2017 Investor Roundtable:General Discussion

[erthquake]

General trading question:

As a conservative investor, I am trying to understand a contradiction I see pop up a lot (mainly in the TSLA Market Action thread).

On the one hand, a lot of investors claim to buy and hold "forever" (I am talking SP in the thousands or 'till 2025). Some even point out their portfolio is 100% TSLA.

On the other hand, many of those same investors claim that on a dip - such as the drop to $295 yesterday due to macro - they bought the dip.

I don't get this because:
- if they have cash lying around to buy the dip, then they weren't fully invested in TSLA with their available money for trading.
- if they were fully invested (buy & hold), they shouldn't have extra cash to buy the dip.

So are these people not being truthful? Are they not doing what they say they do? Are they selling off shares instead of holding forever, but they never post when they sell, only when they get back in?

You catch my drift. How is buying and holding compatible with all the cocky "bought more on the dip" talk?

Not all of us buy and holders are exclusively in TSLA. We might sell other stocks to take advantage of a dip.

Some of us get cash throughout the year, from our jobs or whatever, and don't necessarily buy more stock right away. We wait until the right opportunity (dip) comes along.

 

[hobbes]

Got "Tesla Update" Email today (in Germany) with an invitation to test drive AP 8.1/P100DL, announcing S60 end again, an more interstingly positioning S vs. 3 similar to Elon´s recent tweets:

Model S and Model 3
Since the first hour Tesla has been pursuing the goal of building cars without compromise.
This year, we are launching the Model 3 in North America - a smaller, simpler and more cost-effective version of our flagship model S.
With greater reach, more acceleration, higher performance, greater interior space and more configuration options, the Model S will continue to be the measure of all things when it comes to using Tesla's groundbreaking technologies.

(via google translate)

 

[schonelucht]

Well considering that the AES system would only provide 11% of the energy needs, that means Tesla would provide ~6% of the needs. The question is does KIUC have other sources for more than 83% of their power needs that is cheaper to operate than what Tesla is charging?

I believe the PPAs run over 20 years. So it's not just a question of what is today, but also what is tomorrow. I may hope that SCTY has a minimum draw usage specified in their PPA with the utility. Because with the rate BES and solar is dropping, 5 years from now 13ct/kWh is going to look downright expensive. I have my reservations of SCTY management but even they wouldn't be as stupid to go in without minimum usage requirements.

My takeaway is that Tesla's position in battery storage is not strong. Competitors are able to compete and able to offer prices lower than Tesla, win contracts etc (it's not just AES). We don't know why exactly. Maybe Tesla has a technological/pricing lead but it does not (yet?) translate into a game changing offers in the market place because of something else like no ability to acquire cheap land like @vgrinshpun suggested. Who knows.

Contrast this with the car biz : no one is able to compete. Only one manufacturer even tries today : the Bolt, gets good reviews, low on price, seems to have everything. Yet, can't sell more than 1000/month. Clearly Tesla has something going for them that is game changing. Some will say it's the halo of being the first manufacturer to take EV seriously, some will say it's their unique sales model, some will say it is the supercharging network. It likely is a combination of all those and some more. With utility scale BES, Tesla is simply not in that position. And that is why I'd prefer they focus on the car business : if the others can't compete you are bound to make bank. When others can compete you will have to settle for prices that are set by the market.

 

[RobStark]

Tesla does not need to offer its best, rock bottom price on BES until it has idle machines and workers at the Gigafactory.

Until then it should charge what the market will bear. That way Tesla BES gets deployed to wear it is most needed and makes the most economic sense. Like islands running electricity generation on diesel.

 

[Lump]

Barclays Takes The Red Pill On Tesla (TSLA) Bull Case, "the stock is frequently disconnected from fundamentals"

"But if there is anything we’ve learned over the years in following TSLA stock, it’s that the stock is frequently disconnected from fundamentals. Rather, the stock seems to be more driven by ‘cult’ psychology and the flow of tweets, media attention, and other data points. It’s with that point that we (frustratingly) believe for the time being, despite the incredible run-up of the stock (+38% YTD vs. S&P +5%), that we can’t see any data points near-term that will reverse momentum."

Johnson raises his FY 2017 EPS estimate from a loss of $4.99 to a loss of $4.12. He keeps FY 018 EPS at a loss of $1.05.

 

[aubreymcfato]

I think we sometimes forget that people on the street are not aware of EVs, and one of the main arguments against EVs it still is "you get to burn oil for charging them". But everyone now gets solar.

Now that Tesla owns Solarcity, it's much more difficult for people to come up for arguments pro ICEs. And when Model 3 will be here the "price argument" will drop further.

