Is Tesla Going To Survive?

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
Topic Author
RJC
Posts: 229
Joined: Fri Dec 14, 2018 1:40 pm

Is Tesla Going To Survive?

Post by RJC » Wed May 22, 2019 8:35 pm

TSLA is now at $192 (down 47%)? Is the company going to survive the next few years?

Tesla owners, how is the quality and customer service as of late?

I was actually thinking about splurging for a Model Y in the next few years. I'm not so sure now...

User avatar
Nate79
Posts: 4642
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Is Tesla Going To Survive?

Post by Nate79 » Wed May 22, 2019 8:37 pm

Two article popped up on CNN money today:

https://www.cnn.com/2019/05/22/investin ... index.html

From the article Tesla is in trouble - much more competition now, dropping sales, tax credit is cut in half, and large debt payments coming due while needing to make huge investments for the future.

https://www.cnn.com/2019/05/22/business ... index.html

Consumer reports blasts Tesla for their recent autopilot program due to very bad safety concerns.

rj342
Posts: 298
Joined: Tue Apr 30, 2019 12:21 pm

Re: Is Tesla Going To Survive?

Post by rj342 » Wed May 22, 2019 8:43 pm

Relying on that subsidy to continue indefintiely was bad planning, since it is easily seen as a perk for 'rich' people.

mmcmonster
Posts: 329
Joined: Sun Jan 12, 2014 1:18 pm

Re: Is Tesla Going To Survive?

Post by mmcmonster » Wed May 22, 2019 8:51 pm

RJC wrote:
Wed May 22, 2019 8:35 pm
Tesla owners, how is the quality and customer service as of late?
Model S owner here. Still love the car. Can't say much about the service. I go once a year and they basically tighten a few loose bolts, replace the windshield wipers, and put it through the car wash.

I've had mine for 5 years and over 110k miles on it. On the original brake pads but four sets of tires, I think. Things on it really don't break down.

Next car will be a Tesla, if they still exist. That being said, I think I can take this one another 50-100k miles before I trade it in for a new model.

A good friend of mine has the Model 3. He loves the autodrive and uses it every day on his 30 mile commute to work. The other day it drove him to work even though his allergies were so bad that he had trouble seeing the road. I'm sure he exaggerates about how bad his vision was, but it's still nice to know that the car could take care of him if he missed something.

TomCat96
Posts: 666
Joined: Sun Oct 18, 2015 12:18 pm

Re: Is Tesla Going To Survive?

Post by TomCat96 » Wed May 22, 2019 8:55 pm

Even back in the day of its eyepopping 300+ per share, I've always wondered how their cash position was supposed to work in view of the rate they were burning cash, and Musk's ability to raise money.

There's a reason why the stock was so heavily shorted. I honestly thought it made financial sense to short it. I never did it of course, but their financials didn't make sense to me. Their lenders are going to want to be repaid at some point.

Then there was Musk with the "funding secured" comment. In my opinion, this was nothing but a naked attempt to punish the shorts. I think Musk let the detractors get under his skin. But you can't just post stuff like that to influence your own stock price.

Then there was the time he got embroiled in the whole Thai cave rescue operation, ended up calling one of the cave divers a pedo, and is now being sued for defamation

https://www.forbes.com/sites/legalenter ... e0c931306a

One of the comments in an unrelated thread mentioned that when the founder of company departs, the corporate culture and the competitive advantage may no longer be present. The founder matters. Beyond the balance sheets and financial analysis, leadership matters and Musk has shown himself a little unhinged as of late.

I'm not going to mention the increased competition, lowered demand, and recent price changes.
I really do want Tesla to succeed. But right now, they're not in a good place financially, and Musk himself hasn't given much reason to be confident.

FWIW, im overweight Tesla by virtue of being overweight midcaps. Tesla is currently the #3 largest holding in the extended market fund.
Last edited by TomCat96 on Wed May 22, 2019 8:56 pm, edited 1 time in total.

Topic Author
RJC
Posts: 229
Joined: Fri Dec 14, 2018 1:40 pm

Re: Is Tesla Going To Survive?

Post by RJC » Wed May 22, 2019 8:55 pm

mmcmonster wrote:
Wed May 22, 2019 8:51 pm
RJC wrote:
Wed May 22, 2019 8:35 pm
Tesla owners, how is the quality and customer service as of late?
Model S owner here. Still love the car. Can't say much about the service. I go once a year and they basically tighten a few loose bolts, replace the windshield wipers, and put it through the car wash.

I've had mine for 5 years and over 110k miles on it. On the original brake pads but four sets of tires, I think. Things on it really don't break down.

Next car will be a Tesla, if they still exist. That being said, I think I can take this one another 50-100k miles before I trade it in for a new model.

A good friend of mine has the Model 3. He loves the autodrive and uses it every day on his 30 mile commute to work. The other day it drove him to work even though his allergies were so bad that he had trouble seeing the road. I'm sure he exaggerates about how bad his vision was, but it's still nice to know that the car could take care of him if he missed something.
That is good to hear. I hope Tesla thrives so I can feel confident about purchasing one in the future.

