2017 Investor Roundtable: TSLA Market Action

[Reciprocity]

Two sample points from my friends:

1. double income family, bought 2015 VW e-Golf january 2015 and 2016 Tesla Model X90 in May 2016. One Model 3 reservation to replace eGolf. Invested into TSLA and so able to and planning to replace AP1 Model X with AP2 Model X in 2018, Model 3 to replace eGolf ASAP.

2. single income family, stretched budget to replace Prius with Model S60 lease late 2016. Does not have autopilot enabled. Loves the car but plans to replace with Model 3 after the lease is up. Does not have money in TSLA,

I now wish I had more than just one reservation

I decided to make a poll on this subject to see where peoples heads are at with the model 3 coming soon:

Poll: Model S/X owners with Model 3 Reservation

 

[MP3Mike]

Fidelity where they only charge 4% margin interest on anything over $500k

And IB only charges 2.41% up to $100k, and then 1.91% from $100k to $1M.

 

[22522]

No advice here and disclaimer - long tsla here, not enough shares and STRETCHED last July for a 60S, now a 75 -and a 3 reservation.

Several posts here and on the other investment thread have indicated selling shares to purchase a 3, S or X, think twice. It may become a very expensive purchase due to lost opportunity of a higher SP.

Yeah, I am going to try to borrow against it, somehow. Maybe by keeping the cash position in the account that lets you take loans. Have not figured that out yet.

 

[ylma99]

I'd suggest to add a few choices for non-S/X owners. Non-S/X owners who delay their purchase decision for S/X and wait for 3 are the ones who will impact S/X sales, not the existing S/X owners who are planning to trade down for 3.

I decided to make a poll on this subject to see where peoples heads are at with the model 3 coming soon:

Poll: Model S/X owners with Model 3 Reservation

 

[geneclean55]

I'd suggest to add a few choices for non-S/X owners. Non-S/X owners who delay their purchase decision for S/X and wait for 3 are the ones who will impact S/X sales, not the existing S/X owners who are planning to trade down for 3.

In terms of the dreaded upcoming Osborne, these people that you mention should be affecting S/X sales currently and also past quarters

 

[Reciprocity]

I'd suggest to add a few choices for non-S/X owners. Non-S/X owners who delay their purchase decision for S/X and wait for 3 are the ones who will impact S/X sales, not the existing S/X owners who are planning to trade down for 3.

I'll probably do more polls but for this one, I want to gauge the potential trade down apocalypse or lack there of. I also think there is a ton of evidence that other luxury car demand fell a measurable amount when the 3 was unveiled so I'm not that worried about that.

But to your point, if you are a large luxury car customer you are not waiting for the 3 series level car to decide vs the 7 series. I can't imagine a lot of people are really confused by that, I mean the model 3 is half the price and smaller. If they are waiting, they will be able to test drive one soon enough to help make up there mind, at least the way I understand it is that they want to get demo cars to dealerships as soon as possible so people really can compare them side by side. Maybe by years end or sooner for the most popular locations.

 

[TrendTrader007]

ATD margin is 10% APR for small accounts like mine

That is highway robbery I'm paying 3.5% margin rate

 

[TrendTrader007]

And IB only charges 2.41% up to $100k, and then 1.91% from $100k to $1M.

That is awesome Thanks for the information

 

[Waiting4M3]

That is highway robbery I'm paying 3.5% margin rate

or bank robbery? where the bank robs you

 

[TrendTrader007]

Anything below 5% margin interest on a stock like TSLA is awesome because you're likely to make 30 to 40% or better returns from current levels. So even 10% may be palatable but does reduce overall returns significantly
If I had less than $10k or $20k to invest I personally would buy calls instead of stock this is NOT an advice
I bought J 2019 calls for AB in her account and she has made a return of approximately 85% or so in about 2 to 3 months and I suspect before current run is over she'll make at least 3 to 5 times her money maybe even 10 times

 

[winfield100]

I'd suggest to add a few choices for non-S/X owners. Non-S/X owners who delay their purchase decision for S/X and wait for 3 are the ones who will impact S/X sales, not the existing S/X owners who are planning to trade down for 3.

