Author Topic: Is Tesla a good investment?  (Read 9514 times)

FrugalSaver

  • Pencil Stache
  • ****
  • Posts: 516
Is Tesla a good investment?
« on: March 22, 2018, 10:20:26 PM »
I mostly missed the boat on Amazon, a company I thought had promise Long long ago. A DCA approach there would have yielded a fortune

Tesla intends to be more than just a car company. Itís woefully unprofitable. However, so has been amazon throughout its life.

Could TSLA be a 10 bagger a decade from now? Iím considering allocating 6% of new money and buying in every week or month.

Thoughts?

RedmondStash

  • Pencil Stache
  • ****
  • Posts: 778
Re: Is Tesla a good investment?
« Reply #1 on: March 22, 2018, 10:32:48 PM »
I mostly missed the boat on Amazon, a company I thought had promise Long long ago. A DCA approach there would have yielded a fortune

Tesla intends to be more than just a car company. Itís woefully unprofitable. However, so has been amazon throughout its life.

Could TSLA be a 10 bagger a decade from now? Iím considering allocating 6% of new money and buying in every week or month.

Thoughts?

I've considered the same thing, but mostly because I believe in what they're doing, not because I expect them to skyrocket in price like Amazon.

Tesla the company is not doing that well. And I personally don't believe that investing in individual companies will get me where I want to go. I'm all in on just plain whole-market index funds. Matching the market is possible; beating it consistently is just not something people can do, and a lot of people lose a lot of money proving that every day.

So I'd say invest in Tesla with a small portion of your money that you can afford to lose, because it's a total gamble. And recognize that you're just as likely to lose that money as to break even or make a profit. If your goal is to beat the market and get rich quick, you're going to waste money and time, and be disappointed.

Travis

  • Handlebar Stache
  • *****
  • Posts: 2255
  • Location: Arizona
Re: Is Tesla a good investment?
« Reply #2 on: March 22, 2018, 10:36:44 PM »
This is the "get rich slowly" forum, not the "magic 8 ball hot stock pick" forum.  Tesla could be worth a trillion dollars someday, or it could keep plodding along. How long are you willing to sit on the stock and find out?  Apple was the stock to own in the mid 80s, nearly became worthless in the 90s, and is now the biggest company on Earth. You only needed to wait 30 years to reach that point and never in that period ever think that you had made a bad decision buying.  That's the thought process you need to have whenever you think about buying an individual stock.  You also need to ask what you're foregoing by buying that hopefully profitable stock now rather than something you know is going to be more reliable in giving you a return on your investment.

SC93

  • Pencil Stache
  • ****
  • Posts: 618
Re: Is Tesla a good investment?
« Reply #3 on: March 22, 2018, 10:47:15 PM »
1 stock is always dangerous unless you have the extra money to play with.

As for the car itself..... I don't like it. My buddy has one. We had the choice and chose a Maserati. While he was looking for a charging station we were driving all we wanted to. If he leaves his house in Austin he has to plan to stop in Waco to charge if he comes to our house in Fort Worth. And it's not just a quick thing like a fill-up is. They are making great strides with batteries and hopefully they get it figured out so I can enjoy it but I doubt it.

Freedomin5

  • Pencil Stache
  • ****
  • Posts: 938
  • Location: China
Re: Is Tesla a good investment?
« Reply #4 on: March 23, 2018, 04:00:40 AM »
Could TSLA be a 10 bagger a decade from now? 

Let me consult my crystal ball and get back to you.

All kidding aside, as others have mentioned, put some fun money in there if you think it might be your golden goose, but I wouldn't bet my life savings on this one stock. I myself have $1000 in TSLA. I just think the cars are pretty -- I like the concept.

SwitchActiveDWG

  • 5 O'Clock Shadow
  • *
  • Posts: 88
Re: Is Tesla a good investment?
« Reply #5 on: March 23, 2018, 05:08:46 AM »
This is the "get rich slowly" forum, not the "magic 8 ball hot stock pick" forum.  Tesla could be worth a trillion dollars someday, or it could keep plodding along. How long are you willing to sit on the stock and find out?  Apple was the stock to own in the mid 80s, nearly became worthless in the 90s, and is now the biggest company on Earth. You only needed to wait 30 years to reach that point and never in that period ever think that you had made a bad decision buying.  That's the thought process you need to have whenever you think about buying an individual stock.  You also need to ask what you're foregoing by buying that hopefully profitable stock now rather than something you know is going to be more reliable in giving you a return on your investment.

This. Individual equities are entertainment money. Buy it if you would value having some Tesla stock but have the correct mindset about it.

WYOGO

  • Stubble
  • **
  • Posts: 153
  • Location: Salt Lake City
  • Great Basin
Re: Is Tesla a good investment?
« Reply #6 on: March 23, 2018, 07:25:21 PM »
Iíd like to believe they are competitively positioned in the market place. I even purchased a 17í Model S but leave the stock alone. It really is not consistent with my investment ideology. The car is absolutely incredible. First vehicle I have not even a hint of buyers remorse over.

I think the long term outlook is far more favorable for profitability than the near term.

EricL

  • Pencil Stache
  • ****
  • Posts: 802
Re: Is Tesla a good investment?
« Reply #7 on: March 23, 2018, 07:45:48 PM »
The first time I heard of Tesla they were building electric high performance sports cars.  The idea was to raise capital to later produce consumer electric cars that didn't suck.  I laughed because they started selling them just as gas went up and everyone wanted a good electric car and nobody could afford a high performance electric sports car.  At least not anyone who couldn't already afford a Lamborghini.  The joke was on me.  Tesla had crap timing.  But they had the tech savvy to build a high performance electric car.  Something I should've considered more carefully. Once they got things on an even keel, their stock went from $20 to $200.

I figured I'd already missed the big growth opportunity.  But I examined Tesla a little more closely.  The CEO, Elon Musk is a visionary, with his fingers in all sorts of tech pies from rockets to goofy flamethrowers.  Tesla is a futuristic company that is near fully automated.  It produces sophisticated automobiles with a fraction of the workforce.  There's a whole thread on this board about how automation will kill jobs.  But for an investor, that's very promising.  So I invested at "the top" of $200.  The stock, while volatile, hasn't disappointed.  I expect it will have serious ups and downs over the next few years.  But overall I think it's a good buy and hold.

Still prefer Index Funds though.


Telecaster

  • Handlebar Stache
  • *****
  • Posts: 1224
  • Location: Seattle, WA
Re: Is Tesla a good investment?
« Reply #8 on: March 23, 2018, 08:55:02 PM »
There is no moat.   Two years ago if you wanted a high-end performance electric car, your only choice was Tesla.  Within a year or two, nearly every high-end manufacturer will have an electric vehicle.  Porsche, Mercedes, BMW, etc. 

WYOGO

  • Stubble
  • **
  • Posts: 153
  • Location: Salt Lake City
  • Great Basin
Re: Is Tesla a good investment?
« Reply #9 on: March 23, 2018, 10:10:30 PM »
There is no moat.   Two years ago if you wanted a high-end performance electric car, your only choice was Tesla.  Within a year or two, nearly every high-end manufacturer will have an electric vehicle.  Porsche, Mercedes, BMW, etc.

Ahhh yes but with no charging infrastructure and a number of years behind establishing one, the network of ever increasing Tesla Superchargers, 1100 or more currently, enabling interstate travel globally is quite the moat. Trust me when I say few people will purchase 60-100K plus electric cars that cannot travel interstates easily with a reasonably fast and convienient charging solution. Basic fully electric cars like the Nissan Leaf are city commuter cars and most who own them have other long distance travel solutions. Teslaís are suitable for interstate travel offering both the range and charging solutions required.