User avatar
nisiprius
Advisory Board
Posts: 38469
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Is Tesla Going To Survive?

Post by nisiprius » Wed May 22, 2019 8:59 pm

Opinion is polarized, and the situation is in such flux that I feel reluctance to gauss weber Tesla will survive Musk's having been oersted as chairman.
Last edited by nisiprius on Wed May 22, 2019 9:01 pm, edited 2 times in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

123
Posts: 4797
Joined: Fri Oct 12, 2012 3:55 pm

Re: Is Tesla Going To Survive?

Post by 123 » Wed May 22, 2019 8:59 pm

Tesla cars will survive even if the company doesn't. Tesla has more cachet then DeLorean did and it already has more cars on the road then DeLorean.
The closest helping hand is at the end of your own arm.

GoldenFinch
Posts: 1852
Joined: Mon Nov 10, 2014 11:34 pm

Re: Is Tesla Going To Survive?

Post by GoldenFinch » Wed May 22, 2019 9:05 pm

I live in a rust belt city and I see a surprisingly high number of Teslas driving around. Although they used to stand out, they are becoming ubiquitous and blending in with the pack. The news about Tesla has been increasingly negative. Kind of reminds me of what happened with Saturn. Lots of enthusiasm in the beginning, and then a lot of problems.

TomCat96
Posts: 666
Joined: Sun Oct 18, 2015 12:18 pm

Re: Is Tesla Going To Survive?

Post by TomCat96 » Wed May 22, 2019 9:07 pm

nisiprius wrote:
Wed May 22, 2019 8:59 pm
Opinion is polarized, and the situation is in such flux that I feel reluctance to gauss weber Tesla will survive Musk's having been oersted as chairman.
+6

User avatar
arcticpineapplecorp.
Posts: 4192
Joined: Tue Mar 06, 2012 9:22 pm

Re: Is Tesla Going To Survive?

Post by arcticpineapplecorp. » Wed May 22, 2019 9:07 pm

RJC wrote:
Wed May 22, 2019 8:35 pm
TSLA is now at $192 (down 47%)? Is the company going to survive the next few years?
1. how would I or anyone know? Does anyone have a crystal ball?
2. If I said one way or the other, why would you believe what was written by an anonymous poster on the internet?
3. If I said with confidence what would happen, could I be wrong?
4. there have been plenty of companies that everyone thought would survive, but didn't and plenty of companies that everyone thought would not survive, but did.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

User avatar
Huygens
Posts: 26
Joined: Tue Dec 04, 2018 8:35 pm

Re: Is Tesla Going To Survive?

Post by Huygens » Wed May 22, 2019 9:09 pm

I wonder if a large, established auto manufacturer will acquire Tesla if the stock price falls low enough. The brand and technology has to be worth it to someone at a low enough price. I am no Elon sympathizer, but I find it hard to believe that Tesla will go the way of the DeLoreans.

User avatar
Socrates
Posts: 339
Joined: Sun May 13, 2018 10:27 pm
Location: Margaritaville

dead man walking

Post by Socrates » Wed May 22, 2019 9:12 pm

Nope.......
“Don't waste your time looking back. You're not going that way.” ― Ragnar Lothbrok.

Helo80
Posts: 795
Joined: Sat Apr 29, 2017 8:47 pm

Re: Is Tesla Going To Survive?

Post by Helo80 » Wed May 22, 2019 9:18 pm

Tesla made the first popular and mass-consumer EV. There are competitors, e.g. Nissan Leaf, but when people think EV, they think Tesla, and vice versa.

However, Audi, and I believe Porsche, have had advertisements on TV for their EVs. BMW, Mercedes, et. al are not far behind. In the not too distant future, European luxury brands will respond with their own EV offerings and provide real competition to Tesla.

For better or worse, EVs now are a commodity left for more affluent and higher NW individuals. The used market just is not there with the age of Tesla's, and people buying $50 to $100K + Tesla's tend to be more affluent. That being said, this group of consumers is fickle as well, and sometimes rich people like to be unique and have different toys from everything else. 4 years ago, that may have been Tesla Model S... Now, it may be these new Audi's coming out. When Mercedes, BMW, etc. do their own EVs, they'll move to those brands.

I am very neutral on Tesla and Musk. I am very much like an index fund manager of an S&P500 ---- I really do not root for or against Tesla. I just have always felt that Musk has a big mouth (but it absolutely works for promoting Tesla and Tesla's interests) and is not so good with on-time delivery promises. But, I do worry that Tesla in the not too distant future will have serious competition on their hands. The people that can drop $80k+ on his cars will have more options very soon.


EDIT: Another thing about Tesla is that I never understood how it had a market cap similar to GM, Ford, and other majors that have produced automobiles for many, many, many decades and regularly push out millions of vehicles year in, year out. I mean, Ford would have to have a terrible year (and execs would be replaced), if they sold fewer than 800,000 F-series trucks. Invariably, the Big 3 are working on their own EV offerings. The distribution channels are already well-established.

