Tesla

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Till Eulenspiegel
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Tesla

#1

Post by Till Eulenspiegel » Thu Jul 12, 2018 4:17 pm

We had some discussions on this topic already - is Tesla just a fraud or more like a gamble. Here

https://www.bloomberg.com/news/features ... on-of-hell

something to initiate some more discussion (and to distract from the Orange One).


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Re: Tesla

#2

Post by Foggy » Thu Jul 12, 2018 4:47 pm

That story makes it sound like a gamble that may eventually pay off, but I have to wait until Gregg checks in ... and I'm sure JPC can tell us about the financials.

They're shooting for 5,000 a week. Bloomberg in a separate article says they're at 4,300. But they also want to build 500,000 a year, and 5,000 a week is only 260,000 a year. And they are having problems.

More will be revealed, I reckon. :smoking:


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Re: Tesla

#3

Post by Danraft » Thu Jul 12, 2018 6:12 pm

Foggy wrote:
Thu Jul 12, 2018 4:47 pm
That story makes it sound like a gamble that may eventually pay off, but I have to wait until Gregg checks in ... and I'm sure JPC can tell us about the financials.

They're shooting for 5,000 a week. Bloomberg in a separate article says they're at 4,300. But they also want to build 500,000 a year, and 5,000 a week is only 260,000 a year. And they are having problems.

More will be revealed, I reckon. :smoking:
That "driven" work ethic of being on the cutting edge is common.
There was a book about early personal computer design called, "The Soul of a New Machine" that was pretty good. Since my father was a Systems Analyst Mainframe computer guy when Punch cards were the thing, and his co-workers were into the early computers, it resonated as I had already learned basic and would scan down into machine language in hex when looking for what port the program was calling.
My nephew works for Amazon setting up plants in India. Amazon requires fierce loyalty and is a meritocracy. Perform or get out.
We shall see. In interviews you can see he has a prodigious memory, yet is somehow not wired well.


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Re: Tesla

#4

Post by Grumpy Old Guy » Thu Jul 12, 2018 6:47 pm

Whether gamble or fraud, I will not buy a Tesla nor invest in the company. The Chevrolet Volt makes more sense. You can run on electric power for most driving, but with no range worries.



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Notorial Dissent
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Re: Tesla

#5

Post by Notorial Dissent » Thu Jul 12, 2018 9:04 pm

My recollection, FWIW, is that Tesla/Musk has already pretty well burned through their IPO money, a great whopping lot of it in fact, has a production line that isn't efficient, doesn't very well at all, is continually breaking down, and is way way behind on where they should be, even assuming minor problems as a given. To say they are haemorrhaging money is a massive exercise in understatement, and Musk is wanting to go back to the trough for another helping. Earlier this year they fired a whole bunch of what I assume were middle management, but with his odd corporate structure I'm not sure, and I'm not sure what it accomplished other than to infinitesimally cut expenses and the way he does things may have done more harm than good.

Gregg has a good take on the production aspects, and if you're a shareholder it isn't pretty.

Always reminded me of the good old penny stock market days, for some reason.


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Re: Tesla

#6

Post by JohnPCapitalist » Thu Jul 12, 2018 11:07 pm

Foggy wrote:
Thu Jul 12, 2018 4:47 pm
That story makes it sound like a gamble that may eventually pay off, but I have to wait until Gregg checks in ... and I'm sure JPC can tell us about the financials.

They're shooting for 5,000 a week. Bloomberg in a separate article says they're at 4,300. But they also want to build 500,000 a year, and 5,000 a week is only 260,000 a year. And they are having problems.

More will be revealed, I reckon. :smoking:
I don't follow Tesla closely, and haven't looked at the financials. One of the industries I've never looked at is automotive final assemblers, because it's a relatively unique business. I can understand the business model for parts suppliers, but that's much more straightforward.