Add OTA software updates improving the car and adding features,  including the one I received yesterday that substantially improves AP2 enhanced autopilot, there is not a single offering, concept or otherwise, that offers a better value proposition currently in the premium, high performance fully electric market.

I am reminded courtesy of the New York Times that ...ĒOverall, the Tesla Model S is the best electric car you can buy, and one of the best cars of any type.Ē

They are well positioned from a brand/product standpoint, but that is only one piece.
« Last Edit: March 23, 2018, 10:21:14 PM by WYOGO »

CCCA

  • Bristles
  • ***
  • Posts: 441
  • Location: Bay Area, California
  • born before the 80's
    • FI programming
Re: Is Tesla a good investment?
« Reply #10 on: March 23, 2018, 10:42:04 PM »
There is no moat.   Two years ago if you wanted a high-end performance electric car, your only choice was Tesla.  Within a year or two, nearly every high-end manufacturer will have an electric vehicle.  Porsche, Mercedes, BMW, etc.

Ahhh yes but with no charging infrastructure and a number of years behind establishing one, the network of ever increasing Tesla Superchargers, 1100 or more currently, enabling interstate travel globally is quite the moat. Trust me when I say few people will purchase 60-100K plus electric cars that cannot travel interstates easily with a reasonably fast and convienient charging solution. Basic fully electric cars like the Nissan Leaf are city commuter cars and most who own them have other long distance travel solutions. Tesla’s are suitable for interstate travel offering both the range and charging solutions required.

Add OTA software updates improving the car and adding features,  including the one I received yesterday that substantially improves AP2 enhanced autopilot, there is not a single offering, concept or otherwise, that offers a better value proposition currently in the premium, high performance fully electric market.

I am reminded courtesy of the New York Times that ...”Overall, the Tesla Model S is the best electric car you can buy, and one of the best cars of any type.”

They are well positioned from a brand/product standpoint, but that is only one piece.


I consider Tesla like alot of people considered Apple about 5 years ago.  Everyone said Android and Samsung and (insert iPhone killer companies) would eat their lunch.  They thought that all of the other companies would make phones that were as good or better than Apple and once that happened, Apple would collapse and fade away to oblivion. Obviously that didn't happen.


I feel like lots of people felt about Apple back then, i.e. Tesla's got some pretty good products, but their lead in the space can't last for much longer and when all the big car companies get into this space, Tesla won't be able to keep their lead up anymore. 
They may be a fine niche car maker with a good brand, but their current market cap cannot be justified in that scenario, where they are a top 20 car maker not a top 5. 
Now I have no idea whether they will go the way of most startups and fail after being targeted by the "big players" or they will, like Apple, prove everyone wrong, but the former seems more likely than the latter.


Charging infrastructure is not as big of a competitive advantage as you might think.  Government (federal/state/local) are all trying to push for more infrastructure and many private companies are trying to do the same.  If you look at this map, you can toggle on and off the superchargers and see that, their network is significant, no doubt about it, but you're not going to be stranded if you only had to use non-Tesla branded chargers, though you may have to pay.
 
https://www.afdc.energy.gov/fuels/electricity_locations.html#/find/nearest?fuel=ELEC

edited to add: These large battery electric vehicles don't really need local charging since you can go 200+ miles on a charge and you'll be at home (and able to charge) much more frequently than every 200 miles.  It's only on longer inter-city trips that you'll need charging infrastructure and that's more straightforward to install with decent coverage (along interstates, US highways etc. . .).
« Last Edit: March 23, 2018, 10:56:51 PM by CCCA »

Freedomin5

  • Pencil Stache
  • ****
  • Posts: 938
  • Location: China
Re: Is Tesla a good investment?
« Reply #11 on: March 24, 2018, 05:27:21 AM »
Nobodyís mentioned what Tesla is doing in China. There are quite a few Teslas on the road. And Iím sure theyíre probably building super charging thingies throughout China.

tyler2016

  • 5 O'Clock Shadow
  • *
  • Posts: 62
    • Tyler's Guides
Re: Is Tesla a good investment?
« Reply #12 on: March 24, 2018, 07:52:02 AM »
Forget the cars for a moment. Right now Tesla has a market cap on par with GM, Ford, and the other big automakers. Take a look at Tesla's revenue and assets compared to those. Even with an insane growth rate, it would be a long time before making any money based on increased book value or earnings. Any return at this point will most likely be speculative. I'm not a CFA or anything, but I don't recommend any serious investment in individual securities unless you have read Benjamin Graham's books The Intelligent Investor and Security Analysis.

forummm

  • Walrus Stache
  • *******
  • Posts: 7360
  • Senior Mustachian
Re: Is Tesla a good investment?
« Reply #13 on: March 24, 2018, 08:41:46 AM »
Buying TSLA shares is a great idea. But only if your goal is to learn what it feels like to have a stock you own go to zero in a bankruptcy. It's the single best short in a market full of overvalued companies. The unsecured bondholders will also lose most of their money (and bondholders have to get 100% of their money back before shareholders get a penny). I think the odds of bankruptcy this year are over 10% and over 70% by the end of next year. They will lose about $1 billion this quarter, and the same next quarter, and will lose at least $500 million per quarter even if they eventually can start making 5000 Model 3's per week (which I don't think they can do until next year, even if they are still in business).

The stock price got so out of control because of incredibly naive people who have no idea what they are doing with investing, but did listen to the media worship and maniacal proclamations from Musk (who routinely intentionally misleads investors in order to separate them from their cash). People are going to lose enormous amounts of money as reality hits. Don't be one of those people.

forummm

  • Walrus Stache
  • *******
  • Posts: 7360
  • Senior Mustachian
Re: Is Tesla a good investment?
« Reply #14 on: March 24, 2018, 08:46:23 AM »
Tesla intends to be more than just a car company. Itís woefully unprofitable. However, so has been amazon throughout its life.

It's amazing how the canard that Tesla has any similarities to Amazon persists. Amazon has had persistently strong positive cash flow for almost 2 decades. Tesla has had persistently strong cash burn for their entire 14 years. Tesla is 100% dependent on frequent infusions of fresh investor cash while Amazon is entirely self funded. As soon as Tesla runs out of enough gullible donors to their massive cash bonfire, bankruptcy will incur. Amazon is merely hugely overvalued. Tesla is a $0.

SnackDog

  • Handlebar Stache
  • *****
  • Posts: 1092
  • Location: Latin America
Re: Is Tesla a good investment?
« Reply #15 on: March 24, 2018, 09:03:38 AM »
Model 3 ramp-up will determine the fate of Tesla.  They will either figure out the production problems and ramp up soon or they will run out of cash and investors will sue, sort of like Tucker.  It could be a very, very exciting stock to own, either way.

nick663

  • Stubble
  • **
  • Posts: 221
  • Location: midwest
Re: Is Tesla a good investment?
« Reply #16 on: March 24, 2018, 09:14:04 AM »
Tesla seems to have some fundamental flaws and I believe they all track back to Elon.  He is a visionary but he needs to be insulated from the manufacturing side of the business because his late changes and micromanagement does not mesh well with design freezes and the manufacture of a product.  The bad part is they are located in an area that is short on manufacturing experience so few are challenging his ideas.

On top of that, their market cap is on par with automakers that already mass manufacture vehicles at a large profit.  If everything goes perfectly, TSLA should have a valuation in the region it's at right now... and there is nothing in Tesla's past to demonstrate things will go perfectly (much the opposite).

