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Krugerrand
Meow
You'll have to remind me to do that
I have to remind you to remind me to give you rep points? Okay.
(I like all the new faces.) Also like that I got a little notification on my page that you'd quote one of my posts and then was able to click a direct link to here.)There's a like button? Where? As long as I get my free pony from my last set of rep points, I'm a happy camper.
Oh, yeah - topic - TSLA was up today on Baird's upgrade.
Not sure the article on analysts visit Tesla factory was reported correctly. According to the MarketWatch article: "The company’s current battery costs are about $150 to $200 per kilowatt hour, whereas average pack costs are about $350/kWh, the analysts said." Does average mean average for Tesla or average for the industry? Is the author confusing cells and packs? $350/kwh seems too high. I know Elon has stated an attainable goal for Tesla is $100/kwh pack cost. I would expect that Tesla is currently at the $150-200/kwh pack cost. ???
Can't wait for the Seeking Alpha article on how the new changes to the teslamotorsclub website are proof positive that the website is doomed, run by someone who has no knowledge of business or engineering, looses money on every forum post and it's clear that mercedes superior knowledge of all things internet will soon turn this into a ghost site.
I like it. Just takes a bit of getting used to.
I like it. Just takes a bit of getting used to.
chickensevil
Active Member
I am trying to post a photo from my computer......Keep getting an error message
I know this is off topic.....Help Chicken...The sky is falling
Wrong Chicken... I believe that would be ChickenLittle... But I was amused all the same
I have to remind you to remind me to give you rep points? Okay.
There's a like button? Where? As long as I get my free pony from my last set of rep points, I'm a happy camper.
Oh, yeah - topic - TSLA was up today on Baird's upgrade.
Come on, you know the short term thread isn't just about TSLA... It's basically the general forums catch all thread where people talk about whatever is most prevalent.
I speculated that there will be a like button show up sooner or later in the main forum changes thread based on the "liked posts" category on your profile.
I do certainly love the additional alerting!
---- Ahem. On topic, I am pleased to see the suspected trend holding out on the increased price as we move closer to March 31. I see mostly smooth sailing up to around 240 and then I get nervous and will be likely going into cash mode again waiting for a new trend to become clear.
jhm
Well-Known Member
Why Oil Prices May Not Move Higher | OilPrice.com
Art Berman pretty much sees oil as range bound and pretty much at the top of its range now. The market is still adding surplus oil to storage. Berman thinks demand drops off with higher prices.
But I am concerned about two other factors. At around $40/b, shale oil producers will complete more wells and increase supply. And at these high prices the economics of storage don't look so good.
The futures market still puts nine year oil expectations at just $52/b. But the spot price near $36 means there is very little contango left to compensate for storage. I link in the above article indicates that the cost of storage is about $0.65/b/month or $2.5/b/year. Apparently storage operators like to lock in longer rents if they can. Based on this annual price, it seems that the cost of owning a facility may be about $30 to $40 per barrel, which agrees with what I was able to surmise from futures curves. Regardless, the annualized return on storing oil till June 2017 is about 8%. So that is adequate, but not compelling. As storage fills up, rents will increase. So this will simply push the price down. Storage investors will need more upside to motivate building out storage capacity.
So I think the price of oil needs to return to near $30.
Would anyone be interested in a thread on shorting oil as a hedge for Tesla shares?
Art Berman pretty much sees oil as range bound and pretty much at the top of its range now. The market is still adding surplus oil to storage. Berman thinks demand drops off with higher prices.
But I am concerned about two other factors. At around $40/b, shale oil producers will complete more wells and increase supply. And at these high prices the economics of storage don't look so good.
The futures market still puts nine year oil expectations at just $52/b. But the spot price near $36 means there is very little contango left to compensate for storage. I link in the above article indicates that the cost of storage is about $0.65/b/month or $2.5/b/year. Apparently storage operators like to lock in longer rents if they can. Based on this annual price, it seems that the cost of owning a facility may be about $30 to $40 per barrel, which agrees with what I was able to surmise from futures curves. Regardless, the annualized return on storing oil till June 2017 is about 8%. So that is adequate, but not compelling. As storage fills up, rents will increase. So this will simply push the price down. Storage investors will need more upside to motivate building out storage capacity.
So I think the price of oil needs to return to near $30.
Would anyone be interested in a thread on shorting oil as a hedge for Tesla shares?