That said, my bullshit antennae have been tingling on Tesla for a little while. Tesla's response to criticism of the dismal Model 3 production rate, still in sample quantities years after mass shipments were promised, was to hang all of Management's credibility on a weekly production number that he promised to be able to hit from this point forward, a number significantly above previous levels. Not a smooth ramp but a gap upward to the magic 5,000 cars/week. When management hangs their credibility on a single make-or-break goal, that inevitably creates room for a lot of chicanery. And we professional investor types understand this immediately, as we've seen it before. Regardless of whether that's indicative of fraud or not, it certainly is indicative of a very risky play that will more than likely end badly. Specific problems with TSLA's ability to hit this figure:

First, it seems that they are focusing obsessively on the production target to "prove" that the business model is real, in particular that they can get to a real GAAP operating profit and stop burning $1 billion-plus in cash every quarter (and thus having to go back to an increasingly skeptical market to borrow what they need to keep the doors open). Some critics have alleged (and I don't track the story to know if this is true) that they're conflating net shipments (that go on the truck to dealers or customers) with line completions (units that roll off the line) -- and that they're hustling so hard to make the numbers that a large number of line completions are being held back from shipment in order to do rework, which raises costs and depresses sales figures. That is a very slippery game and will not end well. I've also heard (but not done enough work to confirm) that 30% to 70% of vehicles have to go in for non-trivial repair work in the first year after delivery. Since TSLA is a cult/status item, that hasn't yet hurt customer perception but could easily start to do so.

The second, and probably more major issue, is Musk's recent behavior. Two things are very characteristic of fraud and/or criminal behavior, and are sufficient to engender fatal skepticism among professional investors. First, Musk seems to be distracting people from issues inside the company. A good example is the submarine he had the SpaceX guys try to bash together to save the kids stuck in the cave in Thailand. SpaceX had minimal expertise in putting something of that sort together. And the odds that the rescue team would try out unproven technology to avert a tragedy that held the world's attention for days was nil, even if it arrived in time. Musk had to know this because somebody had to have told him. Yet he did it anyway, to distract from the increasing concerns about the Model 3 production rates.

More troubling is Musk's really out-there statements. I am a stock analyst. And many people think stock analysts are charlatans and buffoons (to which I say, if you think it's easy, let's see you do better, if you can even get a job; I make my mistakes in public and you can lie all day about your losers and exaggerate your winners). Even if you think we are idiots, we do have the potential to influence stock prices significantly. Mutual fund managers typically own 80% of the shares of most quality companies in the market. And the 100-200 fund managers that make decisions about owning any given large company's stock turn to anywhere from 2-20 specialists in that industry like me for advice on what to do with a given stock. If even one of us turns negative on a stock, it can have a major effect on the stock price.

On the most recent conference call, Musk was unprofessional and personally insulting to Toni Saccognahi of Sanford Bernstein. Toni is a widely respected guy at a highly respected brokerage firm and was asking a question that every single investor on the call was wondering about. Of all the guys on the call, Musk picks the stupidest possible choice of people to trash and the wrong . I've never heard a management team, in the thousands of earnings calls I've listened to in my career, treat an analyst like that. Not once, not in any way close to what Musk said. Because of what is a basic rookie mistake, Musk's judgment about larger issues is incredibly suspect. In particular, I don't trust him to not think he's smarter than his stockholders. Management hubris never ends well for investors.

And he's also going to war against the press, with an argument that's nearly "fake news" accusation that Trump hurls. There are a lot of useless financial journalists who are shallow suck-ups to CEOS (*cough* Maria Bartiromo *cough*) but there are some who are absolutely stellar (Gary Weiss, John Carreyrou, who broke the Theranos story, and a number of others). Trashing investigative reporters who pro's think are asking legit questions is waving a big red flag in front of a bull.

Musk's behavior is not unlike the idiot founder of Papa John's pizza restaurants, who quit the board today. The guy was an inept operator and should have retired years ago. In the last two years, as his competitors' stocks soared (Dominos +75%, Pizza Hut (Yum Brands) +21%), his stock was down 26% in a time when cheaper chain restaurants overall are doing OK. That's due to a much bigger management problem than the CEO using the "n" word. But he blamed Obamacare for his shitty profits a couple years ago and blamed the NFL, where they advertised on football games, for shitty sales one quarter. When his competitors reported results a couple days later, and exceeded estimates and said they saw no effects from the NFL "take a knee" controversy (they also advertised in football games), he was shown to be a moron.