BTDretire

  • Handlebar Stache
  • *****
  • Posts: 2099
Re: Is Tesla a good investment?
« Reply #17 on: March 24, 2018, 09:14:39 AM »
The conventional wisdom is,
"Buy low and sell high, and if it doesn't go up don't buy it."

forummm

  • Walrus Stache
  • *******
  • Posts: 7360
  • Senior Mustachian
Re: Is Tesla a good investment?
« Reply #18 on: March 24, 2018, 09:29:26 AM »
Model 3 ramp-up will determine the fate of Tesla.  They will either figure out the production problems and ramp up soon or they will run out of cash and investors will sue, sort of like Tucker.  It could be a very, very exciting stock to own, either way.

Even if they ramp up the Model 3 soon they will still be losing several billion dollars per year. They lose money on the S, X, and 3.

Also the "Model 3 ramp" is one of the canards that Musk has gotten investors and the media to believe. No other car maker has a production ramp. They just go through all the development and testing of the vehicle (which Tesla skipped) and then turn on the switch at the factory and start mass producing cars. The new Leaf just came on the market and they are already selling about 10,000 per month. No "ramp", no quality problems, no massive losses, and no restriction of which version of the car is available. Just cars that work and are available.

TomTX

  • Magnum Stache
  • ******
  • Posts: 2920
  • Location: Texas
Re: Is Tesla a good investment?
« Reply #19 on: March 24, 2018, 09:53:26 AM »
Model 3 ramp-up will determine the fate of Tesla.  They will either figure out the production problems and ramp up soon or they will run out of cash and investors will sue, sort of like Tucker.  It could be a very, very exciting stock to own, either way.

Even if they ramp up the Model 3 soon they will still be losing several billion dollars per year. They lose money on the S, X, and 3.

Um, no. The "Lose money on S and X" is something being pushed by Seeking Alpha and the other shorts. Tesla has a healthy gross profit on the S and the X. They're dumping a lot of money into SG&A (building superchargers, service centers, et cetera) and R&D (autonomous driving, semi, pickup truck, crossover "model Y", storage, solar roof, etc.)

Model 3 had depreciation for the production line spread across a couple thousand cars last year. Having it spread across ~100x as many will help a lot.

Quote

Also the "Model 3 ramp" is one of the canards that Musk has gotten investors and the media to believe. No other car maker has a production ramp. They just go through all the development and testing of the vehicle (which Tesla skipped) and then turn on the switch at the factory and start mass producing cars. The new Leaf just came on the market and they are already selling about 10,000 per month. No "ramp", no quality problems, no massive losses, and no restriction of which version of the car is available. Just cars that work and are available.

The new Leaf isn't a brand new design on a brand new production line. It's being produced on the same lines as the prior Leaf. It's just a model year improvement. Huge difference.

TomTX

  • Magnum Stache
  • ******
  • Posts: 2920
  • Location: Texas
Re: Is Tesla a good investment?
« Reply #20 on: March 24, 2018, 09:59:22 AM »
1 stock is always dangerous unless you have the extra money to play with.

As for the car itself..... I don't like it. My buddy has one. We had the choice and chose a Maserati. While he was looking for a charging station we were driving all we wanted to. If he leaves his house in Austin he has to plan to stop in Waco to charge if he comes to our house in Fort Worth. And it's not just a quick thing like a fill-up is. They are making great strides with batteries and hopefully they get it figured out so I can enjoy it but I doubt it.

Depends how often he drives from Austin to Ft. Worth (or other long distance travel) - the rest of the time he can just recharge overnight in the garage instead of having to go to the gas station.  With a new Tesla - if he stays overnight and you have a dryer outlet in your garage (or he stays at a hotel with a destination charger) - he has no need to stop either direction. If he has an older S60, he might need to top off for 5 minutes at the Supercharger.

That "not just a quick thing" to Supercharge is still FAR faster than any other charging network for any other car. Agreed that it's just a barely tolerable recharge speed.

Disclosure: I do have a Model 3 reservation. I only own the stock as part of VTI.

MayDay

  • Magnum Stache
  • ******
  • Posts: 3576
Re: Is Tesla a good investment?
« Reply #21 on: March 24, 2018, 10:12:27 AM »
I find their issues getting the cheap car manufactured to be fascinating.

I hope eventually be some tell all's come put about it.

What the hell is going so wrong? Anyone have speculation?

Adam Zapple

  • Stubble
  • **
  • Posts: 204
Re: Is Tesla a good investment?
« Reply #22 on: March 24, 2018, 12:22:25 PM »
I own the stock because after missing the boat on Amazon, Netflix and Apple, I decided that, even though they appear to be overvalued at current levels, I wasn't going to miss the boat on another potential "game changer."  As others have suggested, I only invest in individual companies with fun money.  I'm up about 35% on it and have a stop-loss set so I can't lose anything on it.

TomTX

  • Magnum Stache
  • ******
  • Posts: 2920
  • Location: Texas
Re: Is Tesla a good investment?
« Reply #23 on: March 24, 2018, 07:49:04 PM »
I find their issues getting the cheap car manufactured to be fascinating.

I hope eventually be some tell all's come put about it.

What the hell is going so wrong? Anyone have speculation?

Well, they had a plan to reach a 10k/week rate by the end of 2020 (originally expressed as a "500k/year rate by the end of 2020, which is the same thing, but was repeatedly misinterpreted as 500k IN 2020, so they switched to talking about weekly rate)

When the response to the unveiling was so overwhelming (~400k reservations) - they said they would try to reach that rate by 2018, pulling it in two whole years. This is an insanely aggressive schedule for a brand new car design on a brand new production line different from any production line they have done before. Plus brand new automated battery pack production facilities for their brand new larger 2170 cells.

From what they have said, the main bottleneck was the new automated pack assembly.  This is apparently being resolved - the number of VIN registrations went WAY up last week.

The whole "going so wrong" is overblown. Multiple estimates have put Model 3 production for January and February ahead of Bolt production - and Bolt had already been in production for a year before Model 3. Additionally, GM outsources the powertrain (including pack assembly) to LG, and has FAR longer history building cars and FAR more experienced workforce on the assembly line.

nick663

  • Stubble
  • **
  • Posts: 221
  • Location: midwest
Re: Is Tesla a good investment?
« Reply #24 on: March 24, 2018, 09:33:14 PM »
I find their issues getting the cheap car manufactured to be fascinating.

I hope eventually be some tell all's come put about it.

What the hell is going so wrong? Anyone have speculation?

Well, they had a plan to reach a 10k/week rate by the end of 2020 (originally expressed as a "500k/year rate by the end of 2020, which is the same thing, but was repeatedly misinterpreted as 500k IN 2020, so they switched to talking about weekly rate)

When the response to the unveiling was so overwhelming (~400k reservations) - they said they would try to reach that rate by 2018, pulling it in two whole years. This is an insanely aggressive schedule for a brand new car design on a brand new production line different from any production line they have done before. Plus brand new automated battery pack production facilities for their brand new larger 2170 cells.

From what they have said, the main bottleneck was the new automated pack assembly.  This is apparently being resolved - the number of VIN registrations went WAY up last week.

The whole "going so wrong" is overblown. Multiple estimates have put Model 3 production for January and February ahead of Bolt production - and Bolt had already been in production for a year before Model 3. Additionally, GM outsources the powertrain (including pack assembly) to LG, and has FAR longer history building cars and FAR more experienced workforce on the assembly line.
It's not overblown at all.  The original target was to produce 5,000 cars per week by the end of 2017.  They now say they will hit that target by the end of Q2.  6 months late to a production target is a huge deal.

The Bolt comparison is bs as well as that was never promised as a high volume car and they still had to idle the plant last year due to a lack of demand.  Days of inventory is low right now but that may be by design as they know the demand right now is frustrated Model 3.  If Tesla pulls a miracle and actually hits a deadline (there is a first time for everything) they don't want to be sitting on 70 days of inventory.

