Water Brothers Financial Commentators

Water Brothers Financial Commentators
Contributor since: 2013
Right - Tesla is what all the Saudi princes lose sleep over. I think you are a bit lost in a "Teslacentric" universe.
Who is Mary Benzinga? Is this an attempt at sarcasm or sloppy writing? an article that starts out with a conclusion and works its way backwards smiting all the tesla foes, current and potential, with dismissive swipes, not facts - well this is promotional material not analysis.
Peter lynch never said "buy a co. with a bad product . SBUX has mediocre coffee, but DNKN has awful "premium" coffee. Schultz is a marketing genius. if one invests to lose less in a recession, one will lose more all the time, both literally, and in lost opportunity. remember, DNKN has already gone bankrupt once.
So you were tongue in cheek in that you are not concerned about the recurring X car delays? So this is really a positive article vis a vis Tesla? And this article added what new information or views? You write well, but the haughtiness of your pieces suggest that you think you get it but we all don't. The buyback program indeed can be a drawdown on the balance sheet, particularly the way Musk has chosen to account for it. The delays on the X car can be meaningful and be very costly considering Tesla's burn rate and the need for revenue, not to mention hurdling the one product label, the D car is not a material nor disruptive unveiling. So do you think this was a positive, meaningful announcement or a bit concerning going forward?
My political views are in favor of free universal health care provided by the gov't; I am a liberal democrat and Obamacare is in very grave risk of having its subsidies wiped out by the courts for one. Your quoting one source of better than expected benefits - review the CBO's projections - is vague and questionable. See a pattern here?
So you are wrong on guessing my political views. My point was that to let's say quote Obama on Obamacare would be intellectually dishonest - as is using a very favorable SA research report to build numbers for another very favorable SA research report, in a vacuum.
You are right. Why don't they just eliminate disclosing any sales numbers because it is too hard and controversial to calculate them. And why don't they just create numbers for the balance sheet like gross sales, etc. Whoops they already do that don't they? Apple doesn't do that with phone orders or shipments or I-pads do they? But of course Apple isn't a "growth" co. anymore. Enron did that and Worldcom did that and I suspect NFLX does that - the just plugging in numbers deal- so really we have to understand Musk as a Bernie Ebbers, Ken Lay disciple rather than as a Steve Jobs disciple.
A backlog is not good? OK , you don't have a Tesla problem, you have a business problem. Chicago School of Economics is in Illinois, GO THERE!
No LT will be king and you will be less well off.
Musk must write your stuff, right? You quote a sycophant analyst and Musk with no regard for reality. In Chicago they have not heard of Tesla? What if Musk is not being entirely - or as he says being totally- honest about reasons and numbers and predictions? Well Andrea James says 325 so it must be true. Demand is unlimited so it must be true. Gross margins of 25% plus so if not true Musk will make it true - Musk and those accountants. Really, for an explosive worldwide growth co. this story is rapidly becoming "where's the beef".
If you believe Musk, which of course, you must, to support your blind faith . Future production is not the only thing that matters because it is not yet real. You might do the math and see where the 100,000 run rate fits. And how does anyone square the 9000 production rate with the 7800 delivery rate if demand is out of this world? These are not staggering growth numbers for a new, singular, perfect, disruptive, beautiful, amazing car marketed by a genius, with huge tax credits etc.
Once again a Tesla "research" report quotes another SA Tesla "research" report to come to a favorable conclusion. I would like to know where I can wager the under on the 3.8 million vehicles sold in 2020. Gov't figures on Obamacare will prove to be less pie in the sky than your assumptions. Not only was Ford's car way cheaper - see SA "researcher" LT - but it was filling a void, people didn't have cars, not replacing the cars people have today in great abundance. And Ford lowering sales expectations this week is not due to losing customers to tesla but rather a slowdown in the cycle. Of course tesla does not sell cars but rather stock and dreams so why care about the trends in its industry.
