Short-Term TSLA Price Movements - 2016

[jhm]

I am pretty sure that right now if you did a 70:30 split with Tesla (like Apple's 30% cut for iTunes) to let them use your car as an autonomous taxi your side of that deal would result in $dollars per mile, not cents. That would let anyone with a suitable credit score buy a Tesla Model S or a Model X and have Tesla pay them back for the entire purchase by carving out 25 - 30,000 miles while you didn't need it anyway.

Ok, now you are proposing a scheme which sounds too good to be true. I let Tesla lease out my car when I am not using it, and I get a big enough return to pay for the whole car. The problem is there are sufficient numbers of investors willing to lease the whole car full time to get this rate of return. If leasing 70% of the time pays for the whole car, then leasing the car 100% should get a 43% return. Banks would line up for such a deal. Moreover, leasing 70% from me actually reduces the value to Tesla because, I am going to demand the car whenever I need it. So if I need to drive in a rush hour, Tesla is missing out on an hour of peak demand for such a car. So the banks will give Tesla much better terms.

But how about I enter into a 5 to 95 sharing relationship with Tesla? Over a 20 year life, I get to drive the car for 1 year, and Tesla puts it into service for 19 years. My only stipulation is that I get the first year exclusively. For a $40K Model 3, I'd be happy to pay $3000 for that first year, and I'll use less than 2% of the million mile lifetime range. Seems like a good deal to me. Would it be good for Tesla? The rideshare customers won't mind that the vehicle was used for a year. So why would Tesla want to put a brand new car into service immediately? They just need to lease it to someone who values a first year vehicle more highly than the average rideshare customer. There is a premium for a new car and exclusive use, and Tesla would do well to extract that premium however small in the future before putting a car into public service.

 

[Julian Cox]

Privacy.

Machine vision. Play nice, chat away, fall aleep and the machine will turn a blind eye. Start yelling or punching the girl in the seat next to you and you'll have its full attention all the way to the station while a live security officer on screen explains the procedure. Note, there are cameras on buses, taxis and metro rail already. Just no such instantly practical security enforcement. With AI EV there is.

BTW, the fine details like this ARE heading off topic IMO. Suffice to say that there is no obstacle that will stand in the way of either the economics or practicalities and nothing here affects freedom of consumer choice. If you want a car like a Model X for your exclusive private use, autonomous or not, it will never be more expensive than it is today. This technology will just open up the option to access such a car for the equivalent of gas money for anyone.

 

[Causalien]

Here are a few question marks I've been having on my mind.
It feels strange that closing the yuan short can have an impact on USA stock market. Weirder still that Chinese market have an impact on usa market.

It might be the combo of yuan and oil yhat's bringing things down, but oil going down have traditionally been a boom for market.

What I suspect is happening is that since the inclusion of yuan i sdr, chinese have been selling yuan to buy USD. this has the effect if bidding up the USD while lowering all assets. The next for them is to buy income generating assets.

Maoing, if you are reading, I'd like some input on what's happening with the currency flight from yuan. Are you still able to do it? How long does it take?

 

[JRP3]

Privacy.

In someone else's car? Not to mention no privacy if the Uber driver/Cabbie is physically present.

 

[ev-enthusiast]

Classic bear market price action.

Calgary, please keep posting your ideas.

I remember talking to you about oil price action and commodities having a negative impact on TSLA during last summer.
While I undestood your fears, my expectation was that low oil prices do not affect sales figures for such an expensive thing like an expensive vehicle. Well, the time tells us that we have both been right. You because TSLA took a really bad dive after our conversation during last summer and me as Tesla reported record deliveries during Q4.
Thing is had I sold my calls at that time that would have saved me a LOT of money!

Thus please keep posting your ideas, just make it easier for others to follow your ideas by adding your reasoning or a link for further explanation or research!

Thank you in advance!

 

[steph280]

It seems that there are serious shenanigans going to be involved this week. There is crazy high open interest for this week for both $200 calls and $200 puts: 4,125 and 15,140 respectively. For comparison the next week calls/puts at $200 have open interest of 4/186. Given freak out macro, it looks like it will not cost that much capital for option writers to herd TSLA toward $200 this week. It might be that the spring will have mighty re-bound after end of this week.

View attachment 107480

I can't deny, this is having some serious effect.

