1. I think my point about repaying the loan and changing perception toward perception is largely geared toward conservative lawmakers and politicians. Some (like Romney and Palin) have grouped Tesla with the likes of Solyndra, calling them "losers". Even some of the public have the perception that Tesla received bailout money (which isn't true because the DOE loan is separate). But for the public it was around the same time as the government bailout of GM, etc. So, paying off the loan clears up misperceptions, and this can help their case with being able to sell directly to consumers in states such as Texas and N Carolina (with their bills being voted on).
2. Totally agree Tesla was smart to do it now and agree that execution isn't guaranteeing success. But money in the hands of a wise person can really accelerate a roadmap and enlarge success. I personally think Tesla is at an inflection point where the money will be very well spent and will accelerate growth and demand.
3. Regarding Elon Musk's purchase, it's true he's borrowing a bunch of money but even that still signals his confidence in the stock and its current price. And I think that's overall good to ensure investors since the stock has been very volatile of late.
4. It's true investment banks have made terrible mistakes in the past, but still lots of investors and institutions are influenced by the top investment banks. Fidelity owns $1.5b of common stock and Morgan Stanley owns $500m of TSLA common stock (as of 3/31/13, http://www.nasdaq.com/symbol/tsla/institutional-holdings). Lots of institutions and funds are starting to invest in TSLA and this is providing upward pressure on the stock over time (especially if TSLA keeps meeting/surpassing expectations.
The next big milestone for Tesla is reaching 25% gross margin (which is rarely had in the auto industry). Elon Musk is promising they'll reach this milestone 4th quarter this year. If they reach it this year, it is nothing short of miraculous.
The next big milestone for Tesla is reaching 25% gross margin (which is rarely had in the auto industry). Elon Musk is promising they'll reach this milestone 4th quarter this year. If they reach it this year, it is nothing short of miraculous.
I would say so, considering they're at 5% now.
Edit: Strike that. It's actually 2%. Musk had this to say:
"I am highly confident that we will have a gross margin of at least 25%, and — I mean, the emphasis on at least. I think we will do better than those numbers. So, I want to be very clear about that."
I thought 1st quarter gross margin was 5% w/o the zev credits. Elon Musk said that that was the average in the quarter, meaning that they started lower and ended higher than the 5% average. I think they're well on their way to 25% by the end of the year. In the conference call Elon shared that it took several months for the gross margin improvements they make to show up materially, meaning that they will have implemented most of their gross margin improvements months ahead of the 4th quarter. This is why Elon is so confident with 25% gross margin by the end of the year... because most of the manufacturing improvements have already been made and it just takes time to realize the increased margins.
I thought I read 5% somewhere, but went and looked it up and saw 2%. Probably depends on how you count it. Either way, that is a huge increase. Musk has a long history of exaggerating, which is what I suspect he's doing here.
2. Totally agree Tesla was smart to do it now and agree that execution isn't guaranteeing success. But money in the hands of a wise person can really accelerate a roadmap and enlarge success. I personally think Tesla is at an inflection point where the money will be very well spent and will accelerate growth and demand.
3. Regarding Elon Musk's purchase, it's true he's borrowing a bunch of money but even that still signals his confidence in the stock and its current price. And I think that's overall good to ensure investors since the stock has been very volatile of late.
4. It's true investment banks have made terrible mistakes in the past, but still lots of investors and institutions are influenced by the top investment banks. Fidelity owns $1.5b of common stock and Morgan Stanley owns $500m of TSLA common stock (as of 3/31/13, http://www.nasdaq.com/symbol/tsla/institutional-holdings). Lots of institutions and funds are starting to invest in TSLA and this is providing upward pressure on the stock over time (especially if TSLA keeps meeting/surpassing expectations.
The next big milestone for Tesla is reaching 25% gross margin (which is rarely had in the auto industry). Elon Musk is promising they'll reach this milestone 4th quarter this year. If they reach it this year, it is nothing short of miraculous.