that is at least me. I have ~1.2+ million miles driving, and am retired, have test driven a Model S 3-4 times, BUT there are 2 of us, we are close to 70, take routine, 1,030 mile 1 way trips, 5-6 times a year, plus, general "gallivanting around the country", need a smaller sedan, such as a model 3, BUT i'm almost ready to get an S85 CPO. @ ~$50,000
I have gone in ~3 years from "you want to spend HOW MUCH!?!? for a car" to, "yes we will get a Tesla, how much will it extend our 16 hour, 15 minute "cannon ball runs" (we will visit friends 1/2 -1/3 the way whom have 220v outlets) before i retired, a number of my non EV co workers were very interested in a Tesla, or any long distance, rapid refueling EV, as are a bunch of the millenials my kids age.(24-35)

 

[Off Shore]

that is at least me. I have ~1.2+ million miles driving, and am retired, have test driven a Model S 3-4 times, BUT there are 2 of us, we are close to 70, take routine, 1,030 mile 1 way trips, 5-6 times a year, plus, general "gallivanting around the country", need a smaller sedan, such as a model 3, BUT i'm almost ready to get an S85 CPO. @ ~$50,000
I have gone in ~3 years from "you want to spend HOW MUCH!?!? for a car" to, "yes we will get a Tesla, how much will it extend our 16 hour, 15 minute "cannon ball runs" (we will visit friends 1/2 -1/3 the way whom have 220v outlets) before i retired, a number of my non EV co workers were very interested in a Tesla, or any long distance, rapid refueling EV, as are a bunch of the millenials my kids age.(24-35)

Be sure to get one with AP1; it's the perfect road trip machine. We bought ours new two years ago in July and are planning our third cross-country in August.

 

[SebastianR]

Tesla is concerned about something, it's clear by there recent actions related to down selling the 3. I am less concerned as the way I see it either the demand is real and a huge vacuum will be created by the successful release of the 3 where it will be really impossible to get and that will sell a lot of model S/X new and used.

I'm wondering if we overanalyse this whole thing a bit too much: Truth to be told, IMHO the key risk for Tesla this very moment is that people put the decision to buy a Model S (less a Model X) off until they see the final version of the Model 3. If enough people do this in May, June, July Tesla misses 3 months.

Now I do believe that Tesla did what is prudent to minimise this risk: 1) Creating a bigger mental distance between the Model S and the Model 3 (remember those days when you could lease a Model S 60 for very little money for 2 years? Yea, those days are gone); 2) Anti-selling the Model 3 ("you gotta wait for it for years if you order now - if you are sitting on the fence, buy shiny Model S today!"); 3) Guiding for only half a year of demand and not changing that guidance at a time when they probably had it all in the bag: who cares if demand for the lower level Model S falls of a cliff if that's picked up by higher trim Model 3 with (hopefully) better margins?

So I'm not worried about Model S owners trading down at all. In fact I'm quite happy to bet a nice bottle of wine that this year the Model S sales will be higher than last year's

 

[Reciprocity]

I'm wondering if we overanalyse this whole thing a bit too much: Truth to be told, IMHO the key risk for Tesla this very moment is that people put the decision to buy a Model S (less a Model X) off until they see the final version of the Model 3. If enough people do this in May, June, July Tesla misses 3 months.

Now I do believe that Tesla did what is prudent to minimise this risk: 1) Creating a bigger mental distance between the Model S and the Model 3 (remember those days when you could lease a Model S 60 for very little money for 2 years? Yea, those days are gone); 2) Anti-selling the Model 3 ("you gotta wait for it for years if you order now - if you are sitting on the fence, buy shiny Model S today!"); 3) Guiding for only half a year of demand and not changing that guidance at a time when they probably had it all in the bag: who cares if demand for the lower level Model S falls of a cliff if that's picked up by higher trim Model 3 with (hopefully) better margins?

So I'm not worried about Model S owners trading down at all. In fact I'm quite happy to bet a nice bottle of wine that this year the Model S sales will be higher than last year's

To that end, Tesla's next push might be to get 3s into the dealers for great drives and direct comparison asap. Maybe in conjunction with the first deliveries. This would let people really see and feel the difference. Of course they will be test driving S-P100D vs 3-75.

 

[Bet TSLA]

It's safe to say that removal of the driver's instrument cluster is a pretty ham-handed attempt at finding something, anything, that can be removed to differentiate 3 from S.

