Tesla Steps Up Production

[lakedaemonian]

Re: The Tesla battery swap is the hoax of the year

Before 2008, I got a good information that GGP was not viable. I bought puts and saw my money get chipped away a little each month waiting for it to go BK. It did blow up but nearly a year after i bought the puts. Going short takes excellent timing and nerves of steel. Instead of collecting a dividend, or interest you pay to hold that position. Even if the price just hovers you lose. I don't really short after this experience.

On that note, I just woke up to see TSLA up $32+(15%) per share today.

Pretty wacky roller coaster ride.

[GRG55]

Re: The Tesla battery swap is the hoax of the year

It never fails to amuse just how ridiculously effusive the so called "analysts" can be once they get an idea into their heads. The caption below reminded me of some of the stuff emitted by Mary Meeker (who is now a "venture capitalist" at Kleiner Perkins) and her peers during those heady days in the very late 1990s. "It's not just cars..." sounds a lot like "The internet changes everything...".

On another thread about Tesla I made an offhand comment a while back about the stock going to $500 before reality finally sets in.

Analysts are hired by the companies, like Tesla, to write stuff that justifies their "strategic" moves, and generate "the numbers" to support the latest strategy. Once a company has the full weight and backing of the most influential analysts on Wall Street the whole affair takes on the tone of a religious revival meeting. Tesla, a marginal car manufacturer, is now "in position to disrupt industries well beyond the realm of traditional auto manufacturing" (pause here for Hallelujah, we are saved chorus). Some day Tesla might be a widows and orphans short. Before that it might be the long of the decade though. $500 is well within the range of the achievable...

"...Morgan Stanley, which also is bullish on the stock, is even more ebullient. “We are witnessing the most disruptive intersection of manufacturing, innovation and capital experienced by the auto industry in more than a century,” gushed analyst Adam Jonas in a note. “Tesla may be in position to disrupt industries well beyond the realm of traditional auto manufacturing. It’s not just cars.”..."

It's all so bloody predictable...

Tesla Motors Stock Soars After Analyst Upgrades Price Target

Updated Feb 25th 2014 3:04PM

Outside of the Dow, Tesla Motors soared 14% to another record high after Morgan Stanley more than doubled its projected price for the stock at $320. Analyst Adam Jonas had this to say in a note to investors:

"If it can be a leader in commercializing battery packs, investors may never look at Tesla the same way again If Tesla can become the world's low-cost producer in energy storage, we see significant optionality for Tesla to disrupt adjacent industries."

[GRG55]

Re: The Tesla battery swap is the hoax of the year

Bedtime entertainment from Bloomberg (highlights mine):

Keep Gushing Over Tesla's Latest Best Day Ever

February 25, 2014

There he goes again: Elon Musk, the battery-powered swashbuckler who’s already worth more than the gross domestic product of Nicaragua, just had another one of his best days ever. Tesla Motors (TSLA), his Palo Alto (Calif.) company, was the subject of a breathless research recommendation by Morgan Stanley, and shares popped as high as $259 on Tuesday from their previous close of $218. The electric carmaker
is already worth $30 billion, or just over half of General Motors.

As if Tesla needed another prize, the day also brought word that Consumer Reports named the Tesla Model S its overall top pick for 2014. “The Tesla,” glowed the magazine’s review, “is brimming with innovation. Its massive, easy-to-use 17-inch touch screen controls most functions. And with its totally keyless operation, full Internet access, and ultra-quiet, zero-emission driving experience, the Tesla is a glimpse into a future where cars and computers coexist in seamless harmony.” And reports from Japan, meanwhile, have Tesla in talks with Panasonic for a massive lithium ion battery plant that would open in 2017. According to the Nikkei financial newspaper, Panasonic is already signing up local materials makers.

Catch your breath, for a moment, before we get to the real panting out of Morgan Stanley, which now believes a fully disruptive Tesla could be worth 30 percent more than it is now (on top of being up 65 percent in 2014 and 620 percent in a year). Yes, hope generally tends to spring eternal from the bullish ranks of Wall Street analysts. And what better time to wax whimsical and Pollyannaish than the present, when the market is near another record and a text-messaging app shop with a few dozen employees can get taken out for $19 billion?


Which is why Morgan Stanley’s Adam Jonas argues that Musk’s plans to build a battery “gigafactory” could go beyond the hulking auto industry to also upend the largely protected and predictable utility sector, which banks $360 billion in yearly power sales. “If it can be a leader in commercializing battery packs, investors may never look at Tesla the same way again,” writes Jonas, whose new $320 target for Tesla shares entail a doubling of his previous volume assumptions for vehicle sales. “If Tesla can become the world’s low-cost producer in energy storage, we see significant optionality for Tesla to disrupt adjacent industries.”

