Skating to where the puck is going

[Grieve]

I've never been able to invest in safe, reliable, dividend-producing companies. I find it too boring. I always want to find something risky that is either going to crash and burn or go to the moon. You always hear about those people who invested $1000 in Apple or Berkshire Hathaway 10 or 20 years ago, and now are multi-millionaires. The trick is figuring out what is going to be the next Apple or Berkshire (not that financial blogs aren't always happy to tell you about 500 different companies are definitely the next Apple).

Anyway, I'm putting my bet on Telsa (TSLA). It's already up about 300% this year, but I'm going to try to bet on the long term...not trade it at all for at least 10 years and see how it looks then. I wouldn't be surprised if it drops a lot in the short term (Apple went from $198 in 2007 to $95 in 2008, and from $700 to under $300 in the last year), but I think it could be massive in the long term.

Tesla's cars are getting rave reviews from everyone, and Elon Musk seems to be a genius in the mold of Steve Jobs. Having conquered electronic banking (PayPal), electric cars (Tesla), solar power (SolarCity) and space (SpaceX), and his next project is a train that can travel from LA to San Francisco in 30 minutes, twice the speed of a plane, for a fraction of the cost, entirely solar powered, and that leaves whenever you arrive - no schedule. So far everything he's tried he's succeeded spectacularly in, so I think he's someone worth investing in.

Of course Tesla hasn't actually made a profit yet (like Amazon in that way), but the Model S has a 99 score from consumer reports and raves from car magazines and consumers. Their next car, the Model X, is supposed to go from 0-60 in 5 seconds - this an electric car. So even though they only sell around 17k cars a year right now, if they can make electric cars go truly mainstream, I think they can have a great future. The Prius only sold 18k in it's first year...now lifetime sales are over 3 million.

[Slamz]

Nossir, I don't like it.

I don't see electric cars going mainstream anytime soon (like, next 30 years). Way too much infrastructure required. By the time you start talking about spending a trillion dollars on infrastructure you might as well just invest in some sort of urban redesign or some sort of people-mover system that's not based on cars at all.

Some sort of "wow" development in the field of portable energy could change things but even having to plug in your car at all is going to be a huge barrier to anyone not in a single family home, which, I think it's safe to say, will automatically exclude most people in America. (Maybe if you could run a car for 5 hours on a battery the size of a suitcase, weighing no more than 40 pounds... then we'd see some shit happen.)


You might as well invest in someone who claims to have an idea on how to build a warp drive.


And frankly, if electric cars do take off, I bet Toyota will sell more of them than Tesla.


I feel like Netflix has a greater chance of being the next Apple than Tesla. There's definitely big changes coming in how people get access to television and movies and Netflix stands poised to either blow the doors off or implode, depending on how things go. (Blow the doors off = more people pick it up and their international ventures take off. Implode = networks band together to create an upstart competitor that actually doesn't suck.)

[Jakensama]

Whats Netflix's endgame though? Enough quality original programming like they seem to be on the track for will attract more subscribers, sure - but how many new subscribers can you get before you plateau. Once they hit that they will surely be profitable, but its not enough of a jump to think their stocks goign to go through the roof comparatively.

I guess if they can transition overseas well it would be impressive, but its very hard to do that well since all of the content you own in the US means squat elsewhere - and US original programming might not draw the huge numbers in non english speaking markets.

[Grieve]

Some sort of "wow" development in the field of portable energy could change things but even having to plug in your car at all

You mean like a 90s battery swap that is faster than filling up your car?

http://techcrunch.com/2013/06/20/tesla-s...years-end/

Even without that, the battery has a range of 300 miles. Even when I commuted from West Virginia to Rockville every day my commute was only 120m round trip... Charging is free at Tesla superchargers, which are planned to cover 80% of the US population by 2014, and 98% by 2015.

is going to be a huge barrier to anyone not in a single family home, which, I think it's safe to say, will automatically exclude most people in America.

Well, the cars start at $62k, after federal tax credit, so I think it's safe to say it already excludes most people in America. But there is more than enough rich people worldwide to ensure very healthy sales growth.

[strife]

62K would be affordable to most people if you factor in "free" gas... if they ever get it where it's how you claim it could be, then that will be one thing. I just don't see it.

[Slamz]

You mean like a 90s battery swap that is faster than filling up your car?

That's not really a "wow" technology so much as a workaround for the lack of a wow technology. They take your spent battery out and put in a fully charged one. Presumably the drained one gets stuck on a shelf somewhere to charge. Not that exciting because it's going to take a ton of money to create the infrastructure to support that.