 

[Buddyroe]

Ok, now you are proposing a scheme which sounds too good to be true. I let Tesla lease out my car when I am not using it, and I get a big enough return to pay for the whole car. The problem is there are sufficient numbers of investors willing to lease the whole car full time to get this rate of return. If leasing 70% of the time pays for the whole car, then leasing the car 100% should get a 43% return. Banks would line up for such a deal. Moreover, leasing 70% from me actually reduces the value to Tesla because, I am going to demand the car whenever I need it. So if I need to drive in a rush hour, Tesla is missing out on an hour of peak demand for such a car. So the banks will give Tesla much better terms.

But how about I enter into a 5 to 95 sharing relationship with Tesla? Over a 20 year life, I get to drive the car for 1 year, and Tesla puts it into service for 19 years. My only stipulation is that I get the first year exclusively. For a $40K Model 3, I'd be happy to pay $3000 for that first year, and I'll use less than 2% of the million mile lifetime range. Seems like a good deal to me. Would it be good for Tesla? The rideshare customers won't mind that the vehicle was used for a year. So why would Tesla want to put a brand new car into service immediately? They just need to lease it to someone who values a first year vehicle more highly than the average rideshare customer. There is a premium for a new car and exclusive use, and Tesla would do well to extract that premium however small in the future before putting a car into public service.

Cool. So, my 17 year old son - who drove a random stranger's Model S in Miami a few months ago (at his insistence), is going to prom in a couple of months. Can I "lease" your Model S for him to drive?

 

[dc_h]

I think the bear issue is in part China and oil. Both of these are creating risk concerns to capital markets. What does the market know and not know. If China has a serious issue, are their global banking exposures and would China pull global savings back. If oil drops to $20, what countries and companies will go bankrupt. If oil stays in the $20-$30 range, what countries will be destabilized? These are huge macro risks. They are causing or contributing to recessions in Australia, Canada, Russia and recessions are being avoided by unsustainable spending in Saudi Arabia and other Opec pillars. The risk off macro trend effects the entire market and high beta stocks like Tesla most of all. The oil decline also challenges the energy cost advantage of EV's. This may not effect Tesla in the long term, it builds a better car than ICE vehicles, but it definitely impacts TSLA in the short term.

In the short term the market is often irrational and can stay irrational longer than most people can stay liquid. Macro challenges are not a reflection of Tesla performance, but it does reflect TSLA performance, at least in the short term.

Here are a few question marks I've been having on my mind.
It feels strange that closing the yuan short can have an impact on USA stock market. Weirder still that Chinese market have an impact on usa market.

It might be the combo of yuan and oil yhat's bringing things down, but oil going down have traditionally been a boom for market.

What I suspect is happening is that since the inclusion of yuan i sdr, chinese have been selling yuan to buy USD. this has the effect if bidding up the USD while lowering all assets. The next for them is to buy income generating assets.

Maoing, if you are reading, I'd like some input on what's happening with the currency flight from yuan. Are you still able to do it? How long does it take?

 

[Papafox]

A short-term dilemma

I wish to convert a few more TSLA shares to leaps soon and like everyone else I'm looking for the bottom. Obviously, there's no way for sure to tell if we're there or not. TSLA seems to pretty closely be tracking broader markets today, so the question really revolves around whether we think the downturn has pretty much played itself out. Your thoughts? Also, does anyone see any negative catalysts for TSLA around the corner? Obviously, CES turned out to be a negative catalyst with Bolt and other announcements. Any thoughts about Detroit Auto Show effects? Seems there is not much room for new info because CES stole the thunder this year.

 

[Julian Cox]

jhm

I think the big thing that most people don't appreciate instantly is that an AI EV running 70-80% of the time 24/7 between charging will accumulate a million miles of travel in only 3-5 years (this is running at average speeds of only 30 or so mph when running). There is no 20 years. The 10-20 year numbers for average ICE fleet age require that cars are parked 95% of the time. If you were to actually Uber your ICE car 24/7/90% it would barely last a year and a half before hitting 300,000 miles and be ready for the scrap heap having produced multiples of its own weight in carbon emissions and multiples of its build cost in fuel and maintenance. This is why Ford and GM are happy to cooperate with ride sharing - cars that wear out fast result in quicker sales turnover and more parts and maintenance sales outside of warranty.

As you say (and as I said) the economics of this will give rise to novel leasing schemes. The bottom line is that a $40K EV (a fully autonomous Model 3) that costs Tesla $30K to build costs $0.03 cents per mile in amortized value over a million mile lifespan LESS scrap value at 1 million miles. Net about $0.025 (2.5 cents) per mile. The energy, maintenance and finance costs are also trivial. I estimate $0.06 cents all in before overheads of running the service. You can't buy gasoline for $0.06 per mile let alone build an ICE car as well.