Never underestimate the power of a simple message: EV + solar + storage.

 

[Hogfighter]

Barclays Takes The Red Pill On Tesla (TSLA) Bull Case, "the stock is frequently disconnected from fundamentals"

"But if there is anything we’ve learned over the years in following TSLA stock, it’s that the stock is frequently disconnected from fundamentals. Rather, the stock seems to be more driven by ‘cult’ psychology and the flow of tweets, media attention, and other data points. It’s with that point that we (frustratingly) believe for the time being, despite the incredible run-up of the stock (+38% YTD vs. S&P +5%), that we can’t see any data points near-term that will reverse momentum."

Johnson raises his FY 2017 EPS estimate from a loss of $4.99 to a loss of $4.12. He keeps FY 018 EPS at a loss of $1.05.

My response to the whole 'cult stock' discussion is similar. Okay, sure....it's a cult stock. But when is the cult status going to end? (Hint: never)

 

[winfield100]

I think you and everyone else missed @brian45011 's point. Intentional? I think, his point is this.
* KIUC didn't pay Tesla a penny yet, but has agreed to purchase power at 13.9c/kwh. Tesla can supply 52 MWh daily at most.


* Now comes AES, with a 100 MWh system. They offer to sell power to KIUC at 11c/kwh.
* So, everyday, when KIUC needs more power, which one will it choose first?

I think you are missing a much larger point, focusing in on Telsa vs AES
look at the link from KUIC itself, the utility purchasing renewable power and their overall goal for the island of Kaua'i
69+ megawatts of renewable enery, 37% of their needs in 2015, 125+ megawatts of renewable energy by 2025 , >75% of their needs (with another 25% elsewhere)
LOOK at the map of completed and in progress projects on the island
The GOAL is to switch from FOSSIL fuels to SUNLIGHT powering the island, NOT "are your renewable electrons from sun or hydro or biomass cheaper than his renewable electrons. FOCUS on the goal and the path to it
(note the 21 megawatts of distributed solar on customers roofs, with 6.6 more under construction)
{If you would be so kind, please point to the ?100?megawatt of AES on Kaua'i renewableenergy page, either completed, under construction or under consideration}

Renewable Energy Projects | Kauai Island Utility Cooperative

 

[dalalsid]

General trading question:

As a conservative investor, I am trying to understand a contradiction I see pop up a lot (mainly in the TSLA Market Action thread).

On the one hand, a lot of investors claim to buy and hold "forever" (I am talking SP in the thousands or 'till 2025). Some even point out their portfolio is 100% TSLA.

On the other hand, many of those same investors claim that on a dip - such as the drop to $295 yesterday due to macro - they bought the dip.

I don't get this because:
- if they have cash lying around to buy the dip, then they weren't fully invested in TSLA with their available money for trading.
- if they were fully invested (buy & hold), they shouldn't have extra cash to buy the dip.

So are these people not being truthful? Are they not doing what they say they do? Are they selling off shares instead of holding forever, but they never post when they sell, only when they get back in?

You catch my drift. How is buying and holding compatible with all the cocky "bought more on the dip" talk?

new Income?

 

[EinSV]

Barclays Takes The Red Pill On Tesla (TSLA) Bull Case, "the stock is frequently disconnected from fundamentals"

"But if there is anything we’ve learned over the years in following TSLA stock, it’s that the stock is frequently disconnected from fundamentals. Rather, the stock seems to be more driven by ‘cult’ psychology and the flow of tweets, media attention, and other data points. It’s with that point that we (frustratingly) believe for the time being, despite the incredible run-up of the stock (+38% YTD vs. S&P +5%), that we can’t see any data points near-term that will reverse momentum."

Johnson raises his FY 2017 EPS estimate from a loss of $4.99 to a loss of $4.12. He keeps FY 018 EPS at a loss of $1.05.

I think Barclays and most of the other TSLA analysts have definitely taken the red pill:

To remind Street Insider clients, the red-pill analogy comes from the Matrix when Morpheus begins to show Neo how the Matrix works (YouTube): "You take the blue pill, the story ends. You wake up in your bed and believe whatever you want to believe. You take the red pill, you stay in Wonderland, and I show you how deep the rabbit hole goes."
​

Barclays Takes The Red Pill On Tesla (TSLA) Bull Case, "the stock is frequently disconnected from fundamentals"

 

[kenliles]

Good confirmation for those that were concerned about this detail on the trunk opening size--

Tesla Model 3 photos show release candidate’s promised enlarged trunk opening

 

[winfield100]

And then there is the issue that it appears the AES system won't be operational until sometime late in 2019. (If things go as planned.) So Tesla has three years before they need to worry about the cheaper cost of the AES system during which time energy needs may increase. (More BEVs anyone?)

