NKTR: A Story Stock still being told

Investment Analysis Clubs Saul’s Investing Discussions
#10

My comments: A few words on Tesla as The Ultimate Story Stock… The company – A total disaster! A basket case! Huge capital expenses involved in building cars, constantly flirting with bankruptcy it seems. Big problems in getting the cars constructed. They already bailed out Elon’s cousins whose company (SolarCity?) was going under…Note that I make a clear distinction between the car (that everyone loves) and the company (which seem to be a basket case, at least from the headlines that I read.)

Your response: You are repeating nonsense you read somewhere. Not your sort of company, so there’s no reason you should know anything about it, but why repeat unsupported lies and distortions?..The “headlines” you read are pretty much equivalent to just parroting Citron on Shopify.

From Elon Musk’s recent letter to employees: “We have made the difficult decision to let go of approximately 9% of our colleagues across the company. These cuts were almost entirely made from our salaried population and no production associates were included, so this will not affect our ability to reach Model 3 production targets in the coming months.”

So where exactly are the lies and distortions? I’m just curious. I said:

Huge capital expenses involved in building cars - obviously true.
Big problems in getting the cars constructed - You MUST be aware of that.
They rescued SolarCity at the expense of Tesla stockholders. - simply a statement of fact.

The only thing you could be questioning was whether they are flirting with bankruptcy. (I did say “it seems”). If you can’t get your cars produced on time, and then lay off part of your workforce, it sure isn’t good.

And I did hold Tesla from about $65 to $195 as I remember (that’s approximate from memory) and did very well. I wish them all the best. I think Elon’s great. I really do. Everyone who has a Tesla loves the car. But car companies have a tough, tough, row to hoe.

Best,

Saul

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#11

Ya
Watch your tone Branmin
You are being disrespectful esp with acronyms referencing sware words.
Saul is in good company criticizing Tesla’s business model and stock valuation including David Gardner and Jim chanos and
others
I made a five bagger on TSLA but i am out now.

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#12

Yes you are very correct…apologies for the language.

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#13

A few words on Tesla as The Ultimate Story Stock.

I don’t think this board really wants a full analysis of TSLA, which is why I didn’t mention the company by name. If anyone thinks we do, a new thread should be started. I’d be happy to participate.

For this thread, to keep it somewhat aligned with the original subject, I’ll just point out that a major difference between the NKTR story and the TSLA story is that Tesla is far more in control of its own success. NKTR has to wait to see how the tests/studies go and then how they’re interpreted. Tesla just needs to build cars more quickly.

And, I believe one can make a decent assessment of whether Tesla has the engineering chops to speed up production quickly enough, and whether Tesla management (Elon and Deepack Ahuja) has the financial insight and levers in place to keep the company going and growing until then. I don’t know the biomedical world, but what I’ve seen is that there’s strong disagreement on whether Nektar’s drug is in fact even successful or not. And if it proves to be not as successful as the FDA (?) wants, with as small known side-effects as the FDA wants, I don’t believe Nektar has any levers in place to change that and try again, whereas Tesla can tweak their assembly line continuously as long as they have enough money for operations.

Finally, we can run the numbers on Tesla’s revenue, cash flow, costs of operations, etc. We can then factor in expected production rates to see what the company’s financial condition would be under various circumstances, and then choose to rate the likelihood of those circumstances occurring to make our investment decisions. With Nektar, it’s all a bet on whether something already designed and unchangeable will do what they hope it will do. That makes Nektar far more speculative than Tesla (that’s not to say that Tesla is less risky, just that one has to speculate as to the risk in Nektar whereas one can determine the risk within certain boundaries with Tesla).

Tesla was the Ultimate Story stock back before 2014. Back then, no-one knew whether they could engineer an entirely new car on their own (Roadster was a Lotus-produced glider with a Tesla drivetrain), much less knew what the real demand was, much less what the gross margins on the vehicle would be. Today we have much more information and so one doesn’t need to rely on a story to make an investment decision. That’s not yet true with Nektar.

