How much to allocate to TSLA and when to sell

[TradingInvest]

Everyone's situation is different. This is where I am at, and my future plan:

I have stock money and other assets. On the stock side, majority is in TSLA plus small amount in index and various stocks.

I think TSLA is very safe and has very little real downside, dips will be short lived if we get any. We are near a turning point. This is similar to early 2013. I still remember the 8 fold rally. The right approach is to buy and sit. Pretty sure we will get 20+ fold. If no squeeze, it may take 10 years. If we get a squeeze, could get there sooner. Now it's not a matter of if, it's when. I do think we are setting up to get the squeeze of the century. The largest growth story combined with the largest short. They can't get out.

The question is when do I sell?

In a situation like this, selling at a predetermined price is not the best approach. In stead I will watch what's happening. If Tesla's production and everything indicate we are going well according to the Master Plan II, then I should buy more, not sell. If the short squeeze starts, then I will not sell, regardless of price movement.

In general I plan to hold all of my shares until Elon sells all of his shares (Elon selling for tax purpose to cover vested options doesn't count as a sell to me).

To sum it up: I am all in on shares. Plan to hold for 10 years 20~30 fold. Will continue to add using cash generated from other assets. We don't get this kind of opportunity everyday.

 

[Johann Koeber]

I like your approach.

Time to sell would be when Tesla stops being an exceptional company.

And when I finally need money, for example after retirement.

 

[ww73]

I'm holding until kids college or roadster 2020 launch. ;-)

 

[TradingInvest]

TSLA moved from $30 to $280 from early 2013 to mid 2014. I think that wasn't a real short squeeze. It's a price discovery. In 2013, some shorts kept adding short position, other shorts were replaced by new shorts. Then the stock stayed in a range between $180 to $280 for several years. All of those are not signs of a short squeeze.

This time the condition is perfect to get a real short squeeze, likely the squeeze of the century. The ultimate growth company combined with the largest and determined shorts. On top of that, long term shareholders are well trained, weak hands have been washed out. There is no way they can cover the 40 million short shares. This squeeze could become spectacular like VW 10 years ago.

I will add some deep in the money LEAPs, also I will get ready to do some option trading (when we are clearly in the middle of a short squeeze). These will be done with new money, not affect my long term holdings.

 

[UnknownSoldier]

If a short squeeze actually does materialize, when should you sell to maximize your profit from the squeeze? I mean your goal is to sell at the peak, wait for the price to crash again, and then buy in at the lower level after the squeeze ends isn't it?

 

[TradingInvest]

If a short squeeze actually does materialize, when should you sell to maximize your profit from the squeeze? I mean your goal is to sell at the peak, wait for the price to crash again, and then buy in at the lower level after the squeeze ends isn't it?

My main thesis for Tesla investment is not based on a potential short squeeze, it's based on my view Tesla will grow into a trillion dollar company. So I don't actively look for local peaks and bottoms. I might sell 1% after the stock reaches $3000. Keeping the rest. Or I could still be buying on the way up.

If you look at Apple and Amazon rally in the past 15 and 20 years, the best time to sell was "never". Keep buying was the right action. Tesla's potential is much bigger than Apple and Amazon.

 

[Yggdrasill]

Yeah, I'm also wondering when to sell if a squeeze does occur. I can't place long duration orders, max two days, so I can't put in orders where I sell 10% in stages, for instance. How long do squeezes last? Minutes? Hours? Days? And if Tesla hits say 1000, why wouldn't even large long term shareholders sell?

I also don't have a short squeeze as one of the reasons for buying TSLA, but if it does occur, my TSLA holdings are such a significant part of my net worth that I would have to be stupid not to sell at the 500-2000+ range. Just to reduce risk and shift money away towards other purposes.

 

[neroden]

So, as I've said before, if TSLA hits $10,000/share next January, I really will sell. Short squeezes do tend to be followed by crashes and returns.

I'm not really sure about the range between $2000 and $10,000 which is why I think it's worth discussing what price would clearly be "ahead of itself".

 

[UnknownSoldier]

Well I mean if TSLA hit $10,000/share and you didn't sell then I don't know what to tell you. But yes, what I want to see is someone attempt a rough calculation based on average and peak volume, days to cover, total percentage of float shorted, and whatever it is else that people use to estimate how long a short squeeze could last. How did people know when to get out when VW went to $1,000 a share briefly?

 

[Sudre]

I am not really good at throwing darts at the board but I was trying to look at the target a bit today. It seems with Fridays action, if shorts weren't dumping shares, TSLA might have reached the 330 range.... but it's hard to say because longs may not have been buying in mass if not to fight the shorts unless there is a big entity out there buying shares and loving the fact the shorts are holding the SP down for them.

SO what would that have done to Fridays gains if 4M shorts were covering while longs were also acquiring 8 million shares? I think shorts dumped a few million shares a few times to force the price down. I would think shorts covering while longs were buying would be an exponential growth in SP. Maybe something close to the all time high in one day. (+80-100)

How many shorts doubled down below 300? how many jumped in at 380? The next day everyone around 300 is probably getting a call. That's what? 10 million shorts covering the next day. Longs probably won't be buying since the price will be going up fast. I know I won't be selling either.

Third day up and around 24 million still short. SP at 500ish and basically all shorts get a call. Has Tesla trade 24 million shares in a day?

I don't think this is a likely scenario. I think it will be a melt up as shorts sneak out the door on their tip toes.

 

[neroden]

Sell when there's competition which is better.

Competition has to have (a) a range of roughly 250 miles on a single charge, (b) fast-enough overnight garage charging, (c) a Supercharger-type network and fast-enough on-road charging, and (d) high volume production.