First off in your opening section you have a math error 7 versus 17 - (1997-2014 or 04?). Secondly the premise of comparing hybrid sales and EV sales for the same initial number of years has a huge post selective bias to it; the very fact that the hybrid market was established from zero created the ability for a nuanced non-market to erupt - i.e. EV's. The comparison is faulty due to this. And this skews all your other comparisons.
Your PE #'s are based on unreal "E"'s. Otherwise your article is absurd -stay out of it for a week???? So we should buy one week puts? This is an investment approach? This isn't even short-term trading. It is the Irwin Corey school of investing, which has become so popular on this site. You are probably too young to remember Professor Corey but he, like his progeny - Cramer, Gartman, Yellen, Bernanke - say maybe it's a bird, maybe it's a plane, maybe , maybe, maybe... Otherwise your article makes the usual "overvalued" argument for Tesla that you weren't even intending.
Why don't they stop making money losing cars then Randy and become an energy provider and be very profitable like - well like Solar City? Every argument you proffer for the success of this company circumvents the fact that they are an automobile manufacturer. No car co. is going to pay then the 100 million in FCF you propose and it won't be FCF anyway because it will fill Musk's other funding deficiences, like the Gigafactory. You always take tangential approaches that presuppose this is a well-capped, diversified, profitable co. with a huge patent portfolio and proprietary businesses. A corollary business argument would be like Keurig giving away machines to sell single serve cups, the razor blade argument - or retailers with their own credit facilities making their real profits on cc's; however Tesla has yet to establish their basic market so it is car sales we should be most attentive to, shouldn't we?
Oh I can, but my point was that it is misdirection from the simple truth at hand - for Cramer, how has my model portfolio for viewers and readers done, if one followed all of my advice?; for Musk it is can I make money selling EV's? Cramer's portfolio overall has consistently trailed the market - that is his public picks, not his insider trading charitable bull trust. Musk has yet to show he can turn a profit selling EV's or anything else for that matter - that is except for selling shares in his companies.
Musk is just like Cramer - if he says a hundred things a week you can't even remember what he said by the end of the week. This article just plugs in a bunch of hypothetical numbers and mostly Tesla's just like all the rest. The consistency of Musk moving all over the place, from storage for homes, to automated vehicles, to profit margins that are unheard of is the strongest indication of a hyper-salesman trying to cling to hope that he will be bailed out - self-financing , do you really believe there will be no additional funds raised and that the earlier than LT expects serious sales of X car will support the Gigafactory? If you do the stock is a buy - at 125$.
You can do that yourself, but you chose to read. Try reading real facts and thoughtful analysis more often.
please let me know the next stock you pick and how to trade it because you, as most of SA's investors are the best. You bought perfectly and sold perfectly without ever declaring your intentions. And, no, you and Carlson do not know how to value a high growth co. properly - you don't understand the concept of profitability. This is a momentum stock at best, not a high growth co. yet. One year of vehicle sales exploding exponentially from zero is a far cry from say a CMG or KORS or GOOG as to five year growth charts (even though all of these may be overvalued as well). And there are not just one or two bears on this site. I personally know four distinct individuals coming at this from different experiences and points of view. The fact that you are starting to think tsla is reasonably valued means what? That is one of the most hedged comments I have ever read. And you are right, the world of tsla followers breaks down just like most things - 50/50. However, I don't hate tsla for any other reason than that so many people will lose so much money in the future due to false projections, false predictions, disguised financials and the confusion put out there by the 50% long side that this is anything more than an electrical car co. trying to become a player - however it does that, using its batteries or Panasonic's, its dealers or traditional dealers - but if they don't sell enough cars at a profit they will be gone, all the religious world-changing stuff be damned.
And most of these haven't happened yet.
