Tesla Plunges After a Conference Call
bloomberg.com
bloomberg.com
At the same time, it was fantastic to see a young, smart, retail investor (Gali from Hyperchange) get to ask so many questions directly to the leadership team. I thought before the call that Gali would get to ask only one question, like the other analysts. He was able to ask almost 10!
It was surreal. I was left feeling that the team overall did a great thing by allowing Gali but wished that Elon didn’t insult the institutional investors by (at least so harshly) dismissing valid questions.
I think Elon might have done well to be less brusque with the more run of the mill questions but I really enjoyed listing to the long exchange there
thats the opposite of being fair, but unfair is fine sometimes.
fair point ;)
In the context of an investor call, which are supposed to convey an investment thesis for the company, I cannot agree. The questions were too pie-in-the-sky to have any bearing on whether TSLA equity/debt/or hybrid have an attractive relative value. It seemed to me that Elon was simply running out the clock.
'And so where specifically will you be in terms of capital requirements?' Sacconaghi said.
'Excuse me. Next. Next,' Musk said to the call operator. 'Boring, bonehead questions are not cool. Next?'"
https://www.bloomberg.com/news/articles/2018-05-03/elon-musk...
Interestingly though, markets are reaction to this response emotionally.
Truly, this sounds divorced from the reality of anything Elon Musk is involved in. He’s making electric cars, rockets, and solar panels, not fusion power or immortality pills. Let’s be realistic! I think it’s important to separate what he actually does from what you desperately hope he may someday do.
Do you credit Musk with coming up with the idea of getting to Mars?
He might kill a bunch of people trying.
I don't think so. The material takeaway is Tesla will need to raise new capital in 2018. The numbers implied it. The market previously guessed Musk had some genius plan to avoid it. On this call, the lack of such a plan became evident. Dilution and/or increased default risks/interest costs are being priced in.
No matter what he does he'll more than likely be fine on the money side.
Then he shouldn't be the CEO of a public company which continues to sell stock and debt to investors on the promise of a return.
Also, Elon Musk very much does care about returns. He has a great track record in that department. He's just learned it's not something that's healthy to focus on in the short-term. Unfortunately, running out of cash forces the compression of time horizons. The latter is what investors are rightfully worried about.
A crazy high valuation is no guarantee that a company can not go bust at some point, though in Tesla's case if they run out of money all that will likely happen is that their next round will be one at a lower valuation and with a group of investors that cares less about the short term.
Elon made the decision to play on Wall Street, that decision comes with some responsibilities and it is downright strange to see him literally bite the hand that feeds him. Without the cash he picked up through the IPO Tesla would be in a completely different position. He's made a couple of boneheaded moves (such as rolling Solar City in with Tesla), which have so far been accepted because of the halo and the promises. But there is a limit to how far that will stretch and I'm confused why he would stretch that on purpose if he has other alternatives (such as simply answering the questions). If he doesn't have any answers, which is one way to interpret his refusal, then Tesla is already in trouble.
I am so sick of the cult of Elon. There is no defending his behaviour here.
What he's done is remarkable. But he should step down, assign himself a founder/chief scientist title, and move forward with "fixing" his company. No fear of ejection; I suspect he's a major shareholder.
[0] https://twitter.com/elonmusk/status/799908000689336320
[1] https://twitter.com/elonmusk/status/823727035088416768?lang=...
I'm not sure how that reflects on Tesla. Tesla is not manufacturing bicycles. Nor are they manufacturing Model As in the 1930s automobile market.
I'm just not sure how applicable the comparison is. I think you could compare 1930s Ford vs contemporary automakers to 2018 Tesla vs contemporary EV makers. But comparing 1930s Ford vs horse and buggy to 2018 Tesla vs contemporary automakers seems less apt to me. I think the move from horse and buggy to automobile was very different than the move from ICE vehicles to EV vehicles.
I do think that Ford's early success is incredible. It is astonishing to me that Ford could be selling millions of cars a year in 1930. I'd be interested in other transitions involving such a large expense that happened so quickly. It is interesting to wonder what the equivalent would look like today. But I don't think it is exactly fair to label someone a disappointment if they don't measure up to 1930s Ford.
By the 1930s, Ford Motor had 30 years of experience. Between 1908 and 1924, Ford built 10 million Model Ts.[0]
I don't know if Tesla will build 10 million cars by 2024. I think that would be incredible if they did. Nor do I know if they will be manufacturing 2 million/year by 2030. If that happens, they will have matched Ford. They will have done it in a mature market, unlike Ford. They will have done it with modern manufacturing technology. They will have done it when owning a car is taken for granted. I'm still not sure how that comparison would reflect on Tesla.
A comparison with 1918 Ford vs 2018 Tesla seems more relevant than a comparison between 1930s Ford and 2018 Tesla. But it still doesn't seem like a very clean comparison.