HermanCain

  • 5 O'Clock Shadow
  • *
  • Posts: 27
Re: Is Tesla a good investment?
« Reply #25 on: March 25, 2018, 12:16:45 AM »
You didn't miss the boat on Amazon. Its shareprice does not reflect its actual value as a share. Basically, there is a lot of speculation behind its shareprice.

Yes, it has a HUGE growth. But that does not mean that dividends even really exist. Management chooses to expand as there is room for that--walmart and costco are competitors. Walmart's revenue is 400 billion last I checked, so there is a way to go.

You missed the boat of speculative investors. I don't think you really missed anything.

If you want to invest, as a strategy, in beating the speculators, you're banking on predicting the future. Nobody can do that.

If you owned VSTAX you would come out fine...

TomTX

  • Magnum Stache
  • ******
  • Posts: 2920
  • Location: Texas
Re: Is Tesla a good investment?
« Reply #26 on: March 25, 2018, 01:20:43 PM »
I find their issues getting the cheap car manufactured to be fascinating.

I hope eventually be some tell all's come put about it.

What the hell is going so wrong? Anyone have speculation?

Well, they had a plan to reach a 10k/week rate by the end of 2020 (originally expressed as a "500k/year rate by the end of 2020, which is the same thing, but was repeatedly misinterpreted as 500k IN 2020, so they switched to talking about weekly rate)

When the response to the unveiling was so overwhelming (~400k reservations) - they said they would try to reach that rate by 2018, pulling it in two whole years. This is an insanely aggressive schedule for a brand new car design on a brand new production line different from any production line they have done before. Plus brand new automated battery pack production facilities for their brand new larger 2170 cells.

From what they have said, the main bottleneck was the new automated pack assembly.  This is apparently being resolved - the number of VIN registrations went WAY up last week.

The whole "going so wrong" is overblown. Multiple estimates have put Model 3 production for January and February ahead of Bolt production - and Bolt had already been in production for a year before Model 3. Additionally, GM outsources the powertrain (including pack assembly) to LG, and has FAR longer history building cars and FAR more experienced workforce on the assembly line.
It's not overblown at all.  The original target was to produce 5,000 cars per week by the end of 2017.  They now say they will hit that target by the end of Q2.  6 months late to a production target is a huge deal.

The Bolt comparison is bs as well as that was never promised as a high volume car and they still had to idle the plant last year due to a lack of demand.  Days of inventory is low right now but that may be by design as they know the demand right now is frustrated Model 3.  If Tesla pulls a miracle and actually hits a deadline (there is a first time for everything) they don't want to be sitting on 70 days of inventory.

No, the ORIGINAL target for Model 3 was 10k/week at the end of 2020. As I already stated. They attempted to speed that up to meet overwhelming customer demand, and made multiple statements that they expected to miss the revised targets. They also said they expected to miss the July 2017 planned start of production.

Why is Bolt comparison BS? They have many thousands of outstanding outside the US - years worth in some markets.  GM also promoted it as the first practical, mass market EV

Entirely a fair comparison. Unless you think GM is just intentionally dragging their feet - which is a plausible perspective.


nick663

  • Stubble
  • **
  • Posts: 221
  • Location: midwest
Re: Is Tesla a good investment?
« Reply #27 on: March 25, 2018, 01:59:20 PM »
I find their issues getting the cheap car manufactured to be fascinating.

I hope eventually be some tell all's come put about it.

What the hell is going so wrong? Anyone have speculation?

Well, they had a plan to reach a 10k/week rate by the end of 2020 (originally expressed as a "500k/year rate by the end of 2020, which is the same thing, but was repeatedly misinterpreted as 500k IN 2020, so they switched to talking about weekly rate)

When the response to the unveiling was so overwhelming (~400k reservations) - they said they would try to reach that rate by 2018, pulling it in two whole years. This is an insanely aggressive schedule for a brand new car design on a brand new production line different from any production line they have done before. Plus brand new automated battery pack production facilities for their brand new larger 2170 cells.

From what they have said, the main bottleneck was the new automated pack assembly.  This is apparently being resolved - the number of VIN registrations went WAY up last week.

The whole "going so wrong" is overblown. Multiple estimates have put Model 3 production for January and February ahead of Bolt production - and Bolt had already been in production for a year before Model 3. Additionally, GM outsources the powertrain (including pack assembly) to LG, and has FAR longer history building cars and FAR more experienced workforce on the assembly line.
It's not overblown at all.  The original target was to produce 5,000 cars per week by the end of 2017.  They now say they will hit that target by the end of Q2.  6 months late to a production target is a huge deal.

The Bolt comparison is bs as well as that was never promised as a high volume car and they still had to idle the plant last year due to a lack of demand.  Days of inventory is low right now but that may be by design as they know the demand right now is frustrated Model 3.  If Tesla pulls a miracle and actually hits a deadline (there is a first time for everything) they don't want to be sitting on 70 days of inventory.

No, the ORIGINAL target for Model 3 was 10k/week at the end of 2020. As I already stated. They attempted to speed that up to meet overwhelming customer demand, and made multiple statements that they expected to miss the revised targets. They also said they expected to miss the July 2017 planned start of production.

Why is Bolt comparison BS? They have many thousands of outstanding outside the US - years worth in some markets.  GM also promoted it as the first practical, mass market EV

Entirely a fair comparison. Unless you think GM is just intentionally dragging their feet - which is a plausible perspective.
Please provide evidence of that original Model 3 target because I was not aware of that and my google skills are letting me down.

The Bolt comparison is BS because factories are set up around a specific volume.  All indications are that GM used a volume of around 30k units annually for the Bolt which is the pace they were being produced in the 2nd half of last year.  You can't compare that to Tesla who has a factory built around building 500k vehicles per year but delivered 1550 in Q4 last year (when they were supposed to be building 5k/week) and claim that Tesla is doing well.  The amount of investment at Fremont is staggering and running at a fraction of capacity is a money losing proposition.

Also, GM is increasing production later this year of the Bolt: https://www.fool.com/investing/2018/03/08/why-does-general-motors-want-to-boost-production-o.aspx

TomTX

  • Magnum Stache
  • ******
  • Posts: 2920
  • Location: Texas
Re: Is Tesla a good investment?
« Reply #28 on: March 25, 2018, 03:13:04 PM »

Please provide evidence of that original Model 3 target because I was not aware of that and my google skills are letting me down.
Sure thing. Here's an article written when the change was made:

https://electrek.co/2016/05/04/tesla-tsla-surge-model-3-production/

Quote

The Bolt comparison is BS because factories are set up around a specific volume.  All indications are that GM used a volume of around 30k units annually for the Bolt which is the pace they were being produced in the 2nd half of last year.  You can't compare that to Tesla who has a factory built around building 500k vehicles per year but delivered 1550 in Q4 last year (when they were supposed to be building 5k/week) and claim that Tesla is doing well.  The amount of investment at Fremont is staggering and running at a fraction of capacity is a money losing proposition.

Also, GM is increasing production later this year of the Bolt: https://www.fool.com/investing/2018/03/08/why-does-general-motors-want-to-boost-production-o.aspx

I should hope GM would boost production later this year. January + February projects out to about 15k Bolts in 2018, which is just pitiful.

I won't say Tesla is doing well with their ramp, but the delays are understandable. They are a new car company that 6 years ago had never produced a single car on an assembly line. They are trying to set up a new and very different assembly line on a brand new model. 

The factory is not "set up" for that full production yet. They will have to add more equipment (possibly a full additional assembly line) for 10k/week (500k/year) of Model 3.