Today, is Tesla a fraud or a company that's trying to paper over problems but is on the correct side of the law? At this point, it's hard to say. But the longer these tactics go on, bullying enemies, trashing the press, distracting investors, and a whole bunch of other things, the more likely that whatever's going on inside the company will cross the line into fraudulent behavior. Bernie Madoff didn't start out to run the biggest Ponzi scheme in history. But his struggles to live up to what he thought his clients expected of him caused him to cross the line at some point.

As an aside, only 64% of TSLA's stock is held by institutions (mutual funds, hedge funds, etc.). That's a bit low for a company with that market cap. By comparison, General Dynamics, a complicated company with hard to understand technology and with a market cap nearly identical to TSLA, is 86% institutionally owned, a bit closer to the norm. That (plus the moon-eyed chatter on investing boards from true believers) tells a market pro that TSLA is a "cult stock" whose price is supported by individual investors who are betting on the coolness of the idea, and not on the actual state of the business. That suggests that, whether fraud or not, the stock can easily drop in value if people become disillusioned with the company's prospects, or if Musk gets fired.

Also, I haven't checked into this but am skeptical that the company's battery technology is all that magical. Building lithium batteries is hard, and for large applications, they put together arrays of small cells that are like "AA" batteries, by the hundreds or thousands. As I understand it, Tesla doesn't make the cells but they do have some clever technology to optimize charging time and also to draw down the cells in interesting ways like the "insane mode" acceleration off of traffic lights.

The other core technology competence appears to be the software in the console. But those are both vulnerable -- other smart people can match or improve on Tesla's battery management stuff, and now that car manfacturers are finally putting powerful hardware in the dashboard, it's going to be much easier for them to build higher-quality user experiences with all the bells and whistles of Tesla's screen. That competitive advantage will likely be under increasing threat, and if TSLA doesn't broaden the reach of their "special sauce" technologies, they'll get undercut on price by the Chinese or Koreans within 2-3 years. They promised that the base Model 3 would cost $35,000 but in reality the average price out the door has been something closer to $55,000. If TSLA starts to look like there cracks in the "Elon Musk, Savior of Mankind" story, the order book will disappear and anybody who wants an ecologically responsible car will just go ahead and buy a Prius already.



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Re: Tesla

#7

Post by Notorial Dissent » Fri Jul 13, 2018 12:17 am

If I were going to describe it I would put it the terms of an out of control brokerage. I, FWIW, think Musk is definitely out of control and so it would seem is the company.

I'm not familiar with what Tesla's battery tech is, or is supposed to be, but I thought it was supposed to be something new and more functional, my misconception I guess. The thing with LI batteries is that they really aren't all that cheap or easy to make, and if you don't do it right they go boom really easy. It sounds like they are just using off the shelf conventional if the description I read is accurate.


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Re: Tesla

#8

Post by Foggy » Fri Jul 13, 2018 7:17 am

I will admit, the story about him sleeping in his office and working on the production line was not convincing. To me, that's proof that ur doin it rong.

But if he gets to 5,000 a week of what JPC called "net shipments" and sells them for the $55,000 JPC mentioned, that's an income stream of $275 million a week. More than a billion a month.

It's obvious they have serious problems, but it will be interesting to see if they can pull out a miracle. Of course, we were told that the Segway was going to take over the world, and I haven't seen one of them in a long time.


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Re: Tesla

#9

Post by ZekeB » Fri Jul 13, 2018 7:35 am

I'd be leery of investing anything in his automobile venture when he spends millions and millions on his rockets and other side ventures. Get your ducks in a row with the car before you spend $$ on other things, Elon. Don't feed me the "it's other money" line.