Electric utility demand runs at $2 trillion globally. Assume Tesla rolls out a 7.2 million-unit global vehicle fleet, Jonas says, and the company’s cars will store energy capacity that exceeds the entire daily electricity consumption of Mexico. Taken to the max, self-sufficient “autonomous” cars like Tesla’s could contribute $5.6 trillion in global economic savings. Thus, argues Jonas, “Tesla cannot be valued on near-term multiple metrics like traditional auto companies given that we expect it to multiply revenues by more than 10 times from 2013 to 2016; by nearly 30 times by 2020; and around 60 times by 2028.”


In Morgan Stanley’s most bullish case for the decade-old automaker, battery economies of scale create a mass consumer migration to Tesla vehicles, particularly in the high-margin premium car market. That will then offshoot profitable forays into grid storage and third-party battery supply. The upshot: Tesla shares could change hands at $500 a share, which would make Musk Motors worth more than present-day GM.

To be sure, Jonas also spells out a bear case where Tesla is relegated to premium niche-brand status, margins creep back down, and the stock falls back to $100. And not everyone finds his sunny case very convincing. L. Craig Shealy, an investment banker focused on technology and energy, calls the 53-page report “fascinating—unfortunately very reminiscent of ones I read for Worldcom, Global Crossing and Covad in early 2000.”

Investors must ask themselves if the market and Tesla’s operating results will keep allowing unprecedentedly easy access to super-low-cost capital for the next 15 years, Shealy suggests. If and when Tesla becomes some combination of utility and mature auto producer, he asks, will it still be valued by the market as a high-growth tech company that should trade at 10 to 20 times cash flow?

“Does this research team reside in Colorado,” concludes Shealy, “and have they recently taken delivery of an obscenely large Girl Scout cookie order?”

[don]

Re: The Tesla battery swap is the hoax of the year

Batteries 'R Us

[GRG55]

Re: The Tesla battery swap is the hoax of the year

Batteries 'R Us

Hmmmm...doesn't look like the sort of place the 1% with a Model S would shop.

Maybe they need to hire some Girl Guides to sell cookies out front and generate some walk-in traffic?

[Lasher]

Re: The Tesla battery swap is the hoax of the year

And reports from Japan, meanwhile, have Tesla in talks with Panasonic for a massive lithium ion battery plant that would open in 2017. According to the Nikkei financial newspaper, Panasonic is already signing up local materials makers.

I don't follow this field much, but do either of these companies have some outstanding battery technology that makes them stand out? Even giving Tesla the benefit of the doubt that they can be the next big battery supplier, what's separating them from the other companies in the industry?

[GRG55]

Re: The Tesla battery swap is the hoax of the year

I don't follow this field much, but do either of these companies have some outstanding battery technology that makes them stand out? Even giving Tesla the benefit of the doubt that they can be the next big battery supplier, what's separating them from the other companies in the industry?

The so called "analysts" like the story?

[don]

Re: Tesla Steps Up Production

This is exactly the modus operandi of the dot-com analysts: roping retail investors in at higher and higher levels while the companies concerned massively diluted shareholders leading to an implosion... I cant remember a time apart from Dotcom where price targets were jacked up in this way right before a capital raising.



Tesla has just announced it intends to issue a $1.6 billion convertible note offering "for the development of a "Gigafactory" and a "Gen III" vehicle." While not that unusual - and of course, why not take advantage of low cost financing and a surging momentum in your stock - what we did find at least intriguing was the underwriters included Morgan Stanley. This is the same firm (though we would be very sure that Chinese walls ensured total lack of knowledge) that doubled their price target (from $153 to $320) for TSLA yesterday (following the analyst's now almost clairvoyant questions during the earnings conference call). Paging Henry Blodgett?
Four things jump out at us...

1. During the recent conference call, MS analyst Adam Jonas seems to be advancing the idea of a capital raising for this battery factory on the behalf of Musk, who just agrees with the concept...

Adam Jonas: Elon, the stock price and the results have been obviously performing very well lately. You’ve got some great investment opportunities and some growth opportunities ahead of you, not only in the auto business but also in the non-auto business and the battery business. So I’m just wondering, how are you thinking about being opportunistic and pulling in some fresh capital to help derisk the plan, plan for a force majeure, or to see some of these opportunities that you have.