[0] https://www.history.com/this-day-in-history/fords-assembly-l...
As I write this, TSLA is down about 6% on the day, and it's not as if sharp drops or a general downward trend are unusual over the past year. They're in real trouble, and this doesn't seem like a good time for Musk to let his ego out of its box.
Some people on HN think Musk is doing us all a favour by allowing us to participate in his projects. Evidence of this is the inevitable, "Elon should take the company private" that seems to surface in these threads. As if going public is a favour from Musk, as opposed to a way to raise capital.
The company is public and the CEO is accountable to the shareholders. Period. The hubris with this company is shocking.
> But then, acting within the confines of normality isn't really the trait that may bring the dawn of a new era of humanity.
Tesla is not bringing 'the dawn of a new era of humanity', it's an electric car manufacturer. They came and went and now they're back.
They make cars.
In so many meetings, people just want to hear themselves talk, whether to offer some opinion, reiterate some point, or ask some useless question. If your goal is, "end this meeting as quickly as possible so I can start fixing the things that need fixing", often the other people in the meeting become your careless adversaries.
edit: I regret trying to raise this point in a thread about Elon Musk. :-(
Which would explain Elon ending the conference call. Instead he spent 15-20 minutes taking open-ended questions from a youtuber with a TSLA position of 56 shares.
>If your goal is, "end this meeting as quickly as possible so I can start fixing the things that need fixing"
For Elon the 'things that need fixing' are exactly what the investors he cut off were asking about. If he is so focused on fixing those things he should have been able to give easy answers. The dodge is illustrative of how well he's handling those problems.
As well it seems ridiculous that the CEO of a ~$50B company can't spare an hour or two every quarter to explain his own company. Even Elon Musk isn't that busy.
How long is your piece of string?
Well this morning it was three metres but then we doubled it and it looks like that was too much so come back tomorrow and we will let you know.
- There is no answer
- Musk does not know the answer
- Musk does not want to admit he does not know the answer
- Musk does not want the answer to be known
Yes his shareholders, you know the people that were specificly invited to this call, own the company and that he has to directly answer to, by law.
Instead musk decided to childishly deflect.
Not just softballs... questions that have nothing to do with Tesla today or the near future... rather... questions about Elon's whimsical dreams of the far future and how Tesla might possibly play into that.
Questions about fully autonomous electric vehicle taxi fleets, etc... but he skipped all the questions about how he's going to get Tesla there or how to survive long enough to see that future.
It is obvious to anybody looking at the balance sheets of the company that TSLA will need to raise capital soon. Either late 2018 or maybe early 2019. A company with $3 Billion cash that's losing $1-billion per quarter will need more money. That's just the facts.
Musk is going to be either relying upon institutional investors / the stock market in general for another round of equity offerings, or relying upon banks for a loan. In either case, it seems like Musk just bit the hand that feeds his company money.
Another 300,000 reservations at $1000 per is probably not going to happen. There are fewer and fewer ways for TSLA to raise tons of money.
I'm not necessarily saying "TSLA Will definitely run out of money in 3-quarters". I'm saying "TSLA is currently, on a linear-approximation track to run out of money in 3-quarters".
Obviously, the Model 3 rampup will improve profitability. But the Model 3 Ramp-up also requires more resources (more humans in the assembly line. More robots in the assembly line. etc. etc.). So that still requires money.
A linear approximation is basically a quick-but-shitty-approximation. Its really easy to calculate and full of flaws, but full of flaws in a way that almost everyone can immediately understand.
Exponential approximations (ie: Musk's approach) might be more realistic... since production lines can exponentially grow to some degree. But if you are off by even a little bit, then you end up being ... oh I dunno... 8-months to 10 months late with your 5000-cars per-week estimate.
I think that Matt Levine (bloomberg) might suggest there's more & easier money to be had in the private market, anyway (see Uber, pre-IPO Spotify, etc...).
The problem for Musk, if he also shares that view, is that taking the company private seems (to me) like an impossibility at this point.
That hypothesis is, at least so far, not sustained by the evidence of private-market darlings continuing to rise in the public markets.
The situation has a lot in common with why leveraged buyouts almost always end in disaster, dispite the hype surrounding them when they are first annouced.
Obviously the appropriateness is different, but this is not new behavior. Anyone trying to draw conclusions about the state of tesla from his behavior here is probably making mistakes (or at least using bad data) unless they thought the same BEFORE this call.
You may not like it as a speculator of the stock, but it might be more in line with his and Telsa's long term interest.
Or, you know, an owner of the stock with a long position. Someone who cares that the company is a viable business.
> but it might be more in line with his and Telsa's long term interest.
His long-term interests don't matter. It's a public company. His shareholders' long term interests are what's important - his job is to execute on them. If he can't do that, he shouldn't have taken the company public.
He works for these investors, not the other way around.