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Re: Tesla

#10

Post by Whip » Fri Jul 13, 2018 9:17 am

JohnPCapitalist wrote:
Thu Jul 12, 2018 11:07 pm
Foggy wrote:
Thu Jul 12, 2018 4:47 pm
That story makes it sound like a gamble that may eventually pay off, but I have to wait until Gregg checks in ... and I'm sure JPC can tell us about the financials.

They're shooting for 5,000 a week. Bloomberg in a separate article says they're at 4,300. But they also want to build 500,000 a year, and 5,000 a week is only 260,000 a year. And they are having problems.

More will be revealed, I reckon. :smoking:
I don't follow Tesla closely, and haven't looked at the financials. One of the industries I've never looked at is automotive final assemblers, because it's a relatively unique business. I can understand the business model for parts suppliers, but that's much more straightforward.

That said, my bullshit antennae have been tingling on Tesla for a little while. Tesla's response to criticism of the dismal Model 3 production rate, still in sample quantities years after mass shipments were promised, was to hang all of Management's credibility on a weekly production number that he promised to be able to hit from this point forward, a number significantly above previous levels. Not a smooth ramp but a gap upward to the magic 5,000 cars/week. When management hangs their credibility on a single make-or-break goal, that inevitably creates room for a lot of chicanery. And we professional investor types understand this immediately, as we've seen it before. Regardless of whether that's indicative of fraud or not, it certainly is indicative of a very risky play that will more than likely end badly. Specific problems with TSLA's ability to hit this figure:

First, it seems that they are focusing obsessively on the production target to "prove" that the business model is real, in particular that they can get to a real GAAP operating profit and stop burning $1 billion-plus in cash every quarter (and thus having to go back to an increasingly skeptical market to borrow what they need to keep the doors open). Some critics have alleged (and I don't track the story to know if this is true) that they're conflating net shipments (that go on the truck to dealers or customers) with line completions (units that roll off the line) -- and that they're hustling so hard to make the numbers that a large number of line completions are being held back from shipment in order to do rework, which raises costs and depresses sales figures. That is a very slippery game and will not end well. I've also heard (but not done enough work to confirm) that 30% to 70% of vehicles have to go in for non-trivial repair work in the first year after delivery. Since TSLA is a cult/status item, that hasn't yet hurt customer perception but could easily start to do so.

The second, and probably more major issue, is Musk's recent behavior. Two things are very characteristic of fraud and/or criminal behavior, and are sufficient to engender fatal skepticism among professional investors. First, Musk seems to be distracting people from issues inside the company. A good example is the submarine he had the SpaceX guys try to bash together to save the kids stuck in the cave in Thailand. SpaceX had minimal expertise in putting something of that sort together. And the odds that the rescue team would try out unproven technology to avert a tragedy that held the world's attention for days was nil, even if it arrived in time. Musk had to know this because somebody had to have told him. Yet he did it anyway, to distract from the increasing concerns about the Model 3 production rates.

More troubling is Musk's really out-there statements. I am a stock analyst. And many people think stock analysts are charlatans and buffoons (to which I say, if you think it's easy, let's see you do better, if you can even get a job; I make my mistakes in public and you can lie all day about your losers and exaggerate your winners). Even if you think we are idiots, we do have the potential to influence stock prices significantly. Mutual fund managers typically own 80% of the shares of most quality companies in the market. And the 100-200 fund managers that make decisions about owning any given large company's stock turn to anywhere from 2-20 specialists in that industry like me for advice on what to do with a given stock. If even one of us turns negative on a stock, it can have a major effect on the stock price.

On the most recent conference call, Musk was unprofessional and personally insulting to Toni Saccognahi of Sanford Bernstein. Toni is a widely respected guy at a highly respected brokerage firm and was asking a question that every single investor on the call was wondering about. Of all the guys on the call, Musk picks the stupidest possible choice of people to trash and the wrong . I've never heard a management team, in the thousands of earnings calls I've listened to in my career, treat an analyst like that. Not once, not in any way close to what Musk said. Because of what is a basic rookie mistake, Musk's judgment about larger issues is incredibly suspect. In particular, I don't trust him to not think he's smarter than his stockholders. Management hubris never ends well for investors.

