2017 Investor Roundtable: TSLA Market Action

[pz1975]

I also want to thank @vgrinshpun. Doubled my weekly call position at 375 this morning and then sold 75% of all of them at 384.50 (net 200% return). Bought another smaller batch before close at 382 today expecting a morning spike tomorrow.

 

[TNEVol]

I am considering whether the M3 comes out with all 75 KWH but software limited to say 55. This makes a lot of sense based on the history of the MS.

 

[dmckinstry]

I am considering whether the M3 comes out with all 75 KWH but software limited to say 55. This makes a lot of sense based on the history of the MS.

Actually, that makes sense to me too. Many who only can justify the base price initially, may later want to make the upgrade. In fact Tesla may want hold off on announcing the upgrade until later.

 

[dennis]

Actually, that makes sense to me too. Many who only can justify the base price initially, may later want to make the upgrade. In fact Tesla may want hold off on announcing the upgrade until later.

But it doesn't make sense for Tesla to charge for less battery than they are installing because they will be under extreme margin pressure until they reach significant volume for M3.

 

[D-egg-O]

But it doesn't make sense for Tesla to charge for less battery than they are installing because they will be under extreme margin pressure until they reach significant volume for M3.

This makes more sense from a gross margin point of view. If Tesla does come out with only one battery for the Model 3 that is software locked for the base configuration, this would indicate to me that their battery costs came in pretty darn low.

 

[FredTMC]

FredTMC said: ↑
Yes, tesla to sell Largest battery first with first M3s (IMO)

IMO I think it would be a big PR mistake not to initially come out with the $35k base M3, at least as one option. I do expect similarly what happened with the MS to happen to the M3, in that the smaller battery will be soon be discontinued. When MS came out in 2012 you could get a 60, for $50k USD or CAD, now the smallest battery option is 75. Product constrained, why would Tesla sell $3 widgets when they can just as easily sell $4 widgets.
Perhaps I'm just saying this because I'm hoping for one of the early edition M3 (ordered one day after reveal) and I'm going base. The $35k USD M3 is now $50k CAD. The MS would have been a great investment, as will the M3...but not nearly as good as TSLA stock.

I'm an early investor. Makes sense for tesla to make decent GrossMargins on Model 3 sooner rather than later. Especially since they are supply constrained for many months.

Wall Street and shorts will beat the drum loudly that tesla can't/won't be able to make money on M3.

I got my MS60 four months after MS launched and I was fine with waiting for the higher optioned cars to get delivered first.

 

[NicoV]

Wow. That looks like a license to print money.

Nobody seems to comment on my comment, so I'll elaborate:
5. An extra benefit to joint venture with an SOE is that there should have no issue of raising capital

Tesla can bring in their know how and products etc as captial in the joint venture. The only thing the joint venture partner can bring in is money. Since the partner is essentially the Chinese state, I expect the Chinese govermnet to pay for a large part of the investment needed. 'No issue of raising capital' is an understatement in those circumstances.

6. The joint venture can sell lots of "new energy credit" to other passenger vehicle manufacturers who do not have enough credit, as the new energy credit is required to be 8%, 10%, 12% for 2018, 2019, 2020, respectively for passenger vehicle manufacturers.

I interpret this to be a similar system like the Californian ZEV credits. The German car manufacturers have very little sales in China that qualifies for this, certainly in the next few years, so they will have no choice but to buy those credits if they want to keep selling their ICEs in China. And unlike California, these won't sell for pennies on the dollar, but for dollar on the dollar.

 

[Waiting4M3]

I am considering whether the M3 comes out with all 75 KWH but software limited to say 55. This makes a lot of sense based on the history of the MS.

MS had enough demand, but not enough for them to configure every car as the top of the line model. I would guess that M3 is different, there is enough demand for the top of the line M3 for a quarter or two easily. If I'm waiting in line for a 75kwh model, it would piss me off to see Tesla software limits a 75kwh car to 55 and sell to someone else for less money while I'm still waiting. I think that wouldn't be a good customer relation move, and an unnecessary financial hit.