Good analysis, but twenty years without profits and then , with the best projections, a niche player ... and you would want to own the stock? The very idea that you laud most of their efforts and conclude by saying "but don't expect profits" is a terrific solo comment on the bubble market we have. Would you start a business- and could you survive- knowing you would see no profits in 17-20 years? Amazon laid the groundwork for this kind of new view, the acceptance of profitless concept co.'s And, I think you make a very good backdoor argument inadvertently , for why they should not have used the total vertical integration model they have. They should have let others build batteries, build superchargers, be less cap intensive. My view is the reason they have gone this route is because Musk is a control freak, and also secretive - there are lots of examples of Tesla's hand held close to their secretive vest - so they don't really want anyone to know the real nuts and bolts and batteries of this co.
Now your argument is that the ICE execs are so locked into their traditional model that they cannot or are afraid to engage in an enthusiastic EV design , development , manufacture program. Why if it is so clear this is a dinosaur business and that Tesla has a huge lead in where the business is going and a better idea (apologies to Ford) on how to make, market, sell, service vehicles? These are contradictory statements. I think the internal conflictions are way more in the Tesla camp - although your belief is that veteran, successful car companies, who actually have profits rather than bogus projected margins are scared to death everyday at their desks - that is, should we build more than one Gigafactory, should we pretend our patents (which we know to be useless) are invaluable but give them away, should we sate the US market which is slowing in demand or spread our cars out everywhere, what to do about tricky Chinese politics, is our stock too high or not.
This is the fundamental problem again with Tesla sycophants - the market for EV's is relatively a niche market even if you include all price points, Tesla has a small percentage of that market, Tesla has no roster of cars and even its third projected model, several years hence is expected to cost a luxury car's number at 40k. so you have smaller pools of potential of small pools to begin with. and the margins you extol are not real gross margins but tricked up by moving balance sheet items like development and warranty costs to hidden corners of the sheet, unlike the accounting of established car companies. The FCF will tell the tale of where these 35% margins went. You also are buying into the idea that Tesla can make better cars for less money with bigger profit margins than anyone ever has in 100 plus years of the auto business. And that the ma and pa vertical approach of no sales staffs, no service centers, no real dealerships will handle 500 k cars/annum. The ad hoc basis of this co., as small and undercapped as it is will buckle when a real problem hits and it will be revealed to be a nuts and bolts co. not a vision in Elon's eye. Let's see his first ever dollar of profit from a co. he runs before we can validate this model. And you might want to research the other vehicles in BMW's pipeline before you consider the i3 as their whole EV effort.
You want me to view a video of Tesla's chief engineer to come away with a "fair and balanced" investment opinion. That is exactly what I criticized you for - and for that matter it is failing of most Tesla sycophants - you regurgitate what Tesla says - be it phony gross margins, recalls that aren't recalls, drivetrain issues, a bad gigafactory deal with no upfront money, the chiseled in stone declaration that solid state Panasonic batteries for Toyota are meaningless intrusions, that fuel cell technology won't happen to fruition, that 30,000 cars = 500,000 cars, that non- GAAP earnings and massive fcf losses are acceptable at a 10 year old company. The underlying logic and strategy Tesla is pursuing - let's dumb it down - is to sell cars with batteries for a lot of money. Your exaggeration of their mission is typical of Tesla's cult - everybody has wall outlets to charge cars, all the major automakers are building EV /Hybrid vehicles. The winners will be those well-managed, quality controlled, excellent companies who can sell more cars at a profit. Over complicating this stuff to the messianic level of Tesla's mission is just hype. And as to my investment prowess, I successfully managed portfolios for 20 years with a retail specialization - I bought SBUX day one, owned Panera early, COH, etc. They all figured out how to make money, Tesla has not. Your gobbledygook Supercharger argument does not isolate Tesla as unique- you think BMW cannot develop same? There is no proprietary technology here that they own - not electricity, not batteries, not lithium, not more real estate than everyone else, not patents.
I think it's great that that your life is so centered on a car. A car is not a stock investment. I have driven Jags, Porsches, fast BMW's and they didn't change my life. Losing all your money in an "investment" in the love of your life (Tesla) could be a life changer. It's just a car, bud.