Musk and his Tesla were absolute visionaries --- I give them that. But, I think that people were translating their enthusiasm for him into Tesla's value and now reality is catching up.


EDIT2: Remember, when the 2009 Toyota Prius came out, it was a hot commodity as gas prices were high and at 50 mpg in the city, it was quite green. I remember that Toyota raised the MSRP by $500 to try and taper demand. Leonardo DiCaprio had a Prius and raved about how good it was for the planet. Now, I'm sure DiCaprio has moved on to Tesla's. Down the road, I'm sure he'll get a new EV toy that is not Tesla. Prius used to be the king, then Tesla took over, and invariably, somebody will take it from here. It's the free market.
Last edited by Helo80 on Wed May 22, 2019 9:31 pm, edited 2 times in total.

TomCat96
Posts: 666
Joined: Sun Oct 18, 2015 12:18 pm

Re: Is Tesla Going To Survive?

Post by TomCat96 » Wed May 22, 2019 9:18 pm

arcticpineapplecorp. wrote:
Wed May 22, 2019 9:07 pm
RJC wrote:
Wed May 22, 2019 8:35 pm
TSLA is now at $192 (down 47%)? Is the company going to survive the next few years?
1. how would I or anyone know? Does anyone have a crystal ball?
I mean, it doesn't have to be straight up conjecture. You can look at the rate they're burning cash compared with how much they have left before they have to raise cash again.

https://qz.com/1604080/tesla-is-losing- ... ning-pace/

https://www.forbes.com/sites/jimcollins ... 98ae38401b

The last quote:
"That cash burn profiles Tesla as a company that will have trouble paying its bills, and that is why the bond market's reaction is much more important that the stock market’s, even though Tesla's stock price decline this morning has removed more than $4 billion from its market capitalization. With another $566 million of convertible debt coming due in November--it is old SolarCity paper so carries the fantastical conversion price of $759.36 per Tesla share--the bond market is going to be the key determinant of Tesla's financial health. (my emphasis)

This is how it should be, and is certainly more useful to one who actually analyzes the company than watching talking heads on CNBC bloviate about Elon Musk and his legal issues--he is due in court today in Manhattan. Keep your eyes on the prize, and remember my favorite investing phrase--cash flow never lies. Tesla's in trouble now, and though Tesla shares are trading today well below their level of September 2014, in a credit-crunch situation it is not just the excess that gets removed from an equity’s valuation, it is the entire valuation itself.
"

User avatar
arcticpineapplecorp.
Posts: 4192
Joined: Tue Mar 06, 2012 9:22 pm

Re: Is Tesla Going To Survive?

Post by arcticpineapplecorp. » Wed May 22, 2019 9:25 pm

TomCat96 wrote:
Wed May 22, 2019 9:18 pm
arcticpineapplecorp. wrote:
Wed May 22, 2019 9:07 pm
RJC wrote:
Wed May 22, 2019 8:35 pm
TSLA is now at $192 (down 47%)? Is the company going to survive the next few years?
1. how would I or anyone know? Does anyone have a crystal ball?
I mean, it doesn't have to be straight up conjecture. You can look at the rate they're burning cash compared with how much they have left before they have to raise cash again.
ok, but you're assuming they can raise cash again. Can they? What if they can't? If the OP is asking whether they'll be around, we could simply ask, can they continue to raise cash again? Answer to that question is same as before:

1. how would I or anyone know? Does anyone have a crystal ball?
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

ohai
Posts: 798
Joined: Wed Dec 27, 2017 2:10 pm

Re: Is Tesla Going To Survive?

Post by ohai » Wed May 22, 2019 10:22 pm

Hi guys, just some market points that I read about briefly a couple days ago:

CDS implies a 40% default chance within 5 years.
Tesla bonds have YTM of about 9%.

So, the market thinks there is a good chance of default, but that it is far from a sure thing.

In my opinion, they aren't going to go bankrupt. In the worst case, they will be bought out - either by some company with a stronger balance sheet, by Saudi sovereign fund as a trophy asset, or perhaps broken up and sold into parts.

Still, their situation is not good, and I don't think there is a strong probability that Model 3 demand will support their 2019-2020 cash needs. They are going to have to issue more shares, as I don't think their investors want anything to do with increasing Tesla's debt load. The trade war is a huge pitfall for Tesla; outside of explicit taxes or sales bans, a wave of anti US sentiment could easily upset their market position. Plus, there are tons of cheap, possibly government subsidized, IP stealing Chinese competitors who are just biting at their ankles.

I cannot believe that TSLA was, at one point, thought to be worth more than GM or Ford, when their cash situation means they could become insolvent at basically any time. Unless something changes soon, I think the stock has further to fall.

I also think that Elon Musk is essential to the company at this point, as he is like a cult leader who somehow convinces all his workers to work 80 hours a week. If Ford or GM demanded the output that Tesla does, all those union guys would walk out. Elon Musk is also key to convincing his VC buddies to keep ponying up capital. Without him, the vision and belief in the company will fade, along with their investor cash flow.

randomguy
Posts: 7822
Joined: Wed Sep 17, 2014 9:00 am

Re: Is Tesla Going To Survive?