I'll-believe-it-when-I-see-it. Technically if your city has a charging station I guess you're considered supported but how far out of your way are you going to have to go to get that? It'll be a long time before every service station has one of these. Or even every 10th service station. I can imagine them saying that Rockville is covered but there's only 1 station and it's at White Flint mall. Going 20 minutes out of your way every day to get a battery swap is gonna get old fast.

The real hope would probably be for a major government incentive program to cover a lot of the infrastructure costs, but at $17 trillion in debt, I doubt we'll see a successful push for that kind of spending in the next 30 years either.


I also just don't think an upstart car company is going to trump what corporations like Toyota (or Yamaha for that matter) can do.

[Grieve]

62K would be affordable to most people if you factor in "free" gas... if they ever get it where it's how you claim it could be, then that will be one thing. I just don't see it.

Hmm, I don't see the "affordable to most people" thing. We spend about $2500 a year on gas, which is probably less than most, but still. I don't see the person spending $16k on a Hyundai being willing (or able) to jump up to $62k because they'd make back the extra $46k on free gas after 20 years or so...

In fact I don't see a $62k car ever being affordable to most people. They are coming out with the next-gen model in 2016/17, which should be about half the price ($35k without subsidy). That probably gets closer to being more generally affordable, but I still wouldn't put it in the category that most people (i.e. more than half the US population) could afford.

I'm fine with it being a luxury brand, though. I wouldn't want to see them cutting corners to make a $20k car, just like I don't want Apple to make a $200 (without subsidy) phone. That just damages your brand.

I'll-believe-it-when-I-see-it. Technically if your city has a charging station I guess you're considered supported but how far out of your way are you going to have to go to get that? It'll be a long time before every service station has one of these. Or even every 10th service station. I can imagine them saying that Rockville is covered but there's only 1 station and it's at White Flint mall. Going 20 minutes out of your way every day to get a battery swap is gonna get old fast.

This is more for long journeys than an everyday thing. If you are just doing local driving, the range of 300 miles is more than enough to let you just charge every few days, either at a Tesla station or at home (I figure if you can afford a $62k car you probably have a single family home or a separate garage or whatever).

And charging yourself works out at less than $10 (in most states) for a full 300 mile charge, as compared to what? $50-60 for a full tank of gas?

[strife]

62K would be affordable to most people if you factor in "free" gas... if they ever get it where it's how you claim it could be, then that will be one thing. I just don't see it.

Hmm, I don't see the "affordable to most people" thing. We spend about $2500 a year on gas, which is probably less than most, but still. I don't see the person spending $16k on a Hyundai being willing (or able) to jump up to $62k because they'd make back the extra $46k on free gas after 20 years or so...

Maybe not most people... but I know me personally, I spend $4000 a year EASY on gas... factor in the avg car price is $30k in the us over a 6 year note and that's 54k in car + gas. If I were to keep the car for 10 years(granted, I doubt it would last 10 years... especially with the mileage I put on em), I'm easily making my $ back

[Dharus]

I'll-believe-it-when-I-see-it. Technically if your city has a charging station I guess you're considered supported but how far out of your way are you going to have to go to get that? It'll be a long time before every service station has one of these. Or even every 10th service station. I can imagine them saying that Rockville is covered but there's only 1 station and it's at White Flint mall. Going 20 minutes out of your way every day to get a battery swap is gonna get old fast.

Actually, the infrastructure is already there and most service stations could migrate over very easily. However, most of the charging stations I've seen are free or are part of a benefit. Service stations aren't going to like that price.

FYI. VA already has charging stations at some rest stops (there's one between VA Beach and Richmond). I don't know if they are the super charging types or just an electrical outlet though.

Pure electric isn't going to make it long term in my opinion until we get better tech. Hybrid technology is next and it'll probably dominate for a good 20 yrs I'd guess because it'll be affordable to the masses. By then I see hydrogen fuel cell hybrid being more realistic than pure electric.

[Slamz]

Actually, the infrastructure is already there and most service stations could migrate over very easily. However, most of the charging stations I've seen are free or are part of a benefit. Service stations aren't going to like that price.

Not for the quick charge idea they have, which appears to require stuff be built underground.

Then you're left with a real chicken-or-egg type problem where nobody wants the cars because these stations aren't around and no station owner is going to spend $80,000 or whatever to put in this battery-swap bay for customers that probably don't exist yet.


That's why I'm saying I don't see electric going anywhere unless some new "wow" technology shows up (so maybe next year, maybe not until the year 2541). There's been some interesting sounding supercapacitor work. We need something like that -- something that can hold enough charge to power a car for a few hundred miles but also be really quick to recharge. Batteries are too slow.