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#14

Finally, we can run the numbers on Tesla’s revenue, cash flow, costs of operations, etc. We can then factor in expected production rates to see what the company’s financial condition would be under various circumstances, and then choose to rate the likelihood of those circumstances occurring to make our investment decisions. With Nektar, it’s all a bet on whether something already designed and unchangeable will do what they hope it will do. That makes Nektar far more speculative than Tesla (that’s not to say that Tesla is less risky, just that one has to speculate as to the risk in Nektar whereas one can determine the risk within certain boundaries with Tesla).

Absolutely agree on this ! Don’t want another Tesla discussion as last one on this board had ended on rancor. But will simply say forget the headlines - review the financials and product on its won merit. There is sure risk with Tesla but is far less than what scare mongering headlines in financial press suggests. The odds are still heavily in favor of existing Tesla shareholders

Some months back I had summarized by thoughts on financials:
http://discussion.fool.com/4056/volfan84-both-gaap-and-non-gaap-…

P.S. - I have my money where my conviction is. It is a simple case of tails I will loose some, heads I will win big.

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#15

So where exactly are the lies and distortions?

Huge capital expenses involved in building cars - obviously true.
Yup.

Big problems in getting the cars constructed - You MUST be aware of that.
No, not really. What Tesla has is big problems is meeting Elon’s estimates. They are actually constructing cars very well, and growing their construction capabilities at an amazing pace. If you look at the actual facts, the numbers, what they’re doing is amazing. To spin that as “big problems” is nonsense. Their “big problems” are only with trying to be even more amazing. Elon is a hyper-optimist.

They rescued SolarCity at the expense of Tesla stockholders. - simply a statement of fact.
Again, no. Solar City’s only problem was their capital structure. They were taking big risks and would blow up in a severe recession if their access to capital dried up. Anybody with deep pockets could have bought them for an excellent return on investment. Tesla did, and has been doing very well off of their purchase. The business synergies are just gravy.

The only thing you could be questioning was whether they are flirting with bankruptcy. (I did say “it seems”).
It only seems that way because that’s what you read about. It’s nonsense. Tesla has easy access to all the capital it wants. Yes, early on there was a time Tesla almost went under (and it turned out that Elon raised money then by just mentioning to a friend that he was in trouble). But since then, every time they’ve raised money, however they’ve done it, people have been desperate to get in on it. And nobody sane thinks there’s the slightest chance Elon Musk will let his company go bankrupt. It’s absurd at this point.

If you can’t get your cars produced on time, and then lay off part of your workforce, it sure isn’t good.
Maybe. Tesla has been growing its workforce rapidly, so getting rid of some employees doesn’t seem like a big deal to me. Financial responsibility, prioritizing profitability, etc.

You know Citron played the same BS game with Tesla as with other companies that you invest in. Go read what Left wrote about Tesla and you’ll see it’s the same sort of stuff you’ve been saying here. That should give you a hint about the quality of the information. Citron deals in plausible lies.

But car companies have a tough, tough, row to hoe.
Yeah, another common mistake. Tesla isn’t a car company. Cars are an important part of their business, but soon the energy generation and storage business will be huge, likely bigger and much easier than cars. Currently valued by idiot analysts at $0 so far as I can tell.

No disrespect intended here. Just a request, given your influence, that you be more careful in what you say. As you well know, truth doesn’t come from media or analysts, and quarterly reports need to be examined with a skeptical eye. Think about where your truth is coming from. Citron’s influence comes not from writing idiot analyses full of lies, but from it getting endlessly echoed and amplified by others.

And I did hold Tesla from about $65 to $195 as I remember…
And congrats on your TSLA profits! That would have been before it was on my radar, and a great runup. I’m always late to the party.

-IGU-
(TSLA = 90% of my portfolio now)

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#16

TSLA = 90% of my portfolio now

YOWZA!!!

I wish you luck. We all have our own opinions and mine is that is insane! But to each his own and good luck.

AJ

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#17

-IGU-
(TSLA = 90% of my portfolio now)

Well, good luck to you. Hope it works out but having 90% of your portfolio in one stock and a risky one at that, you have some brass ones.

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#18

TLSA

it seems they are flirting with bankruptcy… why would you disagree with that? and why on Earth would you be so harsh in your rebuttal?? If anything, your harsh reply weakens your case.

Come on… there are NUMEROUS articles and publications out there about Tesla’s financial woes. I think it’s “commonly held fact” that TLSA is on a razor edge… it certainly isn’t a stretch to say “it seems they are flirting with bankruptcy”. If you don’t agree… state some facts… not emotion.