Having a retail investor at the table is a great thing for Tesla shareholders, IMO because so much of the public is interested in the company. I think the split between retail/institutional is 50/50 (I may be wrong on this).
Here are some interesting things that came out during Gali's questions:
- Tesla network/autopilot: autopilot safety data on quarterly basis. Timeline of network depends on regulators. A lot of autopilot crashes are from experienced drivers.
- More info on getting towards level 5 autonomy (hardware is going to be enough, but needs more powerful computers)
- Model Y production - not starting until 2020
- Supercharging network (V3): compared to Porsche’s 350kw supercharger. Tesla's main goal is to increase range.
- Interested in having supercharger network partner with another auto maker
- Tesla Semi - building out batteries/renewable energy to lower cost
- Nikola lawsuit
- Tesla Energy: prioritize power wall backlog now. Gigawatt/hour project coming out soon. How it compares to competition
- Tesla thanking China - possibly building Gigafactory in China
What do you mean by "so much of the public"? Outside of tech circles, Tesla isn't as well known as you imagine.
Why do we need to hear about all of their ideas and potential on the conference call? I can read Twitter, Electek, Teslarati, Reddit or others for that.
Source?
Allowing him to ask almost 10, especially after the abrupt shutdown of the other questions, came off as a slap in the faces of the other analysts.
I've found that strategy to be pretty effectively employed by "perception management" types elsewhere. You know, guys with "reality distortion fields?" When you have a large group of people you're trying to maintain context for, you can end up getting into circumstances where you can get caught at giving contradictory statements more easily. Once the group catches that, they tend to dig and twist, and have further ammo for doing what you, the presenter, DON'T want.
Isolating said group members allows you the luxury of being able to devote your full attention to spinning the perception you're managing to only show what you want them to see without getting caught with your pants down by someone else you spun a yarn for previously.
I could be wrong of course, but I've seen it before.
Investors immediately responded to Elon's hubris in kind by severely punishing the stock. Seems the joke is on Musk.
Stock programs have all kinds of explanations they give out as to why a stock moves. Usually, it's a guess.
https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iYhgfoDa6lZ...
Correlation =/= causation. But... its reasonable to see the connection here.
>“We’re going to go to YouTube, sorry. These questions are so dry. They’re killing me.” He directed the operator to take questions from Tesla investor Galileo Russell, whose HyperChange TV YouTube channel features a video titled, “Why I Bought Tesla Today at $255/Share.”
>Mr. Russell, who had campaigned to get on the call usually reserved for analysts, got more than 20 minutes from Mr. Musk. The first of his dozen or so questions: When will Tesla launch its own network of driverless cars?
>“Thank you for an interesting question,” Mr. Musk replied.
It's especially cringey because if Musk was honest about that interesting question he would say he has no idea and should really be focusing on ramping up production. Instead it's a softball question that lets Musk proselytize on the radical world changing work that Tesla is doing...
Unless you believe that Musk is selling the ability for people to say they have a reservation. In which case there's no point to even bother building the cars in the first place.
Perhaps they need to ask better questions next time?
If they could afford long term planning and investment, by definition they wouldnt be poor.
Everyone wants to sit and cross t’s and dot i’s because they are trained those matter more than net new
If those are the only conversations you have, only doing things you’re sure will be comfortable the economy and society stagnate
Economics are not the law of the land or reality. They’re a control mechanism for our output as a thinking, feeling, creative species
Let’s just make more banal phone apps I guess. The ones where the economics are well known to keep us safe
See stories about kids not playing outside or being allowed a quasi dangerous chemistry set
No one wants to be wrong so we take the safe route, which protects the status quo we all bitch about
Of all the 100% electric cars on road, he has two in the top 5
Who else has been pushing battery storage and solar systems that aren’t ugly af and simply made of old parts glued together in parallel?
All these other experts with experience can’t seem to hang with Johnny come lately.
Humans don’t have a history of being petty over others not being the same as them, or worse, outperforming them. We’d never cherry pick facts, and ignore the whole story. Why that would make us no better than animals
I watched Armadillo do that in 2005
>Of all the 100% electric cars on road, he has two in the top 5
And neither invented the category nor managed to turn a profit on it
>Who else has been pushing battery storage and solar systems that aren’t ugly af and simply made of old parts glued together in parallel?
For batteries: Panasonic, LG but also literally every battery company and chemistry department in the world.
For solar panels: also every chemistry department and dozens of companies, "China" as a vague term.
And these other experts: they're making money instead of losing it.
But even then this whole post buys into the idea that I some how have to disprove that Elon Musk does these things. He doesn't. Companies that Elon Musk is CEO of do those things.
I guarantee you John Carmack would not say he did anything close to what Musk did.