MitchJi
Trying to learn kindness, patience & forgiveness
IMO mobile is unusable.
Why as a Tesla hedge? If shorting oil makes sense then yes.jhm said:
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jhm
Well-Known Member
Shorting oil can make sense as either a hedge or as stand alone trade. Both perspectives are helpful.
If oil is in fact range bound, it makes an attractive short and long trade. But to the extent that Tesla shares are reliably correlated to oil, it makes sense to short oil just to obtain a portfolio that is oil neutral. Personally I am inclined to blend these so that I am hedged oil neutral when oil is at the top of its range and likely to fall and unhedged when oil is low and rising.
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Hogfighter
Professional Lurker
I wrote the following summary of the current state of TSLA for some friends who wanted my 2 cents last week. My apologies for the length, and feel free to shoot holes in anything stated.
Hello all,
There are several items occurring surrounding TSLA that another update is warranted. Let’s examine where we are, in order to have more clarity into the future.
Stock Price
The past year has not been kind to TSLA. There are 4 primary reasons that the price has taken a hit…here they are, and let’s examine each reason individually:
Oil Price and Demand
The Model S was the best selling luxury vehicle in the U.S. in 2015. It outsold the BMW 7 series, Audi A7, and Mercedes S class. That was accomplished without advertising. The Model X has 30,000 reservations. The Model 3 will be revealed at the end of the month, with reservations beginning at that time. Although oil prices have affected overall demand for electric vehicles (EVs), Tesla has not seen demand affected whatsoever. Therefore, any decline in the stock price due to the lower oil prices is unwarranted in the medium term.
Short Interest
Since July of 2015, short interest in TSLA has increased dramatically from 24 million shares to 34 million shares…over 30% of the float. (Source: Tesla Motors, Inc. (TSLA) Short Interest) That equates to over $2 billion in additional short interest. Needless to say, that has put tremendous pressure on the stock price. I do not believe that short interest will go significantly higher (due to higher interest rates being charged for additional stock to be available to short), rather will revert to the mean in the relatively near future of around 27 million shares. Holding a short position in TSLA during the Model 3 reveal will be quite precarious.
Model X
The Model X is over-engineered. It is simply more complicated than it needed to be. This has caused significant delays in production, and also holds risk in possible recalls in the future. As a result of these delays, the stock has taken a hit due to fewer deliveries and cash burn. We are seeing movement, however, in deliveries over the past few weeks. Tesla has announced that they should achieve 1,000 deliveries per week sometime in Q2 of this year. Initial reviews of Model X have been overwhelmingly positive. If Tesla can stick to that schedule and avoid recalls, it would bode well for the stock price.
Cash Flow
A common bear argument against TSLA is how fast it is ‘burning through cash’. It has been cited that TSLA loses $19,000 per car sold (http://www.newsmax.com/Finance/StreetTalk/SeekingAlpha-Tesla-Lose-Car-Sold/2015/11/03/id/700421/). When discussing this topic, it’s important to understand the difference between GAAP and non-GAAP accounting when it comes to TSLA. When Tesla leases a vehicle, it gets paid 100% for that vehicle immediately from the leasing company. It cannot report that income, however, because of the risk associated with the possibility of lower-than-expected residual value of that vehicle….they have to spread out the income over the life of the lease. Residual values are higher than expected, as the vehicles are holding their value very well. Using non-GAAP accounting allows TSLA to report 100% of that income immediately.
Tesla has also announced that it has closed a previous loan and opened an Asset-Backed Line of Credit (ABL). This is essentially a loan, with finished goods (i.e., cars in transit) as collateral. As more vehicles are in transit to customers, the ABL will grow as well. They have announced that with this ABL, they are cash flow positive right now. Critics say that this is fuzzy accounting and is simply more debt. But it is important to understand that these vehicles have already been ordered. They are not merely being shipped to a dealer’s lot, which could sit for months. They are being shipped to customers that have ordered that particular vehicle. So essentially, the ABL pays Tesla for the car as it leaves the factory rather than when the customer pays for it. Being cash flow positive in 2016 with the ABL is a significant leap towards funding growth internally.