 

[Tslynk67]

I hope it's better than USB playback.

Yes, still no gap-less play-back after all my complaints. I mean how difficult can that be to fix?

 

[MartinAustin]

Just traded at $385.30 in the pre-market. That is a new all-time-high.

 

[neroden]

7. New pure electric passenger car production enterprises to produce their own products, with independent intellectual property rights and authorized patents related to the invention.

OK. So one of the holdups was that previously JVs had to have Chinese control and Chinese branding and so on. It's still not clear whether a JV would be required for auto manufacturing, but it seems clear that this is talking about allowing the trademarks and patents to be owned by Tesla outright (not by the Chinese).

 

[neroden]

Any recommendation about when at accumulate Amazon? I'm not going to pay more for WFM, but is AMZN okay?

No recommendation, no idea, this is not investment advice

 

[neroden]

Thanks, that helps to calculate different scenarious.
However, I still do not understand what happens if the price goes below the strike. E.g. I sold 10 contracts of a 300 strike put and the price is $299.99 today. Does the put execute immediately? Based on my calculations, margin requirement will be not enough to buy 1000 shares of TSLA for $300. What happens then?

Then you're *potentially* in trouble. If the guy on the other side tries to execute the put.

This is why my puts are usually secured by cash, and if not, are secured by margin capacity. I am always in a position to buy the stock.

 

[neroden]

I may consider possibly, just maybe, selling some 5-10% core around $450, whenever that is.

FWIW, my low-end valuation model said that TSLA might be too high to be a good buy right now (i.e. if everything goes minimally well), so I haven't been buying since $320. So I ran my high-end valuation model (if everything goes a lot better)... and I wouldn't be selling below $1000.

 

[neroden]

They want to take on Audible/Amazon for content during the commute.

I'm going to keep using my USB stick full of really obscure stuff which isn't on Audible, Amazon, Pandora, TuneIn, Slacker, etc., thank you very much.

And I wish they'd fix the pile of 4-year-old bugs with USB playback, starting with gapless playback so I can play radio dramas. Pretty seriously high level of incompetence at Tesla's programming team.

I did complain about the extreme difficulty of using large USB sticks of music to von Holzhausen at the factory tour. We'll see whether that gets any results, since nothing else has.

 

[neroden]

Well, you'll need to pay for connectivity of your car at some point.

I don't think so. Tesla's figured out that it benefits *Tesla* a great deal to have the connectivity (for data collection for Autopilot 'training" etc). I'm not paying for it, ever, under any circumstances; Tesla wants to have it, so they'll pay for it. I think this is what's going to happen long term.

They may limit the ability to use the data for personal casual use (as opposed to Tesla data collection) without paying extra at some point. Fine.

But basically I think the connectivity costs will be written off as part of the Autopilot data collection program. You'll be paying for them when you pay to unlock Autopilot features, in a sense...

 

[ValueAnalyst]

Any recommendation about when at accumulate Amazon? I'm not going to pay more for WFM, but is AMZN okay?

My view on the mega-cap companies: they are generally undervalued, but nothing comes close to the potential of TSLA, so why bother?

Only if a client has specifically directed me to diversify their portfolio do I hold anything other than TSLA at the moment.

 

[SBenson]

FWIW

 

[ValueAnalyst]

FWIW

View attachment 232420

Could you please explain how you interpret this data? What should we be looking for when we look at this table?

Also, your data shows less than 30m shares short as of May 31, but NASDAQ shows 31m. Why the difference?

Finally, what is the source you use for daily short interest data? Does your source revise previous data when NASDAQ info is released?

 

[racer26]

I also find it very interesting that Ihor posted on Twitter yesterday that according to his sources the short interest is around $11B.

One of these sources is wrong.