Fact: They have a MOUNTAIN of debt.
Fact: They have been downgraded to junk bond status for future borrowing.
Fact: Model 3 production has been a nightmare.
Those facts certainly indicate they are flirting with really bad things.

If they don’t get Model 3 production rate solved and KEEP IT solved… they are in REAL trouble.

To me, they are very vulnerable. A fire at a mega-factory… a labor strike… a bad day could easily escalate to catastrophic in the situation their in. I don’t think anyone would call TLSA “robust”…

BUT… Here’s my real point… doesn’t matter the stock. As soon as it becomes EMOTIONAL… it’s no longer sound investment. When you can’t listen/read other’s points of view and rationally comprehend and process and learn and respond… then THAT should be a warning to you.

Great… you’ve had success with TLSA and bought cars and love the cars. Good for you. But getting emotionally tied to a company is a recipe for disaster in my experience.

Take it for what it’s worth. Just my opinion.

Mark

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#19

People,

In the middle of a multiple year bull market Tesla has been utterly stagnant! The only money made in Tesla has been trading it out in the mid to high $300s, and buying it back in the high $200s, and do that over and over again depending on the news of the week.

What a opportunity cost suffered for investing in Tesla over the last few years. Perhaps things will change when the 3 starts rolling out, but even at 3500 units a week, it will still take nearly 3 years just to fulfill back orders, much less selling vehicles for new owners.

Do you think new owners are going to wait 3 or more years for their 3? They have some real issues. But it will at least save the company.

Tesla is the perfect example of a great company, great stock, but there comes a time to move on. Qualcomm is another such example, of even a greater company, and even greater stock, but the time to move on was around 2006 (which is when I sold out with another triple - reason was apparent at the time. 3G had run its course and Qualcomm did not have the same lock on 4G technology that it had on 3G, and the stock price, except for a recent run up on acquisition rumors (that were not just rumors) fueled a price increase, that then fell when Qualcomm fought off the acquisition tenders, has been stagnant. Qualcomm does pay a dividend however, which may make it worthwhile to hold for that.

I love Tesla cars. I took my son out of school one day to go test drive one. I then took both him and my daughter another day to test drive a Tesla. It was a cool experience for both of us. But I was not going to pay $20k as a downpayment on an automobile. A recent quote from Jerry Jones (owner of the Cowboys) to a young Emmitt Smith, when Emmitt bought a $100k Mercedes, and which every NFL players should be given, treat your money as if there is a large front door and a very small back door, sucking in as much money as you can through the front door and letting escape out the back as little as possible.

I believe Emmitt did not buy such a car again. I decided to get a high end Ford Edge instead, and quite happy with it to this day.

Tesla would be great, Tesla is a “chick” magnet. I recently stopped dating a woman who wanted me to get a sports car convertible (because my full roof sunroof in my Edge was insufficient). Nope, if a woman needs a convertible sports car to get excited to be with me, I figure I don’t need the woman. Not that kids or dogs are much cheaper, but at least they are not demanding convertibles!

Hoping that Tesla breaks out again after a long, long, slumber. Not real high on my confidence level that it will at this point.

Tinker

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#20

Today we have much more information and so one doesn’t need to rely on a story to make an investment decision. That’s not yet true with Nektar.

Absolutely true!

#21

If they don’t get Model 3 production rate solved and KEEP IT solved… they are in REAL trouble.

Yes, but the flip side of this is that M3 production rates have climbed substantially and, with M3 volume, the whole money picture is totally different. This is why I think lots of us feel that the doom and gloom pictures are greatly overdone.

#22

Big problems in getting the cars constructed ,not quite correct, better would be" a big? problems in getting a large volume of cars assembled". Which they seem (finally) to be getting under control. Car companies can ramp fast once the get the bugs out, look up Ford Mustang production.

car companies have a tough, tough, row to hoe. agree ,it is what Buffett would call a bad business. With Tesla it is worse because he real break through will take 2 to 4 years for the 3 and especially the Y to start undercutting the price of ICE cars

I consider Tesla to be a binary choice. Either it will win big or die. Like many bio-techs, except in the case of Tesla you can try out the product for yourself and see if it works, no pesky double blind trials, no FDA.