It's the gateway problem to any of the ones he might find more interesting, and if he isn't willing to engage with that problem enough to satisfy investors, he should be “Chief Ivory Tower Visionary” and let someone else be CEO. Or, at least, get a COO and gracefully hand off boring operational questions to them.
He does desperately need a good COO though to make sure Tesla can actually deliver on its promises.
No, the CEO role is turning abstract vision into concrete strategy and communicating that strategy especially to investoes, because money people always want to hear things from the horse's mouth. It's a good thing for the CEO to be the visionary rather than channel someone else's vision, if they can do the rest of the job, but they can't be stuck in an ivory tower and think that addressing the path from present reality to distant vision is beneath their dignity.
And how much of that image of a all knowing visionary CEO is just a manufactured image ?
And of course the image of an all-knowing visionary CEO is a manufactured image! It's not like people can actually predict the future. Rather, it's selection bias at work. Those CEOs whose vision doesn't resonate end up getting replaced, or their company goes bankrupt, and then they get written out of the history books. The thing is, you need to have a vision to get people excited and actually rowing in the same direction (nevermind the right direction), so without that you're dead in the water anyway.
My point is that left to their own devices, most of those engineers would rather toil away on their own startups or hobby projects, and that convincing them to all work on a tiny piece of a big project requires someone who's both charismatic and has a finger on the pulse of what problems can excite people. Musk has been uniquely successful in aligning people to work on big, hairy, audacious goals.
That doesn't disqualify your statement, but it does highlight that - if that is correct, a COO is needed to put some sanity on the Ivory goals.
Then again, I was working for a startup. I guess that was a success (~25M funding before fizzling), as far as startups are concerned.. lol.
I get that Musk really enjoys thinking big and changing the world, and to such a person questions about capital expenditures might be dry and boring, but they're still important and need to be answered. If he doesn't want to do it then he should delegate.
I'm asking seriously though, what would he stand to gain from hiding info about capex? Or do you think the reaction from investors is due to his attitude or signs of stress/things going wrong internally?
Yes, his forward looking statement was clear, just as Tesla's repeatedly-missed production projections have been clear.
OTOH, when your statements about the future keep turning out to be wrong, it's not surprising that people want more than your conclusions but also want supporting evidence that those conclusions are grounded in reality.
I can be cynical too and look at it as a PR stunt - in many ways it was given that he allowed Gali to ask almost 10 questions - but at the end of the day I was thinking - good for that guy.
Elon called out the press for writing misleading articles to generate clicks. He went as far as calling it irresponsible and dangerous.
He also called out day-traders, saying of you can't handle volatility then sell your stock. "I am not here to convince you to buy Tesla stock."
You can listen to the call at https://edge.media-server.com/m6/p/nwvzygvo
People would not be after him so much if he hadn't missed almost every prediction he's made. The company is quickly approaching a cliff that the Musk cheerleaders cannot simply cheer him across. Timelines really start to matter when your runway is running out.
Either it’s impossible to predict, or Elon can’t do it. Either way continuing to expect accurate predictions from him is the definition of insanity.
What matters for Tesla is making sure that their core offering doesn't get overshadowed by an established automotive manufacturer before they can scale. What matters for Tesla is that petrol prices don't plummet due to some new unforeseen technology of economic downturn. What matters for Tesla is that their cars wear reliably so they don't tarnish their reputation.
> Elon Musk in a couple of years I'm calling it now
Elon Musk criticising others for making misleading statements to generate hype seems more than a little hypocritical, no?
He's just not ready for me as a tenant.
Was this bad enough that you wanted to sell?
I would say a 10% drop in a stock over a few hours is "plunging".
286.94
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I don't know if this carries the same weight in a public company, but setting expectations with investors is super important in a startup and prevents a ton of wasted time wrangling investors who don't get the true cost/benefit ratio of what you're doing.
Sounds like the CEO equivalent of a movie director saying "I didn't make this one for the critics." Translation, "I know there are problems but I'd rather have my ego stroked by fans than face real criticism."
Elon seems to be more focused on his vision of the Big Picture (solving transportation problems, moving to new planets, fixing the energy crisis, etc) than making money in the short term (which might be over the next 10 years). He appears to be a man convinced he knows how to help fix global problems, and believes in his mission more than making money. You still need money to change the world, so he's also tried to do very well at the business side of it.
I'm not convinced Musk will fix humanity. I'm also not convinced he won't. I just feel that this specific statement, that Tesla isn't a business everyone should be involved in, feels like a "we're mission driven, not money driven" proclamation to me.
This is easy to say when it's someone else's money you're burning.
I also hold a wildly different interruption of the saying "I didn't make this one for the critics."
Not all investors have the same aims. Shaking off short-termist investors may be sensible to follow long term strategies. Sometimes public companies even have to become private again in order to pursue the course of action that's best for them.
There is a lot wrong with getting the budget of a superhero action movie and then making the sort of small art-house film that will never be able to pay off the investors.