Basically, they are failing to meet the accelerated goals - they are on track to meet the original goals from early 2016:

5k cars per week by the end of 2018
10k cars per week by the end of 2020

We will learn more in early April when they release quarterly numbers. One hopeful sign is the increase in Model 3 VIN numbers registered - almost 4,700 last week.

nick663

  • Stubble
  • **
  • Posts: 221
  • Location: midwest
Re: Is Tesla a good investment?
« Reply #29 on: March 25, 2018, 03:32:41 PM »

Please provide evidence of that original Model 3 target because I was not aware of that and my google skills are letting me down.
Sure thing. Here's an article written when the change was made:

https://electrek.co/2016/05/04/tesla-tsla-surge-model-3-production/
Looking back, it looks like we were talking about 2 different targets.  I was talking about the 5k/week target for end of 2017 that I'm not aware of changing at any point.  You were talking about the 10k/week target by end of 2018 which did move up, as your link showed.

Did the 5k/week target ever change?  Because that is the target they have missed massively and I was trying to find evidence of.

TomTX

  • Magnum Stache
  • ******
  • Posts: 2920
  • Location: Texas
Re: Is Tesla a good investment?
« Reply #30 on: March 25, 2018, 06:57:59 PM »

Please provide evidence of that original Model 3 target because I was not aware of that and my google skills are letting me down.
Sure thing. Here's an article written when the change was made:

https://electrek.co/2016/05/04/tesla-tsla-surge-model-3-production/
Looking back, it looks like we were talking about 2 different targets.  I was talking about the 5k/week target for end of 2017 that I'm not aware of changing at any point.  You were talking about the 10k/week target by end of 2018 which did move up, as your link showed.

Did the 5k/week target ever change?  Because that is the target they have missed massively and I was trying to find evidence of.

5k/week was always an interim target, originally planned as the full output of the first Model 3 production line once optimized - I'm pretty sure it was end of 2018 for the original target - but it's probably buried in some investor conference call or conference and I'm not going to spend the time to comb it out. The 10k/week rate was planned once a second full production line was set up.

ChpBstrd

  • Handlebar Stache
  • *****
  • Posts: 1037
Re: Is Tesla a good investment?
« Reply #31 on: March 25, 2018, 09:08:50 PM »
TSLA stock is a hyper-speculative bet on the future of one company's line of R&D (on the flip side, TSLA is one of the few American companies still investing in R&D).

And no, nobody on this forum or Seeking Alpha knows squat about how well they will produce cars over the next 2 years, what engineering challenges are coming, etc.

It would be nice to catch the upside of Tesla if it happens, and cap one's losses if it doesn't. Here's how to do that:
Buy the $300 call option maturing in January 2020. Risk is about $78 (price of option) instead of $301 (price of stock). If Tesla succeeds with the launch of its current products and the share price skyrockets, you will receive the upside times 3.84x leverage. If Tesla fails to get mass production off the ground or gets cut off from investor funds or whatever, you'll be glad to have only lost $78!

TL;DR: obtain almost 4x upside leverage while risking only a fraction of the money.


ColoradoTribe

  • 5 O'Clock Shadow
  • *
  • Posts: 29
Re: Is Tesla a good investment?
« Reply #32 on: March 25, 2018, 10:06:28 PM »
I've been a Tesla investor for about 4 years now and TSLA stock comprises about 5% of our net worth. My earliest stock purchases were made around $180/share.  Tesla has been a good long term investment thus far and I believe it will continue to be so for years to come. In the grand scheme, for a long-term investor, the slow Model 3 ramp is really inconsequential.  Five years from now it will not matter whether it took them an extra six months to get production up to 5k/week. We saw similar delays with the Model X and Model S ramps and both cars are leaders in there respective luxury classes with extremely high customer satisfaction and ratings.

The bottom line is electric vehicles have several key advantages over ICE vehicles. I have been a Nissan Leaf owner since 2013.

Nearly silent electric motor, most of what you hear is simply road noise.
Instant torque and superior acceleration.
No motor oil, gas, transmission fluid, radiator, etc. and very few moving parts mean reduced maintenance costs and the electric drive train can easily last 500k+ miles because you no longer have the wear and tear brought about by extreme heat and friction
Refuel at home overnight using a 110 or 220 outlet. I use a 110 outlet in my garage.
You can produce your own transportation fuel with solar panels (I've had a PV system since 2007)

Those saying that established ICE car manufacturers will simply crush Tesla are missing the point. Part of Elon's plan was to force the established majors to get serious about their EV offerings, and that is starting to happen. I suspect some will see the light too late and go bankrupt, some will go on to sell millions of EVs. Tesla doesn't need to dominate this new market. Even a 5% world market share would make Tesla wildely profitable. One also needs to consider that for the foreseeable future the supply of batteries will be the limiting factor in scaling EV production. I'm not aware of another domestic car manufacturer with plans to build a battery gigafactory like the one Tesla and Panasonic have outside Reno Nevada. That is a serious moat, along with the supercharger network. It doesn't matter how many EVs you can build if you don't have the batteries to support that production.

Lastly, Tesla is no longer just an EV company. To date, they are moving into the following areas:

Commercial trucking with the Tesla Semi, which has seen impressive deposits from several giants in the industry
Solar Roof Shingle/Panels
Grid-scale battery storage (see South Australisa grid back-up)
Autonomous Cars
Factory Automation Technology

Each of these alone could be a very profitable stand alone business. I'm not saying Tesla will come to dominate all these sectors, but I like investing in a company that is creating its own electrified ecosystem (production, storage, transportation) and has several avenues to profitability.

Tesla is one of the most shorted stocks in history. That can be frustrating at times as an investor, but it will also set-up a nice (2nd) short squeeze once the Model 3 ramp is confirmed and revenue from the Tesla energy side of the ledger ramps.

Is Tesla a sure thing? Of course not, no single stock is a sure thing, and Tesla is certainly on the higher risk side. Majorty of our investments are in broad based index funds.  For me its simple.  EVs are the future. Once scale is achieved, these cars will be cheaper to own, more fun to drive, easier to maintain, and are better for the planet.  Tesla is best positioned to lead and profit from this revolution.  I am prepared for the consequences if I'm wrong. At this point, I'm well up on my inititial investment and despite the prognostications of the shorts, the stock will never go to zero.  This is not an internet startup. There are physical plants and other tangible assets.  Absolute worst case would be a buy-out.

This is not investing advice.  Do your own research and invest only what you are prepared to lose. I'd suggest starting with a test drive.

Adam Zapple

  • Stubble
  • **
  • Posts: 204
Re: Is Tesla a good investment?
« Reply #33 on: March 28, 2018, 09:10:39 AM »
It's been a rough week

CCCA

  • Bristles
  • ***
  • Posts: 441
  • Location: Bay Area, California
  • born before the 80's
    • FI programming
Re: Is Tesla a good investment?
« Reply #34 on: March 28, 2018, 09:13:52 AM »
TSLA is having a bad month here. It’s down almost 30% and it seems like the bad news and negative sentiment is piling up. Can’t tell if it’s just a blip and will rebound or it’s on its way down further.

boarder42

  • Walrus Stache
  • *******
  • Posts: 7529
Re: Is Tesla a good investment?
« Reply #35 on: March 28, 2018, 09:26:57 AM »
i like tesla but to invest your money in a single stock or move a large portion of your AA there is a poor move.  All the big car companies who know how to produce cars will be all electrica by the mid 2020's.  Tesla is a trailblazer and helped pave the way for a cleaner earth but i dont currently see how they continue to grow unless the beat the big guys at automation - which currently it appears GM is winning.

wordnerd

  • Pencil Stache
  • ****
  • Posts: 959
Re: Is Tesla a good investment?
« Reply #36 on: March 28, 2018, 09:45:05 AM »
This WSJ article is helpful primer on the issues Tesla is facing at the moment: https://www.wsj.com/articles/the-clock-is-ticking-faster-at-tesla-1522233639

SnackDog

  • Handlebar Stache
  • *****
  • Posts: 1092
  • Location: Latin America
Re: Is Tesla a good investment?
« Reply #37 on: March 28, 2018, 04:46:51 PM »
Their credit rating is Caa and two pretty senior finance managers recently quit. They need $2B to cover the cash shortfall this year. And the upcoming announcement of Model 3 production will be way below forecast. I suggest you short Tesla.