I hold some (at a modest profit) but would never recommend it anybody else.

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#23

Tesla is a “chick” magnet. after the diver reaches a certain age and state of decrepitude the chicks might as well be made of non magnetic brass.

But they are great to drive. If you just want transport the few good BEV (mostly Teslas) are not worth the money. Yet.

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#24

Nope, if a woman needs a convertible sports car to get excited to be with me, I figure I don’t need the woman.

Amen!

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#25

BUT… Here’s my real point… doesn’t matter the stock. As soon as it becomes EMOTIONAL… it’s no longer sound investment. When you can’t listen/read other’s points of view and rationally comprehend and process and learn and respond… then THAT should be a warning to you.

Wow, it’s like you’ve been following KITE, CRSPR, and NKTR on this board :grin::grin::grin:

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#26

Re: NKTR, and most “story stocks” follow a very similar pattern. That is not to say some “story stocks” don’t rise and keep rising (e.g. TSLA to-date), however without financial drivers, age-old market patterns tend to dictate price action. Without getting into technical analysis (I realize frowned upon on this board), the market cycle pattern tends to repeat itself over and over again: https://steemitimages.com/DQmUevCF3GRKL3HpqZA3PC33jjqWVAdFWe…

This is currently happening in the crypto markets, and if you go back and look at charts of DDD, WPRT, etc., the same pattern usually can be found with eerie accuracy.

As an update, I sold my short-term NKTR options, and hold a very small “lottery ticket” position built off profits. Whenever I’m in doubt, I tend to go back and view that “Psychology of a Market Cycle” chart.

Re: TSLA, I’m going to stay away from that incredibly polarizing debate, other than to say that the energy side of their business is the real game-changer to me. I believe it has been shared on this board before, but if not, spend the time to watch Tony Seba’s video. It may be a bit of hyperbole, but it will dramatically change the way you view our energy future (and potentially NVDA as well): https://www.youtube.com/watch?v=2b3ttqYDwF0

Lastly, as I’ve received a few emails this month from board members, I’ve finally closed out my position in FOSL. What a cigar-butt ride for the last 6 months!

Stephen

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#27

I have never seen a Tesla but based on the noise that goes past my house on a beautiful Sunday afternoon like today, I think they will never sell too many unless they put huge speakers in them to emulate the sound of an old Honda Civic with those bubble bee sounding pipes, or perhaps you could have a selection so you could emulate the noise of a Harley, or a diesel pickup with 5 inch pipes.
People seems to love their noise. I was thinking this afternoon while working in my shop, and after the 100th Harley sat at the corner revving up, that if we ever get to designer babies, I wonder if the people making all that noise will tell the doctors, “I want one that is really loud and as soon as I get it home I have some mods I am going to do to make it even louder”. Or when they go to the pound to adopt a dog to they ask “which one is the loudest”?
I really believe Tesla will have to do loud in order to succeed.
Just my ramblings.
Mike

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#28

https://www.roadandtrack.com/new-cars/car-technology/a215652…

artificial whines are a feature of the new Jaguar BEV

After sometime driving a BEV, to me the ehaust noise of a ICE is like a mechanical fart, expelling useless smelly gases

#29

What a opportunity cost suffered for investing in Tesla over the last few years. Perhaps things will change when the 3 starts rolling out, but even at 3500 units a week, it will still take nearly 3 years just to fulfill back orders, much less selling vehicles for new owners.

Do you think new owners are going to wait 3 or more years for their 3? They have some real issues. But it will at least save the company.

I think I’m missing something in your analysis.
Why does it matter to the company’s financials how long a buyer has been waiting?
To me, a car sold for $35000 (or $50000) is the same dollars into the cash register as if you had ordered months or years in advance or walked in off the street and took it home the same day.

Actually it is slightly better for the company if you were on a waiting list. They have your deposit interest free. Every car made has a known owner so there is very little spent on storing cars not sold yet. No extra dealer markups and haggling and doing exchanges for different colors and options between dealers – which is just extra overhead (paid for by consumers)

I think every car company would love to have a continuous waiting list for every car they can make.

And of course some (maybe most) consumers would like to walk in and buy right away. But if people voluntarily go on a waiting list instead of going to the competition for an instant purchase, then that says something.

Mike

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