And he's also going to war against the press, with an argument that's nearly "fake news" accusation that Trump hurls. There are a lot of useless financial journalists who are shallow suck-ups to CEOS (*cough* Maria Bartiromo *cough*) but there are some who are absolutely stellar (Gary Weiss, John Carreyrou, who broke the Theranos story, and a number of others). Trashing investigative reporters who pro's think are asking legit questions is waving a big red flag in front of a bull.

Musk's behavior is not unlike the idiot founder of Papa John's pizza restaurants, who quit the board today. The guy was an inept operator and should have retired years ago. In the last two years, as his competitors' stocks soared (Dominos +75%, Pizza Hut (Yum Brands) +21%), his stock was down 26% in a time when cheaper chain restaurants overall are doing OK. That's due to a much bigger management problem than the CEO using the "n" word. But he blamed Obamacare for his shitty profits a couple years ago and blamed the NFL, where they advertised on football games, for shitty sales one quarter. When his competitors reported results a couple days later, and exceeded estimates and said they saw no effects from the NFL "take a knee" controversy (they also advertised in football games), he was shown to be a moron.

Today, is Tesla a fraud or a company that's trying to paper over problems but is on the correct side of the law? At this point, it's hard to say. But the longer these tactics go on, bullying enemies, trashing the press, distracting investors, and a whole bunch of other things, the more likely that whatever's going on inside the company will cross the line into fraudulent behavior. Bernie Madoff didn't start out to run the biggest Ponzi scheme in history. But his struggles to live up to what he thought his clients expected of him caused him to cross the line at some point.

As an aside, only 64% of TSLA's stock is held by institutions (mutual funds, hedge funds, etc.). That's a bit low for a company with that market cap. By comparison, General Dynamics, a complicated company with hard to understand technology and with a market cap nearly identical to TSLA, is 86% institutionally owned, a bit closer to the norm. That (plus the moon-eyed chatter on investing boards from true believers) tells a market pro that TSLA is a "cult stock" whose price is supported by individual investors who are betting on the coolness of the idea, and not on the actual state of the business. That suggests that, whether fraud or not, the stock can easily drop in value if people become disillusioned with the company's prospects, or if Musk gets fired.

Also, I haven't checked into this but am skeptical that the company's battery technology is all that magical. Building lithium batteries is hard, and for large applications, they put together arrays of small cells that are like "AA" batteries, by the hundreds or thousands. As I understand it, Tesla doesn't make the cells but they do have some clever technology to optimize charging time and also to draw down the cells in interesting ways like the "insane mode" acceleration off of traffic lights.

The other core technology competence appears to be the software in the console. But those are both vulnerable -- other smart people can match or improve on Tesla's battery management stuff, and now that car manfacturers are finally putting powerful hardware in the dashboard, it's going to be much easier for them to build higher-quality user experiences with all the bells and whistles of Tesla's screen. That competitive advantage will likely be under increasing threat, and if TSLA doesn't broaden the reach of their "special sauce" technologies, they'll get undercut on price by the Chinese or Koreans within 2-3 years. They promised that the base Model 3 would cost $35,000 but in reality the average price out the door has been something closer to $55,000. If TSLA starts to look like there cracks in the "Elon Musk, Savior of Mankind" story, the order book will disappear and anybody who wants an ecologically responsible car will just go ahead and buy a Prius already.
you didn't even mention the laughable hyperloop debacle.



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Whip
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Re: Tesla

#11

Post by Whip » Fri Jul 13, 2018 9:23 am

Notorial Dissent wrote:
Fri Jul 13, 2018 12:17 am
If I were going to describe it I would put it the terms of an out of control brokerage. I, FWIW, think Musk is definitely out of control and so it would seem is the company.

