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I'm a Tesla analyst. Ask me anything.

Discussion in 'Tesla Discussions' started by Trent Eady, Sep 3, 2017.

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  1. Trent Eady

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    Hi, I'm a Tesla analyst for Seeking Alpha. I'm also an investor, a fan, and a future Tesla Network user. I thought I could answer any questions people on this forum might have about Tesla from a business perspective. This may be hubris, since there are no doubt people here who know more than I do. :blush:
     
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    • Michael Russo

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      Trent, thanks for the offer. I think it is fair for me to share that, in view of the high amount of T≡SLA naysayers' garbage often published by other SA analysts (Montana Skeptic probably topping them all! :mad:), Seeking Alpha information tends to be looked upon here with a few pounds of salt.

      However, just as fairly, I must also point out that your articles have indeed typically been providing a much more objective, even positive perspective on T≡SLA, making you a refreshing exception on this site. We welcome an open dialogue on M3OC so look forward to interesting exchanges. :)
       
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      • SoFlaModel3

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        My only question is when does the configurator open, but I don't think you can answer that :)
         
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        • Kbm3

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          How would you respond to the bear's argument that Tesla's gross margin is very deceptive because it does not include SG&A or R&D? Do you think SG&A cost increases will be much smaller than revenue?
           
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          • AZ Desert Driver

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            Do you (mr analyst) anticipate the TSLA stock to maintain its volatility due to shorts, or do you think that solid business dynamics will dampen its volatility and reflect planned growth and profitability?
             
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            • Matthew Morgan

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              How do you place a value on their battery and solar business and what are your assumptions for growth?
               
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              • Michael Russo

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                Well done, guys!! :cool:
                Think we've got Trent busy for more than one night... Seems like there was a need here! ;)

                Am intrigued to read (some of?) his responses in my European am...
                 
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                • Jayc

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                  If you can answer @SoFlaModel3 's question then maybe we just might give you a chance.

                  Actually, I'm intrigued why you thought a forum full of Tesla enthusiasts and investors would give much notice to one person's analysis.
                   
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                  • Roderick80

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                    Only two questions:

                    1) What in your opinion is the greatest risk in Tesla's supply chain (i.e., is there a particular component, source material or geopolitical concern that outweighs others)?

                    2) Where is Tesla's autonomous driving program compared to current Mobileye, Waymo or other competitor offerings?
                     
                  • Watts4me

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                    When are we getting a HUD?
                     
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                    • MelindaV

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                      #11 MelindaV, Sep 4, 2017
                      Last edited: Sep 4, 2017
                      but how would waymo do outside of the bay area? they are learning the streets inside and out there, but likely would not do well if you dropped them in any other area.

                      for @Trent Eady - what would you anticipate the stock to do in the next 6 months? in my unprofessional opinion, I expect we will see it back up in the $380 range it hit earlier this year, but higher? will we see it hitting $400+ following the next couple quarterly earnings calls?
                       
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                      • Trent Eady

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                        #12 Trent Eady, Sep 5, 2017
                        Last edited: Sep 5, 2017
                        I wasn't getting email notifications so I thought nobody wanted to ask me any questions! :tongueout: If I didn't answer your question, it's because I don't know the answer!

                        Good question. I don't really know. I've read one analysis that found if you counted Tesla's R&D in COGS, Tesla would show a net profit rather than a net loss. If so, this means it isn't just tricky accounting to make Tesla look good.

                        It's hard to say without more research, but it seems to me like SG&A costs are concentrated in fixed assets like service centres, delivery centres, and Superchargers that will not grow commensurately with vehicle production, i.e. they will be spread out over more cars. If SG&A growth starts to catch up with the revenue growth, it will probably be due to building new factories, etc. Not stuff related to Model 3.

                        The way I think of it, it's a race to see who can collect ~10 billion miles of driving data first. Tesla's clear advantage in this regard is that it makes cars and Waymo doesn't. This could change quickly if a major car company partners with Waymo and installs its technology on mass produced vehicle models.

                        The stock's volatility might continue for years to come. If Tesla becomes profitable etc. but the speculation and consternation remains the same, then the volatility might stay the same. My view is that week-to-week, month-to-month, quarter-to-quarter price fluctuations should be ignored (easier said than done) and you should set a long-term (e.g. five-year) price target. If the stock price is below your price target, buy, hold, and don't worry about it. Worry about how the company is doing, not how the stock price is doing.
                         