Post by randomguy » Wed May 22, 2019 10:30 pm

123 wrote:
Wed May 22, 2019 8:59 pm
Tesla cars will survive even if the company doesn't. Tesla has more cachet then DeLorean did and it already has more cars on the road then DeLorean.
Yeah the question is due the remain independant, get sold before bankruptcy or get sucked up afterwards. There is no way Geely, Tata, or any of a dozen other companies wouldn't buy the company for the brand. So from a car owner point of view it isnt worth worrying about. From an investor point of view, it is just like any other stock. Who knows if it will be here in 5 years.

Bill McNeal
Posts: 170
Joined: Tue Feb 23, 2010 3:57 pm

Re: Is Tesla Going To Survive?

Post by Bill McNeal » Wed May 22, 2019 11:02 pm

While Audi and other legacy makes are coming into the EV space, Tesla will maintain key advantages:

1) OTA software updates
2) Lack of a dealer network
3) Supercharger network at key locations to enable long distance travel
4) Autopilot
5) Brand equity

Musk needs to reduce the cash burn and realize self sustaining cash flow. Minimize need for raising cash. If they get shut out of capital markets due to loss of investor confidence then only a buyer will save them. I

User avatar
Cycle
Posts: 1311
Joined: Sun May 28, 2017 7:57 pm
Location: Minneapolis

Re: Is Tesla Going To Survive?

Post by Cycle » Wed May 22, 2019 11:09 pm

Tucker was a great movie. I look forward to watching Tesla on Netflix after the collapse.
Never look back unless you are planning to go that way

Silence Dogood
Posts: 945
Joined: Tue Feb 01, 2011 9:22 pm

Re: Is Tesla Going To Survive?

Post by Silence Dogood » Wed May 22, 2019 11:12 pm

Who knows?

Here is my (worthless) prediction: Tesla will be bought out by Apple once it gets cheap enough.

rj342
Posts: 298
Joined: Tue Apr 30, 2019 12:21 pm

Re: Is Tesla Going To Survive?

Post by rj342 » Wed May 22, 2019 11:22 pm

nisiprius wrote:
Wed May 22, 2019 8:59 pm
Opinion is polarized, and the situation is in such flux that I feel reluctance to gauss weber Tesla will survive Musk's having been oersted as chairman.
Ohm my god, I hope the bad press doesn't ampere their recovery. Joule regret if if it does.

Pu239
Posts: 95
Joined: Mon Dec 17, 2018 6:24 pm

Re: Is Tesla Going To Survive?

Post by Pu239 » Wed May 22, 2019 11:23 pm

arcticpineapplecorp. wrote:
Wed May 22, 2019 9:07 pm
RJC wrote:
Wed May 22, 2019 8:35 pm
TSLA is now at $192 (down 47%)? Is the company going to survive the next few years?
1. how would I or anyone know? Does anyone have a crystal ball?
2. If I said one way or the other, why would you believe what was written by an anonymous poster on the internet?
3. If I said with confidence what would happen, could I be wrong?
4. there have been plenty of companies that everyone thought would survive, but didn't and plenty of companies that everyone thought would not survive, but did.
Former GM executive Bob Lutz (Chevy Volt fame) has been predicting the demise of Tesla for years.

https://www.cnbc.com/2017/11/17/tesla-i ... -lutz.html

Prahasaurus
Posts: 125
Joined: Fri Mar 29, 2019 1:02 am

Re: Is Tesla Going To Survive?

Post by Prahasaurus » Wed May 22, 2019 11:36 pm

My main issue with Tesla is their CEO, who seems incredibly unstable. That quality could be great when getting started, taking bold risks, having a vision that goes well beyond the competition, exciting customers, especially the "early adopter" crowd.

But having to manage a brick and mortar company on a daily basis? Providing the rock solid stability that is necessary for the long term? Doesn't seem to be in Musk's DNA. This is not a software company. I would be very hesitant to invest in Tesla with its current CEO.

Maybe Uber will buy them. That would be poetic justice, a company that never made a profit and probably never will purchasing a company that is losing lots of money using shareholder cash to chase a dream that is probably 20 years away.

DonIce
Posts: 601
Joined: Thu Feb 21, 2019 6:44 pm

Re: Is Tesla Going To Survive?

Post by DonIce » Wed May 22, 2019 11:51 pm

Tesla has a LOT further to fall before it can be seen as a "cheap buy" by other companies. At $34B, it's still almost as big as Ford ($39B) and not that far behind GM ($50B). Neither of those companies could realistically afford to spend $34B.

User avatar
Chan_va
Posts: 789
Joined: Wed Dec 05, 2012 7:15 pm

Re: Is Tesla Going To Survive?

Post by Chan_va » Thu May 23, 2019 12:33 am

nisiprius wrote:
Wed May 22, 2019 8:59 pm
Opinion is polarized, and the situation is in such flux that I feel reluctance to gauss weber Tesla will survive Musk's having been oersted as chairman.
Well played sir.

User avatar
eye.surgeon
Posts: 410
Joined: Wed Apr 05, 2017 1:19 pm
Location: California

Re: Is Tesla Going To Survive?