TomTX

  • Magnum Stache
  • ******
  • Posts: 2920
  • Location: Texas
Re: Is Tesla a good investment?
« Reply #38 on: March 28, 2018, 05:06:15 PM »
I just buy broad-based, low cost index funds ;)

Indexer

  • Handlebar Stache
  • *****
  • Posts: 1179
Re: Is Tesla a good investment?
« Reply #39 on: March 28, 2018, 10:11:29 PM »
@ColoradoTribe:  I agree EVs will do great things. However, Tesla has to still be around to benefit from that.

They have built amazing cars. They have big dreams for the future. I personally want them to be successful, I want to be able to buy a used Model 3 in the future. I want to be able to have solar with a battery back up. The problem is that investors have been pumping up the stock based on the dreams of what Tesla 'could be,' and not what it is today. Expectations have been set unrealistically high and Tesla has borrowed money based on those expectations.


Quote
Five years from now it will not matter whether it took them an extra six months to get production up to 5k/week.

Actually, in reality, it might matter a lot. It could be the difference between Tesla producing 1 million cars/year in 5 years VS bankruptcy within 12 months. Tesla will need more funding soon. Bond investors don't live in the clouds, they don't trade based on dreams of what could be in 5-10 years. Bond investors like results, and they like those results printed on boring balance sheets and cash flow statements. If Tesla doesn't increase Model 3 production, FAST, like really FAST, then the next time they issue bonds they might not find willing investors. Tesla isn't Apple or Google, or even Ford. Those companies have cash on hand. They can handle shocks. They can recover from mistakes. Tesla is running on borrowed money and broken promises. Many great companies have fallen prey to big dreams... and too much leverage.

ColoradoTribe

  • 5 O'Clock Shadow
  • *
  • Posts: 29
Re: Is Tesla a good investment?
« Reply #40 on: March 28, 2018, 11:16:04 PM »
@ColoradoTribe:  I agree EVs will do great things. However, Tesla has to still be around to benefit from that.

They have built amazing cars. They have big dreams for the future. I personally want them to be successful, I want to be able to buy a used Model 3 in the future. I want to be able to have solar with a battery back up. The problem is that investors have been pumping up the stock based on the dreams of what Tesla 'could be,' and not what it is today. Expectations have been set unrealistically high and Tesla has borrowed money based on those expectations.


Quote
Five years from now it will not matter whether it took them an extra six months to get production up to 5k/week.

Actually, in reality, it might matter a lot. It could be the difference between Tesla producing 1 million cars/year in 5 years VS bankruptcy within 12 months. Tesla will need more funding soon. Bond investors don't live in the clouds, they don't trade based on dreams of what could be in 5-10 years. Bond investors like results, and they like those results printed on boring balance sheets and cash flow statements. If Tesla doesn't increase Model 3 production, FAST, like really FAST, then the next time they issue bonds they might not find willing investors. Tesla isn't Apple or Google, or even Ford. Those companies have cash on hand. They can handle shocks. They can recover from mistakes. Tesla is running on borrowed money and broken promises. Many great companies have fallen prey to big dreams... and too much leverage.

People have been predicting Tesla's imminent bankruptcy and demise for as long as I've been following the company/stock. I bought more common shares today and will sleep well tonight. Those aligned against this company and its disruption (not you personally) know that once the model 3 ramp is complete that Tesla becomes profitable and this narrative goes away, so they're milking it one last time. I see indication that the model 3 ramp has picked up to 1500 - 2000/week the past week or two. They'll likely hit 2500/week in the first of Q2, in plenty of time to satisfy bond investors. There was a chance of Tesla failing in the early going, the chances of such a failure now are very low IMO. We'll know for sure in a few years.

Gray_ghost

  • 5 O'Clock Shadow
  • *
  • Posts: 8
Re: Is Tesla a good investment?
« Reply #41 on: March 29, 2018, 09:27:00 AM »
The first time I heard of Tesla they were building electric high performance sports cars.  The idea was to raise capital to later produce consumer electric cars that didn't suck.  I laughed because they started selling them just as gas went up and everyone wanted a good electric car and nobody could afford a high performance electric sports car.  At least not anyone who couldn't already afford a Lamborghini.  The joke was on me.  Tesla had crap timing.  But they had the tech savvy to build a high performance electric car.  Something I should've considered more carefully. Once they got things on an even keel, their stock went from $20 to $200.

I figured I'd already missed the big growth opportunity.  But I examined Tesla a little more closely.  The CEO, Elon Musk is a visionary, with his fingers in all sorts of tech pies from rockets to goofy flamethrowers. Tesla is a futuristic company that is near fully automated.  It produces sophisticated automobiles with a fraction of the workforce.  There's a whole thread on this board about how automation will kill jobs.  But for an investor, that's very promising.  So I invested at "the top" of $200.  The stock, while volatile, hasn't disappointed.  I expect it will have serious ups and downs over the next few years.  But overall I think it's a good buy and hold.

Still prefer Index Funds though.


You may want to do some research on this one , although I agree with the rest of your sentiments. I work in the automotive industry and as it sits Tesla is light years behind in automation and one of their largest struggles currently is  LACK of automation.

Ben Hogan

  • Stubble
  • **
  • Posts: 129
  • Location: Texas
Re: Is Tesla a good investment?
« Reply #42 on: March 29, 2018, 09:35:32 AM »
Bloomberg said 1/3 of their income goes straight to interest on loans. That cant be good or last?

CCCA

  • Bristles
  • ***
  • Posts: 441
  • Location: Bay Area, California
  • born before the 80's
    • FI programming
Re: Is Tesla a good investment?
« Reply #43 on: March 29, 2018, 10:54:03 AM »
@ColoradoTribe:  I agree EVs will do great things. However, Tesla has to still be around to benefit from that.

They have built amazing cars. They have big dreams for the future. I personally want them to be successful, I want to be able to buy a used Model 3 in the future. I want to be able to have solar with a battery back up. The problem is that investors have been pumping up the stock based on the dreams of what Tesla 'could be,' and not what it is today. Expectations have been set unrealistically high and Tesla has borrowed money based on those expectations.


Quote
Five years from now it will not matter whether it took them an extra six months to get production up to 5k/week.

Actually, in reality, it might matter a lot. It could be the difference between Tesla producing 1 million cars/year in 5 years VS bankruptcy within 12 months. Tesla will need more funding soon. Bond investors don't live in the clouds, they don't trade based on dreams of what could be in 5-10 years. Bond investors like results, and they like those results printed on boring balance sheets and cash flow statements. If Tesla doesn't increase Model 3 production, FAST, like really FAST, then the next time they issue bonds they might not find willing investors. Tesla isn't Apple or Google, or even Ford. Those companies have cash on hand. They can handle shocks. They can recover from mistakes. Tesla is running on borrowed money and broken promises. Many great companies have fallen prey to big dreams... and too much leverage.

