Sentiment: summer 2020 @ $1000

[jhm]

Electric-Vehicle Mania Lifts Tesla, Nasdaq Today

It's hard to compare the giddiness the market has for the likes of Nikola and Workhourse with how cautious it is with Tesla. From $1000 to $1100 is only a 10% gain, but it feels like a much bigger move than a 10% bounce in Nikola.

Also it think it is a bit silly for anti-Tesla folks to act like these other upstarts are serious challengers to Tesla. Firstly, they must be serious threats to legacy vehicle makers. If they can't take maket share from GM or Freightliner, they can't take anything from Tesla. Secondly, these upstarts have not cut any production teeth. As Musk pointed out, the engineering effort to design the manufacturing process for a vehicle is about 100 times the effort level of designing the vehicle. I think these upstarts deserve the chance to try to manufacture, but giddy investors will experience a lot of pain when these companies are put to that test.

So I don't think this giddiness will transfer from the likes of NKLA to TSLA, but a more somber appraisal might transfer in the opposite direction.

 

[jhm]

Giddy up!

 

[jhm]

Tesla currently at $1130 on July 1. For a short-term gain, it seems that Tesla @ $1000 was not a bad price.

Congrats to all who bought a crapton!

 

[ZOE5IVE]

Well I am not too happy about the high SP. I went all in last year but I've wished I heard about this company years ago. Basically I only had 9 months of buying time vs some of you guys buying for years. AVG sp is 275 for me. Will continue to buy more just hoping for a dip like in Feb... Even that tweet that Elon dropped(about the sp being too high) didn't drop the sp too much lol. The company will continue to grow for years to go so it doesn't really matter in the scheme of things. Holding for years to come!

 

[ZOE5IVE]

hoping for a dip like in March*...

 

[jhm]

Wow, I was not expecting to see $1200 quite so soon. Congrats again to those who bought a crapton near $1000!

I'd be curious to learn where people see this bull run topping out in the near term.

 

[TheTalkingMule]

I see the idea of $1500 on Battery Day + 2Q Earnings + S&P Inclusion as logical. But it's so logical I could see it happening early and then a major correction on the back end in mid-Sep. Likely waaaaaaaaay too scared to sell at $1500 though. But I might. Clearly the world is coming to an end and this all implodes post-election.

 

[FrankSG]

I see the idea of $1500 on Battery Day + 2Q Earnings + S&P Inclusion as logical. But it's so logical I could see it happening early and then a major correction on the back end in mid-Sep. Likely waaaaaaaaay too scared to sell at $1500 though. But I might. Clearly the world is coming to an end and this all implodes post-election.

Considering:

• The amount of shares that will have to be bought upon S&P 500 inclusion
• The high short interest
• The price inelasticity of many of TSLA's investors
• The amount of money betting on TSLA in the form of options, causing the need for huge amounts of delta hedging
• The amount of Tesla hype in general, and the amount of excited retail activity as of late

I think it's unwise to put a ceiling on TSLA's near term growth. I think you can put a bottom on it, which I would put at somewhere in between $1,500 and $2,000 because of the aforementioned reasons, as well as because of how hard I think Tesla will crush expectations for the 2nd half of 2020.

However, in terms of a ceiling, it's extremely hard to predict how these things will play out. We know at least 15-20M shares will have to be bought by funds indexed to the S&P 500, perhaps multitudes of that if you include the buying from funds benchmarked to the S&P 500. Add delta hedging on top of that, and I wouldn't be surprised if something on the order of 50M shares will have to be bought.

Considering how price inelastic and bullish many current investors are, it's anybody's guess how high the SP has to go before 50M shares worth of sellers show up. It could be $2,000, it could be $2,500, it could be $3,000, perhaps more.

This doesn't mean I won't deleverage a little at some point, but I'll be very reluctant to call a top, and mostly I'm just excited to sit back, relax, and watch the show.

 

[TheTalkingMule]

I wouldn't sell a single share before S&P inclusion. All these sentiments are becoming consensus. Once that happens......the tide tends to turn. That's all I'm saying.

Blast me off to $3000 and I'd be over the moon. Would then sell 100% of shares and wait for the train to crash.