Post by eye.surgeon » Thu May 23, 2019 12:48 am

I've had my Model S 4.5 years but I can't really speak to how service has been since it really hasn't needed any. As an owner I don't really care if Tesla makes it as an independent or gets bought out by one of the Bigs. Still drives down the road the same . But there will always be Tesla in some form. Comparing Tesla to DeLorean at this point is kind of ridiculous, Tesla makes more cars in 2 weeks than Delorean made in total. Heck they make more cars than Porsche.
"I would rather be certain of a good return than hopeful of a great one" | Warren Buffett

Thesaints
Posts: 2824
Joined: Tue Jun 20, 2017 12:25 am

Re: Is Tesla Going To Survive?

Post by Thesaints » Thu May 23, 2019 1:53 am

A company can produce wonderful products and still go bankrupt.

User avatar
4nursebee
Posts: 1275
Joined: Sun Apr 01, 2012 7:56 am
Location: US

Re: Is Tesla Going To Survive?

Post by 4nursebee » Thu May 23, 2019 2:50 am

nisiprius wrote:
Wed May 22, 2019 8:59 pm
Opinion is polarized, and the situation is in such flux that I feel reluctance to gauss weber Tesla will survive Musk's having been oersted as chairman.

Bravo!

Yes, this is a inactionable.

I find this piece, purported to be from Adam Judas, to be interesting.

http://linkback.morganstanley.com/web/s ... 473a5220c0
4nursebee

Grt2bOutdoors
Posts: 20743
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Is Tesla Going To Survive?

Post by Grt2bOutdoors » Thu May 23, 2019 3:46 am

ohai wrote:
Wed May 22, 2019 10:22 pm
Hi guys, just some market points that I read about briefly a couple days ago:

CDS implies a 40% default chance within 5 years.
Tesla bonds have YTM of about 9%.

So, the market thinks there is a good chance of default, but that it is far from a sure thing.

In my opinion, they aren't going to go bankrupt. In the worst case, they will be bought out - either by some company with a stronger balance sheet, by Saudi sovereign fund as a trophy asset, or perhaps broken up and sold into parts.

Still, their situation is not good, and I don't think there is a strong probability that Model 3 demand will support their 2019-2020 cash needs. They are going to have to issue more shares, as I don't think their investors want anything to do with increasing Tesla's debt load.
On the contrary, the most likely scenario is bankruptcy. Why buy a company with high cost debt exposing the purported purchasers balance sheet to that? The best opportunity to capture the technology is to buy it from the senior lenders for pennies on the dollar. Lenders are not in the business of making cars, they will come to the table willing to take a haircut if they can recoup most of their principle. Possible acquirers - Alphabet, maybe just maybe a private equity company, but not likely a foreign company/entity will be permitted.

As for CDS, it’s an imperfect gauge and one where market participants have been less than accurate - I like to think of it as a momentum gauge, more current bets against now, next week it shifts for any of a dozen reasons that may or may not be rational or logical and suddenly CDS are trading lower. Wall Street where crowds run together until they don’t.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Grt2bOutdoors
Posts: 20743
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Is Tesla Going To Survive?

Post by Grt2bOutdoors » Thu May 23, 2019 3:50 am

DonIce wrote:
Wed May 22, 2019 11:51 pm
Tesla has a LOT further to fall before it can be seen as a "cheap buy" by other companies. At $34B, it's still almost as big as Ford ($39B) and not that far behind GM ($50B). Neither of those companies could realistically afford to spend $34B.
And they won’t, they will wait for value of equity to fall precipitously, buy the debt for pennies on the dollar and take it out. One thing Ford and GM have going for it that Tesla doesn’t: time. They can wait it out.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Valuethinker
Posts: 38169
Joined: Fri May 11, 2007 11:07 am

Re: Is Tesla Going To Survive?

Post by Valuethinker » Thu May 23, 2019 4:21 am

Grt2bOutdoors wrote:
Thu May 23, 2019 3:46 am
ohai wrote:
Wed May 22, 2019 10:22 pm
Hi guys, just some market points that I read about briefly a couple days ago:

CDS implies a 40% default chance within 5 years.
Tesla bonds have YTM of about 9%.

So, the market thinks there is a good chance of default, but that it is far from a sure thing.

In my opinion, they aren't going to go bankrupt. In the worst case, they will be bought out - either by some company with a stronger balance sheet, by Saudi sovereign fund as a trophy asset, or perhaps broken up and sold into parts.

Still, their situation is not good, and I don't think there is a strong probability that Model 3 demand will support their 2019-2020 cash needs. They are going to have to issue more shares, as I don't think their investors want anything to do with increasing Tesla's debt load.
On the contrary, the most likely scenario is bankruptcy. Why buy a company with high cost debt exposing the purported purchasers balance sheet to that? The best opportunity to capture the technology is to buy it from the senior lenders for pennies on the dollar. Lenders are not in the business of making cars, they will come to the table willing to take a haircut if they can recoup most of their principle. Possible acquirers - Alphabet, maybe just maybe a private equity company, but not likely a foreign company/entity will be permitted.

