TSLA - Tesla Motors Inc (NASDAQ)

[CityIndex]

Worked out quite well when they did that last time.

It definitely did, the last one was in August 2020, the year $TSLA rallied over 700%.

Today's news helped the stock back into the green YTD, and saw Telsa add more than Ford's entire market cap to their value. All trading carries risk, and although it will likely be down to what broader market sentiment is like, it should be interesting to see if $TSLA can repeat its 2020 performance if the stock split does go ahead.

 

[Value Collector]

When I read your post my first thought was, 'if the SP is dropped too low it could create a snowball affect of trader activity which adds no value and undermines long term investors.

How would it do that? plenty of shares trade on the Australian market for less than $50, and many for less than that with no effect.
in fact as you stated the intent of a stock split is to increase trading, by allowing smaller trades to go through, eg if a share is $10,000 then the smallest trading parcel is going to be 1 share at $10,000, but if you want to let people invest smaller amounts of say $1000, you need to have a lower share price.

But what I am suggesting is reduce the share price to $1, and then just let it grow from there and never do another stock split again, (for 50 years or so at least) doing a stock split only back to $200 or so seems crazy to me, because in the Australian market $200 is already considered a large share price, but in the USA there is a stigma about share prices of $1 or so, but I just don't understand why, it seems like common sense to me to start small, and avoid constant splits.

----------
I understand Buffetts reasons for avoiding stock splits, and generally agree with him, I am a Berkshire shareholder and have read all Berkshire letters going back to 1977, I would have split Berkshire class A every time it hit $20,000 and brought it back to $1, that way I would have only had to do 1 stock split in the 60 year history, rather than every 5 or 10 years like some companies.

I believe Warrens main reason for not splitting the class A is personal, its a life long game to see how high he can get this stock that he bought for $6 back in the 1960's

 

[JohnDe]

How would it do that? plenty of shares trade on the Australian market for less than $50, and many for less than that with no effect.
in fact as you stated the intent of a stock split is to increase trading, by allowing smaller trades to go through, eg if a share is $10,000 then the smallest trading parcel is going to be 1 share at $10,000, but if you want to let people invest smaller amounts of say $1000, you need to have a lower share price.

But what I am suggesting is reduce the share price to $1, and then just let it grow from there and never do another stock split again, (for 50 years or so at least) doing a stock split only back to $200 or so seems crazy to me, because in the Australian market $200 is already considered a large share price, but in the USA there is a stigma about share prices of $1 or so, but I just don't understand why, it seems like common sense to me to start small, and avoid constant splits.

I was just sharing my initial thoughts, and I attached reasoning from another source.

In my mind, dropping the SP from $1000 to $1.00 has got to have some negative side affects. If not, why don't all the companies bring their price down into penny stock territory?

The US share system is a lot bigger than the Australian, many penny stocks in the US are in the $'s. Inflation doesn't just affect the money in your pocket or bank, it also affect the price of shares.

Pros and Cons of Splitting a Stock - Cliffcore

After a stock split, each existing share within a company is divided into multiple additional shares. As a consequence, the company’s share count increases while the price of one single share decreases in proportion to the number the stock is split into. As an example, let’s suppose that a...

cliffcore.com

 

[Value Collector]

I was just sharing my initial thoughts, and I attached reasoning from another source.

In my mind, dropping the SP from $1000 to $1.00 has got to have some negative side affects. If not, why don't all the companies bring their price down into penny stock territory?

As I mentioned in my post above, I understand the Berkshire case, I have been a buffett follower for over a decade and have pretty much read everything he has written publicly.

There is no difference between buying 1 share for $1000 or 1000 shares for $1000, either way you have made the same investment.

If Tesla had split back to $1 last time, the share price would be $5 now, and there would be no need to worry about another split, even if it went up 10x higher to $50, still no need to split.

The only reason to split is if you feel that the share price is high enough that your target market will have trouble purchasing a share, So I agree once it gets over $1000 you will begin to lock out some smaller investors, but there is no bad side affects to having a $1 share price except for stigma, and if you company is truly growing, it won't stay a $1 for long.

