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Elon Musks letter to Tesla

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What are your thoughts? I see their troubles but think this is an interesting read. The $10 research note was purely click bait IMO.

 

From: Elon Musk

To: Everybody

Date: May 16, 2019

As mentioned at the company talk, it is extremely important that we examine every expenditure at Tesla no matter how small, and be sure that it is critical.

When making hundreds of thousands of cars, battery packs and solar systems, even a ten cent savings could be worth over $50,000 a year. There are over 10,000 unique parts and processes at Tesla, so making small improvements across the board has a giant cumulative impact.

At the same time, we must also continue to make our products subtly better in thousands of small ways.

It is important to bear in mind that we lost $700 million in the first quarter this year, which is over $200 million per month. Investors nonetheless were supportive of our efforts and agreed to give us $2.4 billion (our net proceeds) to show that we can be financially sustainable.

That is a lot of money, but actually only gives us approximately ten months at the first-quarter burn rate to achieve breakeven. It’s vital that we respect the faith investors have shown in Tesla, but it will require great effort to do so.

That is why, going forward, all expenses of any kind anywhere in the world, including parts, salary, travel expenses, rent, literally every payment that leaves our bank account must be reviewed, confirmed as critical and the top of every page of outgoing payments signed by our CFO.

I will personally review and sign every 10th page.

Please examine closely every expense where responsibility is, or probably should be, assigned to your group. If in doubt, assume it is on your plate, so that we don’t have anything slip through the cracks.

This will take at least a few weeks to get right. Please don’t worry if it isn’t correct at first.

This is hardcore, but it is the only way for Tesla to become financially sustainable and succeed in our goal of helping make the world environmentally sustainable.

Thanks again for your excellent work,

Elon

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22 minutes ago, PandaFace said:

As mentioned at the company talk, it is extremely important that we examine every expenditure at Tesla no matter how small, and be sure that it is critical.

This is true, there were reports last week that even toilet paper was being rationed IKYN.

After years of running a cash burning facility they have swung wildly the other way. Main problems are cars remain susceptible to spontaneous combustion and the auto pilot function keeps aiming the car at oncoming lorries. 

271992083_TeslaMotorsInc(AllSessions)_20190526_12_43.thumb.png.9b9fe03e9591f9d796c82e7fd234e2cc.png

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@PandaFace,

Tesla is an interesting one. I will start off by looking at the 'monthly' chart which shows a support area.

1405850943_TeslaMotorsInc(AllSessions)_20190526_13_32.png.8097bf05e10fe096d1f0c3bb45bf3d8e.png

If I then switch to the 'weekly' then it seems like there could be some further downside risk and it seems like a 'falling knife' scenario where it is highly probable that investors are taking profits and selling and also it is being shorted too. I have not looked at the short positions on Tesla so it is only an assumption but it seems highly probable without looking that Tesla is being shorted. 

1903326558_TeslaMotorsInc(AllSessions)_20190526_13_35.png.bc80e2599fe633aaa412c92d8fa7387f.png

If we then switch to the 'daily' then you will see a critical price point coming around the $18000 area.

504971943_TeslaMotorsInc(AllSessions)_20190526_13_36.png.67fe71fb9aa9d949ba8431fd624c128c.png

So is Tesla a potential value investing opportunity once the carnage and selling is finished? It could be depending on how it performs going forwards and whether it can stop the phenomonal cash burning which has been taking place for a while now. 

Depending on which reports you read (credibility issues and bias) then some report that autonomous driving will reduce accidents when compared with real drivers. It is reported (not saying it is accurate) that 90% of drivers involved in accidents are down to human driver error. So driverless cars will still be involved in accidents but it should be far less than if human's are driving. If one believes this vision then Tesla could present an excellent value investment proposition once the bearishness has finished. 

Of course cash burn and Tesla actually breaking even and making profits in the future will be crucial to any investment performance going forwards. 

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