As for CDS, it’s an imperfect gauge and one where market participants have been less than accurate - I like to think of it as a momentum gauge, more current bets against now, next week it shifts for any of a dozen reasons that may or may not be rational or logical and suddenly CDS are trading lower. Wall Street where crowds run together until they don’t.
Excellent analysis, thank you.

Valuethinker
Posts: 38169
Joined: Fri May 11, 2007 11:07 am

Re: Is Tesla Going To Survive?

Post by Valuethinker » Thu May 23, 2019 4:22 am

RJC wrote:
Wed May 22, 2019 8:35 pm
TSLA is now at $192 (down 47%)? Is the company going to survive the next few years?

Tesla owners, how is the quality and customer service as of late?

I was actually thinking about splurging for a Model Y in the next few years. I'm not so sure now...
The credit markets have had a pessimistic view of Tesla for a long time.

It now appears that the equity market is beginning to share that view.

Tesla is a high cash burn company and it is running out of road ...

Valuethinker
Posts: 38169
Joined: Fri May 11, 2007 11:07 am

Re: Is Tesla Going To Survive?

Post by Valuethinker » Thu May 23, 2019 4:24 am

RJC wrote:
Wed May 22, 2019 8:35 pm
TSLA is now at $192 (down 47%)? Is the company going to survive the next few years?

Tesla owners, how is the quality and customer service as of late?

I was actually thinking about splurging for a Model Y in the next few years. I'm not so sure now...
The thing about Musk is that he has changed the world ...

This is not a Delorean or a Bricklin or a Tucker. There are enough of these cars out there that it has brand value and market position.

The other car makers are scrambling to catch up.

Tesla as a brand name may only be a footnote in history, the Tesla division of XYZ industries.

But the high performance all-electric car - Electric Vehicle?

It's here. And it's here to stay.

Valuethinker
Posts: 38169
Joined: Fri May 11, 2007 11:07 am

Re: Is Tesla Going To Survive?

Post by Valuethinker » Thu May 23, 2019 4:30 am

Helo80 wrote:
Wed May 22, 2019 9:18 pm
Tesla made the first popular and mass-consumer EV. There are competitors, e.g. Nissan Leaf, but when people think EV, they think Tesla, and vice versa.

However, Audi, and I believe Porsche, have had advertisements on TV for their EVs. BMW, Mercedes, et. al are not far behind. In the not too distant future, European luxury brands will respond with their own EV offerings and provide real competition to Tesla.
Yes. But no.

It will be wrenchingly hard for those companies to separate themselves from 120 years of Internal Combustion Engine and drivetrain. To launch EV models that directly compete with their core models.
For better or worse, EVs now are a commodity left for more affluent and higher NW individuals. The used market just is not there with the age of Tesla's, and people buying $50 to $100K + Tesla's tend to be more affluent. That being said, this group of consumers is fickle as well, and sometimes rich people like to be unique and have different toys from everything else. 4 years ago, that may have been Tesla Model S... Now, it may be these new Audi's coming out. When Mercedes, BMW, etc. do their own EVs, they'll move to those brands.
I think a Tesla is still an aspirational good - a high performance EV. Luxury in a way BMW, Mercedes, Lexus have just not yet managed.

That brilliant "Tesla nod" add says it all. You can buy an EV, be a total geek, and still get attention.
I am very neutral on Tesla and Musk. I am very much like an index fund manager of an S&P500 ---- I really do not root for or against Tesla. I just have always felt that Musk has a big mouth (but it absolutely works for promoting Tesla and Tesla's interests) and is not so good with on-time delivery promises. But, I do worry that Tesla in the not too distant future will have serious competition on their hands. The people that can drop $80k+ on his cars will have more options very soon.


EDIT: Another thing about Tesla is that I never understood how it had a market cap similar to GM, Ford, and other majors that have produced automobiles for many, many, many decades and regularly push out millions of vehicles year in, year out. I mean, Ford would have to have a terrible year (and execs would be replaced), if they sold fewer than 800,000 F-series trucks. Invariably, the Big 3 are working on their own EV offerings. The distribution channels are already well-established.

Musk and his Tesla were absolute visionaries --- I give them that. But, I think that people were translating their enthusiasm for him into Tesla's value and now reality is catching up.


EDIT2: Remember, when the 2009 Toyota Prius came out, it was a hot commodity as gas prices were high and at 50 mpg in the city, it was quite green. I remember that Toyota raised the MSRP by $500 to try and taper demand. Leonardo DiCaprio had a Prius and raved about how good it was for the planet. Now, I'm sure DiCaprio has moved on to Tesla's. Down the road, I'm sure he'll get a new EV toy that is not Tesla. Prius used to be the king, then Tesla took over, and invariably, somebody will take it from here. It's the free market.
And the Toyota Prius has inhabited a niche very well - heavily used urban vehicles like taxis.

Tesla could run out of cash. But it has disrupted the industry and it will be hard/ painful for the other luxury car makers to catch up.

