Research archive for TSLA

Last night we had Tesla results. This is always exciting for market participants even if you don't invest in the stock. People love to hear what Elon Musk has to say. Here is a quick highlights reel of what happened this quarter. Never a dull quarter for these guys!

We had numbers from Tesla last week Wednesday, this was for their First Quarter 2017. Given that the Tesla share price is up 50% Year to Date, on an already lofty share price, the expectations on the company were huge. So how did they stack up?

News from yesterday - Tesla Q1 2017 Vehicle Production and Deliveries. Around 25 thousand vehicles, which is a quarterly record. That is roughly 279 vehicles a day, or in a 24 hour day, 11.63 vehicles an hour. Which does not really sound like a lot. To reach the 500 thousand target, or 125 thousand a quarter at full tilt, the company would have to produce 57 vehicles an hour, or around one a minute.

A 13-G announcement from Tesla seemed innocuous at first glance - SCHEDULE 13G. However, if you dug a little deeper, you suddenly discovered that the investor was none other than Tencent, the Chinese business that we know very well, through our investments in Naspers. So how much is this exactly? We worked it out, they paid for the full stake (8,167,544 shares divided by 1,777,842,836 Dollars) 217.67 Dollars a share. At the closing value last evening, the stake is worth 2.266 billion Dollars. Tencent are now officially a five percent shareholder of Tesla, which is cool from our perspective down here in South Africa. Why? As a Naspers shareholder, who owns around 34 percent of Tencent, you now indirectly own a stake in Tesla.

Tesla announced that they were raising money - Offerings of Common Stock and Convertible Senior Notes. 1.15 billion Dollars in total. Musk himself will be buying 25 million Dollars of common stock, effectively ten percent of the offering (of common). This is not unexpected, we have continued to see suggestions that the company needs to raise money. As they say in what is a very short release: "Tesla intends to use the net proceeds from the offerings to strengthen its balance sheet and further reduce any risks associated with the rapid scaling of its business due to the launch of Model 3, as well as for general corporate purposes."

Tesla reported numbers after hours last night. Tesla is a business that is in build up phase, it is a hugely capital intensive business, led by a fellow that wants to change the world tomorrow. Elon Musk may not necessarily be the inventor of the electric vehicle, he certainly is at the beginning of a momentum shift where consumers are deciding that fossil fuels are not necessarily the future of powering automobiles. The combustion engine design has been tweaked over the decades, it certainly has not really changed that much in that time. Musk wants you back off the grid, he wants you to consume battery technology and be reliant on the sun for your power. I was chatting to a senior fellow who recently attended the mining indaba in Cape Town, he said that loads of people were interested in the raw materials for battery technologies. The more that the mining companies produce as a result of demand, the better for the consumer. You get the sense that the momentum shift is already afoot.

Tesla Motors reported numbers last evening, this was for their third quarter of the current financial year. The company is one that splits the street down the middle, those that think the man is a visionary and that it is going to take more than a quarter (or a year, or a decade) to be materially profitable and those who think that the business is eventually going to come apart at the seams, Musk dreams too much and under delivers. If you are an Elon Musk fan and can put up with your fair share of expletives, then make sure you read the Ashley Vance book on him. It is really good and gives some very valuable insight into how the guy works. He is beyond quirky and has incredibly high standards, as well as incredibly high goals. Musk can be credited for bringing forward the fleet of electric vehicles and equally promoting driverless fleets. Someone always needs to be the doer and the others will follow.

Why do we not like change as human beings? Not all of us, the vast majority prefer the status quo, prefer not to upset the apple cart. I would assume that upsetting the apple cart 300 years ago would result in many apples becoming dirty and "running away" from you. We are resistant to ideas of change, perhaps as it requires mental strength to think that something should be different, it would be easier that way. Tesla is a business that can change your product overnight, whilst you are catching some z's. The software update on the Tesla autopilot will take place over the next couple of weeks. It may not work for "seeing" deer when the system switches to radar (fluffy animals apparently to Elon Musk) in snow, fog and dust.

Tesla reported numbers for their Second Quarter 2016 last week, as we were voting and worried with the weighty matters of democracy. Tesla are equally worried with the weighty matters of sustainable energy and climate change. One of the best and most sensible things Elon Musk said was that the best and most reliable energy sources known to mankind was the sun, yet we hardly enhance the full potential.

That person who doesn't have consensus. Elon Musk. And perhaps that is a very good thing. If your number 1 priority is to change the world, and to really, really change the world, then best you deliver on your promises/forecasts/plans. Best you do that. Last evening the fellow reminded us of the original Masterplan from ten years ago - The Secret Tesla Motors Master Plan (just between you and me). As you could imagine, he does admit to flying by the seat of his pants, as all great inventors do.

I have been thinking about the "fallible" Tesla technology for a few days now. First the fact that it is 2016 and we have driverless cars is pretty cool. The fact that a big fan of the technology met his untimely end in a car he loved, that is not too cool. Being in his favourite car, that perhaps was the only good thing about the incident. I thought one thing of the whole accident, and laid it out last week, what if the truck with the trailer had the self driving technology? Would it have turned at that moment, sensing the oncoming traffic? Possibly not. And as discussed last week, we wouldn't be having this conversation. I was struck in my reading that the very "inventor" of modern flight, one of the Wright brothers was involved in the very first flying fatality known to man. We didn't stop evolving now, did we? Otherwise I wouldn't have actually been able to write this very paragraph whilst sitting on a commercial airline in the sky.

Tesla has been in the news for the wrong reasons over the last few days. Firstly the mangle of the driverless vehicle not distinguishing the background of a trailer against the sky, and causing a vehicle to smash through it, killing the driver, is bad news in itself. It means that the self driving mode is not 100 percent yet. And regardless of how many minor or major accidents humans may have in their life, the fact that the self driving mode is not 100 percent safe is cause for concern. This is regardless of the fact that the driver may not have been paying attention, and may have been watching Harry Potter on his device.

There will be big movements on the 'renewable energy' stock front today, thanks to Elon Musk. Waking up this morning we were greeted with the news that Tesla Makes Offer to Acquire SolarCity Given the huge cash burn rate of both companies, this will be a pure script deal. The current proposal is:

Tesla announced last evening that they were raising more money, not at the discount you may expect. The first line says it all: This is a public offering of shares of common stock of Tesla Motors, Inc. The company is offering 6.8 million shares to shareholders. The Tesla document (if you read it) is a little hard to read, the WSJ do a better job than I ever would - Tesla Plans to Sell $2 Billion of Stock. Raising money to ramp up production and then Elon Musk is exercising rights (and selling to pay for tax obligations) in order to settle obligations. The quantum of which is mind blowing. He is not (repeat not) taking any money out, rather exercising rights granted in 2009 (5.77 million shares) for a mere 36.5 million Dollars.

Nikola Tesla was a strange man. At least from all of the reading that I have done. He moved to New York a couple of years before the founding of our city, Jozi. There he worked for another inventor, Thomas Edison. There was a dispute between the two over a pay issue, Tesla resigned and started with his own string of inventions, including developing a patent for a biplane (it was 1915) that could take off vertically. A list on Wikipedia is a testament to his extraordinary and perhaps unrecognised brilliance -> List of Nikola Tesla patents. He was a dashing, weird, obsessive workaholic, who repeated the ordinary and suggested to all that he never slept.