As usual you articulate great positive arguments for Tesla's ultimate success as a company. And, as usual, you cleverly factualize all of Tesla's assumptions. The presumption that not only is Tesla certainly not the only car co. - all the other hundred year old companies and a few 50 year old co.'s did not suddenly get wiped out. So Tesla has to somehow "steal" sales from BMW, Toyota, Nissan, Fiat, GM etc. - 500,000 steals if one accepts Tesla's hopeful predicted sales. Every business plan has a number - projected sales- the graphs of 5-10 year sales slope beautifully upward. Were writing a business plan tantamount to success, rather than fundraising, anyone with an MBA and an idea would be guaranteed success.
To disrupt the car business Tesla would have to have unique patents and control of a raw material -i.e. all lithium. They would have to be the only viable EV company. Neither are close to true. And even then your premise relies on the EV market exploding exponentially - in spite of good Hybrids and now good Ev's from Tesla (if you will) and BMW and Nissan that hasn't happened - just like solar comsumption is about.75% of total energy consumption - hasn't happened there yet either. And the Hyperloop - please, let Tesla make and sell more than one model car first. That is 22nd Century stuff at best. There are a hundred gas stations for every one Charger station (using liberal accounting for what constitutes a charger station). Oil is how the US got its groove back in the Obama years. To suggest it is going away - read David Mamet's play,"the Water Machine" and your naivete or promotion will fade a bit. And I guess warren Buffet will be broke when Tesla eliminates his favored railroad equity philosophy. Do you really believe BMW et al have conceded any of these disruptive opportunities to an inexperienced player who is rapidly running out of money and just spent six-9 months culminating a sweetheart deal for a battery factory they have no idea how they will fund, for batteries they have no patents on and on the pretense of locking up the world's last traces of lithium supply, when in fact there is no shortage of lithium? And your Solar City leap - they are going broke even faster than Tesla. First you have to have a viable, growing market for a product to explode - Tesla has proven they can sell 30 some thousand cars a year, at a sizeable net loss. No company Musk has ever created has ever shown a profit. After twenty years of running companies - and I know beneath your avalanche of battery stats and old industry experience you will say this is overly simple - don't you think that's a tell? He has shown rather - and this is his real skill - a disruptive ability to raise and burn capital. Your point #2 is so garbled I don't even get it and the vertical integration, new way to sell cars thing is so old at this point. at some point they will need showrooms and service centers don't you think? And if this approach is the killer app then why does every town still have auto parks full of said showrooms - in spite of online sales proliferation, Auto Nation, Auto By Tel etc.? The very fact that all the Tesloans demand that they will dominate every piece of the auto-energy businesses is the very key to the insanity of what is a retail stock that can't make money trading at an infinite multiple after 10 years in business and ten years of debt creation and dilution. Why not make an argument that they will get a nice piece of the auto business? Because you can't. You sir , I believe are very close to Tesla, way too close.
thanks for the reality check.
After misspeaking on Friday Mr. Musk has used his usual divide and conquer tactic of following any negative news with a fantasy item of good news. If you're a sociopath like Musk you can be very creative. Let's see I said stock price was a little high but I am in Japan now so if I say we may have a deal with Toyota in a couple of years, people will read between the lines and think I just negotiated a deal over sushi on Sunday night with Toyota. This type of material news hype is illegal if there is no basis for it, but the SEC doesn't really exist - sort of like the X and E models - whoops E is now 3(like BMW) . Will they let Musk drive the E around the Lompoc prison grounds in Santa Barbara, maybe in a few years when he has a deal with US Gov.
I agree - Elon should never say anything because when he speaks the truth is not usually a priority. I still love his "we can create demand whenever we want" - that one he will have to employ.
Actually 5-6 is not an extra billion - could be 5 on both predictions. But stuff never costs more than original predictions does it? And you miss the whole point - do they have 4 billion even?