It was counterintuitive. I saw EVs as the natural 2nd or 3rd family car - the runabout for urban driving. Nissan Leaf style. However instead Musk went for the high ground, and took it. The future does not look like the BMW i3 - although I see (London) quite a few of them around (they get an exemption from the congestion charge, I believe).

The market cap got silly -- triumph of hope & hype over reality. Musk's use of debt might kill it - the company should have avoided using debt as a funding source.

They are close to the end of the road as a company, but as a piece of technology, well, it does very much look like they've changed the world ...

MrJones
Posts: 328
Joined: Sat Mar 18, 2017 2:23 am

Re: Is Tesla Going To Survive?

Post by MrJones » Thu May 23, 2019 5:14 am

rj342 wrote:
Wed May 22, 2019 11:22 pm
nisiprius wrote:
Wed May 22, 2019 8:59 pm
Opinion is polarized, and the situation is in such flux that I feel reluctance to gauss weber Tesla will survive Musk's having been oersted as chairman.
Ohm my god, I hope the bad press doesn't ampere their recovery. Joule regret if if it does.
Please stop. I'm shocked to see such revolting posts here. You both deserve to be charged with battery against forum readers.

sambb
Posts: 2512
Joined: Sun Mar 10, 2013 3:31 pm

Re: Is Tesla Going To Survive?

Post by sambb » Thu May 23, 2019 5:30 am

its a terrible investment and company - has it ever made money for a year? anyonne can make a money losing product, beware for shareholders,,, i prefer vtsmx

JBeck
Posts: 65
Joined: Fri Apr 15, 2016 4:54 am

Re: Is Tesla Going To Survive?

Post by JBeck » Thu May 23, 2019 5:31 am

Huygens wrote:
Wed May 22, 2019 9:09 pm
I wonder if a large, established auto manufacturer will acquire Tesla if the stock price falls low enough. The brand and technology has to be worth it to someone at a low enough price. I am no Elon sympathizer, but I find it hard to believe that Tesla will go the way of the DeLoreans.
I would bet on a tech company buying them, in fact I think at some point they had offers from Apple and Google?

ausmatt
Posts: 102
Joined: Sun Jan 02, 2011 1:53 pm

Re: Is Tesla Going To Survive?

Post by ausmatt » Thu May 23, 2019 5:41 am

The one interesting concept that came out of JP Morgan’s “leaked” private institutional call on TSLA was the idea that Misk could personally recapitalize Tesla with his >50% Equity in SpaceX.

So while Tesla has pretty much squeezed the juice completely out of debt market options, there are still a lot of potential recapitalization options down the road — future equity raise, SoftBank will give money to virtually anyone these days, PE, acquisition, etc.

So while I think the company will definitely survive (the tech and brand are pretty darn good), your individual positions may not!

User avatar
nisiprius
Advisory Board
Posts: 38469
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Is Tesla Going To Survive?

Post by nisiprius » Thu May 23, 2019 5:50 am

Intriguing parallels with the historic Nikola Tesla--part genius, part charlatan, changed the world (at least to the extent that "electricity as we know it" is based on alternating current) but never made a personal business success out of it... I think Dr. Edwin Land, Steve Jobs' ideal, might have been a more reassuring aspiration than Nikola Tesla.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Topic Author
RJC
Posts: 229
Joined: Fri Dec 14, 2018 1:40 pm

Re: Is Tesla Going To Survive?

Post by RJC » Thu May 23, 2019 5:56 am

FoolStreet wrote:
Wed May 22, 2019 10:25 pm
RJC wrote:
Wed May 22, 2019 8:35 pm
TSLA is now at $192 (down 47%)? Is the company going to survive the next few years?

Tesla owners, how is the quality and customer service as of late?

I was actually thinking about splurging for a Model Y in the next few years. I'm not so sure now...
This kind of post is just asking for trolling. Please don’t feed them. For everyone’s sanity, please ask a moderator to close this thread. It is not actionable by definition since the Y isn’t even out yet nor will be for another year.

I am biting my tongue to not discuss this.
How is this trolling? I have interest in buying a Model Y and was hoping to hear from Tesla owners on the quality and service of late. It's definitely actionable (can put down a deposit now).
Last edited by RJC on Thu May 23, 2019 6:04 am, edited 2 times in total.

Jags4186
Posts: 3452
Joined: Wed Jun 18, 2014 7:12 pm

Re: Is Tesla Going To Survive?

Post by Jags4186 » Thu May 23, 2019 5:58 am

Personally I am enjoying the silence from certain people I know who loved to brag about how much money they were making on Tesla stock.

Derpalator
Posts: 15
Joined: Sun Nov 15, 2015 2:52 pm

Re: Is Tesla Going To Survive?

