsystems, also a fine corporation in its heydey. Even very profitable, inventive, seemingly well run corporations can have a surprisingly short lifetime. I agree with the OP who said they enjoy holding TSLA in their total stock market fund/etf.
Foo/bar/baz are fine variable names for demo code, not production!
And, who can forget microfortnight, attributed to Dick Hustvedt?
In the VAX/VMS operating system the parameter "timepromptwait" was specified in microfortnights (one millionth of a fortnight, or approximately 1.2 seconds).
iirc, it also had application when slowing the clock during stupid "spring forward, fall back" operations.
See Figure 1

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Re: Tesla - next big lottery ticket ?

Post by wrongfunds » Tue Aug 01, 2017 7:03 am

I will be very generous and give you that Tesla will go from $300 to $300 in 10 years aka 10-bagger.

Suppose you put 5K of your play money in it. Even though I told you it went 10x, on the way there it did crash few times. So being very smart, you took the play money off the table as soon as it became 2x i.e. took the profit out. Out of 10x you cashed out your original position at 2x. Later it went up by 5x and you end up with $25K.

Will that $25K be significant or life changing amount for you at the end of 10 years? On the other hand chances are that you may lose all of your $5K.
Would it hurt more to lose all vs making $25K? Remember, I am using insanely optimistic scenario and even then your "number" does NOT look that great.

Moral: Even 10x is not a lottery ticket. You want 1000x if you are thinking of a lottery ticket. With your 3x expectation, there is no reason to play this game at all.

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Leif
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Re: Tesla - next big lottery ticket ?

Post by Leif » Tue Aug 01, 2017 10:18 am

Valuethinker wrote:
Leif wrote:
animule wrote:I am surprised that nobody seems to have mentioned Solar City in this thread. Solar City is a mess, and it seems to be getting worse.
I never had a good feeling about this acquisition. Even if it was profitable Tesla has enough on its plate IMO. Notice the principals have bailed from Solar City/Tesla? They owe a lot to Elon for bailing them out and getting a large chuck of money instead of bankruptcy.

Elon Musk plans crazy 2017 for Tesla, but SolarCity may be the biggest headache
I am vague on the details but wasn't Musk bailing out his own position? He had a large loan to Solar City?

The whole thing stank. The strategic logic was marginal and it seemed to be for the interests of the inside shareholders.
Musk was Chairman of the Board when solar city was independent. On the loan that may be true, I hadn't heard of that. Yes I agree about the fragrance.
Investors should diversify across many asset-classes so that whatever happens, we will not have all our investments in underperforming asset classes and thereby fail to meet our goals-Taylor Larimore

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TomatoTomahto
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Re: Tesla - next big lottery ticket ?

Post by TomatoTomahto » Tue Aug 01, 2017 10:26 am

When it comes to owning a Tesla, I think it helps to be a glass half full type. When it comes to owning Tesla stock, I'm perfectly happy being a glass half empty guy. :beer

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Re: Tesla - next big lottery ticket ?

Post by junior » Tue Aug 01, 2017 10:36 am

Tesla could be the next Yahoo. Not the next Apple. Who can say?

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Re: Tesla - next big lottery ticket ?

Post by sixtyforty » Wed Aug 02, 2017 9:55 am

I'm inclined to think that the very nature of this thread and most panning TSLA tells me the company will probably be a success :) It Might take a number of years though.

PS I believe they release earnings after the bell today.
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Leif
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Re: Tesla - next big lottery ticket ?

Post by Leif » Wed Aug 02, 2017 9:58 am

I agree. Tesla has a huge head start. Many of the traditional car makers are still in denial. I see Tesla as the next Amazon. Maybe not profitable now, but growing rapidly.
Investors should diversify across many asset-classes so that whatever happens, we will not have all our investments in underperforming asset classes and thereby fail to meet our goals-Taylor Larimore

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Re: Tesla - next big lottery ticket ?

Post by avalpert » Wed Aug 02, 2017 10:08 am

Leif wrote:I agree. Tesla has a huge head start. Many of the traditional car makers are still in denial. I see Tesla as the next Amazon. Maybe not profitable now, but growing rapidly.
From Amazon's pre-internet bubble peak it took until early 2009 for it to catch back up to the returns of the total market - a lot of potential 'next Amazon's' came and went in that decade. Anyone that has a strong conviction on where Tesla ends up is just guessing - and believing they can guess better than the market sentiment is not usually a good bet.

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Leif
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Re: Tesla - next big lottery ticket ?

Post by Leif » Wed Aug 02, 2017 11:21 am

avalpert wrote:From Amazon's pre-internet bubble peak it took until early 2009 for it to catch back up to the returns of the total market - a lot of potential 'next Amazon's' came and went in that decade. Anyone that has a strong conviction on where Tesla ends up is just guessing - and believing they can guess better than the market sentiment is not usually a good bet.
Of course it is a guess. I don't own a crystal ball. The market is very high on Tesla right now. My GUESS is that Tesla stock will be very volatile. So far, IMO, they are doing the major things right. And, by and large, their competition is clueless.

