Tesla Was Cash Flow Positive Last Week, CEO Musk Says • Hacker News Board

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#221

Post by marvin » Thu, Dec 06, 2012, 12:32 PM UTC

confluence wrote: post #167

I have a significant fraction of my net worth invested in TSLA and have done so since the IPO. I believe TSLA will become a $50 billion dollar company over the forthcoming decade as it rides 2 cost trends and global GDP growth. Elon Musk does too - his renumeration package has TSLA pegged at a possible ~ $43 billion ( http://seekingalpha.com/article/786711-a-43-billion-tesla-mu... ). I add to my position every month…

I've followed your comments for a while, I think you have some interesting insights.

But you are aware that betting big on Tesla like this is a very big risk, right? It's got a potentially very big payoff (and probably an expected value above 1), but there is still uncertainty. Tesla stock is valued a lot higher than the company's assets, so there is still big potential for a major loss, for instance if the established car companies are able to get their act together in time or if some other, unexpected event happens.

I myself have about 15% of my (relatively small) net worth in Tesla, so I am making the same bet you are, but I am curious if you've given the other scenario any thought.

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#222

Post by loceng » Thu, Dec 06, 2012, 1:02 PM UTC

dave1619 wrote: post #86

Tesla Motors is in great shape. I've been following the company for a while and recently drove the Model S. Amazing car in almost every way. What struck me was that it's not an incremental improvement but really a radical (might I say disruptive) improvement in terms of ride quality (super quiet), handling (low center of gravity with skateboard powertrain), electronics (17" touchscreen), cargo space (heard of the fru…

In the mean time, while waiting for them to release more affordable vehicles, they can increase the number of Supercharger stations, further work on future innovation - and then they will see hockey-stick growth.

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#223

Post by loceng » Thu, Dec 06, 2012, 1:03 PM UTC

jlgreco wrote: post #99

yid wrote: post #88

Earlier quoted context omitted.

Great comment, thank you. I'd just like to add that the "frunk" isn't new -- I've been stashing my gym bag in my Porsche 911's frunk for years (it's a rear-engined car). Edit: While I absolutely live the Model S, I can assure you that exceeding stalwarts of the 5-series category, like the BMW M5, will not be as easy to disrupt as the market the Model S aims for.

Does Porsche call it a "frunk" too? I can't stand that word, it's cute, but awful. Sounds like a word I might use to describe a particularly pungent cheese.

The iPad caused similar thoughts when it was released ...

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#224

Post by confluence » Thu, Dec 06, 2012, 1:29 PM UTC

marvin wrote: post #221

confluence wrote: post #167

I have a significant fraction of my net worth invested in TSLA and have done so since the IPO. I believe TSLA will become a $50 billion dollar company over the forthcoming decade as it rides 2 cost trends and global GDP growth. Elon Musk does too - his renumeration package has TSLA pegged at a possible ~ $43 billion ( http://seekingalpha.com/article/786711-a-43-billion-tesla-mu... ). I add to my position every month…

I've followed your comments for a while, I think you have some interesting insights. But you are aware that betting big on Tesla like this is a very big risk, right? It's got a potentially very big payoff (and probably an expected value above 1), but there is still uncertainty. Tesla stock is valued a lot higher than the company's assets, so there is still big potential for a major loss, for instance if the establish…

I have covered and perfectly hedged costless collars (via options - +/- 10-20% depending on IV) on all my equity positions to protect myself against catastrophic risks (aka black swans) at little to no cost to myself.

Here are some examples of risks I have considered (many more but cbf): economic failure (GFC)/terrorist attacks on TSLA (9/11)/unexpected death of main principals (Elon Musk et al.)/catastrophic accounting fraud (Enron/MCI Worldcom)/financial failure (Solyndra)/bankruptcy (A123)/production fraud (Fisker/BYD).

I've run many possible outcomes both in my mind and in computer simulations of TSLA's future finances (programming rocks). I've completed DCF, Monte Carlo and worst-case scenarios (by far the most important) on TSLA's future finances - which although shaky under certain conditions - do not particularly worry me, since I'm hedged, moderately risk taking and a value investor who doesn't really give a shit what the market thinks. I've got a range of prices based on market outcomes and future EV demand telling me whether to buy or sell.