Post by Derpalator » Thu May 23, 2019 6:00 am

MrJones wrote:
Thu May 23, 2019 5:14 am
rj342 wrote:
Wed May 22, 2019 11:22 pm
nisiprius wrote:
Wed May 22, 2019 8:59 pm
Opinion is polarized, and the situation is in such flux that I feel reluctance to gauss weber Tesla will survive Musk's having been oersted as chairman.
Ohm my god, I hope the bad press doesn't ampere their recovery. Joule regret if if it does.
Please stop. I'm shocked to see such revolting posts here. You both deserve to be charged with battery against forum readers.
Hmm, I don't know. I actually am getting a charge out of this thread! :D

User avatar
yatesd
Posts: 562
Joined: Sun Nov 03, 2013 8:19 am
Location: MD

Re: Is Tesla Going To Survive?

Post by yatesd » Thu May 23, 2019 6:20 am

Bill McNeal wrote:
Wed May 22, 2019 11:02 pm
While Audi and other legacy makes are coming into the EV space, Tesla will maintain key advantages:

1) OTA software updates
2) Lack of a dealer network
3) Supercharger network at key locations to enable long distance travel
4) Autopilot
5) Brand equity

Musk needs to reduce the cash burn and realize self sustaining cash flow. Minimize need for raising cash. If they get shut out of capital markets due to loss of investor confidence then only a buyer will save them. I
I've been waiting for OTA software updates for cars as I think this will benefit everyone. That being said it is finally coming:

GM OTA and advanced architecture
https://www.caranddriver.com/news/a2754 ... hitecture/

Nissan and GM auto pilot capabilities. According to Consumer Reports Cadillac's super cruise is better than Tesla's

https://www.caranddriver.com/news/a2750 ... e-driving/
https://www.cadillac.com/world-of-cadil ... per-cruise

jminv
Posts: 896
Joined: Tue Jan 02, 2018 10:58 pm

Re: Is Tesla Going To Survive?

Post by jminv » Thu May 23, 2019 6:21 am

Yes, it will. If it doesn’t stay independent, it’ll be bought out by another car company or a tech company. Of course, this will likely require Elon Musk to leave the company which is why the apple offer in 2013 fell through (in today’s news).

Jack FFR1846
Posts: 9477
Joined: Tue Dec 31, 2013 7:05 am

Re: Is Tesla Going To Survive?

Post by Jack FFR1846 » Thu May 23, 2019 6:29 am

Jags4186 wrote:
Thu May 23, 2019 5:58 am
Personally I am enjoying the silence from certain people I know who loved to brag about how much money they were making on Tesla stock.
I'm waiting for Dan Mahoney's post. I hear his shorts on TSLA has brought in enough money for him to buy the internet. It TSLA goes where JPMorgan predicts ($10), I look forward to him buying something small like.....I don't know.....all of Europe.
Bogle: Smart Beta is stupid

Jags4186
Posts: 3452
Joined: Wed Jun 18, 2014 7:12 pm

Re: Is Tesla Going To Survive?

Post by Jags4186 » Thu May 23, 2019 6:30 am

Jack FFR1846 wrote:
Thu May 23, 2019 6:29 am
Jags4186 wrote:
Thu May 23, 2019 5:58 am
Personally I am enjoying the silence from certain people I know who loved to brag about how much money they were making on Tesla stock.
I'm waiting for Dan Mahoney's post. I hear his shorts on TSLA has brought in enough money for him to buy the internet.
:beer ;-)

Topic Author
RJC
Posts: 229
Joined: Fri Dec 14, 2018 1:40 pm

Re: Is Tesla Going To Survive?

Post by RJC » Thu May 23, 2019 7:17 am

eye.surgeon wrote:
Thu May 23, 2019 12:48 am
I've had my Model S 4.5 years but I can't really speak to how service has been since it really hasn't needed any. As an owner I don't really care if Tesla makes it as an independent or gets bought out by one of the Bigs. Still drives down the road the same . But there will always be Tesla in some form. Comparing Tesla to DeLorean at this point is kind of ridiculous, Tesla makes more cars in 2 weeks than Delorean made in total. Heck they make more cars than Porsche.
Interesting. Any idea why Tesla is at the bottom of the Consumer Reports list of reliable cars? Maybe electrical glitches then?

User avatar
DanMahowny
Posts: 878
Joined: Sun Aug 06, 2017 8:25 pm

Re: Is Tesla Going To Survive?

Post by DanMahowny » Thu May 23, 2019 7:18 am

Tesla is dead. I've known this for some time, and shorted the stock massively.

Remember when Elon lied about "going private at $420; funding secured"; the stock was around $380 at the time.

Elon is not a genius, is not going the change the world. He is a carnival barker. The stock is going to $0.

People are so gullible.
Funding secured

SovereignInvestor
Posts: 339
Joined: Mon Aug 20, 2018 4:41 pm

Re: Is Tesla Going To Survive?

Post by SovereignInvestor » Thu May 23, 2019 7:24 am

DanMahowny wrote:
Thu May 23, 2019 7:18 am
Tesla is dead. I've known this for some time, and shorted the stock massively.

Remember when Elon lied about "going private at $420; funding secured"; the stock was around $380 at the time.

Elon is not a genius, is not going the change the world. He is a carnival barker. The stock is going to $0.

People are so gullible.
The only 420 that has been seen recently is where. Musk smoked a blunt in the Rogan show. Very unprofessional for CEO.

Locked