If this were some quirky, self-funded Musk project, he could do as he pleased. But not only do they have shareholders, they have $1.8 billion in loans due in the next 18 months: https://www.forbes.com/sites/jimcollins/2018/04/02/forget-th...
While I prefer to focus on long-term over short term, you still can't let the short term kill you. A lot of people think Tesla will be out of money within the year and that's a short-term problem that needs to be solved in the short term. If not there will be no long term.
"Fuck off, I know what I'm doing, and I'm not chasing short-term single quarter results" can easily be fulfilling that duty.
And the cases you bring up for fraud/negligence are very different, and pretty obviously not covered under running an enterprise in good faith.
https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
This can be and has been widely interpreted. It does not have to mean maximizing profits to the exclusion of everything else.
I think one could say that one's "duty" is more about what is ethically required, however. I tend to think that, ethically, a CEO is required to maximize shareholder value. This doesn't mean that he needs to agree with shareholders about what that means, necessarily, and trading off short-term value for long-term value could be the right call.
I feel like sometimes "caring only about shareholder profits" is some kind of code for being greedy, when I think it's quite the opposite -- it's much greedier to spend your company's money for your own vanity, or to set up your next job, or to do favors for friends -- often the non-profit-maximizing activities a CEO engages in falls into one of these buckets.
It is also completely reasonable to say that it is in the shareholders' best interests that their company act ethically, and in accordance with the law.
This is financial suicide for the company. TSLA needs more money this year or next year. Losing $1 Billion per quarter means he is relying on his shareholders each time he raises another round of equity.
The $1.7+ Billion to build the Gigafactory was from the Stock Market (https://electrek.co/2016/05/25/tesla-tsla-stock-offering-pro...). Tesla will need future rounds like this to continue to function.
Pissing off shareholders and reducing the value of your stock is financial suicide.
That seems a bit counter to the purpose of an open public market.
Unless Musk has a plan to get money from somewhere else?
Also, recent events have proved that pissing off the entire financial community so much that they refuse to lend you money because you always lose it is no barrier to becoming President of the USA - and, in fact, can help, because the entire electorate hates the financial industry anyway. Maybe we'll see Elon 2020 and a government bailout. Hell, government bailouts of the auto industry is pretty par for the course these days.
+ 1 for the funniest thing I read on HN for a ling time. Kudos!
If he wants to maximize the amount of money he gets the next time he goes to the trough, while minimizing the dilution, then yes, he needs to drive the price up.
It would not be in Musk's best interests to pander to those investors and compromise the actual long-term integrity of a business that has tremendous opportunity to provide substantial returns by avoiding the mistakes of short-term decision-making.
Also, can you point out who said "Tesla will not need money again"? Elon is always careful to say something like "We will not need to raise money in <relatively short timeframe>". And then he raises money, says he did it because the price was right but it wasn't needed. Shorts accuse him of lying. Rinse, repeat.
As for the second part of your comment:
The Economist wrote that Tesla would have to raise money this year, 2.5 to 3 Billion $.
Elon Musk's response to that:
https://twitter.com/elonmusk/status/984705630106673152
And as far as I can see it has no qualifiers. The complete text of the tweet:
"The Economist used to be boring, but smart with a wicked dry wit. Now it’s just boring (sigh). Tesla will be profitable & cash flow+ in Q3 & Q4, so obv no need to raise money."
Now, that's a pretty strong statement and just like the 5000 vehicles per week production in Q1 that everybody seems to have forgotten about (now it is suddenly good news they do about half that much) it is very much falsifiable. For Elon's sake (and all those employed at Tesla) I hope it works out that way but this could turn out to be a very expensive own goal.
As for Tesla's targets, they have changed (downwards) several times, and I've seen plenty of people noticing. IIRC the target announced after Q4 earnings was 2,500 Model 3's per week by the end of Q1, and they missed by 500.
Honestly, this entire discussion is the kind of thing I'd expect on Seeking Alpha, not Hacker News.
Bloomberg has even charted the successive reduced projections against measures of actual production.
If we’re talking about Model 3, there’s also no way they’ll have unforeseen expenses in Q3/4. It takes way more than 6 months to plan a billion dollar expenditure, so it seems exceedingly unlikely Tesla’s expenditure model is wrong.
So that leaves their revenue model as the only wildcard. If they dramatically fail to increase production... say they plateau at 3k per week... that’s like $50k * 3k * 35 weeks = $5 billion in Model 3 revenue.
Plus they have a couple billion in the bank?
I just don’t see how this is a bankruptcy year for them.
Even with release of the Model Y pushed out to 2020, if they need money and they aren't raising it this year, it probably means more delays.
Which is not true. Investors want to know about the risks, in detail, because then they can make informed choices. Maybe they'll adjust how much they invest, or look for offsetting investments (other companies or financial instruments that would go up if Tesla goes down), or do any of dozens of other things. But they can't do that if they don't get accurate information about the company, which is what Musk is supposed to provide.