30mpg x $0.06 = $1.80 per gallon. If gasoline costs $2.00 then you have a $20 cents shortfall to divide by 30 miles multiplied by 300,000 miles nominal ICE service life = NEGATIVE $2000 to build an Autonomous ICE vehicle with if you want to compete on price per mile with the $40,000 Tesla EV. It is economically impossible to compete with gasoline and ICE the instant the AI EV fleet service hits the roads.

Meanwhile the market value of taxi-like or Uber-like transit per mile is not going to drop to less than a $1 ~ $2 per mile overnight. What Tesla does with the $0.94 ~ $1.94 gross profit per mile that will remain on the table is up to Tesla. Keep it, share it with its vehicle customers - however the deals and opportunities are structured for max value is all all game on.

 

[uselesslogin]

Within the last 24 hours someone just put in an estimated 'start production' date of 15-JAN for their production Model X P90D with an estimated delivery of 1-FEB. I'll keep watching but that is an early sign that there won't be much delay between signature and delivery. There are also a couple of Founder's winners that put delivery dates in of 15-JAN and 18-JAN at some point.

 

[FluxCap]

Here are a few question marks I've been having on my mind.
It feels strange that closing the yuan short can have an impact on USA stock market. Weirder still that Chinese market have an impact on usa market.

It might be the combo of yuan and oil yhat's bringing things down, but oil going down have traditionally been a boom for market.

What I suspect is happening is that since the inclusion of yuan i sdr, chinese have been selling yuan to buy USD. this has the effect if bidding up the USD while lowering all assets. The next for them is to buy income generating assets.

Maoing, if you are reading, I'd like some input on what's happening with the currency flight from yuan. Are you still able to do it? How long does it take?

Try the considerably less cluttered Trading Strategies thread or my Macro thread, or PM.

 

[Julian Cox]

Meanwhile the market value of taxi-like or Uber-like transit per mile is not going to drop to less than a $1 ~ $2 per mile overnight. What Tesla does with the $0.94 ~ $1.94 gross profit per mile that will remain on the table is up to Tesla. Keep it, share it with its vehicle customers - however the deals and opportunities are structured for max value is all all game on.

BTW. The implications for capital value of the Tesla business (TSLA) are beyond.

AI EV cost: $0.06 per mile, call it $0.12 per mile to accommodate SG&A for operating the OTA network and operations center (replacement tires and general maintenance is already included in the $0.06). Open market value on launch probably $2.00 per mile.

$2 / $0.12 = 1667% net profit of a Tesla AHAAS fleet (one thousand six hundred and sixty seven percent net profit i.e. ample margin to spare to undercut any other mode of transport on cost from ICE cars to rickshaws by whatever it takes to put them out of business).

Profit margins like this WILL precipitate a gold-rush. It will also be a global economic emergency affecting every nation the world over to build a Tesla Gigafactory and a Tesla vehicle production plant as well as Tesla autonomous Super Chargers and Tesla Service centers - before long (5-10 year timeframe) there will also be the SpaceX sky-net OTA network to manage fleet operations no matter how remote the location. When this begins to go live some time in the 2-5 year time-frame there will be no time to spend 5-10 years figuring out how to compete or to duplicate the technology. The winning move for govenments, capital markets and industry alike would be to just throw the necessary capital at Tesla to build the infrastructure or to throw money at Tesla in technology licensing fees.

The inevitable winning of inevitable regulatory battles pending, every Tesla factory including Fremont will be able to just print out cars as fast as possible that just roll off the production line and drive away to be either captured by a customer or just route themselves to their first hailed ride to earn their living without any delay or any need to wait for customers to buy them thus reducing the concept of automotive customer demand to an irrelevance.

 

[TSLAopt]

Within the last 24 hours someone just put in an estimated 'start production' date of 15-JAN for their production Model X P90D with an estimated delivery of 1-FEB. I'll keep watching but that is an early sign that there won't be much delay between signature and delivery. There are also a couple of Founder's winners that put delivery dates in of 15-JAN and 18-JAN at some point.