I'm not familiar with what Tesla's battery tech is, or is supposed to be, but I thought it was supposed to be something new and more functional, my misconception I guess. The thing with LI batteries is that they really aren't all that cheap or easy to make, and if you don't do it right they go boom really easy. It sounds like they are just using off the shelf conventional if the description I read is accurate.
they're a bunch of 18650 batteries mashed together in series. same ones used in many cordless drills



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Re: Tesla

#12

Post by JohnPCapitalist » Fri Jul 13, 2018 9:58 am

Foggy wrote:
Fri Jul 13, 2018 7:17 am
But if he gets to 5,000 a week of what JPC called "net shipments" and sells them for the $55,000 JPC mentioned, that's an income stream of $275 million a week. More than a billion a month.
Just to point out a rookie mistake in your statement above, intended as a constructive observation rather than as a personal criticism. It's very important that one never confuse sales ("revenue") with profits (any one of several different definitions of profit could apply, pro's will always clarify exactly which one they're using but for this discussion it doesn't matter). The term "income" is often misused by non-finance pro's to mean revenue or any of the different forms of profit.

You're talking about $275 million a week in revenue. Yes, that sounds like a big number, and it works out to over $14 billion a year. There aren't that many companies in the world that do $14 billion a year in revenue. But the number that's more important to investors is the profit they're making on that. The primary determinant of stock price is the amount of profit a company makes. And my comment above suggested that they could be hitting that production number by doing various things that will hit a revenue number but destroy the profit number -- and Tesla is a company that has not shown any ability to narrow their losses much less to be consistently profitable. They have to keep borrowing money from investors to stay afloat while they're losing money. So the revenue doesn't matter (much) in looking at the company. In other words, if Tesla hits the 5,000 unit/week goal and sells cars at $55,000 but they're losing $6,000 on each car, that's a major fail, not a victory.
It's obvious they have serious problems, but it will be interesting to see if they can pull out a miracle. Of course, we were told that the Segway was going to take over the world, and I haven't seen one of them in a long time.
It will be interesting as an academic exercise. A lot of professional investors will be interested, but will be watching from the sidelines because they won't want to take the risk if Musk "interestingly" augurs in. As they say, "when breakfast time rolls around, the chicken is interested, but the hog is committed."

Kamen was not the guy who overhyped the Segway, it was a battery of useful idiots like Jobs and Wozniak and many other Silicon Valley types. That phenomenon has certainly helped Tesla, but Musk is doing a dangerous amount of overhyping on his own. Kamen quietly sold the Segway business a while ago to some British guy who, IIRC, got killed riding one of his own products.



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Re: Tesla

#13

Post by JohnPCapitalist » Fri Jul 13, 2018 10:00 am

Whip wrote:
Fri Jul 13, 2018 9:17 am
you didn't even mention the laughable hyperloop debacle.
Not only did I not mention the Hyperloop company, I also didn't mention the "Boring company," which managed to top the already unworkable Uber as the most ludicrous and non-economical way to try to solve urban traffic problems. And I even forgot to mention the flamethrowers the Boring Company created to distract customers and investors from the unworkability of the main product of a company created to distract people from the unworkability of Tesla.

Hall of mirrors, anyone?



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Re: Tesla

#14

Post by Whip » Fri Jul 13, 2018 10:40 am

JohnPCapitalist wrote:
Fri Jul 13, 2018 10:00 am
Whip wrote:
Fri Jul 13, 2018 9:17 am
you didn't even mention the laughable hyperloop debacle.
Not only did I not mention the Hyperloop company, I also didn't mention the "Boring company," which managed to top the already unworkable Uber as the most ludicrous and non-economical way to try to solve urban traffic problems. And I even forgot to mention the flamethrowers the Boring Company created to distract customers and investors from the unworkability of the main product of a company created to distract people from the unworkability of Tesla.

Hall of mirrors, anyone?
lol. didn't even know about that one.



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Re: Tesla

#15

Post by Notorial Dissent » Fri Jul 13, 2018 10:57 am

I thought the boring company had just finished their bore, after spending a great whopping great lot of cash, and were supposed to be doing testing or something or other? But yeah, now that you mention it, smoke and mirrors is a good description, or maybe more accurately three card Monte.