Being bombastic and arrogant instead of providing accurate information might be good PR in certain circles (like HN), but Musk has, well, literally any other venue he's ever spoken in as a place to be bombastic and arrogant. This is the venue where he's supposed to be actually honest with investors, not the venue to be fake-honest through statements like "not everyone should invest in this" (gee, Elon, that's never been true of any other company in history... oh wait).
What he’s not providing is accurate predictions of how long things will take. And he’s not obligated to do.
If investors want to make predictions, that’s their job. The company is only responsible for reporting what it did and what it will do.
“Excuse me. Next. Next,” Musk said to the call operator. “Boring, bonehead questions are not cool. Next?”
Yeah. Real helpful there in providing financial information to investors.
Elon says that the diamler CEO does not understand physics "He doesn't know much about physics. I know him. I'd be happy to engage in a physics discussion with him. I actually studied physics in college."
Wiki says otherwise:
"... studied electrical engineering from 1971 to 1976 at the University of Karlsruhe; he graduated as an engineer. He completed his doctorate in engineering in 1982 at the University of Paderborn."
https://www.bloomberg.com/news/articles/2018-02-21/daimler-t...
The Diamler Trucks NA CEO is a banker.
Thanks for the link!
Tesla is a giant confidence game - as are most high growth opportunities.
Risk is fine. Blind risk is not. Questions about cash position for a money-losing company with less cash on hand than it burned in the trailing 12 months are prudent.
That said, Tesla currently has 38 out of 170 million total shares sold short. So there is a strong economic interest in the company failing.
If by "flying close to it" you mean flailing end over end into it then yes.
Do you literally mean that Tesla is a scam? (That’s the normal meaning of “confidence game”, i.e. “con game”).
Under these circumstances, it is not unreasonable for investors to hold you accountable and inquire about the financial situation and plans. Musk's conduct was unprofessional and he could have handled those questions more gracefully instead of dismissing them and berating the people who had been asking them. This kind of behaviour does not exactly inspire confidence, and burning your bridges with the very banks that you might need to raise money later on was certainly not his smartest move.
[1] https://seekingalpha.com/article/4169027-tesla-tsla-q1-2018-...
I just dumped all the $TSLA stock I have bought for the last few years.
I for one have been loving the dump, makes it real easy to buy.
Just like the "Dropbox is a stupid idea because..." everyone loves to quote.
There are plenty other good companies selling great products where I can invest my money.
I honestly think they need to raise more money to be successful. Musk says they don't need money and they can be profitable in next 2 quarters - let's see how it goes.
Since I average it out over several years by investing fixed amount every 15 days, it worked out pretty well for me. (esp. investments in BTC, ETH worked out great :-) ). But I agree I might lose in few of these (or most) I pick and I am okay with that.
My class 90% lost money, 9% broken even, and 1 person got a ridiculous return. I learned from that, just invest in the index. Remember, you have to make more/less than everyone else...a nominal return of 20% doesn't mean anything if everyone made 50%. Last year, the NASDAQ earned nearly 30% two years in a row - that's par.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2479542
Paper finds that "firms that 'cast' their conference calls by disproportionately calling on bullish analysts tend to underperform in the future."
Tesla may be over the hump on getting the business working. But profitability is still a ways off. Tesla may need more capital to get there.
What Tesla doesn't need now are distractions. The truck, the new roadster, the next model, self-driving. They need to focus on shipping product before the money runs out.
If Smith & Wesson launched a consumer flamethrower there would be outrage...Musk has been able to distract with lots of shiny objects but the clock is ticking, even amongst his niche fan base...I hope all the people who are working so hard in Musk's various companies come out of this ok...
Depending on your needs, that has arguably already happened. While Tesla is still the "coolest" brand of car, there are better/cheaper electric cars from many non-Tesla companies already widely available today. That will not go away, even if Tesla implodes.
Also, I wonder how many would go buy a competitor EV vehicle if their Model 3 doesn't happen. Or will they go ICE ?
If it's a bankruptcy (and why would they told before that point?), whatever he deposit contract or general principles of law suggest for a going concern would be the upper limit of refunds, but the actual value would be dependent on what assets were left and what other claims were competing.
The Chevy Bolt is a clean-sheet design and is also a "skateboard".
I'd like Tesla to stick around for a while, so that the other idea also catches on - you know, the "do the right thing for a change" philosophy.
No, there are a very small handful of cheaper electric cars that may be subjectively better for some uses but worse for many others. Bolt, i3, Leaf - that's about it for mass-produced cars being bought in any volume, and the manufactureres are taking a bath on them.
GM is reportedly losing ~$7,500 for each Bolt they sell, how long do you think that would go on if Tesla were to disappear overnight?
https://insideevs.com/april-2018-plug-in-electric-vehicle-sa...