Apple may enter the car market. Perhaps buy Lucid Motors which seems to be in play. Anything is possible.
Investors should diversify across many asset-classes so that whatever happens, we will not have all our investments in underperforming asset classes and thereby fail to meet our goals-Taylor Larimore

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Re: Tesla - next big lottery ticket ?

Post by 4nursebee » Wed Aug 02, 2017 4:19 pm

My previously posted price projections have an error, detected in todays shareholder letter. 25% profit per Gen 3, not the 10% I have thought of for years. Please multiply those targets by 2.5

http://files.shareholder.com/downloads/ ... 017-2Q.pdf
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Re: Tesla - next big lottery ticket ?

Post by Leif » Wed Aug 02, 2017 4:39 pm

4nursebee wrote:My previously posted price projections have an error, detected in todays shareholder letter. 25% profit per Gen 3, not the 10% I have thought of for years. Please multiply those targets by 2.5

http://files.shareholder.com/downloads/ ... 017-2Q.pdf
Q2 Automotive gross margin at 27.9% GAAP and 25.0% non-GAAP
Don't other automakers wish they had those kind of gross margins!
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Re: Tesla - next big lottery ticket ?

Post by 4nursebee » Wed Aug 02, 2017 5:01 pm

The conference call is amazing to listen to.
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Re: Tesla - next big lottery ticket ?

Post by Nate79 » Wed Aug 02, 2017 7:24 pm

Leif wrote:
4nursebee wrote:My previously posted price projections have an error, detected in todays shareholder letter. 25% profit per Gen 3, not the 10% I have thought of for years. Please multiply those targets by 2.5

http://files.shareholder.com/downloads/ ... 017-2Q.pdf
Q2 Automotive gross margin at 27.9% GAAP and 25.0% non-GAAP
Don't other automakers wish they had those kind of gross margins!
No, Tesla's GM is very similar to most manufacturers.

https://seekingalpha.com/article/407570 ... fitability

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Re: Tesla - next big lottery ticket ?

Post by prettybogle » Wed Aug 02, 2017 7:27 pm

OP here. I did make 50 bucks trading tesla stock today :) . Easy $50 every tesla earnings day :happy

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Re: Tesla - next big lottery ticket ?

Post by 4nursebee » Thu Aug 03, 2017 3:00 am

GM gross margin is 13%
TM's is 18
The resource I looked at said TSLA is 23.6
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Re: Tesla - next big lottery ticket ?

Post by TomatoTomahto » Thu Aug 03, 2017 7:11 am

Elon Musk wrote:When we make mistakes it's because we're stupid not because we're trying to mislead anyone... We aspire to be less dumb over time."
A good summation and link to the conference call audio: https://evannex.com/blogs/news/tesla-an ... 8Main+List

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Re: Tesla - next big lottery ticket ?

Post by Nate79 » Thu Aug 03, 2017 9:27 am

4nursebee wrote:GM gross margin is 13%
TM's is 18
The resource I looked at said TSLA is 23.6
Read the link I posted above. There are conventional automakers with higher gross margin than Tesla. And, if you account for R&D cost into gross margin standardizing all of the automakers on even playing field Tesla's gross margin is similar to GM, Ford, etc.

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Re: Tesla - next big lottery ticket ?

Post by Valuethinker » Thu Aug 03, 2017 11:44 am

Interesting stat in FT today.

(from memory) an ordinary car has 30k parts, a Tesla about 7k. (was that only the drivetrain?)

This is really disruptive stuff. Still think the stock is hugely overvalued, but the impact on the car industry is going to be huge.

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Re: Tesla - next big lottery ticket ?

Post by Leif » Thu Aug 03, 2017 4:21 pm

I recall a 10k part count.

Some thought there would be no deliveries of the M3 in 2017. TSLA up 6.5% today. Short covering probably. Shorts are taking it in the shorts.
Investors should diversify across many asset-classes so that whatever happens, we will not have all our investments in underperforming asset classes and thereby fail to meet our goals-Taylor Larimore

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Re: Tesla - next big lottery ticket ?

Post by TravelforFun » Thu Aug 03, 2017 9:43 pm

700,000 people have put down $1,000 deposits on the Tesla 3. Motortrend Magazine calls it 'Car of the Decade'. Tesla solar roof looks very promising, and to some, Elon Musk is Steve Jobs reincarnated. Trust Musk.

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Re: Tesla - next big lottery ticket ?

Post by HomerJ » Fri Aug 04, 2017 12:23 am

TravelforFun wrote:700,000 people have put down $1,000 deposits on the Tesla 3. Motortrend Magazine calls it 'Car of the Decade'. Tesla solar roof looks very promising, and to some, Elon Musk is Steve Jobs reincarnated. Trust Musk.
10 million people bought actual physical real cars from GM last year. And GM will sell 10 million more cars this year.

How long before Tesla builds 700,000 actual cars? Think it will get done this year? Maybe by the end of next year? Or will it take sometime into 2019 to get all those orders filled? Meanwhile, each year, GM will sell another 10 million cars while Tesla works on getting those first 700,000 out.