 

[JohnDe]

As I mentioned in my post above, I understand the Berkshire case, I have been a buffett follower for over a decade and have pretty much read everything he has written publicly.

There is no difference between buying 1 share for $1000 or 1000 shares for $1000, either way you have made the same investment.

If Tesla had split back to $1 last time, the share price would be $5 now, and there would be the need to worry about another split, even if it went up 10x higher to $50, still no need to split.

The only reason to split is if you feel that the share price is high enough that your target market will have trouble purchasing a share, So I agree once it gets over $1000 you will begin to lock out some smaller investors, but there is no bad side affects to having a $1 share price except for stigma, and if you company is truly growing, it won't stay a $1 for long.

I am like you, we are not qualified stock analysts. My answer was just a thought bubble, just like your question.

Why don't companies drop their share price from $1000 to a $1.00? Maybe because it leaves no reserve for events like market crashes, maybe the SP is equivalent to two stock analysts rocking up to a client in a pimped Holden Viva or a Genesis. Which would most clients feel comfortable with?

I don't know, I'm just throwing ideas out there.

If you already have an answer to your question, post it.

 

[Value Collector]

I am like you, we are not qualified stock analysts. My answer was just a thought bubble, just like your question.

I would say I am a fairly qualified stock analyst, investing is my full time profession, my long term passion and the subject of 25 years of consistent study and practical experience.

Why don't companies drop their share price from $1000 to a $1.00? Maybe because it leaves no reserve for events like market crashes,

Considering a share can trade as low as $0.01 it share price can crash a long way before its low share price will hurt liquidity, secondly it can always to the opposite of a stock split and adjust its price upwards if it really needed to, which would happen less often.

maybe the SP is equivalent to two stock analysts rocking up to a client in a pimped Holden Viva or a Genesis. Which would most clients feel comfortable with?

Well, Berkshire Hathaway was once $6 and is now $539,000 so I don't think the share price beginning price tells you anything,

I

If you already have an answer to your question, post it.

My answer is simply that high share prices are simply window dressing, it would have been far more practical for companies to have lower starting share prices than higher ones, as I said if Tesla had adjusted their share price back to $1 or even $10 at the last stock split they would have to go to the expense of doing it again so soon.

I would suggest either adjust it to a lower level that won't need further adjustment so soon, or don't worry about it till it gets to $10,000 or so.

These are just my opinions, I just hate companies fiddling with share prices, the general rule should be to just let the share price be what it will be, and if you are worried about liquidity, choose a low starting point that wouldn't require constant adjustments.

 

[JohnDe]

I would say I am a fairly qualified stock analyst, investing is my full time profession, my long term passion and the subject of 25 years of consistent study and practical experience.




Considering a share can trade as low as $0.01 it share price can crash a long way before its low share price will hurt liquidity, secondly it can always to the opposite of a stock split and adjust its price upwards if it really needed to, which would happen less often.



Well, Berkshire Hathaway was once $6 and is now $539,000 so I don't think the share price beginning price tells you anything,

I



My answer is simply that high share prices are simply window dressing, it would have been far more practical for companies to have lower starting share prices than higher ones, as I said if Tesla had adjusted their share price back to $1 or even $10 at the last stock split they would have to go to the expense of doing it again so soon.

I would suggest either adjust it to a lower level that won't need further adjustment so soon, or don't worry about it till it gets to $10,000 or so.

These are just my opinions, I just hate companies fiddling with share prices, the general rule should be to just let the share price be what it will be, and if you are worried about liquidity, choose a low starting point that wouldn't require constant adjustments.

Well if you’re qualified, then you already know the answer to your wondering.

And if you’re qualified, What was the point of wondering out aloud if you’re not going to like a comment that doesn’t fit your understanding?

I always wonder why American companies seem to hate having share prices under $100, but then rush to split when it hits $500 or $1000, resulting in some companies regularly doing splits (every 5 or 10 years of so).

I have no idea why they just don’t do a low share price eg $1, to begin with and not have to worry about another split for 100 years or so.

 

[Value Collector]

Well if you’re qualified, then you already know the answer to your wondering.

