2017 Investor Roundtable: TSLA Market Action

[CorneliusXX]

Nope! I don't do short term calls I've only got j18 and j19s $250 $260 $290 $300 $400 $410 $500 $600

What's your exposure to TSLA in terms of # of shares after all your leveraged positions? Judging from your comments it seems like you are exposed to the effective movements of 100s of thousands of shares if not more? How do you stay calm on a day like today?

 

[Papafox]

Pretty steep slide in the final 70 or so trading minutes of the day. Can't help but feel like that's just the market trying not to rip TSLA straight vertical into earnings.

Many traders and investors don't share our confidence in the 1Q ER results. They saw today's high as a good place for some profit-taking. I thought that capping was likely occurring at 326.50 because of the long stretch of level trading (something very strange for TSLA), and if volume picked up enough we'd break the cap, but the cap held long enough (if it was a cap) that traders figured "this is as high as it goes today" and took profits.

Usually, the day of the ER is a red day, due to profit taking. That leaves a question mark about tomorrow and rather than deal with a question mark, traders were cashing in.

 

[MitchJi]

An $8b dollar gift to tesla actually. I am pretty certain a large percentage of that cash will make it back into the tesla value chain and buy some nice fully decked out P100DL Model S and X and top of the line model 3s.

Actually, the way the SP is increasing our fully loaded M3 will be mouse nuts.

 

[brian45011]

I saw something blip across twitter about the recent capital raise notes that convert at $327.50, and that the price may go bonkers if that level is breached.

Can someone explain why that would cause the stock to go up? Wouldn't that be a dilutive event? Sorry for the novice question.

I would think, if anything, the conversion price would act as resistance, since conventional arbitrageur holders would sell shares short at the conversion ratio (possibly using rolling naked calls or private transactions to minimize hard to borrow fees), and collect the 2 3/8% interest. If the share price continues to rise the arbitrageurs are protected from upside exposure by the notes they hold; if the share price drops, they cover the short shares with proceeds from when the notes are redeemed.

With the hedges and warrants there is no shareholder dilution for the 2022 Notes unless the share price exceeds $655. The next share price level to watch is $425.82. If the closing share price exceeds that level for 20 of the last 30 trading days in a quarter, the Notes can be converted early during the ensuing quarter.

 

[MitchJi]

Neuralinked...


Mid 2018, I'm targeting a different upgrade
View attachment 225178

I bet you could make a pretty nice income from a semi in the Tesla Network.

 

[Papafox]

Actually, the way the SP is increasing our fully loaded M3 will be mouse nuts.

You're not alone, Mitch. Lots of Tesla owners and future Tesla owners have been investing in the stock. I suspect when things settle down a bit one of the conclusions of these shareholders will be that there is indeed room for a(nother) Tesla in the family. Winfall gains for people who believe in your product is a great thing to boost sales.

 

[MitchJi]

Well, I'll tell you, since I was investing in the pre-Internet era.

The business library at the nearest university business school.

I remember looking up the last four years of annual reports for the four largest businesses in a sector. On paper. Out of filing cabinets. And sitting there all day reading through them. That's how you did it.

The main difference now is, I don't have to leave my house.

You could've invest,in Tesla or elon and you didn't have access to @luvb2b , @esk8mw , @DaveT etc. analysis!

 

[kenliles]

I bet you could make a pretty nice income from a semi in the Tesla Network.

Great point--
My plan is to configure as a home;
I punch in the address for kids and grandkids I want to visit,
located in various places around the country.
It's my Mars project

Kids will love it too

 

[neroden]

I saw something blip across twitter about the recent capital raise notes that convert at $327.50, and that the price may go bonkers if that level is breached.

Can someone explain why that would cause the stock to go up? Wouldn't that be a dilutive event? Sorry for the novice question.

I have no idea. That's not a novice question, it's an advanced question! It would be a dilutive event, definitely.

Anyway, after the $327.50 threshold, the next conversion threshold is $359.87 (for the older convertibles expiring 2019 and 2021).

I am told that *practically all convertibles* are traded by big banks which arbitrage them. The convertible is economically equivalent to a bond plus a call option. I'm not quite sure how they do the arbitrage. Ideally, you'd sell call options at the same strike, sell T-bills of the same duration, and buy a credit default swap, but I'm pretty darn sure they don't actually do pure arbitrage (partly because call options of the same duration are not available) so they're making some assumptions (which may prove to be wrong).

 

[neroden]

What are the chances that this current runup prior to Q1 ER is just a typical buy-the-rumor-sell-the-news event, where investors expect more than what gets delivered and we will see a dip right after the ER ?

Sure, totally possible. Given the extraordinary runup, a "dip" back to $300 would still be higher than I was expecting four weeks ago... so I'd just sit it out...

 

[dmckinstry]

Selling before earnings could be a mistake. The results of our guys analyzing earnings indicate the potential for a major beat. Even if they are wrong, any sell-off will be temporary in the ascent of TSLA.

Well, if it goes up enough, I'll sell of <1% of my holding just before closing on Wednesday, just so I can pretend to feel sad about having sold before the stock continues to rise after the ER.

 

[neroden]

I would think, if anything, the conversion price would act as resistance, since conventional arbitrageur holders would sell shares short at the conversion ratio (possibly using rolling naked calls or private transactions to minimize hard to borrow fees), and collect the 2 3/8% interest.