No. It's been pretty clear for a while that Tesla is trying to give the driver less and less information, with the clear idea that being in a self driving car is not much different from being in the back seat of an ordinary car. Comfort and entertainment are important; driving information is not.

 

[SebastianR]

To that end, Tesla's next push might be to get 3s into the dealers for great drives and direct comparison asap. Maybe in conjunction with the first deliveries. This would let people really see and feel the difference. Of course they will be test driving S-P100D vs 3-75.

Agree. That could happen. I think they might also look what airlines are doing: If you want that Gold Card status, you better buy the Business Class ticket - I mean the Model S ;-)

And that Gold Card will have perks - wanna get a fellow friend into "the Lounge" aka "invite with unlimited Supercharging"? - No problem for Model S/X (Gold Card) members of the club...

I guess the big challenge for Tesla will be how to create a tired "cast system" within customers while not putting any existing customers / new customers off and while highlighting that even a 'Silver Card' on Tesla is worth so much more than a comparable card over at your run of the mill Mercedes shop... (or something along these lines).

 

[GoTslaGo]

Be sure to get one with AP1; it's the perfect road trip machine. We bought ours new two years ago in July and are planning our third cross-country in August.

This brings up an interesting point about AP & FSD. Presumably the FSD allows you to sleep as the car drives. So I ran the math. Let's say you plan to go across the US, taking I-80 from california to NY. Total mileage is 2909 miles. At 65 miles per hour the total amount of time crossing the US would be 44.75 hours so 45 hours of Straight driving. So with FSD one could cross the country in 2 days, relatively comfortably since you can sleep in the car as it drives itself.*

Ok let's add in charging times. Let's say you are using a model with 300 range, but use around 260 miles (86%) between charging. So let's assume 45 minute charge time per stop. At 260 miles per charge one would need to stop approximately 11 times. So 11 x 45 minutes = 495 minutes = 8.25 hours of charging.

So with FSD, sleeping in the car and taking the charging stops, one could cross the country on I-80 for a total of 53 hours. So just over 2 days.

Probably not so relevant for individual car owners, but may be truly relevant for trucking fleets. I would assume the distance between charges would be longer.

For point of reference, I asked how long my wife usually gets her packages from Nordstroms (typically delivered from Midwest). She says around 5-7 days, best was 3-4 days.

*personal note, I did this once in my young and stupid days, and it wasn't comfortable...I just HAD to be on the east coast soon and couldn't ditch the car or afford the flight...

 

[Dagger]

So with FSD one could cross the country in 2 days, relatively comfortably since you can sleep in the car as it drives itself.*

*personal note, I did this once in my young and stupid days, and it wasn't comfortable...I just HAD to be on the east coast soon and couldn't ditch the car or afford the flight...

Wow, your car already had FSD back in the days? How you manage that? Did Emmet Brown come back from the future and give you his car? You should tweet Elon. Would certainly help my bank account if he got hold of some future tech

 

[bdy0627]

I'm wondering if we overanalyse this whole thing a bit too much: Truth to be told, IMHO the key risk for Tesla this very moment is that people put the decision to buy a Model S (less a Model X) off until they see the final version of the Model 3. If enough people do this in May, June, July Tesla misses 3 months.

I agree with this idea. I think there are many potential model S owners who are waiting right now just to see what the 3 turns out to be like. I know I would if I were in the market for an S right now.

 

[TrendTrader007]

current rally should last at least 5 to 6 months more not counting May with potential doubling or tripling of current SP. I'm looking at rally lasting into October/November time frame before i take profits on my calls. Crazy TSLA with short squeeze could end up becoming a $600 to $900 stock by then. I'm tempted to increase my common stock position by another 2000 shares on margin on Tuesday but i am extremely unlikely to do it because i am already 133% long TSLA not counting calls and if i take calls into account then that effectively doubles my position to 233% or so long exposure. Probably the best thing to do for me right now is to do nothing just sit tight and see what happens. The problem with borrowing too much on margin is the flip side. i think I'm being squeamish here because in my clinical judgement probability of TSLA doubling or tripling from here over the next 5 to 6 months is well over 95% so it is as near a slam dunk in investing as one will ever get but i think i'll leave an extra $650k to $1.3 million potential profit on the table in exchange for not going on an antihypertensive