I'm scheduled to pick up my X tomorrow at the factory. I was psyched until I happened to talk in detail about the X to an acquaintence/friend today who was like signature #15 or #17 or something and took delivery two weeks ago. He went over a lot of his issues and concerns and has been unhappy for most of these two weeks, mostly QC issues and I'm hoping they have worked those out in time for me. He is just one person with one view and perhaps he's had some bad luck, I'm just hoping its not wide-spread, I will be another data-point though very soon.

On the upside he did say it was like a 'dream to drive' once in it and driving

 

[Papafox]

A short-term dilemma

I wish to convert a few more TSLA shares to leaps soon and like everyone else I'm looking for the bottom. Obviously, there's no way for sure to tell if we're there or not. TSLA seems to pretty closely be tracking broader markets today, so the question really revolves around whether we think the downturn has pretty much played itself out. Your thoughts? Also, does anyone see any negative catalysts for TSLA around the corner? Obviously, CES turned out to be a negative catalyst with Bolt and other announcements. Any thoughts about Detroit Auto Show effects? Seems there is not much room for new info because CES stole the thunder this year.

The downtrend continues today and so I am holding off my move until at least tomorrow. I notice the high has typically been in the first half hour of the day and so I will hope to catch TSLA after it peaks tomorrow morning (if this happens) and then buy later in the day if we see another downtrend.

 

[jhm]

jhm

I think the big thing that most people don't appreciate instantly is that an AI EV running 70-80% of the time 24/7 between charging will accumulate a million miles of travel in only 3-5 years (this is running at average speeds of only 30 or so mph when running). There is no 20 years. The 10-20 year numbers for average ICE fleet age require that cars are parked 95% of the time. If you were to actually Uber your ICE car 24/7/90% it would barely last a year and a half before hitting 300,000 miles and be ready for the scrap heap having produced multiples of its own weight in carbon emissions and multiples of its build cost in fuel and maintenance. This is why Ford and GM are happy to cooperate with ride sharing - cars that wear out fast result in quicker sales turnover and more parts and maintenance sales outside of warranty.

As you say (and as I said) the economics of this will give rise to novel leasing schemes. The bottom line is that a $40K EV (a fully autonomous Model 3) that costs Tesla $30K to build costs $0.03 cents per mile in amortized value over a million mile lifespan LESS scrap value at 1 million miles. Net about $0.025 (2.5 cents) per mile. The energy, maintenance and finance costs are also trivial. I estimate $0.06 cents all in before overheads of running the service. You can't buy gasoline for $0.06 per mile let alone build an ICE car as well.

30mpg x $0.06 = $1.80 per gallon. If gasoline costs $2.00 then you have a $20 cents shortfall to divide by 30 miles multiplied by 300,000 miles nominal ICE service life = NEGATIVE $2000 to build an Autonomous ICE vehicle with if you want to compete on price per mile with the $40,000 Tesla EV. It is economically impossible to compete with gasoline and ICE the instant the AI EV fleet service hits the roads.

Meanwhile the market value of taxi-like or Uber-like transit per mile is not going to drop to less than a $1 ~ $2 per mile overnight. What Tesla does with the $0.94 ~ $1.94 gross profit per mile that will remain on the table is up to Tesla. Keep it, share it with its vehicle customers - however the deals and opportunities are structured for max value is all all game on.

So you are suggesting that Tesla is not going to give me a one year lease at $3000 (for about 15k miles) because it has the opportunity to rideshare that car at $1 to $2 per mile at a cost of $0.06 per mile. My lease would represent a substantial opportunity cost to Tesla. So maybe I have to pay $15k for the one year lease and allow Tesla to pimp it out to strangers when I am not actually driving it, if I am going to get this car at all. Anything less would still be an opportunity cost to Tesla. So the one year lease may need to be like $25k on a car that sells for $40k.

What makes the conomics so whacky is that such a vehicle would not be sold for $40k. If such a car could offer 1 million rideshare miles in 5 year for at least $1/mile. That's a $1M revenue stream in five year. Discounted at 6%, it's worth $890K. One does not simply sell a revenue stream like that for $40k.

So either the rideshare market is flooded with these cars until the price per mile is just a few cents above cost or nobody gets to buy this car for $40k. Basically, the retail price must be at least Tesla's NPV of ridesharing plus the cost of the making the car. Anything less than that would imply an opportunity cost for Tesla. I suspect the ridesharing profits cannot last long.