Musk created nothing - he raised investor money to hire engineers to make cars. Gates and Jobs, if you insist, created extraordinarily profitable co.'s and in Gate's situation absolutely dominated his industry - 70% market penetration. Buffet - and I am not a fan - created enormous wealth for his investors and a solid, time tested investment strategy; he created Berkshire Hathaway which will be here long after the S and X and 3 are footnotes on how not to run a co. Musk will join Ken Lay's and Bernie Ebbers team not that of folk like Jobs and Buffet and Jack Bogle (who did invent something better as well - the modern day no-load mutual fund, something real and valuable).
Where to begin with this "article". Demand is a problem, the gigafactory may prove obsolete, yet earnings will parabolically rocket to 6$ share from negative in 3-4 years. But "fundamentals" are really good here - say what? There are no fundamentals to boast of. And the gigafactory of 5-6 billion, of which Tesla will contribute 2 - and the "partners" will contribute 4 . Does that include Panasonic's 200 million. These are like George Bush's "partners" in Iraq War and Afghan War, except these aren't even identified yet. The partners are probably another 3 billion raised in an ill-fated secondary convert. As to spreading sales throughout the world sure, if you believe Musk that he is satisfying worldwide demand rather than just selling every car he produces here in US which he could if he wanted because he can create demand at will. I don't know why every car co. didn't try this strategy - Toyota certainly started spreading out its millions of vehicles rather than expanding abroad after saturating Japan- right? It is an absurd strategy that even Reed Hastings doesn't endorse for NFLX - they went overseas after they had 20 million subs. Musk knew demand was getting slow in US after initial novelty surge so he created a strategy to belie the reality. Look folks, this co. will not make 6$ a share in 2017 0r 18. The stock will be 100% diluted by then; the gigafactory WILL be obsolete and they should have waited and built a real car business before having 2 failing businesses and a huge balance sheet bleed. FUNDAMENTALS ARE GOOD - that may be the most absurd assessment of any co. ever covered on SA by any of a universe of differing analysts. HYPE is great, that I believe but this is the most overvalued consumer product, finite stock in history, bar none. I am not talking about ephemeral software co.'s here or possible cancer-curing drug companies with FDA battles unforeseen outcomes
or the 2000 (Y2K) software fix companies when all the banks were going to implode. Folks, this is a CAR co. , it doesn't make lattes or laptops or hotels or railroads or even rockets or solar panels or do online billing, it isn't "THE CLOUD", but it is cloudy. It makes retail , one sale at a time cars and it has sold , what, 50,000 of them - Toyota sells that in a week, every week. And these cars need their own selective charging stations of which there are 1 for every 100 gas stations? Yet this co. is valued at more than John Deere and twice Fiat. What a hundred years the Agnellis wasted on Fiat when if they had Musk's brain they could have created the world in 7 years. Had God consulted with Musk he/she could have shortened his work to 3 days instead of 7. To just now observe that Musk "lies" means you weren't looking. What I think is going to be great fun - not fundamental - is going to be the unravelling of this story. It ain't going to be pretty and Musk will not be a word like Buffet in the investment lexicon when we are all done.
Great 86% downside - and that's missing the fundamental point. You accept Musk's declaration that he can create demand at will. If you accept these kind of pronouncements from sociopathic CEO's (and most are) then any stock story with sizzle is a threat to your investment dollar. Also the 5% "tailwind" you add in may ultimately prove to be somewhat of a headwind in that the verticle integration story may prove unmanageable and unacceptable if the co. starts producing hundreds of thousands of cars. And more specialized outside thinking may be valuable - i.e. dealers, lenders, advertisers. Your upside predictions are based on Musk-assumptions - unlimited demand, no bumps in the road, no technological breakthroughs elsewhere, poor execution by really good co.'s like BMW, Nissan, Fiat, and you are also accepting their ridiculous margin non-gaap numbers as the word when I would question their accounting greatly. The set asides for warranty, the lease buy-back, the disappearance of subsidies etc.
Will be, if it ever is.