My point is, the needle is just barely starting to move toward EVs - it’s not pegged yet by any means.
But given that Nissan and Renault had EVs on the market for as long as Teslas has, I wouldn't be too concerned about the post-Tesla EV market.
I think they would sell more Bolts because without the Model 3 there would be less competition in the Bolt's price range.
Everything I've seen indicates to me that GM is very serious about this, and the German brands are also investing a lot -- the rise of electric cars is coinciding with the decline of diesel, and they are moving their money from one to the other.
The private sector has historically been the one that had sane and logical business practices minimizing risk, while government had the funding necessary to take on large, risky projects for the good of their constituents. Somehow taxes have gone further and further up while our expectations of government plummeted, and now we are looking to these single "genius" entrepreneurs to revolutionize science and technology with investor money.
I'm not a "free market trumps all" person by any means, but is this really true? Xerox PARC, GE, IBM, Ford all come to mind. Sure, still the government was involved in quite a few of these, but I wouldn't say these companies were minimizing risk by any means.
Are you kidding? Society had progressed more in the last 10 years than it has in the previous 20, with all indications the next 10 will see even more progress. We are making real progress, even excluding the great work Musk is doing in Solar/EV/Space/Boring/Hyperloop.
* We are very near peak carbon output, with the majority of the developed world very concerned.
* The United States voted for an African American president (slightly more than 10 years ago) and a female presidential candidate won the popular vote, a milestone for equality.
* Almost 50% of the world's population is connected to the internet, and can communicate directly and instantly.
* The internet moved from on our desks/laps to in our pockets and on our wrists.
* We've made major advancements in medical science, from cardiology to genetics.
* Huge social changes, from winding down the drug war to marriage equality
* Super computers have roughly the same processing speed as the human brain
* VR/AR is entering mainstream.
I don’t know what to say.
A flamethrower is essentially a gasoline/napalm hose / stream with a lighter at the end of it.
The Tesla Flamethrower is literally just a roofing torch like in [1] with a plastic gun around it and the valve turned all the way open. [2]
[0] https://upload.wikimedia.org/wikipedia/commons/transcoded/3/...
[1] https://www.youtube.com/watch?v=UprliuSNvX0
[2] https://qz.com/1191685/elon-musks-boring-company-flamethrowe...
Weeney propane torch: http://gigadgetstech.com/wp-content/uploads/2016/11/Organic_...
A real flamethrower: https://flamethrowerplans.com/wp-content/uploads/2016/03/Fla...
Or, as others have already described, one burns a flammable gas and puts out a flame a few inches long. The other squirts flammable liquid at you from a long ways away, then ignites it. </vast_oversimplification>
And such dismissive behavior (as much as I am not a fan of it) is not uncommon among stressed-out CEOs - Jobs, Gates..
Musk's history of lies - https://twitter.com/wolfejosh/status/989258303640408071
It's far more likely that the stock continues to deteriorate, and that there's a margin call at the $230 level (https://seekingalpha.com/article/4168224-musks-personal-fina...) and that Tesla is liquidated by the end of the year.
I was just wondering if Jobs had ever had an episode like this during a quarterly call. I mean, he was obviously known to be abrasive on other occasions. But in his final decade, Apple's business was in a much more solid position than where Tesla is at now.
And if it does raise more capital, how do you justify the $50 billion market cap if your earnings are crippled with so much debt financing?
Elon is frequently full of shit.
[1] https://finance.yahoo.com/news/edited-transcript-tsla-earnin...
But Apple is sitting on ~$270b of cash (1).
And is run by a guy in Tim Cook that is a world class operator and fulfillment guy.
And who has been criticized for lacking vision :)
We can dream right?
(1) https://www.cnbc.com/2018/05/01/apple-q2-2018-earnings-heres...
It's called being an investor.
Refusing to answer that question, is either being spiteful, or disingenuous. It's a bit of a red flag.
This is a question that can be answered by "any financial analyst"?
Secondly, Musk can't avoid short term investor questions because unless he answers them, there may be no longer term. This kind of clear avoidance of difficult questions can easily add one percentage point to Tesla's future loans and reduce the amount he can collect.
Tesla is down almost 12% from the beginning of the year.
sure, we can day trade or buy stocks and sell whenever we want, but we're not the ones causing market swings, we're positions in computational modeling where the market makers aren't even offering our positions to the market but using your sell to do another buy and make money off us reacting/acting on the market.
The end result is still that Tesla seeks a profit - but its business goal is to change the market. If you don't like that, don't buy the stock.
You want to quantify the risks you are taking. Answering questions would help.
Yes, but if things go horribly wrong in the short-term, the long term doesn't really matter.