You can be a qualified Plumber and still wonder why other plumbers make certain decisions that don't make sense to you, it's not like all plumbers (or board members) are operating perfectly all the time, and who knows maybe someone could end up explaining a rational reason to me and I learn something.

I don't think being qualified in a particular field lets you read the minds of all the other practitioners in that field.

And if you’re qualified, What was the point of wondering out aloud if you’re not going to like a comment that doesn’t fit your understanding?

Firstly who said I didn't like a comment?

Secondly, as I said above there is a chance some one might explain something knew to me and I learn something, or some one reads my comment and they get put on a thought process and they learn something.

 

[JohnDe]

 

[JohnDe]

First 5 Model Y performances from Berlin that are being delivered outside of Germany. It Happened today in Aarhus, Denmark. Wait time for the Model Y is now a few months, compared to the equivalent Audi which is 12 months

 

[JohnDe]

 

[mullokintyre]

Elon Musk has given an update on the Tesla Cybertruck.
From Slash Gear

Tesla chief Elon Musk has announced that the long-delayed Cybertruck will finally enter production next year. However, he didn't confirm if the updated production timeline also means buyers on the pre-order list will get their hands on the angular electric vehicle in 2023. Taking the stage at Tesla's Cyber Rodeo opening party for the Giga Texas factory, Musk also revealed some hardware updates for the Cybertruck. The door handles are gone, which might sound like a worrying omission, but Musk promises that the car will know when users are around, apparently using the same camera-powered environmental awareness tech that is already available on Tesla cars with features like Sentry mode.

However, Tesla's boxy electric truck still doesn't look production-ready. The prototype up for exhibit at the event had airbags missing from the yoke, panels were misaligned with a visible gap, and the position of side-view cameras also appears to have been changed. Tesla plans to build the Cybertruck at the Giga Texas factory, which now serves as the brand's headquarters too. "We can't wait to build this here. Sorry for the delay. But you're going to have this next year, and it's really going to be great." Musk also joked about smashing the window on the updated Cybertruck prototype, bringing back memories of the on-stage fail for the supposedly unbreakable window that lost a battle with a hammer in 2019.

Although Rivian has already started deliveries of the R1T and thus got the drop on Tesla, it only produced 2300 Ev's of all forms Q1 2022.
Even when it gets into full production at its Factory in Normal (what a great name for a town!), it will still only produce 25,000 EV's for the year. if all goes according to plan. It will ramp up further, but will it be too late?

Rivian’s current footprint in Normal will be able to produce 150,000 EVs a year by 2023, and expansions are already in the works to increase that capacity to 200,000 vehicles. A second facility should help too. Last December, Rivian announced an additional plant is coming to Georgia that will eventually produce 400,000 vehicles annually.

The electric Ford F150 Lightning, has also started production and deliveries, but it is going to have to seriously ramp up production if it plans to replace all F150's with an electric version.
According to Ford, it sold 726,000 F series trucks last year, of which nearly 500,000 were the F150 variant.
Ford had originally targeted production at 80,000 per year initially, but due to receiving about 300,000 reservations, doubled planned production to achieve 150,000 F150 Ev's by mid 2023.
Should be interesting to see how many of the rednecks get attracted to an Electric F150.
Mick

 

[mullokintyre]

TSLA shares may not have factored in the closure of the Shanghai plant.
From Zero Hedge

With all of the chaos taking place in Shanghai as a result of a new round of mysteriously overbearing Covid lockdowns, there has been very little attention paid to Tesla's current plant shut down and the effect it may have on the company's operating results.

But analyst Gordon Johnson of GLJ Research is forcing that issue into the spotlight, writing in a note to clients on Monday that on the ground contacts are telling his firm that Shanghai may be closed for a prolonged amount of time.

"In discussions last evening with one of our on-the-ground contacts in China, we were told TSLA’s Shanghai plant will be down until 'at least' mid-May (and not fully-ramped up until 'late 3Q22’ – yes, you heard that right)," Johnson wrote.
He continued: "More specifically, our Shanghai contact says due to TSLA’s plant: (a) being a non critical factory (i.e., not food, medicine and military), and (b) mixing people from multiple districts, which is strictly forbidden because then every district would have to go on lockdown, it will not be given priority vs. other more critical plants."