People have been predicting Tesla's imminent bankruptcy and demise for as long as I've been following the company/stock. I bought more common shares today and will sleep well tonight. Those aligned against this company and its disruption (not you personally) know that once the model 3 ramp is complete that Tesla becomes profitable and this narrative goes away, so they're milking it one last time. I see indication that the model 3 ramp has picked up to 1500 - 2000/week the past week or two. They'll likely hit 2500/week in the first of Q2, in plenty of time to satisfy bond investors. There was a chance of Tesla failing in the early going, the chances of such a failure now are very low IMO. We'll know for sure in a few years.


Sure people have predicted bankruptcy before but past performance cannot be extrapolated forward.  This is clearly make-or-break time for Tesla.  In the past investors have bailed them out, by giving them more cash.  However, given that this is what the company has been shooting for, the high-volume, mass market EV, if they can be successful in ramping up production (and have enough demand) then they should be okay.  If not, they may go bankrupt in the next 1-12 months. 


However, even if they are successful at their ramp up, the main remaining potential worry that I see is that they will likely not be a top-5 automaker and thus cannot justify their market cap.  Once they stop being a company valued on future potential and our desire to see a sustainable transportation future but on actual sales and revenue and profits and reliability and all the other boring stuff that most blue chip companies are judged on, then I see it as unlikely that their sales will be similar to the big car makers.  Remember all the other guys are bringing out EVs and PHEVs too and that car buyers are notoriously picky about their cars in terms of brand, design, model, style, etc. . .  Teslas, despite their cool factor, are not for everyone. Just like Priuses or F-150s or Camrys or Accords aren't.   

hodedofome

  • Handlebar Stache
  • *****
  • Posts: 1205
  • Age: 38
  • Location: Texas
Re: Is Tesla a good investment?
« Reply #44 on: March 29, 2018, 02:22:30 PM »
I have Tesla but it's not the only individual stock I own. I wouldn't tell someone to own index funds + 1 stock you think will do well. Own index funds + a basket of stocks you think will do well. Here's what I have:

Index funds

Volatility trading strategy

Individual Stocks:

Facebook FB
Amazon AMZN
Netflix NFLX
Tesla TSLA
Hubspot HUBS
Salesforce CRM
Shopify SHOP
Ringcentral RNG
Zendesk ZEN
Tencent Holdings TCEHY (Chinese company that owns WeChat which is huge over there)

With individual stocks I take the Peter Lynch approach and buy stuff I use, know and work with. I also consider companies that have super smart people running them, and attract the smartest, most motivated people in the world wanting to work for them. I don't work in biotech, so I have no business buying biotech stocks for the long run. I don't have a clue if this new medicine is gonna work out or not, because I'm not an industry insider.

Because of my job in business to business software sales, I know that everyone is using HUBS, CRM, SHOP, RNG and ZEN. I have 'insider' status in this industry, and the apps that everyone wants to use are probably good investments for the long run.

With FB, AMZN, NFLX and TSLA, those are companies run by their original founders, the founder is a genius and wants to take over the world. That's a decent company to get behind.

Of course, any one of these companies could turn a corner and stop performing well. That's why I hold a basket. I have no clue which company this might happen to, so I don't want a lot of my money tied up into any single stock.

If I have additional money come in, I'd also consider:

Apple AAPL
Google GOOGL
Alibaba BABA
Intuit INTU
Wix.com WIX
GoDaddy GDDY


CorpRaider

  • Bristles
  • ***
  • Posts: 315
    • The Corpraider Blog
Re: Is Tesla a good investment?
« Reply #45 on: March 29, 2018, 05:16:38 PM »
Probably not, but I maintain that if you are a vocal Tesla short there is a 97.3% chance you have a micro penis.

libertarian4321

  • Handlebar Stache
  • *****
  • Posts: 1308
Re: Is Tesla a good investment?
« Reply #46 on: March 29, 2018, 06:32:58 PM »
I'm a buyer of Tesla.

The car.

Not the stock.

ChpBstrd

  • Handlebar Stache
  • *****
  • Posts: 1037
Re: Is Tesla a good investment?
« Reply #47 on: March 29, 2018, 09:41:05 PM »
I have Tesla but it's not the only individual stock I own. I wouldn't tell someone to own index funds + 1 stock you think will do well. Own index funds + a basket of stocks you think will do well. Here's what I have:

Index funds

Volatility trading strategy

Individual Stocks:

Facebook FB
Amazon AMZN
Netflix NFLX
Tesla TSLA
Hubspot HUBS
Salesforce CRM
Shopify SHOP
Ringcentral RNG
Zendesk ZEN
Tencent Holdings TCEHY (Chinese company that owns WeChat which is huge over there)

With individual stocks I take the Peter Lynch approach and buy stuff I use, know and work with. I also consider companies that have super smart people running them, and attract the smartest, most motivated people in the world wanting to work for them. I don't work in biotech, so I have no business buying biotech stocks for the long run. I don't have a clue if this new medicine is gonna work out or not, because I'm not an industry insider.

Because of my job in business to business software sales, I know that everyone is using HUBS, CRM, SHOP, RNG and ZEN. I have 'insider' status in this industry, and the apps that everyone wants to use are probably good investments for the long run.

With FB, AMZN, NFLX and TSLA, those are companies run by their original founders, the founder is a genius and wants to take over the world. That's a decent company to get behind.

Of course, any one of these companies could turn a corner and stop performing well. That's why I hold a basket. I have no clue which company this might happen to, so I don't want a lot of my money tied up into any single stock.

If I have additional money come in, I'd also consider:

Apple AAPL
Google GOOGL
Alibaba BABA
Intuit INTU
Wix.com WIX
GoDaddy GDDY

You have to be careful with technical knowledge about companies with superior products. The best product/service does not always win or become most profitable. Examples: VHS vs. Betamax, BluRay vs. HD DVD, Microsoft Windows vs. Apple in the 80s-90s, Japanese vs. Harley motorcycles, Huffy bicycles vs. higher quality brands, etc.

Tesla certainly has a lot of engineers who are fans of their products, but their recent troubles illustrate the risks of stock picking based on product attributes.

ColoradoTribe

  • 5 O'Clock Shadow
  • *
  • Posts: 29
Re: Is Tesla a good investment?
« Reply #48 on: March 29, 2018, 10:26:11 PM »
@ColoradoTribe:  I agree EVs will do great things. However, Tesla has to still be around to benefit from that.

They have built amazing cars. They have big dreams for the future. I personally want them to be successful, I want to be able to buy a used Model 3 in the future. I want to be able to have solar with a battery back up. The problem is that investors have been pumping up the stock based on the dreams of what Tesla 'could be,' and not what it is today. Expectations have been set unrealistically high and Tesla has borrowed money based on those expectations.


Quote
Five years from now it will not matter whether it took them an extra six months to get production up to 5k/week.

Actually, in reality, it might matter a lot. It could be the difference between Tesla producing 1 million cars/year in 5 years VS bankruptcy within 12 months. Tesla will need more funding soon. Bond investors don't live in the clouds, they don't trade based on dreams of what could be in 5-10 years. Bond investors like results, and they like those results printed on boring balance sheets and cash flow statements. If Tesla doesn't increase Model 3 production, FAST, like really FAST, then the next time they issue bonds they might not find willing investors. Tesla isn't Apple or Google, or even Ford. Those companies have cash on hand. They can handle shocks. They can recover from mistakes. Tesla is running on borrowed money and broken promises. Many great companies have fallen prey to big dreams... and too much leverage.

