2017 Investor Roundtable: TSLA Market Action

[Reciprocity]

Ok, admittedly, the Semi would be outside of my flipping ability, mostly because I don't think that the SEMI target market will buy a gently used Semi truck from an individual.. I think their initial target market is the fleet market (retail distribution centers, etc.) as opposed to owner/operators which make up a good chunk of the market. So you got me there.

Knowing nothing about Semis, I can tell you what market Tesla will be in. It will be the one with the highest gross margins. Simple as that. They will start at the top and work their way down until there is nothing left but sub 10% gross margin vehicles. It is now crystal clear to me how they work and how they are attacking the problem. Like a vampire sucking the profits from competitors with little to no effort. I am actually marveling at it. The government cant save them all.

 

[Reciprocity]

Just a bit of cautionary advice -

Those of you who speculate about the price at which you'd be selling your shares:

Please remember there is a strong difference between musing "Gee, TSLA is $347 right now...if I awake tomorrow and find it at $1347, that's it! I'm selling!",

and

seeing a stock that's $1 higher today than it was y'day, and that one's y'day, and.....and soon enough, it's at $1,347 (or wherever) but that's only $1 higher than it had been the prior close.

Do you really think you'd sell? Remember: the next day it might be at $1348.

====>Frogs in boiling water aren't necessarily all short-sellers.<==========

All of my $TSLA money is retirement money so I am long and strong. I am hoping to live off the Dividends in retirement. Not a advice.

 

[MitchJi]

Could you summarize why you expect a market crash in Sept? And why do you think Tesla would be affected by this? I don't want to get into too much detail on this in Market Action, but in short if you could please?

One thing is that I believe that the reason that the SP went up and then dropped recently is that the market has started to believe Elon-Tesla but it's fragile because they still haven't actually completed the M3 ramp.

I believe that the SP should rise to about $400, a new high because they are obviously much closer to the goal than they were the last rise. OTOH I believe that they are vulnerable in the same fashion that they were the last time that the SP fell, over essentially nothing. My wife's intuition is that the SP will fall at least one more time between now and December. Sometimes she is wrong but sometimes she is amazingly accurate. So we are hoping for $400 by the end of August, but we are currently planning to cash out by then regardless. We wouldn't do that if we were holding shares. Our options went up over $76k to $376k so far in the last two days. They were up to about $545k ath.

Notes: Not an advice, and subject to change!

As a side bar I'm going to mention that one time when he was on vacation Jesse Livermore went into a brokerage with a friend and decided based on nothing but his feelings to short Union Pacific. On the spot he sold 30k shares short. About a couple of weeks later it plummeted on the news of the San Francisco earthquake and Jesse made over 100k which was quite a bit in 1906!

 

[Bet TSLA]

About a couple of weeks later it plummeted on the news of the San Francisco earthquake and Jesse made over 100k which was quite a bit in 1906!

Nothing like profiting off the misery of others! And for the irony part, you do realize what a big quake in California would do to TSLA, right?

 

[ValueAnalyst]

One thing is that I believe that the reason that the SP went up and then dropped recently is that the market has started to believe Elon-Tesla but it's fragile because they still haven't actually completed the M3 ramp.

I believe that the SP should rise to about $400, a new high because they are obviously much closer to the goal than they were the last rise. OTOH I believe that they are vulnerable in the same fashion that they were the last time that the SP fell, over essentially nothing. My wife's intuition is that the SP will fall at least one more time between now and December. Sometimes she is wrong but sometimes she is amazingly accurate.

As a side bar I'm going to mention that one time when he was on vacation Jesse Livermore went into a brokerage with a friend and decided based on nothing but his feelings to short Union Pacific. On the spot he sold 30k shares short. About a couple of weeks later it plummeted on the news of the San Francisco earthquake and Jesse made over 100k which was quite a bit in 1906!

Gotcha, just wanted to make sure there wasn't something obvious I was missing in the macro picture.

Sounds like we have different investment styles... I'm definitely not saying my is better than others (definitely not), and I hope all well works for you and your wife. Being invested primarily in stock, however, (with conservative amount of margin and some longest term LEAPs) I can say that when I'm on vacation, I just sip my piña colada(s) and people-watch as calm waves wash ashore I just know my strengths and weaknesses and the value of a piece of mind... and trust me, I had to learn it the hard way.

 

[kenliles]

I just sip my piña colada(s)

I like the coladas route - I always figured them to be hedge frankly-
not sure why the plural would be parenthetical though...

 

[jbcarioca]

I could be way wrong, but I thought most auto manufacturers use the sedan platform for the small crossovers and their truck platform for full sized SUV.

