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Lengthy article. But good review of how we got here. Shorting is as natural as going long... It's an important characteristic of any market. But the articles p

by anonu 8y ago

Lengthy article. But good review of how we got here. Shorting is as natural as going long... It's an important characteristic of any market. But the articles point is that the shorts might be clustered in the hands of some influential hedge fund guys... Who basically wage an information campaign to crush the stock... Whether they're right or wrong. In that sense, I disagree with the articles premise that Musk should ignore the short sellers. Fight fire with fire... Or a flame thrower. Musk's company is a super speculative one at this stage. So a lot of it runs on gut feelings and perspective. Not actual fundamentals.

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ricw 8y ago
It’s actually not that speculative. Model x and a have 25% profit margins, unheard of in an industry that typically has mid single digit margins. It’s something only Porsche is able to achieve. They’ve announced that they Yer aiming for similar margins for the model 3. In short, the core business is extremely profitable. What is “speculative” is the aggressive expansion tesla is engaging in. It’s why they need cash and what is making them a target.
- CPLX 8y ago
  Their ability to maintain and defend those margins against established luxury car makers over time of course is severely in doubt.
- thomaskcr 8y ago
  > Model x and a have 25% profit margins Part of the short thesis is that they are hiding warranty repairs in "Services and Other" - underreserving for warranty would make those margins artificially high. They reserve $3000/car - considering that just the 3 people I know with Model S's have all had a drive unit replaced, one had a battery replaced, between them I have lost count of the number of door handle replacements - I think there is something to that. Even if their per car margins are high, they still have a negative operating margin. If you can't make money selling cars, does it really matter what your automotive gross margin is? I think the focus on those margins is a major misdirect away from the fact that the capital they've been raising has been used for operational costs as well as capex - which implies that they aren't "reinvesting profits in growth" but dependent on cash infusions for survival. And it seems to have worked based on the TMC and Reddit TeslaMotors threads - people think that the gross margins on the cars means they are making money if you ignore their investing in the future, which just isn't true. Aside: My favorite bull response while sharing this information so far was "source" on my claim they had negative operating profit from someone who was "heavily invested in the stock" -- it's those stripey pages at the beginning of those reports you should be reading as an investor. I try to follow the bull reasoning as much as possible but it's really hard when a lot of it is just based on faith in Elon - I don't really know how to model that.
  - thomaskcr 8y ago
    Here's an example customer receipt from Model 3 service posted today - the fact that the "Services and Other" costs have been rising combined with the differing pay types on customer receipts is what really gives me pause https://twitter.com/kkandyrocks/status/1014812194297573376 https://twitter.com/kkandyrocks/status/1014812194297573376 "Pay type: Warranty" https://twitter.com/kkandyrocks/status/1017651046376706048 https://twitter.com/kkandyrocks/status/1017651046376706048 "Pay Type: Goodwill - Service" I think that a blown pyro fuse within the first couple months of ownership should be a warranty cost.

by anonu 8y ago

deleted 8y ago

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ricw 8y ago

It’s actually not that speculative. Model x and a have 25% profit margins, unheard of in an industry that typically has mid single digit margins. It’s something only Porsche is able to achieve. They’ve announced that they Yer aiming for similar margins for the model 3. In short, the core business is extremely profitable. What is “speculative” is the aggressive expansion tesla is engaging in. It’s why they need cash and what is making them a target.

CPLX 8y ago
Their ability to maintain and defend those margins against established luxury car makers over time of course is severely in doubt.
thomaskcr 8y ago
> Model x and a have 25% profit margins Part of the short thesis is that they are hiding warranty repairs in "Services and Other" - underreserving for warranty would make those margins artificially high. They reserve $3000/car - considering that just the 3 people I know with Model S's have all had a drive unit replaced, one had a battery replaced, between them I have lost count of the number of door handle replacements - I think there is something to that. Even if their per car margins are high, they still have a negative operating margin. If you can't make money selling cars, does it really matter what your automotive gross margin is? I think the focus on those margins is a major misdirect away from the fact that the capital they've been raising has been used for operational costs as well as capex - which implies that they aren't "reinvesting profits in growth" but dependent on cash infusions for survival. And it seems to have worked based on the TMC and Reddit TeslaMotors threads - people think that the gross margins on the cars means they are making money if you ignore their investing in the future, which just isn't true. Aside: My favorite bull response while sharing this information so far was "source" on my claim they had negative operating profit from someone who was "heavily invested in the stock" -- it's those stripey pages at the beginning of those reports you should be reading as an investor. I try to follow the bull reasoning as much as possible but it's really hard when a lot of it is just based on faith in Elon - I don't really know how to model that.
- thomaskcr 8y ago
  Here's an example customer receipt from Model 3 service posted today - the fact that the "Services and Other" costs have been rising combined with the differing pay types on customer receipts is what really gives me pause https://twitter.com/kkandyrocks/status/1014812194297573376 https://twitter.com/kkandyrocks/status/1014812194297573376 "Pay type: Warranty" https://twitter.com/kkandyrocks/status/1017651046376706048 https://twitter.com/kkandyrocks/status/1017651046376706048 "Pay Type: Goodwill - Service" I think that a blown pyro fuse within the first couple months of ownership should be a warranty cost.