2017 Investor Roundtable: TSLA Market Action

[ValueAnalyst]

I see the value of de-risking but wonder whether an opportunistic cap raise like that might potentially derail the nice steady climb we've been experiencing?

In any case, my hunch (which could easily be wrong) is that they will do a cap raise after the Semi Reveal. They will then have a clear rationale for the ask -- to build the Semi, the new fast charging network (probably) and GFs 3,4 and 5 (maybe details on some locations will be ready), plus complete the Model 3 ramp. With any luck will have released initial incarnation of FSD and have a visible TE ramp. SP could easily be far higher than today.

Given that Semi will share many of the same components as Model 3, I don't expect Semi investment to be substantial enough to require a secondary. I believe Elon has also mentioned that, for the same reason, Semi would have relatively high margins even during ramp up.

 

[vgrinshpun]

If I had a nickel for every time this was debated. Here is the definative answer:

View attachment 231339

Hmm...

Advice or not?

 

[adiggs]

Same, would love to hear what people are planning. I am just as happy to stay long and have the stock grind up, but going 5x in a few days would be a shame to miss half that upside on the whipsaw effect after the big spike.

The problem here is seeing the stock spike 5x in a few days and thinking to yourself "this is crazy - quick, sell and lock in profits, and buy puts for the ride back down". Then the stock doubles again instead of going down, and waits until after your puts expire to come back to earth.

How did you know after the 3x spike in a few days that it wasn't going to keep going to 5x? How do you know at 5x that it isn't going on to 10x?

I'm with @neroden on the long termy thing - I like long running short covering rallies.


That being said, a sharp spike to $2700 probably hits my personal price point and I cash it in at that point. So I do have a price! Not because I think that's all that Tesla is worth in a reasonable time frame, but because at that level I've got a reasonable shot at having my financial needs met for the rest of my life.

 

[austinEV]

I think that is the source of all the short squeeze interest. Mark this as "funny" if you have fantasized about riding a leveraged position to the top of a VW type squeeze, selling at the tippy top, going long on puts then selling them 2 days later when things return to earth, thus making a mint on both sides of the spike.

Only 11 funnies. Y'all are liars Add me to the list for 12.

Hmm...

Advice or not?

Not advice, fact!

 

[jhm]

3-4 trillion, in 15 years yes.
After that we'll slowly approach a world where money won't matter anymore (because of AI doing everything better than a human), and so the stock market will probably disappear....

I could see $4T in 15 years.

 

[bdy0627]

At a time when TSLA is looking so strong, I want to look at 2 potential worst case scenarios and how the PPS could drop, just to get some perspectives

1) MS fire related drop from Sep to Nov 2013, from $190 to $121, 37% drop
2) MX early production related drop from Dec 2015 to Feb 2016, from $240 to $151, also a 37% drop

I think both these scenarios are pretty close to what worst case can be for the M3. Both times the PPS came back up within 2-3 months. At current level $380, down 37% puts us at ~$240. It would be prudent to invest/trade with this in mind. I'm all-in, but definitely prepared to ride through a dip like that.

This is what we should expect at some point, don't know when though. If you go off of the charts and use the 200 MA, you would have held through the first drop and exited your trading money before the 2nd drop. There is a lot of value in having exited that 2nd drop to be able to load up with leverage on that dip. Huge profits from being able to do that. There is some whipsawing in between those years even if you try to ignore the smaller fluctuations and go with the primary trend. That's the price you pay to have dry powder for something like the 2016 dip. What you would like to avoid is deleveraging too soon on the rise as you can miss a massive amount of gains with the compounding effect. I believe it is a more profitable approach to stay leveraged until the primary trend changes or appears to be changing. However, that may be more emotionally stressful than deleveraging on the way up. What's less stress worth???

 

[doctoxics]

Doesn't the bid/ask spread make a fairly significant impact on such transactions?

I purchase/sell at the midpoint. Timing has been good enough so far to cover the bid/ask spread. As others have noted here, there are patterns. As we know, the stock can move quickly on news, so I am never out for very long.

 

[doctoxics]

So you focus in general on LEAPs instead of shares? Or do you maintain a lot of shares as well? Thanks

J'19 leaps, deep in the money, provide two to one leverage without having to deal with margin interest and the possibility of a margin call. Since a small percent of the value is out of the money, the time decay is minor compared to out of the money leaps. Currently, I do not own shares of TSLA.

 

[Zhelko Dimic]

I could see $4T in 15 years.

Hey, I called for 10T last year, don't get soft on me!
Short-Term TSLA Price Movements - 2016
Short-Term TSLA Price Movements - 2016
You need to read both to fully understand my thoughts, I'm not really calling for 10T or anything remotely similar, I'm saying it's perhaps possible...
TSLA was $207 when I wrote that, and is $380 now

 

[doctoxics]

What's funny with the tesla " shorts " is that they're accusing Tesla investors to " believe " without looking at the fundamentals, but they're the first one to bring irrelevant news concerning Tesla, like " competitors are going to catch up by 2018 " ....

Trying to understand why the shorts are still around. If its mostly ICE manufacturers and oil money that they can afford to lose to slow Tesla down, I get it. But there is another explanation, perhaps. Could the shorts be just hanging on until the early ramp of Model 3 in hope that the launch will fail and the stock price will plummet. If that should be true, then a severe short squeeze might be expected in September-October.

 

[GoTslaGo]

Trying to understand why the shorts are still around. If its mostly ICE manufacturers and oil money that they can afford to lose to slow Tesla down, I get it. But there is another explanation, perhaps. Could the shorts be just hanging on until the early ramp of Model 3 in hope that the launch will fail and the stock price will plummet. If that should be true, then a severe short squeeze might be expected in September-October.