Secondly, Capital Expenditures (CapEx) have been significant during 2015. They have invested heavily in the Supercharger network, service centers, the Gigafactory, and tooling. These investments will give Tesla a huge advantage in the future if electric vehicles become commonplace. Furthermore, much of this CapEx spending on tooling has already occurred for the Model 3. Specifically, the paint shop and the stamp press line already have the capacity of 500,000 cars per year. Most importantly, TSLA is predicting to be free cash flow positive by the end of the year. This is later than they previously predicted, but if they can fund their growth with revenue (rather than additional debt or secondary offerings) then this bear argument ceases to exist.
Model 3
On March 31st, Tesla will unveil the Model 3. A deposit of $1,000 is required to place a reservation. One item of note: the federal government gives a $7,500 tax credit for purchasing an EV, but only to the first 200,000 vehicles made by the same manufacturer in the U.S. This is important because Tesla has already sold approximately 50,000 vehicles in the U.S. so far, and should sell another 50,000 by the time Model 3 becomes available. That means that only the first 100,000 U.S. reservation holders should expect the rebate. My prediction is that we will see a mad rush during the first few days to place a reservation. 1 million reservations in 2016 is not unachievable, in my opinion. That would be the equivalent of a $1 billion loan, interest-free.
In summary, the stock price has been battered due to the false premise that demand for Tesla vehicles will shrink due to low oil prices, coupled with a dramatic increase in short positions. Tesla is in better shape financially than it has ever been. The Model 3 reveal, especially if they disclose the number of reservations in the days that follow, could give the stock price a real boost. There is not another stock, with revenue growing at 50% per year, that trades at just over 3x this year’s revenue (For comparison, Home Depot trades at 2x revenue: McDonald’s trades at over 4x revenue). It is true that if TSLA is just another auto manufacturer, then the stock is overpriced. But if TSLA is anything other than that…if it is something different, something that we’ve never encountered…..then the stock is potentially wildly underpriced.
Hello all,
There are several items occurring surrounding TSLA that another update is warranted. Let’s examine where we are, in order to have more clarity into the future.
Stock Price
The past year has not been kind to TSLA. There are 4 primary reasons that the price has taken a hit…here they are, and let’s examine each reason individually:
- Decline in oil prices will affect EV demand
- Short interest has increased
- Delay in Model X shows difficulty in production
- Cash flow extremely negative in 2015
Oil Price and Demand
The Model S was the best selling luxury vehicle in the U.S. in 2015. It outsold the BMW 7 series, Audi A7, and Mercedes S class. That was accomplished without advertising. The Model X has 30,000 reservations. The Model 3 will be revealed at the end of the month, with reservations beginning at that time. Although oil prices have affected overall demand for electric vehicles (EVs), Tesla has not seen demand affected whatsoever. Therefore, any decline in the stock price due to the lower oil prices is unwarranted in the medium term.
Short Interest
Since July of 2015, short interest in TSLA has increased dramatically from 24 million shares to 34 million shares…over 30% of the float. (Source: Tesla Motors, Inc. (TSLA) Short Interest) That equates to over $2 billion in additional short interest. Needless to say, that has put tremendous pressure on the stock price. I do not believe that short interest will go significantly higher (due to higher interest rates being charged for additional stock to be available to short), rather will revert to the mean in the relatively near future of around 27 million shares. Holding a short position in TSLA during the Model 3 reveal will be quite precarious.
Model X
The Model X is over-engineered. It is simply more complicated than it needed to be. This has caused significant delays in production, and also holds risk in possible recalls in the future. As a result of these delays, the stock has taken a hit due to fewer deliveries and cash burn. We are seeing movement, however, in deliveries over the past few weeks. Tesla has announced that they should achieve 1,000 deliveries per week sometime in Q2 of this year. Initial reviews of Model X have been overwhelmingly positive. If Tesla can stick to that schedule and avoid recalls, it would bode well for the stock price.
Cash Flow
A common bear argument against TSLA is how fast it is ‘burning through cash’. It has been cited that TSLA loses $19,000 per car sold (http://www.newsmax.com/Finance/StreetTalk/SeekingAlpha-Tesla-Lose-Car-Sold/2015/11/03/id/700421/). When discussing this topic, it’s important to understand the difference between GAAP and non-GAAP accounting when it comes to TSLA. When Tesla leases a vehicle, it gets paid 100% for that vehicle immediately from the leasing company. It cannot report that income, however, because of the risk associated with the possibility of lower-than-expected residual value of that vehicle….they have to spread out the income over the life of the lease. Residual values are higher than expected, as the vehicles are holding their value very well. Using non-GAAP accounting allows TSLA to report 100% of that income immediately.