I don't use leverage, margin, or derivatives that aren't fully covered and hedged by my own cold hard cash no matter what the environmental situation - let's me sleep like a baby. I hate uncapped risk - hate, hate, hate it!

I'm impervious to volatility, time decay and catastrophic risk.

My worst case VAR is 20% on the TSLA position - aka loss of 20%. I have no problems with that - I'm actually used to mark-to-market drawdowns of 50-60% - so 20% is peanuts (my current CAGR for the last 4 years has been 35% - mostly because I'm the guy that buys in a crisis with a margin of safety significantly below fair value).

My nightmare scenario is actually TSLA gapping up 20%+ without me being there to lock in another costless spread.

I'm not impervious to nuclear war - but you can't hedge that shit.

I know risk, tech, finance and economics inside and out.

Concentration is for people like me who know what they are doing. For everyone else - there's Mastercard.. I mean index funds :D

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#225

Post by tocomment » Thu, Dec 06, 2012, 2:01 PM UTC

confluence wrote: post #224

marvin wrote: post #221

Earlier quoted context omitted.

I've followed your comments for a while, I think you have some interesting insights. But you are aware that betting big on Tesla like this is a very big risk, right? It's got a potentially very big payoff (and probably an expected value above 1), but there is still uncertainty. Tesla stock is valued a lot higher than the company's assets, so there is still big potential for a major loss, for instance if the establish…

I have covered and perfectly hedged costless collars (via options - +/- 10-20% depending on IV) on all my equity positions to protect myself against catastrophic risks (aka black swans) at little to no cost to myself. Here are some examples of risks I have considered (many more but cbf): economic failure (GFC)/terrorist attacks on TSLA (9/11)/unexpected death of main principals (Elon Musk et al.)/catastrophic account…

That sounds amazing. Could you explain how you set up your hedge, and why it doesn't cost you anything? I'm just starting to learn about option strategies.

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#226

Post by to3m » Thu, Dec 06, 2012, 2:04 PM UTC

mdonahoe wrote: post #217

hatcravat wrote: post #166

Earlier quoted context omitted.

I think part of the problem is also that many people underestimate the amount of time it takes to stop for gas. For city driving, you start with a full battery in the morning and never worry about stopping for gas (so the only place charge time matters is on the freeway). The amount of time spent actually transferring liquid into the tank may only be 5 minutes. But then you need to add the time it takes for your card…

What I would enjoy is never having to stop for gas before commuting to work. Charge it overnight, and I am certain to have enough. No more driving on fumes because I forgot I was low and I don't have time to do it in the morning. The sum of all the time spent at the pump will be greater than the times you spend at Superchargers for the occasional long distance trip.

Filling my car up never bothered me personally.

I suppose my thinking is just that while most of the time it will be fine, you won't have to look that far or try that hard to find a journey that would need a recharge to complete. Visiting friends, let's say. Now, what are your options? You could visit the super charger, which could work, but that assumes there is one nearby! (There are currently all of six, and all in California as far as I can tell. Yes, there will be 150 in 2015, they say - but it is 2012.)

You could find a car charge point. They're also somewhat rare, though certainly more common than the super charger, and, currently, have inevitably lower throughput than a petrol station. So it may take longer to find a free one.

You could use a plug. Better hope you're visiting somebody who doesn't live in a flat, or who has nearby parking on the street! Also, now you're hitting up your hosts for the cost of your transport. And let's hope it's not a big get-together, and everybody else lives nearby :)

(Or, if you're staying at a hotel, expect to pay for the use of their electricity the same way you pay for the use of their phone and their drinks cabinet. If you're taking your children somewhere child-friendly, you should probably expect similar mistreatment. And so on.)

I am vaguely negative based on the current situation, and I don't really trust grand claims about the future. But should the outlook change, I will be sure to change my tune accordingly. I have no particular desire to spend more on transport than required, nor do I have any specific emotional attachment to the internal combustion engine.

