2017 Investor Roundtable: TSLA Market Action

[Macro Slayer]

Every time I see Mark Speigel's name I think of Schmeigel because he kind of looks like him too. He just released an article on value walk highlighting his Tesla short position. It is comical because the crux of his short thesis is that he doesn't like or trust Elon Musk.

He has admitted this year that up to 1/3 of his fund has been short Tesla. That plain and simply is a violation of fiduciary duty. It will be so funny if he has to shutter Stanphyl next year because of an emotional position gone against him.

 

[22522]

From a market action perspective, there is an analogy, or uhm, first principle, that says stock price reflects anticipated future earnings.

Anticipation happens just before a launch event.

Does the Tesla stock price track around Gigafactory launch attempts look substantially different than the SpaceX stock price would look around each landing attempt?

In other words, the view forwards today looks the same as the view forward looked the last time the stock price was passing upwards through $330.


TESLA is a try and try again stock. The stock price volatility reflects this.

 

[AlMc]

As far as TSLA is concerned, might be good to check in with Whitney Tilson about that.

And Jim Chanos.

And David Einhorn.

And Andrew Left.

And good ole Mark Spiegel.

And .... Etc. Etc. Etc.

Undoubtedly there are quants and traders who are making money off TSLA, including via short bets.

But the hardcore shorts and short hedge funds (including the so-called smart ones) are getting crushed shorting TSLA and have been for years.

You are correct. But those are 'toxic' shorts as I described them in a previous post. They are convinced, or paid to be convincing, that Tesla will fail.

However, smart shorts/bears, can and do make money.

Sooner or later I am convinced that it will be near impossible to make money shorting TSLA. But, currently I still define it as a momo stock part of my holdings because it has traded in such a large range (up and down) for some time now.

 

[Hogfighter]

I'm sure I'll get crucified for this, but I hope the SP falls post-ER long enough for me to load up on Jan '20 calls, just like what happened last November.

 

[EinSV]

You are correct. But those are 'toxic' shorts as I described them in a previous post. They are convinced, or paid to be convincing, that Tesla will fail.

However, smart shorts/bears, can and do make money.

Sooner or later I am convinced that it will be near impossible to make money shorting TSLA. But, currently I still define it as a momo stock part of my holdings because it has traded in such a large range (up and down) for some time now.

I don't doubt that a few shorts have had success selling/shorting high and buying/covering low but believe they are a small percentage. Not only are shorts swimming against the current of a share price that has risen substantially, but as I posted a couple months ago in the short interest thread, short interest has tended to increase as the SP drops and decrease as it rises. Tracking short interest (post 1010)

IMO this strongly suggests that shorts are not only enduring the pain of shorting a stock whose price has risen significantly over the years, but twisting the knife in their own wounds by shorting more when the price is low and covering when the price is high, exactly the opposite of what "smart shorts" would be expected to do.

 

[Navin]

Check out Mark spiegels twitter at any given time - he is really having mental issues and has been consumed by tesla.

 

[kenliles]

I'm sure I'll get crucified for this, but I hope the SP falls post-ER long enough for me to load up on Jan '20 calls, just like what happened last November.

Yes- Crucify him -

 

[Johan Gustafsson]

Factory visit!
God Morning!
Looking forward to hear earning call today!
Today a have my second factory tour, something special you want me to look for ?

 

[everman]

Check out Mark spiegels twitter at any given time - he is really having mental issues and has been consumed by tesla.

You'll have to keep us filled in. He's blocked a few of us already.

 

[racer26]

Every time I see Mark Speigel's name I think of Schmeigel because he kind of looks like him too. He just released an article on value walk highlighting his Tesla short position. It is comical because the crux of his short thesis is that he doesn't like or trust Elon Musk.

He has admitted this year that up to 1/3 of his fund has been short Tesla. That plain and simply is a violation of fiduciary duty. It will be so funny if he has to shutter Stanphyl next year because of an emotional position gone against him.

I'm glad even level-headed bearish leaning investors are seeing Spiegel as a crazy person.