Normally investors listen forward-looking statements from CEO, but Musk has failed all his projections so many times that they are worthless. He says that he don't need to ask more money this year. Investors look at the numbers and don't believe it. He should give something useful that helps investors to asses the risk on their own and put number to it.
> Musk is making a contribution to the world.
Musk is not in trial. People just want to ask tough and important questions. Avoidance is not a good signal.
This is such a dumb, narrow-minded statement. Musk isn't some angel handing out miracles. He's a businessman, on a business-centric call, and was being rude to other businessmen who are essential to the success of anything he wants to do. This isn't The Wolf of Wall Street, this was Toni Sacconaghi, an extremely credentialed analyst, doing his job. And if you don't think that wall street analysts don't "make a contribution to the world", you need some perspective. Tesla as a company literally would not exist without the funding provided by companies like the ones Toni represents.
If Musk wanted to have a TED talk about how cool the future is, then he should have scheduled that on his own time. This was not that. Posters on HN complain all the time about how they get pulled into meetings and then their time is wasted because their bosses only wanted to talk about irrelevant stuff. That's exactly what happened here, only Musk was the one wasting everyone else's time.
Today, the stock market still serves as a way to spread innovation. Elon Musk would not have been able to build Tesla, nor SpaceX, nor Solarcity without the help that Wall Street has provided. You are incorrect in assuming that this is about a "single-minded focus on wealth". They are asking questions about capital because these are the things that will determine whether or not Tesla will fail at "making the world a better place", and those are important things to know, just like it was important to know if all of your farmers are going to go out of business and cause a famine.
It's actually odd when you think about it: we do a lot of observing and commenting these days (myself included) and I wonder how much more productive we would be individually and as a society if more of our energy was invested in creation and building.
Transcript : https://seekingalpha.com/article/4169027-tesla-tsla-q1-2018-...
"We have no interest in satisfying the desires of day traders. I couldn't care less. Please sell our stock and don't buy it."
"If you want me to do things only for ROI reasons, you should get out of this stock."
https://www.cultofmac.com/268413/tim-cook-tells-profit-obses...
It sounds to me like Musk has been projecting near term (<1 year, sometimes even “next quarter”) transition to being cash flow positive and not needing new capital regularly for six years now and is used to just getting away with it even though it's been wrong every time.
Like trucks and vans etc.
Pipe-dream sure, but I was really hoping that this would happen.
How hard would it be to extend the length of the chassis only to allow for a long van/bus/truck be built on top of it (and by how hard, I mean "how hard" - not "it couldn't be that hard, could it" type of question)
Tesla is effectively the Apple of the car world. The whole thing is locked down, and if you make modifications to the car, they will brick it with software.
You don't really "own" that Tesla.
https://www.cnbc.com/video/2018/05/03/tesla-earnings-call-wa...
“how well can I infer you’re doing so I make sure I make more money or lose less money in the next 6 months?” Over and over and over...
I wish I had enough money to give Tesla a runway, free of Wall Street scrutiny for a year. But that's not in the spirit of capitalism I guess.
I mean ... if I were an institutional investor in Tesla, I'd really wish he would have answered those questions. He must have known what the outcome would be.
The thing is that he isn't wrong. I listened to one of these earnings calls the other day and literally fell asleep.
Obviously it would be boring to you as a layman with no money on the line. I'm sure I'd be bored too. That's not relevant though.
I totally agree, still in my experience they are quite boring. I'm not even advocating for any kind of change or anything, they are probably supposed to be boring.
>"Obviously it would be boring to you as a layman with no money on the line."
Why would you I assume I was listening to an earnings call without money on the line? But actually, now that you mention it, recordings of those calls could be a good insomnia cure.
I don't believe Musk's critics are specifically disagreeing with how boring earnings calls may or may not be. I guess if I expected these calls to be not boring, I would think Musk had made an interesting observation.
Setting aside the abject glibness of this comment, the likelihood of it recovering at this time tomorrow is pretty much guaranteed, and by his logic (not everyone should own this stock) it will be owned by the right people (those that believe in Tesla's ability to deliver a compelling product rather than healthy stock returns).
Which probably doesn't make investors happy and understandably so, but the Musk moves in mysterious ways.
None of it matters if Tesla produces products that people love. So far they're doing a great job of that. If they keep up the "pace of innovation" they will succeed, and if they don't, they will fail.
None of this drama will matter in the end. As a Musk fan since before he was cool, this just makes me like him that much more.
Want to kill Tesla? Do you understand who he was talking to? These people are Tesla investors. Well, maybe that should be "were" now.
I simply believe that founders, products, and teams determine success and that investor happiness is a lagging indicator. This is clearly what Elon Musk believes too.
Wall Street investors are like sheep. You can curse at them all you want. They can bleat all they want. They'll still come running when the food is ready.
Believing investors could be loyal to Elon Musk based on his personal behavior is a good way to kill Tesla. They only value the profits that he can generate for them, and he knows it.