Johnson told clients he did not think that the closure had been priced into the company's stock or models: "More to the above, in our conversations this evening, our contact, who is a supplier to TSLA, expressed their view that it will take 2-to-3 days to fully re-ramp the factory for each day it is closed. Consequently, in short, with the Street modeling TSLA’s sales/EPS growing from $17.8bn/$2.72 in 1Q22 to $19.597bn/$2.50 in 2Q22, we DO NOT believe this news is priced in (our contact believes TSLA could lose money in 2Q22 vs. the current Consensus est. that they will deliver $2.50/shr in EPS [or $2.873bn in net income])."

GLJ's contact in China, when asked if the factory will close longer than just through the end of April, said:

"Yes, it will shut for a minimum of 4-6 more weeks and most likely at least June 1 absent recession of the Dynamic Zero Covid policy. I also expect re-ramp to take 2-3 days for every day the factory is closed. So a closure through May won’t have Shanghai back to full production until late Q3. It’s a non critical factory (food, medicine and military) and mixing people from multiple districts is strictly forbidden because then every district would have to go on lockdown. My best case estimate for Q1 production is 190k. And that’s based on a mid May open. I fully expect the quarter to come on around 160k and be a loss.”
Johnson says he thinks that Tesla's Shanghai plant is >100% of the company's profit and, if this becomes obvious, that the views around Tesla's other factories' efficiency may come under pressure.

Reading some of GLJ musings on Tesla, he may have some negative bias towards Tesla, so it may be prident to down grade some of his assessment.
However, the closure, however long it goes on for, will definitely have an impact on Teslas profitability.
The question is, just how much.
Mick

 

[JohnDe]

TSLA shares may not have factored in the closure of the Shanghai plant.
From Zero Hedge

Reading some of GLJ musings on Tesla, he may have some negative bias towards Tesla, so it may be prident to down grade some of his assessment.
However, the closure, however long it goes on for, will definitely have an impact on Teslas profitability.
The question is, just how much.
Mick

Yes, it is going to be hard for TSLA with its strongest factory in shutdown. Have Texas may help, but investors are a finicky bunch.

Tesla Inc. exported just 60 cars produced at its Shanghai factory in March, a record low as strong domestic demand sucked up most of the output, according to China Passenger Car Association data released Monday.​

​

The U.S.-based maker of EVs shipped a total of 65,814 cars from its factory in China’s financial hub last month, with the bulk of those -- 65,754 -- going to the domestic market.​

Bloomberg - Are you a robot?

www.bloomberg.com

 

[JohnDe]

Looks like they pulled off another increase even with "challenges with supplies and the closures of its Shanghai plant".

Deliveries up 68% on 2021 with 310,048 vehicles produced to the end of March
13 Apr 2022

THERE seems no end to Tesla’ momentum – the Californian-based electric vehicle producer has set another quarterly delivery record despite ongoing market challenges.

For the first quarter of 2022, Tesla delivered 310,048 units – 68 per cent more than it achieved in the same period of 2021.

The production figures included some 295,324 Model 3 and Model Y variants, while the remaining 14,724 comprised of Model S and Model X variants. By contrast, Tesla produced 180,338 units between January 1 and March 31, 2021.

Speaking to US publication Money Transfers, Trading Platforms’ CEO Jonathan Merry said: “Tesla’s Q1 2022 performance is more impressive considering the testing environment it has been operating under.

“It has had challenges with supplies and the closures of its Shanghai plant. One would expect these to impact its numbers; if it has, it’s minimal, which speaks volumes of Tesla’s resilience.”

Tesla appears to stand alone in the US market where competitors including GM, Audi and Kia are in decline. General Motors delivered just 457 electric vehicles in Q1 2022 and recalled thousands of its Bolt electric models due to battery issues.

Conversely, BMW reported marginal gains in US sales across Q1, while Hyundai reported a massive 241 per cent increase in the sale of its battery-electric models.