Or they realize they can use quantum entanglement to drive your car around while it's plugged in.

[strife]

not directly related to the conversation at hand... but I think this is a pretty cool idea... far fetched and has some MAJOR hurdles to get over... but I think this "may" be the future...

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[Vanraw]

I think Tesla is probably a good long bet. However my prediction is they will be bought. Probably by Toyota, who is one of their largest investors.

The big issue here is the recharge / swap out infrastructure. But that sort of thing is one oil crisis away from the feds paying for it. Talk oil to $300 a barrel and you will see the electric car refill issue resolved almost over night.

The other thing you might want to bet on is Compressed Natural Gas.

[Dharus]

Then you're left with a real chicken-or-egg type problem where nobody wants the cars because these stations aren't around and no station owner is going to spend $80,000 or whatever to put in this battery-swap bay for customers that probably don't exist yet.

Station owners usually have to pull out a underground tank every so often. Its expensive along those lines to do (without any pollution cleanup; with cleanup its easily 100k+). But your right about the chicken-egg problem. That's also why I think hybrids will rule for a while until other things are put in place.

[Dharus]

I think Tesla is probably a good long bet. However my prediction is they will be bought. Probably by Toyota, who is one of their largest investors.

The big issue here is the recharge / swap out infrastructure. But that sort of thing is one oil crisis away from the feds paying for it. Talk oil to $300 a barrel and you will see the electric car refill issue resolved almost over night.

The other thing you might want to bet on is Compressed Natural Gas.

Natural gas might be risky because once we open up our exporting who knows if it'll remain cheap domestically. I can see a lot of NG going to India and China... China especially.

I see Tesla getting eaten as well and if I had shares I'd probably sell then.

[Grieve]

Well, I didn't quite last my 10 years...I sold all my position today two days after I bought.

I was already up over 5%, and this morning a very influential shorting outfit called Citron Research sent out a tweet saying they were shorting TSLA I checked, and when they've done that in the past stocks have usually tanked for a few days or weeks before rising again. I'm hoping to get back in at a lower price.

Anyway...oil has been shooting up again recently, and is already over $100 again. I wouldn't not be at all surprised to see it spike over $200 if the world recovery continues and especially if things in the Middle East go south. That is going to drive people to electric vehicles in droves, just like it did when oil spiked to $143 a few years ago. Although shale is the wildcard...if Brent gets too high, shale becomes more affordable and could crash oil prices.

[strife]

I wouldn't not be at all surprised to see it spike over $200 if the world recovery continues and especially if things in the Middle East go south.

AHHHHHHH

I'm not sure it will go up THAT high again anytime soon... I was expecting it to start coming down again relatively soon...

[Grieve]

TSLA up over 10% after hours after crushing estimates. Love these guys. I should have kept all the shares I bought on the 26th, but still doing great.

Edit: now up 15%, up 21.5% from the price I paid on the 26th. Be up $2743 now if I'd kept all 100 shares... :roll:

[Grieve]

Incidently, they commented on Slamz's issue with non-Single Family Home dwellers on the con-call:

http://seekingalpha.com/article/1616182-...art=single

Elaine Kwei - Jefferies
That's great and then is there any thoughts behind addressing the challenges for folks living in apartments or condos where you might not have a personal garage? As I could see this especially being an issue for the Gen 3 buyers especially.

Elon Musk - Chairman of the Board, Chief Executive Officer, Product Architect
Yes, absolutely. It's not a huge percentage of the market that has the issue, but it is what is. Something we need to address. So for the biggest and toughest one is I guess street parking. A lot of cities and municipalities are putting in charging infrastructure on the street. So we are working with them to get more of that established.

For apartment and condos, for their garages there, we actually have loosely formed a group within our sales and service operation team that is able to work with whoever is running the condo or apartment building and tell them what they need to do to install sockets. Then I think what's going to be important long-term, is the ability to load level or limit total electricity power load in an apartment building.

So if there is a lot of cars, you don't want to exceed the total power of going to that building at any one time. So you should cap a peak power limiter that's able to communicate between the cars that are getting charged. Then there are a few companies we are working with in that regard to deal with that sort of peak power load in apartment buildings.

It really hasn't been thus far a constraint on our growth. So if it occupied a little bit of our attention as that becomes, next year perhaps, it will become constraint on our growth and then its going to be more centrally in our attention.

So certainly they are thinking ahead for their upcoming $35k mass market car.