Welcome to the board Macro Slayer. Your considered bearish-leaning views are indeed most welcome here. Its not often we see someone with cogent arguments for the bearish side of the trade here.

 

[Reciprocity]

ok.. looks like I am going to get the shot I missed yesterday.

 

[myusername]

Ok. I will change the word 'long' to 'buyer' since someone shorting would be a 'seller'

not w/ options. i've never traded a share of TSLA in either direction... and I think it's safe to say I'm short

 

[Reciprocity]

not w/ options. i've never traded a share of TSLA in either direction... and I think it's safe to say I'm short

I thank you for your losses as they are my gains.

 

[myusername]

I thank you for your losses as they are my gains.

why would you say that? this is basically the definition of a bad human.

 

[30seconds]

I think we are at the tail end of the current business cycle with a recession looming. There are a lot of tells and this can all be debated. In my mind the fact that the super cycle bond bull market has come to an end is the biggest tell. My thinking is just simply, if Tesla isn't FCF positive by the time the bond markets start to move, the downside risk of being cut off is quite severe. Dilution in a macro bear market when liquidity has dried up will be crippling.

I hope none of this happens and this current business cycle could very well hum along for quite some time. Tesla could also become cash flow positive sooner than anyone thinks and in effect self funding.

The canary in the coal mine would be if any of Tesla's current bond issuance start trading substantially under par. Right now for example, the TSLA 5.300% 15Aug2025 Corp trades at 97.500 which is quite normal and where it probably should be. As long as I am in this trade I will mostly just check the bond information. If it get's below 94.500 then I would take notice, other than that the share price takes care of itself.

Thank you for joking the conversation.

This will also depend on how much of Tesla’s demand is subject to macro conditions (I would argue more on the S&X than the 3) and how much of Tesla’s cash usage can be modulated as some of it is for longer term investments.

I think the risk profile of the company significantly changes when they get to 5000 model 3/ month. That is within the current capacity of the GF, allow them to allocate GF, Fremont and SG&A over 300,000+ vehicles (annualized).

Of course Tesla has other cash needs - Buffalo, a new GF, continued supercharger and store expansion - but these can be slowed if a macro slowdown occurs.

Final note on this - the 2008 downturn was highly abnormal with respects to depth and length. I think we would be due for more of a garden variety slowdown.

 

[JRP3]

Today a have my second factory tour, something special you want me to look for ?

Model 3's on the production line.

 

[mongo]

Factory visit!
God Morning!
Looking forward to hear earning call today!
Today a have my second factory tour, something special you want me to look for ?

Soap box mode
I'm guessing all the stuff that would be great to know is covered under the NDA.
If tours leak sensitive info, Tesla will stop doing them.
If there are things you are allowed to share, cool, but don't jeopardize a good thing for the sake of our informational appetites.

/Soap box

 

[Fifield]

This is a chart showing the expected range of TSLA moving forward, based on assumptions:
- Steady 50% annual revenue growth rate through 2025
- Gross profit margin of 22.5%
- Annual share dilution of 5%
- Steady risk-free rate of return
- Also using Q3 earnings estimates from @luvb2b et al

The current price level appears to be an exceptional buying opportunity if these assumptions hold true or don't vary significantly enough to materially affect the stock price. TSLA has closed only ~10% of trading days below these current multiples, so the risk here is relatively low - especially compared to October 2014, when I first started accumulating

 

[sunhelm]

View attachment 257550
This is a chart showing the expected range of TSLA moving forward, based on assumptions:
- Steady 50% annual revenue growth rate through 2025
- Gross profit margin of 22.5%
- Annual share dilution of 5%
- Steady risk-free rate of return
- Also using Q3 earnings estimates from @luvb2b et al

The current price level appears to be an exceptional buying opportunity if these assumptions hold true or don't vary significantly enough to materially affect the stock price. TSLA has closed only ~10% of trading days below these current multiples, so the risk here is relatively low - especially compared to October 2014, when I first started accumulating

I assume this is log scale?

 

[copyhacker]

this is basically the definition of a bad human.

Not trolling here, but isn’t this basically the definition of shorting? Profiting off of someone else’s failure?