 

[mullokintyre]

At the risk of upsetting the Teska afficonados, the following youtube video bdoes not out them in a good light.

Its lengthy, but the guy has some serious street cred amongst the DIY community.
Probably less amongst the non techs.
Mick

 

[Value Collector]

At the risk of upsetting the Teska afficonados, the following youtube video bdoes not out them in a good light.

Its lengthy, but the guy has some serious street cred amongst the DIY community.
Probably less amongst the non techs.
Mick

I don’t think I would touch a car that’s been put together from two written off cars, I support the guy having a hobby, but I my Dad was a panel beater and growing I constantly had it drummed into to me to never buy a car that’s been written off, I certainly wouldn’t want a Tesla pieced together like that.

But as I said I support him doing it, but I can also see why Tesla wouldn’t be that comfortable with it also, since it’s their brand on the line every time a bad news article hits the head lines.

 

[mullokintyre]

Well, thats interesting, as my Dad was also a panel beater.
These days, being written off does not mean what it used to.
The cost of labor , spare parts, paints solvents, and most importantly the airbag replacement, can write off a car with minimal damage.
Just been watching a Utube vid of Robbie Layton rebuilding a Toyota Fourrunner written off by the insurance company after hitting a deer which had got into the front RHS wheel well .
Was not a lot of obvious damage externally, but this car had every single airbag go off, both front and rear, a total of 11 air bags to be replaced, as well as the two front explosive lockup mechanisms in the front seat belts.
That was the knockout blow, as the headliner had to be removed, the complete dash, the seats had to be cut open, new side airbags installed and then reupholstered. The amount of labour alone would have made it a write off.
I guess a Tesla may well be in a similar position if it hit a deer and set off all the airbags.
Mick

 

[mullokintyre]

The Dreaded Murdoch Press reports on a record tesla profit.

Tesla reported record quarterly profit as consumers snap up the company’s electric vehicles, though production disruptions in China and inflationary pressures signal a bumpier road ahead.
The automaker said first-quarter sales jumped roughly 80 per cent to $US18.76bn, generating a profit of $US3.32bn. Wall Street expected the company to report roughly $US2.2bn in first-quarter profit on around $US17.7bn in sales, according to analysts surveyed by FactSet.

The world’s largest car company by value is recovering from a shutdown at its Shanghai factory, where work was suspended March 28 because of strict government measures meant to slow the spread of Covid-19.
The closure, which dented first-quarter output, is likely to take a bigger toll in the second quarter, reducing the company’s output by roughly 90,000 vehicles, Credit Suisse forecast. That estimate assumes the factory, which had become Tesla’s largest by output, will be operating at reduced levels in the coming weeks. The company confirmed Wednesday that it had resumed limited production in Shanghai.

Tesla, which made roughly 930,000 vehicles last year, reiterated that it is aiming to boost deliveries by an average 50 per cent annually. However, factories are likely to continue operating below capacity through 2022, due largely to supply chain bottlenecks, it said.
Tesla delivered around 310,000 vehicles globally in the first quarter, up from 184,877 a year earlier and 308,650 in the fourth quarter. Chief Executive Elon Musk tweeted earlier this month that supply chain interruptions and China’s Covid-19 measures had made the period exceptionally difficult.

Tesla shares closed down nearly 5 per cent Wednesday, before advancing more than 4 per cent in late trading after the company posted its quarterly results.

That record profit of 2,2bill for the quarter would have paid for Musks foray into the land of the twits.
A few more quarters like this and he will be able to buy it lock stock and barrell.
Mick

 

[Value Collector]

The Dreaded Murdoch Press reports on a record tesla profit.

That record profit of 2,2bill for the quarter would have paid for Musks foray into the land of the twits.
A few more quarters like this and he will be able to buy it lock stock and barrell.
Mick

Musks investment into Twitter is in his own account, not on Teslas, and since Tesla doesn’t pay a dividend Teslas profits can’t help him buy Twitter.

For Musk to purchase Twitter he either has to sell some of his Tesla shares (or some of his space ex shares), or borrow the money using his Tesla stock as collateral.

Musk also only owns 17% of Tesla, so only a fraction of the profit is his.