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#227

Post by confluence » Thu, Dec 06, 2012, 2:10 PM UTC

tocomment wrote: post #225

confluence wrote: post #224

Earlier quoted context omitted.

I have covered and perfectly hedged costless collars (via options - +/- 10-20% depending on IV) on all my equity positions to protect myself against catastrophic risks (aka black swans) at little to no cost to myself. Here are some examples of risks I have considered (many more but cbf): economic failure (GFC)/terrorist attacks on TSLA (9/11)/unexpected death of main principals (Elon Musk et al.)/catastrophic account…

That sounds amazing. Could you explain how you set up your hedge, and why it doesn't cost you anything? I'm just starting to learn about option strategies.

Basic strategy (there are others): I own stocks in 100 chunk blocks. I then buy the exact same amount of -15-20% puts to cover my downside risk and simultaneously sell the same amount of ~+10-20% calls and use their premium to make the insurance free.

My portfolio value, if hedged perfectly and fully backed with cash is now locked to +/- ~20% (depending on IV) at little to no cost.

More here: http://www.investopedia.com/articles/optioninvestor/09/asset... || http://www.theoptionsguide.com/the-collar-strategy.aspx || http://www.theoptionsguide.com/costless-collar.aspx || http://www.advisorperspectives.com/newsletters10/Risk_Manage...

Mark Cuban used this to stay a billionaire through the dot-com crash: https://www.quora.com/How-did-Mark-Cuban-survive-the-dot-com...

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#228

Post by nikfre » Thu, Dec 06, 2012, 2:18 PM UTC

ryanhuff wrote: post #214

rybosome wrote: post #197

Earlier quoted context omitted.

This is a trivial statement. It's an obvious truism that if other manufacturers produced vehicles like Tesla's, then Tesla's vehicles would no longer be unique. What other companies COULD produce is irrelevant - Tesla is making something drastically different from them. You don't agree that engineering an extremely novel product makes a company "different"?

I don't know whether Tesla can maintain their technical advantage once the market becomes more interesting to the larger manufacturers. Whatever advantage they have today is irrelevant. The capabilities of the current crop of vehicles is still outside the typical driving expectations of the broader market (limited range, slow charging). Once the technology improves to affordably and effectively eliminate these issues…

Guess they have alot of patents that would create great barrier to entry!?

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#229

Post by snuze » Thu, Dec 06, 2012, 2:23 PM UTC

stcredzero wrote: post #205

calinet6 wrote: post #118

Earlier quoted context omitted.

This is like saying that Sony can make an mp3 player, so the iPod isn't competitive in that market. Or that a 5GB iPod won't hold enough music, so it's just an expensive toy. Within 5-10 years the battery problem will improve, especially if there is demand. This is technology, not automotive development. We're not in Detroit anymore. They're in a different class. Tesla is set up to do it right from the start at a muc…

Ford is striking me as innovative nowadays. Eliminating the gas cap is one example.

I would argue that the example you picked is more of a gimmick than true innovation. Tesla also eliminated the gas cap, along with the gas tank, and the gas engine...

Re: Tesla Was Cash Flow Positive Last Week, CEO Musk Says

#230

Post by mpyne » Thu, Dec 06, 2012, 2:58 PM UTC

jpxxx wrote: post #220

mpyne wrote: post #155

Earlier quoted context omitted.

> The government is not just any old company or investor, the government has guns and can compel action in a way that others cannot. As such it is very powerful to have as a investor and very dangerous to have as a competitor. Too dangerous. I get what you're saying but I really wish people would quit bandying about the "government has guns" line. I'm one of the zillions working in the USG and I can tell you that the…

Whether the USG is a collection of well minded do-gooders, an inept bureaucracy that can't tell one hand from another, a literal collection of antichrists, or absolutely none of the above: the USG has guns.

So do the militiamen in Montana, so what exactly is your point?

The bobbies patrolling the streets in the U.K. are unarmed but people still seem to respect the rule of law over there, companies can still be seized, etc.

In fact there are probably even a few Western democracies without so much as a military that still could pass laws to nationalize a business.

"Guns" are the least of your problems with government from a day-to-day point of view.