Elon Musk: Yes, I think that’s a good idea. I agree with that. I think that would be the smart move. We can talk more about that next week with — and also discuss the Gigafactory plans. Unfortunately, I can’t say anything [indiscernible] right now, except that I agree. I think your advice is good.

Adam Jonas: Okay. And I don’t want to follow up [ph] or anything, but as a follow-up to that, I guess, is a — would a capital raising be a prerequisite to launch the Gigafactory? Or is that an understatement?

Elon Musk: I think it’s necessary to have it occur in 3 years. It’s not necessary if we allow that time frame to expand.

2. Morgan Stanley raises their price target for TSLA by over 100%


January 25: Raising our price target to $320 from $153 previously.

We understand the change to our fair valuation of TSLA shares is significant – more than $13bn on a fully diluted share count of 142m.

This magnitude of value attribution is equivalent to an additional $1.7bn of after tax free cash flow by 2020, growing at 5% with a 12% discount rate. A $1.7bn NOPAT number is enormous within the scope of Tesla’s existing business path (our current forecasts call for $0.8bn of net income by 2015 and $2.1bn by 2020).

However, from the perspective of a global auto industry (>100 million annual unit sales and >$2 trillion of revenues by 2020) or a global electric utility industry (0.7 billion households combined in US + Europe + China out of households 1.4 billion globally) it is a tiny number. Our previous forecast of 500k complete TSLA vehicles by 2028 would account for 40bps of global market share.

Successful? Yes. Disruptive? Not really at all.

3. Day after Stock soars $60, Morgan Stanley underwrites a huge convertible note issue for TSLA (implicitly reducing an dilution via the stock ramp).



Tesla announced today an offering of $1.6 billion aggregate principal amount of convertible senior notes in an underwritten registered public offering. Of the total offering, Tesla will offer $800 million aggregate principal amount of convertible senior notes due 2019 and $800 million aggregate principal amount of convertible senior notes due 2021. In addition, Tesla intends to grant the underwriters a 30-day option to purchase up to an additional $120 million in aggregate principal amount of convertible senior notes due 2019 and an additional $120 million in aggregate principal amount of convertible senior notes due 2021, for a total potential offering size of up to $1.84 billion.
...
Goldman, Sachs & Co., Morgan Stanley, J.P. Morgan and Deutsche Bank Securities are acting as joint book-running managers for the offering.

and 4. In the disclosures, of course, Morgan Stanley admitted it would seek compensation from Tesla (which it did)...

In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from Autoliv, Avis Budget Group Inc, BorgWarner Inc., Dana Holding Corp., Delphi Automotive PLC, Ford Motor Company, General Motors Company, Goodyear Tire & Rubber Company, Hertz Global Holdings Inc, Johnson Controls, Inc., Lear Corporation, Magna International Inc., Tenneco Inc., Tesla Motors Inc., TRW Automotive Holdings Corp.

As long as CNBC (and everyone else in the status quo hugging mainstream media) keeps pumping every word from the sell-side as gospel, this will never end...

While we are sure this is a mere coincidence and that sell-side research which absolutely cannot pay its own way has learned its lessons, as one smart chap wrote us...

from zerocred

[Southernguy]

Re: The Tesla battery swap is the hoax of the year

I don't follow this field much, but do either of these companies have some outstanding battery technology that makes them stand out? Even giving Tesla the benefit of the doubt that they can be the next big battery supplier, what's separating them from the other companies in the industry?

I find yours a very good question. Where shall they get the lithium from?
What about today batteries producers?
Yours is a very simple yet important unanswered question

[Milton Kuo]

Re: Tesla Steps Up Production

tesla has just announced it intends to issue a $1.6 billion convertible note offering "for the development of a "gigafactory" and a "gen iii" vehicle." while not that unusual - and of course, why not take advantage of low cost financing and a surging momentum in your stock - what we did find at least intriguing was the underwriters included morgan stanley. This is the same firm (though we would be very sure that chinese walls ensured total lack of knowledge) that doubled their price target (from $153 to $320) for tsla yesterday (following the analyst's now almost clairvoyant questions during the earnings conference call).

Has Tesla floated all of their shares since their IPO? If not, wouldn't it be better to sell shares of stock they're still holding rather than issuing a note?

[ProdigyofZen]

Re: The Tesla battery swap is the hoax of the year

I find yours a very good question. Where shall they get the lithium from?

Uyuni Salt Flats in Bolivia: The largest mirror in the world.

Could the town of Potosi (close to the salt flats) once again become a top 5 largest city in the world after the Spanish exploited its silver and gold hoard? Probably not but fun to think about the "Saudi Arabia of Lithium."