People have been predicting Tesla's imminent bankruptcy and demise for as long as I've been following the company/stock. I bought more common shares today and will sleep well tonight. Those aligned against this company and its disruption (not you personally) know that once the model 3 ramp is complete that Tesla becomes profitable and this narrative goes away, so they're milking it one last time. I see indication that the model 3 ramp has picked up to 1500 - 2000/week the past week or two. They'll likely hit 2500/week in the first of Q2, in plenty of time to satisfy bond investors. There was a chance of Tesla failing in the early going, the chances of such a failure now are very low IMO. We'll know for sure in a few years.


Sure people have predicted bankruptcy before but past performance cannot be extrapolated forward.  This is clearly make-or-break time for Tesla.  In the past investors have bailed them out, by giving them more cash.  However, given that this is what the company has been shooting for, the high-volume, mass market EV, if they can be successful in ramping up production (and have enough demand) then they should be okay.  If not, they may go bankrupt in the next 1-12 months. 


However, even if they are successful at their ramp up, the main remaining potential worry that I see is that they will likely not be a top-5 automaker and thus cannot justify their market cap.  Once they stop being a company valued on future potential and our desire to see a sustainable transportation future but on actual sales and revenue and profits and reliability and all the other boring stuff that most blue chip companies are judged on, then I see it as unlikely that their sales will be similar to the big car makers.  Remember all the other guys are bringing out EVs and PHEVs too and that car buyers are notoriously picky about their cars in terms of brand, design, model, style, etc. . .  Teslas, despite their cool factor, are not for everyone. Just like Priuses or F-150s or Camrys or Accords aren't.

I think you way over simplify how easy it will be for the ICE manufacturers to turn to EVs, while maintaining their ICE production. Its hard to serve tow master. I would also point out that Tesla's biggest advantage is not their cars per se, its there ability to produce enough batteries for mass produce EVs. Unless I missed it, Ford, and GM do not have a gigafactory to mass produce the Lithium Ion batteries.

As far as valuation, the stock price will almost always stay ahead of the valuation for disruptive growth companies. THat's okay with a buy and hold strategy. Tesla is no longer a "car company", it's an energy and transportation company. As I mentioned above, Tesla is tackling grid scale battery backup/stabiliztion, residential battery storage, commercial trucking, solar roofing shingles, manufacturing automation, self-driving cars, and more. Will Tesla hit a home run with all these, no, but chances are they'll succeed on multiple fronts.

I suggest, instead of going back and forth and likely not change either of our opinions, let's make some predictions and see what happens. Here are my predictions for 2018. Tesla will finish the year:

With at least one, possibly two profitable quarters
Sell over 250,000 vehicles (S, X, M3), which would be 150% YOY growth
Stock price over $400


PS - I also predict the M3 will be named Popular Mechanics 2018 Car of the Year :)
https://www.popularmechanics.com/cars/g19605464/best-cars-2018/







« Last Edit: March 29, 2018, 10:37:24 PM by ColoradoTribe »

nick663

  • Stubble
  • **
  • Posts: 221
  • Location: midwest
Re: Is Tesla a good investment?
« Reply #49 on: March 30, 2018, 07:32:18 AM »
@ColoradoTribe:  I agree EVs will do great things. However, Tesla has to still be around to benefit from that.

They have built amazing cars. They have big dreams for the future. I personally want them to be successful, I want to be able to buy a used Model 3 in the future. I want to be able to have solar with a battery back up. The problem is that investors have been pumping up the stock based on the dreams of what Tesla 'could be,' and not what it is today. Expectations have been set unrealistically high and Tesla has borrowed money based on those expectations.


Quote
Five years from now it will not matter whether it took them an extra six months to get production up to 5k/week.

Actually, in reality, it might matter a lot. It could be the difference between Tesla producing 1 million cars/year in 5 years VS bankruptcy within 12 months. Tesla will need more funding soon. Bond investors don't live in the clouds, they don't trade based on dreams of what could be in 5-10 years. Bond investors like results, and they like those results printed on boring balance sheets and cash flow statements. If Tesla doesn't increase Model 3 production, FAST, like really FAST, then the next time they issue bonds they might not find willing investors. Tesla isn't Apple or Google, or even Ford. Those companies have cash on hand. They can handle shocks. They can recover from mistakes. Tesla is running on borrowed money and broken promises. Many great companies have fallen prey to big dreams... and too much leverage.

People have been predicting Tesla's imminent bankruptcy and demise for as long as I've been following the company/stock. I bought more common shares today and will sleep well tonight. Those aligned against this company and its disruption (not you personally) know that once the model 3 ramp is complete that Tesla becomes profitable and this narrative goes away, so they're milking it one last time. I see indication that the model 3 ramp has picked up to 1500 - 2000/week the past week or two. They'll likely hit 2500/week in the first of Q2, in plenty of time to satisfy bond investors. There was a chance of Tesla failing in the early going, the chances of such a failure now are very low IMO. We'll know for sure in a few years.


Sure people have predicted bankruptcy before but past performance cannot be extrapolated forward.  This is clearly make-or-break time for Tesla.  In the past investors have bailed them out, by giving them more cash.  However, given that this is what the company has been shooting for, the high-volume, mass market EV, if they can be successful in ramping up production (and have enough demand) then they should be okay.  If not, they may go bankrupt in the next 1-12 months. 


However, even if they are successful at their ramp up, the main remaining potential worry that I see is that they will likely not be a top-5 automaker and thus cannot justify their market cap.  Once they stop being a company valued on future potential and our desire to see a sustainable transportation future but on actual sales and revenue and profits and reliability and all the other boring stuff that most blue chip companies are judged on, then I see it as unlikely that their sales will be similar to the big car makers.  Remember all the other guys are bringing out EVs and PHEVs too and that car buyers are notoriously picky about their cars in terms of brand, design, model, style, etc. . .  Teslas, despite their cool factor, are not for everyone. Just like Priuses or F-150s or Camrys or Accords aren't.

I think you way over simplify how easy it will be for the ICE manufacturers to turn to EVs, while maintaining their ICE production. Its hard to serve tow master. I would also point out that Tesla's biggest advantage is not their cars per se, its there ability to produce enough batteries for mass produce EVs. Unless I missed it, Ford, and GM do not have a gigafactory to mass produce the Lithium Ion batteries.

As far as valuation, the stock price will almost always stay ahead of the valuation for disruptive growth companies. THat's okay with a buy and hold strategy. Tesla is no longer a "car company", it's an energy and transportation company. As I mentioned above, Tesla is tackling grid scale battery backup/stabiliztion, residential battery storage, commercial trucking, solar roofing shingles, manufacturing automation, self-driving cars, and more. Will Tesla hit a home run with all these, no, but chances are they'll succeed on multiple fronts.

I suggest, instead of going back and forth and likely not change either of our opinions, let's make some predictions and see what happens. Here are my predictions for 2018. Tesla will finish the year:

With at least one, possibly two profitable quarters
Sell over 250,000 vehicles (S, X, M3), which would be 150% YOY growth
Stock price over $400


PS - I also predict the M3 will be named Popular Mechanics 2018 Car of the Year :)
https://www.popularmechanics.com/cars/g19605464/best-cars-2018/
I don't think you understand how car production works.  Car companies don't build every component of the vehicle, quite the opposite actually.  Yet they manage their supply chain and utilize the competition within it to deliver quality vehicles at a profit.  A battery pack is not a complex assembly and there are existing suppliers out there that can provide it so I doubt you'll see OEMs getting into making them.  And before you say that the Gigafactory is a huge advantage remember that one of the limiting factors on Model 3 production so far has been production at the Gigafactory: https://electrek.co/2017/10/31/tesla-model-3-bottleneck-gigafactory-1-panasonic-ceo-battery/

Also, there is already a M3 on the market so I would skip using that abbreviation for the Model 3.