Tesla has a very good chance of being a successful car company. One can reasonably believe they will indeed be bigger than every other car company in the world someday. But the price ALREADY reflects that. They have to become the biggest car company in the world just to equal TODAY's price.

Yet you guys are counting on Tesla to grow 3x, 5x, 10x bigger than that?

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Re: Tesla - next big lottery ticket ?

Post by Mordoch » Fri Aug 04, 2017 12:31 am

TravelforFun wrote:700,000 people have put down $1,000 deposits on the Tesla 3. Motortrend Magazine calls it 'Car of the Decade'. Tesla solar roof looks very promising, and to some, Elon Musk is Steve Jobs reincarnated. Trust Musk.
Actually the current number of deposits on the Model 3 is about 455,000.

It should be noted that actually Apple performed terribly under Steve Jobs for awhile prior to his second time as CEO of Apple, so even buying the
Steve Jobs argument strongly enough does not necessarily mean specifically investing in Tesla now is a smart buy. (As noted a basic point is the current valuation complicates the investment picture beyond the company merely being successful.)

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Re: Tesla - next big lottery ticket ?

Post by 4nursebee » Fri Aug 04, 2017 8:22 pm

prettybogle wrote:OP here. I did make 50 bucks trading tesla stock today :) . Easy $50 every tesla earnings day :happy
Did you buy or sell a $50 ticket?
Today was very nice for anyone who bought without emotion (or with minimal)
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Re: Tesla - next big lottery ticket ?

Post by avalpert » Fri Aug 04, 2017 8:35 pm

prettybogle wrote:OP here. I did make 50 bucks trading tesla stock today :) . Easy $50 every tesla earnings day :happy
The previous two earnings days TSLA went down - so did you make easy money shorting it or are you just crowing from one guess turning out right with no recognition that you haven't found a sure thing money maker and are setting yourself up for big mistakes?

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Re: Tesla - next big lottery ticket ?

Post by TravelforFun » Fri Aug 04, 2017 8:39 pm

HomerJ wrote:
TravelforFun wrote:700,000 people have put down $1,000 deposits on the Tesla 3. Motortrend Magazine calls it 'Car of the Decade'. Tesla solar roof looks very promising, and to some, Elon Musk is Steve Jobs reincarnated. Trust Musk.
10 million people bought actual physical real cars from GM last year. And GM will sell 10 million more cars this year.

How long before Tesla builds 700,000 actual cars? Think it will get done this year? Maybe by the end of next year? Or will it take sometime into 2019 to get all those orders filled? Meanwhile, each year, GM will sell another 10 million cars while Tesla works on getting those first 700,000 out.

Tesla has a very good chance of being a successful car company. One can reasonably believe they will indeed be bigger than every other car company in the world someday. But the price ALREADY reflects that. They have to become the biggest car company in the world just to equal TODAY's price.

Yet you guys are counting on Tesla to grow 3x, 5x, 10x bigger than that?
I don't see a future for gasoline or diesel powered cars. They carry around 2,000 parts in their drivetrains vs. 200 in electric cars. I would like to see GM and Ford's master strategy for the next 20 years.

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Re: Tesla - next big lottery ticket ?

Post by HomerJ » Sat Aug 05, 2017 12:10 am

TravelforFun wrote:
HomerJ wrote:
TravelforFun wrote:700,000 people have put down $1,000 deposits on the Tesla 3. Motortrend Magazine calls it 'Car of the Decade'. Tesla solar roof looks very promising, and to some, Elon Musk is Steve Jobs reincarnated. Trust Musk.
10 million people bought actual physical real cars from GM last year. And GM will sell 10 million more cars this year.

How long before Tesla builds 700,000 actual cars? Think it will get done this year? Maybe by the end of next year? Or will it take sometime into 2019 to get all those orders filled? Meanwhile, each year, GM will sell another 10 million cars while Tesla works on getting those first 700,000 out.

Tesla has a very good chance of being a successful car company. One can reasonably believe they will indeed be bigger than every other car company in the world someday. But the price ALREADY reflects that. They have to become the biggest car company in the world just to equal TODAY's price.

Yet you guys are counting on Tesla to grow 3x, 5x, 10x bigger than that?
I don't see a future for gasoline or diesel powered cars. They carry around 2,000 parts in their drivetrains vs. 200 in electric cars. I would like to see GM and Ford's master strategy for the next 20 years.
Dude, no one is saying electric isn't the future. We're saying the price for Telsa ALREADY assumes that GM and Ford will lose the majority of their business and Tesla alone will pick it all up.

Now, if Tesla branches out with their battery business or some other disruptive technology besides cars, they may indeed continue to grow their stock price. But cars alone isn't going to get them 5x of their current stock price unless 50% of all cars on the planet are made by Tesla in 10-20 years.

Edit: Of course, I could be completely wrong. If people can bid Tesla's capitalization higher than GM with zero profits, of course they can bid Tesla up 5x higher even with minimal profits. Stock market can indeed be crazy.

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