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Re: Tesla

#16

Post by Sam the Centipede » Fri Jul 13, 2018 11:32 am

:-D Will there be an examination on JohnP's lecture? :-D

That was very interesting, and a real insight into the soft (or people) side of rational investing. Numbers are important, and often tell a lot about history, but their ability to forecast the future is variable. And there is a huge difference between a target and a result. I read an article some years ago where a researcher looked at previous annual reports of large companies that had gone belly-up; almost all the reports were unreasonably optimistic about the company's future and none told the true story of "oh shit oh shit oh shit".

In world politics, it's always been clear that the leaders of a revolutionary or liberation movement rarely make a smooth transition into running a calm, stable government. The skill set required to gain power in a hostile environment is very different from the skill set required to manage a country.

There's a parallel in business or industry, where the disruptors who can build up a start-up from nothing are not necessarily those who are best at running a successful stable company. Novelty start-ups require cowboys, hustlers and snake oil salesman, big companies require cost accountants, production engineers and a marketing department. Elon Musk is clearly a start-up kinda guy.



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Re: Tesla

#17

Post by JohnPCapitalist » Fri Jul 13, 2018 11:48 am

Sam the Centipede wrote:
Fri Jul 13, 2018 11:32 am
:-D Will there be an examination on JohnP's lecture? :-D

That was very interesting, and a real insight into the soft (or people) side of rational investing. Numbers are important, and often tell a lot about history, but their ability to forecast the future is variable. And there is a huge difference between a target and a result.
Yeah, numbers don't always mean you can forecast the future. On the other hand, in the hands of a skilled and knowledgeable analyst, numbers can be extremely helpful in predicting how a company is going to do. It's all about the context and around having good judgment about the context.

If a company's sales fell 10% this year and profits dropped 15% from last year, is that a disaster? Depends on what the competition is doing, what the economy is doing, and a whole host of other things. If the competition's sales dropped 15% and profits plunged 25%, then your numbers are pretty good. But if you're outperforming a declining industry when the economy is doing well (like the big battle to be #1 in the coal industry), then you're still screwed. The question is how screwed you are in the latter circumstance. And again, there, judgment and context is everything. Every coal company's stock has an appropriate price, even though they're ultimately going out of business, and you can make money on the stocks of even doomed industries if you know how to put their numbers into context and figure out what really matters.
I read an article some years ago where a researcher looked at previous annual reports of large companies that had gone belly-up; almost all the reports were unreasonably optimistic about the company's future and none told the true story of "oh shit oh shit oh shit".
Managements are supposed to be optimistic in all but the most dire circumstances in the chairman's letter in the annual report. With the exception of what Warren Buffet writes every year, most professional investors ignore it unless there's something significantly delusional, in which case we're going to have to wonder about management's credibility. We try to have as much face-to-face time as we can get with the managements of the companies we invest in to judge their credibility throughout the year. By the time the end of the year rolls around and the annual report appears, we professionals are long past whatever drivel they put in that document (I'm talking specifically about the chairman's letter and the "warm fuzzy" pictures; we do pay attention to the numbers and the legalese in the rest of the annual report).

That "research project" sounds like exactly the sort of twaddle that some backwater B-school professors invent as a way to get a paper into a low-impact journal like the "Eastern Louisiana Journal of Behavioral Market Economics" on the theory that "hey, it's quantitative research!" I kinda doubt that it was done by somebody at Harvard, Northwestern or Stanford.



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Sam the Centipede
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Re: Tesla

#18

Post by Sam the Centipede » Fri Jul 13, 2018 12:51 pm

The New York Times "Bits" newsletter this week was written by Ray Zhong, a technology reporter based in Beijing. It includes this paragraph in other news:
Tesla, which is still struggling to mass-produce its cars in the United States, is opening a giant plant in Shanghai. The rap on Tesla’s chief executive, Elon Musk, is that he overpromises and underdelivers, all while sounding infuriatingly blasé about the consequences. But to many in China, Mr. Musk is a fearless dreamer who overcomes failure to do things that ordinary people cannot. Here’s a blog post (in Chinese) that came out after one of Mr. Musk’s other companies — SpaceX — shot a car into space this year. The headline? “China Doesn’t Have a Musk.”
I only offer this as something someone is saying, I am not in a position to evaluate the guy's opinions.