As for -->electrical<-- needs on Kaua'i increasing, KUIC had an ad, just expired, for a $10,000 credit on a Nissan Leaf EV so I expect the entire island may go electric vehicles in the next 10 years
Nissan Leaf Rebate | Kauai Island Utility Cooperative

 

[winfield100]

My response to the whole 'cult stock' discussion is similar. Okay, sure....it's a cult stock. But when is the cult status going to end? (Hint: never)

or when one of the Big Freakin' Rockets has a serious "malfunction" in the late 2030's on the earth-mars run and the uploads memory overflows due to another malf in the 'neural mesh' and things get "squirmy with overlaps" (comeon folks, you'all are discussing Matrix so this is 'on topic')(and read some of the Ian M Banks stories about sentient really big spaceships)(and other similar EssEff)

 

[Intl Professor]

The Earth is our spaceship. When are we going to get serious about maintenance?

 

[DurandalAI]

General trading question:

As a conservative investor, I am trying to understand a contradiction I see pop up a lot (mainly in the TSLA Market Action thread).

On the one hand, a lot of investors claim to buy and hold "forever" (I am talking SP in the thousands or 'till 2025). Some even point out their portfolio is 100% TSLA.

On the other hand, many of those same investors claim that on a dip - such as the drop to $295 yesterday due to macro - they bought the dip.

I don't get this because:
- if they have cash lying around to buy the dip, then they weren't fully invested in TSLA with their available money for trading.
- if they were fully invested (buy & hold), they shouldn't have extra cash to buy the dip.

So are these people not being truthful? Are they not doing what they say they do? Are they selling off shares instead of holding forever, but they never post when they sell, only when they get back in?

You catch my drift. How is buying and holding compatible with all the cocky "bought more on the dip" talk?

I don't think it's a contradiction to say that you have money in your money market account that slowly accumulates until you're ready for a buying event. I have a day job, and a certain % of my paycheck goes into my investment account every 2 weeks. That money sits in there until I plan on acquiring additional stocks, which I typically buy on a dip with limit orders that I have set up. So, I could say that in terms of stocks, I'm 100% Tesla, but I don't think that the money market cash that's sitting ready to be invested into stocks doesn't disqualify a "100% Tesla" statement, as opposed to saying 75% Tesla and say, 25% T-bills or some other "Safe" less than inflation location. I can't speak for others, just myself on this.

 

[EinSV]

Well, it could be, but trying to batter the price down now to rescue a J18 $100-strike put is complete lunacy; there's no chance. This sort of manipulation only works with relatively near-term options and relatively near-the-money strike prices.

There are still quite a lot of options outstanding in that category, so maybe there's some of this going on. I don't think it accounts for anywhere near the full 31 milllion shares shorted though!

Just wanted to follow-up on this briefly (no time yesterday). I agree that if SP manipulation through strategic shorting to protect short option bets exists it does not tell the whole story. But as you noted yesterday, there have been longstanding unusual SP patterns, that I think fit well with the manipulation theory:

So, interesting. Opens, jumps up in "amateur hour", sharp dip at 10 AM, being pushed back up again. This is a somewhat familiar pattern. Papafox, look familiar to you? You've become the expert on intraday Tesla charts.

If this sort of SP manipulation is occurring then it makes sense to me that shorts who are optionholders, including of longer term options, would have a bigger incentive to do it, since they could afford to risk some losses on shares to protect against bigger losses on options. For example, they would have an incentive to try to keep a lid on SP (and sentiment) so that momo traders and others would not jump in and run the SP up so high that even with a sharp drop later after the expected botched Model 3 launch (or whatever they are betting on) they would still lose money. Admittedly just a speculative theory, and one that probably cannot be proven short of an SEC investigation or something along those lines.

 

[JRP3]

Old man Bob showing how clueless he is Auto industry legend Bob Lutz goes off on Elon Musk, President Trump

QUESTION: What’s your take on Elon Musk and Tesla? ANSWER: I don’t know why it is that otherwise intelligent people can’t see what’s going on there. They lose money on every car, they have a constant cash drain, and yet everybody talks as if this is the most miraculous automobile company of all time. Q: What do you think will happen with Tesla down the line? Bought by a traditional auto company? A: Maybe, but who needs it? (Musk) has no technology that’s not available to anybody else. It’s lithium-ion cobalt batteries. Every carmaker on the planet has electric vehicles in the works with a 200-300-mile range. Raising capital is not going to help, because fundamentally the business equation on electric cars is wrong. They cost more to build than what the public is willing to pay. That’s the bottom line.