Yes. Even if it is a success, the "strong" shorts will figure out ways to spin more FUD to try to get their way.

 

[AlMc]

Trying to understand why the shorts are still around. If its mostly ICE manufacturers and oil money that they can afford to lose to slow Tesla down, I get it. But there is another explanation, perhaps. Could the shorts be just hanging on until the early ramp of Model 3 in hope that the launch will fail and the stock price will plummet. If that should be true, then a severe short squeeze might be expected in September-October.

Two reasons they stay:

1. Possible model 3 ramp or QC issues

2. Poor margins because of the '3' with decrease of GM overall to point that Tesla needs more funding/dilution.

I do not see either, but it is good to know what the 'bears/shorts' hypothesis is to make sure one is looking at TSLA SP as objectively as possible.

 

[GoTslaGo]

Hey, I called for 10T last year, don't get soft on me!
Short-Term TSLA Price Movements - 2016
Short-Term TSLA Price Movements - 2016
You need to read both to fully understand my thoughts, I'm not really calling for 10T or anything remotely similar, I'm saying it's perhaps possible...
TSLA was $207 when I wrote that, and is $380 now

Nice call on this one:

"Or maybe not, as I'm not sure if future as I describe it will be interesting to Elon... First part for sure will be interesting, but money is in the later part (transition from 1T -> 10T), and that could be just a "boring execution" for Elon, so he may not care about it. and succession is always tricky..."

(Post number 1, September 2016)

 

[Curt Renz]

Bonds and Tesla: How to make money on Thursday

 

[ValueAnalyst]

The problem here is seeing the stock spike 5x in a few days and thinking to yourself "this is crazy - quick, sell and lock in profits, and buy puts for the ride back down". Then the stock doubles again instead of going down, and waits until after your puts expire to come back to earth.

How did you know after the 3x spike in a few days that it wasn't going to keep going to 5x? How do you know at 5x that it isn't going on to 10x?

I'm with @neroden on the long termy thing - I like long running short covering rallies.


That being said, a sharp spike to $2700 probably hits my personal price point and I cash it in at that point. So I do have a price! Not because I think that's all that Tesla is worth in a reasonable time frame, but because at that level I've got a reasonable shot at having my financial needs met for the rest of my life.

The company is worth a lot more than $2,700 per share would imply. I wouldn't sell a share at that price but I would probably stop buying.

 

[AlMc]

The company is worth a lot more than $2,700 per share would imply. I wouldn't sell a share at that price but I would probably stop buying.

I will give you a TMC contributor discount and sell you all my shares at $1,350 tomorrow. PM with your wire transfer info and we can get that going.

 

[ValueAnalyst]

I will give you a TMC contributor discount and sell you all my shares at $1,350 tomorrow. PM with your wire transfer info and we can get that going.

Are you the Nigerian Prince everyone keeps talking about?

 

[BornToFly]

The shorts are not going away, because they view Tesla as an automaker that makes very few cars, while losing money, with a market cap higher than GM and BMW. They are incapable of seeing the big picture that gets TSLA to a $700 Billion market cap. When Tesla continues to grow at 70-100% per year, has $100 Billion in sales in 3-4 years, with a substantial portion coming from Tesla Energy, and is burying all the big automakers in a booming EV market, some will start to see the light....

 

[vgrinshpun]

If I had a nickel for every time this was debated. Here is the definative answer:

View attachment 231339

Hmm...

Advice or not?

Not advice, fact!

I was referring to your nickel lament...

 

[jhm]

Hey, I called for 10T last year, don't get soft on me!
Short-Term TSLA Price Movements - 2016
Short-Term TSLA Price Movements - 2016
You need to read both to fully understand my thoughts, I'm not really calling for 10T or anything remotely similar, I'm saying it's perhaps possible...
TSLA was $207 when I wrote that, and is $380 now

Well, the basic question is how long can Tesla keep growing at 50% or better. At this rate, $7B revenue in 2016 grows to $4.6T in 2032. Further assume 10% net income and 20 times price earning and you get $9.2T market cap. And if that's not big enough for you, just wait till 2033.

The biggest assumption here is 16 years of 50% revenue growth. For $4.6T revenue, Tesla needs to be a player in a number of markets with perhaps over $20T combined addressable market. You can see why Musk likes vertical integration. The new vehicle market in 2032 is maybe $4T. But charging all those vehicles is another $1T, service perhaps $1T. Stationary storage is maybe $1T. And so on. So $20T in addressable market seem plausible, but it would seem to go well beyond the current scope of Tesla. Automating factories, logistics services, tunneling, robotic mining, what else?

Or perhaps we should just start with the global GDP. By 2032 the world economy could be about $130T. So Tesla may need to address about 15% of all markets and capture about 3.5%. When you start to consider the limits of global economy growth on Tesla's growth, the question becomes what can Tesla do to advance the economy? Specifically there are opportunities to help developing economies advance. Perhaps solar and battery backed microgrids could bring new economic growth to energy poor communities. By developing these economies the global economy grows faster. Say 4.5%, instead of 3.5%. This would growth global GDP to $150T instead of $130T in 2032. As powerful a fossil fuel based global economy has been, it has still left some 1.2 billion people without access to electricity. Energy and transport is still too expensive grow these underdeveloped economies. Perhaps Tesla can help change the trajectory.

It will be much easier for Tesla to continue to grow at a high rate if the global economy is growing well.