 

[Knightowl]

hoping for a dip like in March*...

I wager not till around mid Nov if it is going to happen..if not then I will start to feel better about the value support by the market and will have better info on all impacts in play that could drop the market value again.

 

[jhm]

Apparently, merchandizing is giving the Tesla stock a real boost today.

 

[LN1_Casey]

Apparently, merchandizing is giving the Tesla stock a real boost today.

 

[jhm]

Today we see a teeny tiny pullback. Maybe $1400ish will be the top for a little while.

Most of the sentiment expressed here was to hold at $1000. In spectacular fashion, the price soars to $1400. Even if you wanted to by a crapton more at $1000, is it time to sell a crapton at $1400? This is easily more than a year's worth of gain in just a few weeks.

I'm not sure if we'll pull back to $1000 or surge ahead to $2100.

I'd be careful with options though. Implied volatility has soared. For the last few days some call options I watch have added more per share value than Tesla shares have gained. This is not normal delta behavior. It is a surge in IV. That is, option buyers are paying a higher premium than usual. Perhaps some are trying to use options to trade around the earnings report. If so, IV could drop back to normal levels the day after the conference call. So these pumped up call options could lose value even if the share price gains coming out of ER.

Crazy times.

 

[FrankSG]

Today we see a teeny tiny pullback. Maybe $1400ish will be the top for a little while.

Most of the sentiment expressed here was to hold at $1000. In spectacular fashion, the price soars to $1400. Even if you wanted to by a crapton more at $1000, is it time to sell a crapton at $1400? This is easily more than a year's worth of gain in just a few weeks.

I'm not sure if we'll pull back to $1000 or surge ahead to $2100.

I'd be careful with options though. Implied volatility has soared. For the last few days some call options I watch have added more per share value than Tesla shares have gained. This is not normal delta behavior. It is a surge in IV. That is, option buyers are paying a higher premium than usual. Perhaps some are trying to use options to trade around the earnings report. If so, IV could drop back to normal levels the day after the conference call. So these pumped up call options could lose value even if the share price gains coming out of ER.

Crazy times.

Agree with you on options, but if I wanted to buy TSLA for the long term, my opinion would still be buy a crapton at $1,400.

Hoping for a lower entry point with S&P 500 inclusion still in front of us, is a big gamble that may not pay off. I think there's quite a good chance that S&P 500 inclusion will revalue TSLA at $2,xxx, perhaps even as high as $3,xxx if things get really crazy.

It's just that there are about 145M shares (185M - 40M in Elon's hands) + 15M synthetic shorted shares in the hands of investors today. These investors holding 160M shares think Tesla is worth $1,400 per share as of right now.

S&P 500 inclusion might lead to the forced buying of as much as 40M, 50M, or even 60M+ shares, as well as additional short covering, Sticking with 50M total, that would mean we're going to find out at what price investors are willing to part with 50M shares. The supply of TSLA shares is about to contract from 160M to 110M (perhaps less), and we're going to find out what price those shares will have to rise to before demand for TSLA shares drops from 160M to 110M.

It could be relatively small, or a large but short-lived peak, but I would not be surprised to see a permanent revaluation of the stock to $2,xxx.

 

[jhm]

One thing Tesla definitely has going for it is an impressive base of battle-hardened shareholders who won't sell their shares for any price. They certainly are not going to let shorts walk away financially intact. I do think this is part of what we are witnessing.

 

[hershey101]

Agree with you on options, but if I wanted to buy TSLA for the long term, my opinion would still be buy a crapton at $1,400.

Hoping for a lower entry point with S&P 500 inclusion still in front of us, is a big gamble that may not pay off. I think there's quite a good chance that S&P 500 inclusion will revalue TSLA at $2,xxx, perhaps even as high as $3,xxx if things get really crazy.

It's just that there are about 145M shares (185M - 40M in Elon's hands) + 15M synthetic shorted shares in the hands of investors today. These investors holding 160M shares think Tesla is worth $1,400 per share as of right now.

S&P 500 inclusion might lead to the forced buying of as much as 40M, 50M, or even 60M+ shares, as well as additional short covering, Sticking with 50M total, that would mean we're going to find out at what price investors are willing to part with 50M shares. The supply of TSLA shares is about to contract from 160M to 110M (perhaps less), and we're going to find out what price those shares will have to rise to before demand for TSLA shares drops from 160M to 110M.