Some more interesting stats...in Q1 they took 8.4% of the entire luxury car market, and the outsold all of these luxury brands (considered their closest competitors):

Tesla Model S: 4900 units
BMW 7-Series: 2,338 units
Mercedes-Benz S-Class: 3,077 units
Audi A8: 1,462 units
Lexus LS: 2,860 units

[Breand]

I had to check the date on these posts because I feel like some of you are using old information to make your arguments. The Model S is already changing the road map for luxury car sales and is a huge game changer. I live in a rich area of the country and I'm already seeing them all over the place on my commute. Just saw one yesterday in fact. They have a showroom in our fancy mall on Long Island.

For one thing, how much infrastructure do you really need for a car who's base option range is 232 miles? The old concept of battery charging no longer applies. The argument is no longer charging time, but distance traveled on a single charge. Most people will commute an entire week before they have to recharge their car.

And how many rich people live in apartments? Most in NYC, DC and LA, and rich people get what rich people want in their buildings, so charging stations will be a selling point for developers.

Also, don't ignore the fact that they are changing the way cars will be sold and skipping the middle man car dealer, which of course is scaring the crap out of the car sales lobby which is fighting tooth and nail to get Tesla to stop. But the profit margin for each sale is bigger, which may allow them to lower the sticker price.

It was also just announced to be the safest car on the market (having no front engine will do that). And got the highest rating ever in Consumer Reports, which a lot of people take very seriously. Even the old, crotchety car critics are being converted.

When they get their base luxury model out there they will be competing with the hugely lucrative base luxury models: BMW 328i, Audi A4, Mercedes C300, Volvo S60, Lexus IS 250, Acura TL. These cars simply won't be able to compete with Tesla, and the luxury market is primed for a change of scenery as Audi has reached it's saturation point and people want a new "It" car. Those cars will seem like dinosaurs compared to what Tesla will have to offer at the same price point. We hope anyway, heh.

I think the electric revolution will happen a lot quicker than you think, at least in the luxury market.

[Jakensama]

These cars simply won't be able to compete with Tesla, and the luxury market is primed for a change of scenery as Audi has reached it's saturation point and people want a new "It" car.

Your ragging on my Audi?? So much for your housewarming gift!

[Breand]

These cars simply won't be able to compete with Tesla, and the luxury market is primed for a change of scenery as Audi has reached it's saturation point and people want a new "It" car.

Your ragging on my Audi?? So much for your housewarming gift!

If your house warming gift is your Audi, I take it back.

[strife]

It was also just announced to be the safest car on the market (having no front engine will do that). And got the highest rating ever in Consumer Reports, which a lot of people take very seriously. Even the old, crotchety car critics are being converted.

Just read that article... "Better than a perfect score", which is about as stupid is saying they gave 110% and just shows that what they considered a perfect score before, wasn't actually a perfect score.

Link

I'll be sold on Tesla as a car manufacturer after Jeremy Clarkson reviews it... until then... meh.

[strife]

This guy thinks you should sell your Tesla.

Link

He sounds like he knows what he's talking about Of course I don't understand a lot of what he's saying being that I don't dabble in the whole stock trading thingamajig

The bottom line is that this stock has gone up for all the wrong reasons. It started its surge due to a misleading profit, then benefited from a short squeeze and more unusual gains in the second quarter. None of that is sustainable. The short squeeze is dying down, and the accounting trickery cannot go on forever. TSLA is like Wile E. Coyote running out in midair. Once the market looks down and realizes there’s nothing supporting that lofty valuation, it could fall a long way.

I would not recommend investors try to short TSLA just yet. The stock still has a lot of momentum and could continue to go higher despite its poor fundamentals. Trying to short a high momentum stock is just asking for trouble. As the saying goes, “The market can stay irrational longer than you can stay solvent.”

However, investors should avoid TSLA, and those holding the stock should sell and enjoy their profits. The problem with an irrational stock is that there’s no way to predict when it will be rationally priced again. Just know that when the market comes to its senses—probably once all those option holders have cashed in—those holding TSLA are going to lose a lot of money.

[Slamz]

I think the electric revolution will happen a lot quicker than you think, at least in the luxury market.

That wouldn't entirely surprise me; I just think that Tesla is going to be the DeLorean of the electric car market. If the concept ever really starts to take off, Toyota, Ford, Lexus, etc, will come in and crush them.

Unless they have some really interesting patent, I guess. But I also don't think you're going to get an entire industry to shift if it's being bolted to the ground by some fundamental patents that prevent competition.

[Jakensama]

These cars simply won't be able to compete with Tesla, and the luxury market is primed for a change of scenery as Audi has reached it's saturation point and people want a new "It" car.

Your ragging on my Audi?? So much for your housewarming gift!

If your house warming gift is your Audi, I take it back.

Too late, now you are getting a bottle of two buck chuck.