                      • Michael Russo

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                        Thank you, Trent, for this first shot.

                        I don't recommend you to check in 5+ times a day like some of us... :D yet, if you haven't turned on your mail notifications by now, I'd recommend a daily visit... ;)

                        And be prepared for tough questions... you've kind of created expectations with that thread title... :)

                        I'll add one of my own... Why is Seeking Alpha so full of naysayers and T≡SLA bashers? Not being facetious, just genuinely curious.
                         
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                        • Trent Eady

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                          Seeking Alpha is more or less reflective of general opinion. Wall Street analysts have a roughly equal number of buy, sell, and hold ratings on Tesla, meaning opinion is divided and there is no consensus. The same six writers pen most of the anti-Tesla articles on Seeking Alpha, and I think the same three writers (myself included) pen most of the pro-Tesla articles.

                          So under ten people play an outsized role in setting the tone of the site, and the ratio of prolific anti-Tesla writers to prolific pro-Tesla writers is 2:1. Given the small sample size, it's not too far off from the roughly 1:1 ratio of Wall Street analysts. Seeking Alpha itself is an open platform and has no editorial position on any stock.

                          Now the deeper question... Why is general opinion so divided? Well, in fairness, Tesla is a high-risk company. There all kinds of things that could go wrong (e.g. an earthquake in Fremont, California) that are impossible to predict. If you're a more conservative investor, Tesla might just be above your risk tolerance.

                          Another reason is that by default people seem to predict the future by extrapolating from the past in a linear way. For instance, electric car adoption has been growing at such and such a rate for the last ten years, so for the next ten years it will grow at the same rate. Or, historically, the automotive industry has been a low-margin industry so Tesla will have low margins when it sells to the mass market. Or we refuel our cars at gas stations, so we'll need a Supercharger station for every gas station.

                          It is gutsy to predict, for instance, that by 2030 virtually all cars will be electric, even if this prediction is supported by a reasonable mathematical model. It just seems so radical. It's intuitively hard to believe. So I think I understand one of the main reasons why so many people don't see the kind of growth for Tesla that would justify accepting the risk at its current valuation (which is as high as much larger auto companies).
                           
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                          • Michael Russo

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                            Very helpful to know this, Trent, thank you. When I first discovered the site, shortly after my reservation, close to 11 months ago (!), all I could see was the hardline bashing... I was tempted to give up on SA completely yet my passion for the brand & the company made me keep an eye for all new articles related to T≡SLA (and they are rather frequent!) and I was pleased to discover after a few months more regular entries by the 'positive bunch' of which you are indeed a part!

                            On the deeper perspective, also good insights.

                            Keep on persisting!! :)
                             
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                            • Cloxxki

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                              #16 Cloxxki, Sep 7, 2017
                              Last edited: Sep 8, 2017
                              What should Tesla do, take its take to serve those roughly half a million people waiting for Model 3, and then make a well educated decision whether or not to increase production capacity? Or, waste not a single day in getting at the very least a high-volume assembly plant together to help get rid of Model 3 backlogs as well as free up capacity for Model Y and possible other products?
                              From what I gather, the Nevada battery and drivetrain factory should handle more volume than Fremont could take, it would also supply cells for Model Y's yet to be built facilities.

                              Many analysts bash the lack of profits, butt is that from the shorts only? Surely those who are already invested and since a while, must feel that the growth achieved at the cost of profits, has served them well? Will a sound investor refuse to invest in a fast-growing company because they re-invest any dollar of margin they achieved, and attract more capital on top? Not all growth comes from stock emissions anymore, that also should be a positive rather than a negative? It seems that wehn it comes to Tesla, suddenly borrowing money, let alone re-investing profits, is a terrible taboo. In Western economies built and propped up entirely on debt.
                               
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                              • Topher

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                                So is that something they consider on every company in earthquake country? When they notice these risks, do they actually consult actuarial tables to determine how likely they are, and calculate how that affects the price of the stock?

                                From the outside, it just looks like they are making stuff up.

                                Thank you kindly.
                                 
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                                • Trent Eady

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                                    • Stolz25

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                                      Why is Seeking Alpha always so wrong about everything?
                                       
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