The last two linked pieces are in Chinese, so Google Translate might be your friend if you're curious what they say. The first one (from "ordinary people cannot") is not very interesting, but the second one (under "blog post") is quite amusing in Google's rather zany translation. I can't vouch for the accuracy of the translation, but it starts:
Yesterday, when we felt that the stock market was not good for a long time, Tulp Trump should honor its original flag to be launched into the sun, and then go to sleep early, another part of the Americans later witnessed the arrival of historical moments!
Tulp Trump? According to the Oxford English Dictionary, a "tulp" is:
An African plant of the iris family, which is grown for its showy flowers but is toxic to livestock.
So it could be an accurate translation!



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Foggy
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Re: Tesla

#19

Post by Foggy » Fri Jul 13, 2018 4:12 pm

Oh, I used the word income instead of revenue, but I usually think in terms of "income and expenses". I have owned several businesses myself, y'know. And I knew that his expenses might exceed the amount of income revenue, but like JPC said, that's a lot of money coming in, regardless what you call it, and if it costs more than $55,000 to build one unit, then he's hemorrhaging more than a billion a month. If it was that bad, you'd think he'd have the brains to pull the plug.

In my defense, I was left unsupervised. :oops: :bag:


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Notorial Dissent
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Re: Tesla

#20

Post by Notorial Dissent » Sat Jul 14, 2018 1:02 am

So apparently was Musk.


The fact that you sincerely and wholeheartedly believe that the “Law of Gravity” is unconstitutional and a violation of your sovereign rights, does not absolve you of adherence to it.

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Foggy
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Re: Tesla

#21

Post by Foggy » Sat Jul 14, 2018 5:57 pm



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Suranis
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Re: Tesla

#22

Post by Suranis » Sun Jul 15, 2018 12:22 am

Rich person donates to both sides to cover their asses. Not new. The Kochs donated money to Clinton, after all.


Irony can be pretty ironic sometimes.

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JohnPCapitalist
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Re: Tesla

#23

Post by JohnPCapitalist » Sun Jul 15, 2018 10:39 am

What do you make of this one? The Thai head of the rescue operation dismissed Musk's offer to help as a publicity stunt, as quoted in an NYT article published today (https://www.nytimes.com/2018/07/14/opin ... ubris.html). Musk's response?
You know what, don’t bother showing the video. We will make one of the mini-sub/pod going all the way to Cave 5 no problemo. Sorry pedo guy, you really did ask for it. -- Elon Musk (@elonmusk)


This is Trumpish behavior. Somebody who's an expert in the field doesn't think you have anything to offer, and you attack him personally with outrageous attacks. Musk's tweet storm of other commentary is extremely unbecoming, and will further turn public opinion against him. Essentially, he thinks he's the only one who can accomplish anything difficult and that the real experts in the field, who came together from all over the world to pull off this rescue, are poseurs.

This is just another data point to reinforce my belief that Tesla is a company whose stock should be avoided, and anything Musk is involved in should become increasingly suspect. He's imploding before our eyes as he's trying to keep Tesla afloat, just as Trump appears to be in some of his addresses.



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Till Eulenspiegel
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Re: Tesla

#24

Post by Till Eulenspiegel » Sun Jul 15, 2018 3:11 pm

Musk calls one of the rescue team a "pedo "? Is this the Limbo ? How low can you go ?

In any not Bizzaro World this would bei the end for Tesla. But in Trump's America - who knows.


„Er aber, sag’s ihm, er kann mich im Arsche lecken!“ - J.W. Goethe - Götz von Berlichingen

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Sterngard Friegen
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Re: Tesla

#25

Post by Sterngard Friegen » Sun Jul 15, 2018 4:52 pm

It appears that Musk has deleted his defamatory Tweet. If an employee had written that I would anticipate a firing within a few minutes. What Musk did is disgraceful. I agree with JohnPC.



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