Ah, got it. I was thinking selling calls was more likely than selling shares.

With the hedges and warrants there is no shareholder dilution for the 2022 Notes unless the share price exceeds $655. The next share price level to watch is $425.82. If the closing share price exceeds that level for 20 of the last 30 trading days in a quarter, the Notes can be converted early during the ensuing quarter.

You should also watch $359.87 and $467.83 (the equivalent prices for the 2019 and 2021 notes -- the conversion price and the early conversion price, respectively). And $512.66 and $560.64 (the warrant exercise prices on the antidiultion hedge deals for the 2019s and 2021s respectively). Also $560.60, which is the conversion price for the SolarCity 2018s.

 

[Chris Fox]

Most assuredly. I think that by the time I can take delivery of my Model 3 in mid 2018, I'll be able to fully option it out! FSD, AWD, & Ludicrous are on my wish-list.

I'll cash out some of my shares for a fully decked out Roadster 2.0

 

[Starno]

SP post market close looks strong

 

[Krugerrand]

Didn't we just merge with SCTY ?

No, that was a bailout and should be relegated to the same file folder as the *pie* quarter.

 

[Krugerrand]

They were always essentially the same company. I'm talking about the other direction. As in, Model 3 gets pumping at 500k units per year, truck is revealed, economy sedan is revealed.....Elon sells the automotive division to AAPL for $100B.

Move more deeply into energy, sell off the solar, battery production and storage unit for $100B. Start running micro-grids and operating as primary conduit for local electricity markets, sell that off for $200B.

I don't see Elon wanting to stick with each of the core businesses past the point where they're semi-scaled. That's the automotive unit in 18 months if Model 3 goes smoothly, storage in another 3-5 years, energy/grid services in 10ish years.

I'm not savvy enough to understand how those spinoffs perform, but we shouldn't be picturing Elon running this stuff as long as we'd like or being around when these assets are theoretically worth $500B. That's a concern to me.

Um...no.

He's building a family empire. The umbrella will continue to get bigger. Count on it.

 

[Curt Renz]

Well, I'll tell you, since I was investing in the pre-Internet era.

The business library at the nearest university business school.

Generally open to the public. You go there, you could get all the annual reports and SEC filings for firms (the stuff you now look up on EDGAR). They could even *order* reports which they didn't have in stock. You can get all kinds of books about all kinds of industries, including historical data going back over 100 years and books on analysis. And there was a huge collection of different newspapers, including lots of foreign newspapers. They also had "ticker tape terminals". Lots and lots of analysis reports available from various sources (anyone remember Value Line?) You did analysis by hand.

I remember looking up the last four years of annual reports for the four largest businesses in a sector. On paper. Out of filing cabinets. And sitting there all day reading through them. That's how you did it.

The main difference now is, I don't have to leave my house.

Indeed, that’s the way I used to do it. While in college I used its library, and afterward visited nearby college libraries. Microfilm was occasionally the medium. While working in Chicago TV financial news, I’d phone the reference desk at the city’s largest public library until we had internet access. During the few years I lived in Palo Alto, I took advantage of the Stanford University library which allowed Palo Alto residents to check out books.

 

[geneclean55]

If you had to buy one tech stock...

 

[DurandalAI]

I'll cash out some of my shares for a fully decked out Roadster 2.0

Sounds nice! I wish I could do the same, but my initial investment isn't nearly big enough. I would need a 500% return just to get my M3 for free. I'm anticipating a 200-250% return by 2018, but by that point in time I may be able to afford the M3 on my own without cashing out my TSLA stock..

 

[TrendTrader007]

What's your exposure to TSLA in terms of # of shares after all your leveraged positions? Judging from your comments it seems like you are exposed to the effective movements of 100s of thousands of shares if not more? How do you stay calm on a day like today?

Effective exposure is in excess of 50,000 shares including common and calls
Already up in excess of $3 million in unrealized profits since I initiated the position on December 19, 2016 hence no cause for panic
If things go as I suspect and we get a parabolic move then I expect to make millions more within the next several months
Of course I could be wrong and just as easily lose all my profits and more
It took me 3 years to make a profit of $875k in Googl and Cmg from 2005 through 2008
Less than a year to lose 1.2 million in 2008-2009
Left a potential profit of $7.9 million in BIDU between 2008 through 2012 on the table by selling too soon
It took me 1 year to make a million in profits in FB from January to December of 2013
Took another year to make a second million in FB from July 2015 through July 2016
Then took me 5 months to lose a million in TSLA from July through November 16 yes I actually sold TSLA at the bottom at $182 on November 16, 2016 then bought it back at $203 on December 19,2016
I don't have enough time or space to write down all my adventures and misadventures in the stock market since 1998. Suffice it to say that I live and breathe the stock market and wouldn't trade in my passion for stocks for anything in the world
Now so far my biggest score in less than 6 months
That tells me that TSLA has lot more potential than most stocks I've ever traded and if traded right this stock is the real deal and could be a true wealth maker similar to AAPl or AMZN or NFLX
Of course, I could be terribly wrong and lose my shirt in 2 days after ER
So, Not an advice (need I say it anymore, kinda redundant isn't it)