It could be relatively small, or a large but short-lived peak, but I would not be surprised to see a permanent revaluation of the stock to $2,xxx.

What probability do you put on S&P inclusion?

Keep in mind there are two variables at play:
- Q2 Profit
- the desire by the S&P governing party to have $TSLA included...

What are the probabilities these two events don't go your way?

Long-term $TSLA holders know that if Q2 won't bring profit, Q3 will... Satisfying the _current_ S&P inclusion criteria is near inevitable over the long run. Whether $TSLA is added to the S&P after these criteria are satisfied, or if the criteria are changed, that's a seperate conversion. But one must also consider that the $1k -> $1400 runup has been mostly front-runners on the inclusion. Do these folks hold to Q3 if Q2 is a slight loss? I think not, I think they dump $TSLA hard.

Also, the numbers you talk about $2,xxx, and $3,xxx... If they are ever hit, that's going to be a supply and demand issue, not based on fundamentals... Which means, if we get there, $TSLA will quickly come back down and you have to know how to time your exit.

 

[FrankSG]

What probability do you put on S&P inclusion?

Keep in mind there are two variables at play:
- Q2 Profit
- the desire by the S&P governing party to have $TSLA included...

What are the probabilities these two events don't go your way?

I'd say 75% Q2 Profit.

The inclusion happening I'd say is 95% or more. I think the only reason it wouldn't get included is if malicious parties (shorts, oil, etc.) have enough influence with the S&P to sway them to not include TSLA. That seems unlikely though considering how much money is at stake here.

Long-term $TSLA holders know that if Q2 won't bring profit, Q3 will... Satisfying the _current_ S&P inclusion criteria is near inevitable over the long run. Whether $TSLA is added to the S&P after these criteria are satisfied, or if the criteria are changed, that's a seperate conversion. But one must also consider that the $1k -> $1400 runup has been mostly front-runners on the inclusion. Do these folks hold to Q3 if Q2 is a slight loss? I think not, I think they dump $TSLA hard.

Exactly, if it somehow doesn't happen after Q2, it'll 99%+ happen after Q3. It's a short term gamble to bet on it not happening after Q2 and a significant subsequent price drop, which is also far from certain.

Also, the numbers you talk about $2,xxx, and $3,xxx... If they are ever hit, that's going to be a supply and demand issue, not based on fundamentals... Which means, if we get there, $TSLA will quickly come back down and you have to know how to time your exit.

Stock price is 100% supply and demand. Fundamentals are just a starting point from which demand flows forth, but if fundamentals always 100% dictated a clear cut valuation and SP, the market would have near zero volatility. Different investors have vastly different views on companies and their fundamentals.

If there is a SP retracement, be it small or large, that's because there were front runners/traders/speculators. It is simple economics that increased demand, which in this case is completely price inelastic and will buy at any price, will permanently increase the SP to some extent. Given the specific nature of TSLA's S&P 500 inclusion, I highly doubt that is already completely priced in, but time will tell what will happen exactly. It's impossible to say for sure, assuming 50M shares need to be bought, what price somebody is willing to sell that final 50Mth share for.

 

[hershey101]

If there is a SP retracement, be it small or large, that's because there were front runners/traders/speculators. It is simple economics that increased demand, which in this case is completely price inelastic and will buy at any price, will permanently increase the SP to some extent. Given the specific nature of TSLA's S&P 500 inclusion, I highly doubt that is already completely priced in, but time will tell what will happen exactly. It's impossible to say for sure, assuming 50M shares need to be bought, what price somebody is willing to sell that final 50Mth share for.

Agreed... I feel fairly confident in saying that given the current run-up, that 50Mth share will probably end up being above $2k, not below... That, combined with what you put as roughly 70%-80% chance of S&P inclusion in Q2 is why I bought some 1600/2k spreads this week.. They pay out about 5:1, so my S&P inclusion probability only needs to be 20% for that to break-even... I'd say I'm 4x more likely to make money on this bet then lose money. I like those odds...