 

[FluxCap]

I'm scheduled to pick up my X tomorrow at the factory. I was psyched until I happened to talk in detail about the X to an acquaintence/friend today who was like signature #15 or #17 or something and took delivery two weeks ago. He went over a lot of his issues and concerns and has been unhappy for most of these two weeks, mostly QC issues and I'm hoping they have worked those out in time for me. He is just one person with one view and perhaps he's had some bad luck, I'm just hoping its not wide-spread, I will be another data-point though very soon.

On the upside he did say it was like a 'dream to drive' once in it and driving

Congrats on the X my friend!

 

[eloder]

BTW. The implications for capital value of the Tesla business (TSLA) are beyond.

AI EV cost: $0.06 per mile, call it $0.12 per mile to accommodate SG&A for operating the OTA network and operations center (replacement tires and general maintenance is already included in the $0.06). Open market value on launch probably $2.00 per mile.

$2 / $0.12 = 1667% net profit of a Tesla AHAAS fleet (one thousand six hundred and sixty seven percent net profit i.e. ample margin to spare to undercut any other mode of transport on cost from ICE cars to rickshaws by whatever it takes to put them out of business).

Profit margins like this WILL precipitate a gold-rush. It will also be a global economic emergency affecting every nation the world over to build a Tesla Gigafactory and a Tesla vehicle production plant as well as Tesla autonomous Super Chargers and Tesla Service centers - before long (5-10 year timeframe) there will also be the SpaceX sky-net OTA network to manage fleet operations no matter how remote the location. When this begins to go live some time in the 2-5 year time-frame there will be no time to spend 5-10 years figuring out how to compete or to duplicate the technology. The winning move for govenments, capital markets and industry alike would be to just throw the necessary capital at Tesla to build the infrastructure or to throw money at Tesla in technology licensing fees.

The inevitable winning of inevitable regulatory battles pending, every Tesla factory including Fremont will be able to just print out cars as fast as possible that just roll off the production line and drive away to earn their living without any need to wait for customers to buy them.

I feel more and more like I've bought the next Apple with every year that passes. I just have to remember historically how long it took Apple stock to blow up, and with Tesla it may not even be that long with how many slow-moving industries they're bound to cause turmoil in.

Added some more to my short-medium term stock holdings around $207 today. I'm not really worried about the prices going lower but I'm also not expecting China to be a lasting consequence due to the strength in the US markets right now and our relatively minimal harm from sustained low oil prices. The last China worries were rough, but I just can't see the current fears being somehow worse than China and Greece combined.

 

[Julian Cox]

So you are suggesting that Tesla is not going to give me a one year lease at $3000 (for about 15k miles) because it has the opportunity to rideshare that car at $1 to $2 per mile at a cost of $0.06 per mile. My lease would represent a substantial opportunity cost to Tesla. So maybe I have to pay $15k for the one year lease and allow Tesla to pimp it out to strangers when I am not actually driving it, if I am going to get this car at all. Anything less would still be an opportunity cost to Tesla. So the one year lease may need to be like $25k on a car that sells for $40k.

What makes the conomics so whacky is that such a vehicle would not be sold for $40k. If such a car could offer 1 million rideshare miles in 5 year for at least $1/mile. That's a $1M revenue stream in five year. Discounted at 6%, it's worth $890K. One does not simply sell a revenue stream like that for $40k.

So either the rideshare market is flooded with these cars until the price per mile is just a few cents above cost or nobody gets to buy this car for $40k. Basically, the retail price must be at least Tesla's NPV of ridesharing plus the cost of the making the car. Anything less than that would imply an opportunity cost for Tesla. I suspect the ridesharing profits cannot last long.

From a long term shareholder's perspective or from the perspective of DCF valuation (or just someone that wants a clear answer to silly FUD about "Tesla's looming competition") it really does not matter. The value of production of this entity traded as TSLA is on track to dramatically exceed the cost of production in a way that nothing else can touch by two orders of magnitude. Assuming its management remains at least half-ways competent TSLA will capture staggering value for its shareholders however it goes about navigating the opportunity ahead.

Musk's back of a napkin calculation of TSLA $700 billion Market Cap by 2025 is a gross underestimate. AI EV sees to that because 50% compound annual revenue growth for ten years and a 10% net GAAP margin at the end x 20 P:E is not even the half of it.

 

[dc_h]

I feel like the anti-John Peterson has arrived. I bought every time he posted. Now what to do?

Personally I feel that low oil prices and market risk will hurt short term TSLA. It may have no effect on Tesla, but many in the market are not sure. Inevitably, we will see, one way or another.