You're not wrong. That is the way it has been for a long time.

 

[D-egg-O]

Knowing nothing about Semis, I can tell you what market Tesla will be in. It will be the one with the highest gross margins. Simple as that. They will start at the top and work their way down until there is nothing left but sub 10% gross margin vehicles. It is now crystal clear to me how they work and how they are attacking the problem. Like a vampire sucking the profits from competitors with little to no effort. I am actually marveling at it. The government cant save them all.

Owner/operator market has the highest margins.

 

[jhm]

 

[Jayjs20]

Too bad today wasn't a good macro day.

 

[Starno]

All of my $TSLA money is retirement money so I am long and strong. I am hoping to live off the Dividends in retirement. Not a advice.

Same except I'm a bit too far off retirement (22 yo), but I guess by the time I'm 30 TSLA money will be enough money to live without working for some company ...

 

[supratachophobia]

Deep pockets are great and all, but there is a major issue if you dont know what to spend it on. The competition flat out does not have the technology and have not been doing any real serious work on it. LG and Samsung are not breaking ground an $5B battery factories for cars either, so they wont be bailed out by them on the Cells. Germany just announced a massive 35GWh factory for batteries for storage first then auto later, it breaks ground just before 2020 and will not be at full capacity until 2028. No matter how much money you have, you cannot buy time and somethings just take time. It takes 6 years to develop a completely new car from nothing, even for the big guys. And no amount of money can speed that up because you just dont have the people, and things like testing takes time as a major component of the test. You can only speed things up so much with massive amounts of money, ask Tesla. They decided to accelerate things a year ago and its cost billions, but Tesla has already bit the bullet and they are coming out the other side of that already. The other manufactures have not started. And they are not even close to starting based on this recent announcement out of Germany. To put this into context, they will start in late 2019 (really 2020) and get to where Gigafactory1 will be in 2018 by 2028.. that is 10 years behind. In that 10 years, Tesla will have 3-5 more combined battery+auto factories strategically throughout the world. I agree that competition is coming, but they are going to be fighting for the low margin scraps as Tesla will dominate the market from the top down. I dont believe Tesla will ever make a $20k car, though in 10 years, maybe VW will make one with 5% GM.

Keep in mind that those in the industry that test these batteries and know the most about their construction/reliability, Panasonic is the leader. They just are at the moment. And they pairing without Tesla has only made them better at this specific part of their portfolio. There have already been rumblings about the new roadster packs having issues, and those are not Panasonic.

 

[MartinAustin]

Can't seem to crack $350, though it keeps pushing that way...

 

[ValueAnalyst]

Friendly reminder to everyone that TSLA is always very volatile and often counter intuitive in the shorter term.

 

[Starno]

Can't seem to crack $350, though it keeps pushing that way...

Maybe the infamous " power hour " will make the job

 

[Starno]

Very flat day until now

 

[jhm]

Can't seem to crack $350, though it keeps pushing that way...

Push it real good.

 

[Tslynk67]

Very flat day until now

Except being 6-7% up?

Be happy, remember 16Q3 ER, where it gapped-up significantly in AM, the dropped like a stone before the opening bell?

 

[D-egg-O]

SP is like PNW weather right now, muy muy caliente.

 

[esk8mw]

I truly do not understand the "competition is/will catch up!" argument.

It's an accepted fact that Tesla is well ahead of everyone on electric cars and massive battery production, obviously a gating item. Years ahead, at least 5-10. No one (intelligent) disputes this.

It is also an accepted fact that Tesla moves faster and iterates faster than every other automaker. In fact, they are mocked for this approach to building cars by the likes of GM.

If 1 and 2 are true, exactly how in the hell is anyone going to catch Tesla? Until such time as another company comes out moving significantly faster than Tesla - and Tesla doesn't respond by pushing even harder - it can't happen. Even if it did, it would take 10-15 years to catch up because Tesla isn't standing still. If a car is travelling 100 MPH and is 1000 miles ahead of the competition, even if a new car starts chasing at 110MPH, it's going to take a looooong time to overtake the leader. In the meantime, Tesla's giant lead grows bigger every day because they continue to outpace and outwork everyone. Tesla is going 100MPH on electric cars and everyone else is either going 10MPH, fixing a broken axle in the pit crew or left the race to go on a date with fuel cells.

These things are measured in time, not money. Even the most well-funded effort from, say, Apple, would be way behind. A charging network cannot appear quickly. GGFs cannot appear overnight. Massive car factories, tooling, car design, brand cultivation, engineering and software aren't going to arise in a snap, even if the player throws $100 billion at the effort.