So far there isn't any -- and there won't be any until late 2019 at the *earliest*. Which is why people tolerate Tesla's buggy and broken software which gets worse with each update, the total chaos and dropped information when dealing with service or delivery, etc.

When there is competition, that's when the investment case for Tesla gets weaker. Even with one or two competitors they'll still sell every car they can make, but when there are three high-volume competitors, that's when there may be pressure on Tesla's margins.

Of course, if Tesla actually fixes their communications problems, keep the stock forever.

 

[deonb]

Plan to hold for 10 years 20~30 fold.

You think in 10 years, Tesla would be worth more than the combined market cap of all other car companies in the world PLUS Exxon, Shell, Chevron, Total and BP put together?

 

[arcus]

You think in 10 years, Tesla would be worth more than the combined market cap of all other car companies in the world PLUS Exxon, Shell, Chevron, Total and BP put together?

Tesla is cars, solar, energy storage and battery technology... for now. There's plenty of room to grow and market share to grab in any of these. They have the ever-expanding SC network that can easily be made profitable as well.

 

[deonb]

Tesla is cars, solar, energy storage and battery technology... for now. There's plenty of room to grow and market share to grab in any of these. They have the ever-expanding SC network that can easily be made profitable as well.

Ahh, so now we're buying stock in yet-to-be-announced potential maybe market segments for a company?

Cool, in that case I'm buying stock in Vermont Maple Syrup - they're going to be the market leader in canine telekinesis!

 

[arcus]

Ahh, so now we're buying stock in yet-to-be-announced potential maybe market segments for a company?

The deployment of the Tesla energy related projects is a fact. Gigafactory is a fact and Tesla is about to expand there. Solar installations are a fact. Solar roof tiles installations will pick up as well. It's not just about the cars anymore.

Of course, you are free to invest in the telekinetic syrup if that's what rocks your world.

 

[deonb]

The deployment of the Tesla energy related projects is a fact. Gigafactory is a fact and Tesla is about to expand there. Solar installations are a fact. Solar roof tiles installations will pick up as well. It's not just about the cars anymore.

That only justifies their current valuation - already baked into the price. And only if they execute on it perfectly.

If they were just priced as a car company they would need to sell 5 million cars per year to justify their current valuation. The Gigafactory/Solar/Supercharger stuff is already built in the price there otherwise TSLA would be worth about $30 right now.

For it to grow 30 times from here, they'll need to have a source of revenue that will give them around $4.5 trillion per year. The global motor vehicle revenue today is $1.6 trillion. The projected projected global solar market in 5 years is $50b.

So Tesla will have to supply every vehicle in the world - but that only gets them halfway (generously). On top of that they have to supply every solar outfit in the world, and while doing that increase the solar market size by 60x over today - which, since solar is at 1.8% of energy already, would put you at a point where have (slightly) more power from just Tesla Solar than the entire energy production of the world today.

And all of this is going to happen in 10 years...

 

[mongo]

That only justifies their current valuation - already baked into the price. And only if they execute on it perfectly.

If they were just priced as a car company they would need to sell 5 million cars per year to justify their current valuation. The Gigafactory/Solar/Supercharger stuff is already built in the price there otherwise TSLA would be worth about $30 right now.

For it to grow 30 times from here, they'll need to have a source of revenue that will give them around $4.5 trillion per year. The global motor vehicle revenue today is $1.6 trillion. The projected projected global solar market in 5 years is $50b.

So Tesla will have to supply every vehicle in the world - but that only gets them halfway (generously). On top of that they have to supply every solar outfit in the world, and while doing that increase the solar market size by 60x over today - which, since solar is at 1.8% of energy already, would put you at a point where have (slightly) more power from just Tesla Solar than the entire energy production of the world today.

And all of this is going to happen in 10 years...

It depends on your ratio of revenue to profit/ gross margin. Double the GM and you only need half the revenue.

 

[deonb]

It depends on your ratio of revenue to profit/ gross margin. Double the GM and you only need half the revenue.

True, but when you need 100% of the global market share of all vehicles, you can't really charge Model S prices for them.

 

[mongo]

True, but when you need 100% of the global market share of all vehicles, you can't really charge Model S prices for them.

100% global???
78.6 million vehicles projected in 2017.
40k ASP with 25% GM is $786 billion in gross profit, $4,636 per share (no dilution)...
Seems a little much...
30x$300 a share = $9,000/ share. At a 20:1 profit to share ratio (5% return): $450/share/year * 170 million shares=76.6 Billion in profit, call it 100 billion in gross profit, that is 10 million cars per year @ 40k ASP/ 25% margin. 1/8 of world market and ignores revenue form energy generation, battery sales, and solar panels.

 

[deonb]

100% global???
78.6 million vehicles projected in 2017.
40k ASP with 25% GM is $786 billion in gross profit, $4,636 per share (no dilution)...
Seems a little much...
30x$300 a share = $9,000/ share. At a 20:1 profit to share ratio (5% return): $450/share/year * 170 million shares=76.6 Billion in profit, call it 100 billion in gross profit, that is 10 million cars per year @ 40k ASP/ 25% margin. 1/8 of world market and ignores revenue form energy generation, battery sales, and solar panels.

You don't even sell 10 million luxury cars @ 40k ASP. That's more than BMW, Mercedes, Audi and Lexus put together.

Easy way: Ford has a fairly wide product line. They have ~$150b revenue of a ~$50b market cap. That's approximately the same market cap as Tesla. Now multiply by 30.