 

[callmesam]

i watched GPRO very closely from IPO to failure... it is the perfect example of an absolute stock scam... engineered from the beginning... without getting too deep into the details... it was a smack in the face depiction of a company creating a stock out of a story then completely cashing in on it... in my opinion it was 100% premeditated... and now the CEO and his family walked away with BILLIONS of dollars (including father who walked away with 100s of millions of investors dollars who just happened to be one of the key people who engineered the dot-com bubble)... in 1 year after IPO, GPRO's market cap was worth less than the amount of money that was made through stock sales by 3 individuals.

Tesla is another example of Silicon Valley dream euphoria... all you have to do is imagine them as a trillion+ dollar company... and you can justify not selling until $1000/share... when the distance from current reality and this imaginary endpoint is lightyears away.

One could say Tesla isn't the same as GPRO... with its successes... but does Elon have 100s of millions of dollars from Tesla... yes... does Tesla have a market cap that is greater than 90% justified by things that ***might*** happen in the future... yes... does Tesla disseminate information in a strategic way to keep the story alive and inflated... yes... is Tesla a Silicon Valley story... yes... is Tesla's CEO compared to Steve Jobs... yes... do investors constantly counter bear arguments with "then I bet you wouldn't invest in Apple in 1999 either!"... yes... do investors declare market cap valuations as pointless because of AMZN... yes.

but the largest similarity between GPRO and TSLA is... investors believe Tesla will be a company in the future that it currently is not... and are paying for it today.

GPRO's story was that it would become the largest social media company rivaling FB and the like... the analysts were "pounding the table" declaring growth... at least it failed fast.

TSLA is GPRO in slow motion... and right now the CEO of GPRO is cruising around in his $40m yacht with his $1b bank account while his company's market cap is: $1.17b down from a 15 BILLION dollar valuation.

Normally ignoring, but I wanted to take the briefest of moments to share my feelings about investing, when REASONING BY ANALOGY:

Back to ignoring.

 

[neroden]

General trading question:

As a conservative investor, I am trying to understand a contradiction I see pop up a lot (mainly in the TSLA Market Action thread).

On the one hand, a lot of investors claim to buy and hold "forever" (I am talking SP in the thousands or 'till 2025). Some even point out their portfolio is 100% TSLA.

On the other hand, many of those same investors claim that on a dip - such as the drop to $295 yesterday due to macro - they bought the dip.

I don't get this because:
- if they have cash lying around to buy the dip, then they weren't fully invested in TSLA with their available money for trading.
- if they were fully invested (buy & hold), they shouldn't have extra cash to buy the dip.

Ah, you're going to feel dumb when you find out the answer.

Many of these people have jobs which pay large salaries.

My extra 18 shares this week (bought, of course, at a higher price than if I'd actually timed it right, and NOT on the dip -- I am no good at short-term timing) came from having a small amount of earned income and making an IRA contribution recently.

Most people here have far more earned income than me. They may have bought a bundle in February, but they got another paycheck in March.

 

[neroden]

I think you are missing a much larger point, focusing in on Telsa vs AES
look at the link from KUIC itself, the utility purchasing renewable power and their overall goal for the island of Kaua'i
69+ megawatts of renewable enery, 37% of their needs in 2015, 125+ megawatts of renewable energy by 2025 , >75% of their needs (with another 25% elsewhere)
LOOK at the map of completed and in progress projects on the island
The GOAL is to switch from FOSSIL fuels to SUNLIGHT powering the island, NOT "are your renewable electrons from sun or hydro or biomass cheaper than his renewable electrons. FOCUS on the goal and the path to it
(note the 21 megawatts of distributed solar on customers roofs, with 6.6 more under construction)
{If you would be so kind, please point to the ?100?megawatt of AES on Kaua'i renewableenergy page, either completed, under construction or under consideration}

Renewable Energy Projects | Kauai Island Utility Cooperative

Absolutely. I do wonder what happens when they get close to 100%, and exceed it. Do they start curtailing some of the renewable projects when load is low? They count biomass as renewable, so I suspect that'll be the one that gets curtailed. If they decommission that, which they might since I doubt it ramps up and down well, then maybe they start finding a way to convert the excess into something exportable...

Probably that doesn't happen until all the cars on the island are electric too, though, so it'll be a while. I wouldn't worry about the SolarCity PPA, they'll have made their money back before >100% renewable overcapacity starts to become an issue.