Tesla has also announced that it has closed a previous loan and opened an Asset-Backed Line of Credit (ABL). This is essentially a loan, with finished goods (i.e., cars in transit) as collateral. As more vehicles are in transit to customers, the ABL will grow as well. They have announced that with this ABL, they are cash flow positive right now. Critics say that this is fuzzy accounting and is simply more debt. But it is important to understand that these vehicles have already been ordered. They are not merely being shipped to a dealer’s lot, which could sit for months. They are being shipped to customers that have ordered that particular vehicle. So essentially, the ABL pays Tesla for the car as it leaves the factory rather than when the customer pays for it. Being cash flow positive in 2016 with the ABL is a significant leap towards funding growth internally.
Secondly, Capital Expenditures (CapEx) have been significant during 2015. They have invested heavily in the Supercharger network, service centers, the Gigafactory, and tooling. These investments will give Tesla a huge advantage in the future if electric vehicles become commonplace. Furthermore, much of this CapEx spending on tooling has already occurred for the Model 3. Specifically, the paint shop and the stamp press line already have the capacity of 500,000 cars per year. Most importantly, TSLA is predicting to be free cash flow positive by the end of the year. This is later than they previously predicted, but if they can fund their growth with revenue (rather than additional debt or secondary offerings) then this bear argument ceases to exist.
Model 3
On March 31st, Tesla will unveil the Model 3. A deposit of $1,000 is required to place a reservation. One item of note: the federal government gives a $7,500 tax credit for purchasing an EV, but only to the first 200,000 vehicles made by the same manufacturer in the U.S. This is important because Tesla has already sold approximately 50,000 vehicles in the U.S. so far, and should sell another 50,000 by the time Model 3 becomes available. That means that only the first 100,000 U.S. reservation holders should expect the rebate. My prediction is that we will see a mad rush during the first few days to place a reservation. 1 million reservations in 2016 is not unachievable, in my opinion. That would be the equivalent of a $1 billion loan, interest-free.
In summary, the stock price has been battered due to the false premise that demand for Tesla vehicles will shrink due to low oil prices, coupled with a dramatic increase in short positions. Tesla is in better shape financially than it has ever been. The Model 3 reveal, especially if they disclose the number of reservations in the days that follow, could give the stock price a real boost. There is not another stock, with revenue growing at 50% per year, that trades at just over 3x this year’s revenue (For comparison, Home Depot trades at 2x revenue: McDonald’s trades at over 4x revenue). It is true that if TSLA is just another auto manufacturer, then the stock is overpriced. But if TSLA is anything other than that…if it is something different, something that we’ve never encountered…..then the stock is potentially wildly underpriced.
jhm
Well-Known Member
Shorting Oil, Hedging Tesla
I set up a new thread for shorting oil and hedging Tesla. I think that most of my comments about the state of the oil market will tend to go into this new thread. Obviously oil price movements will remain a key driver of Tesla price movements, but I sense a need to take this to the next level where I actively trade oil to net out this risk.
I set up a new thread for shorting oil and hedging Tesla. I think that most of my comments about the state of the oil market will tend to go into this new thread. Obviously oil price movements will remain a key driver of Tesla price movements, but I sense a need to take this to the next level where I actively trade oil to net out this risk.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Great post. I agree with your conclusion too - that much of the near term price actrion will depend on Model 3 reception and reservation numbers. I wish we had the rep. system still, here, have a green bar
Hogfighter
Professional Lurker
Thanks Johan! Hope you had a nice ski the other day....
AIMc (or is it ALMc? I need glasses).....do with it as you please. Thanks!
AIMc (or is it ALMc? I need glasses).....do with it as you please. Thanks!
virtuesoft
Member
I've used the following in the past...
AJ Bell Youinvest
It's not particularly cheap, but none of the brokers that you let you trade within an ISA are.
I've also used IG for spread betting. That is also tax free as it's technically a bet by UK law. It's a lot cheaper, the spread is narrower and the fees are more reasonable. I usually do a quarterly bet. I pick the one that is the furthest out (they go up to 9 months) so that it gives my trade time to work out. You have to be sensible with your position sizing with IG though as it is leveraged.
I would recommended something like AJ Bell YouInvest for long term trades and IG for short term trades (9 months or less).
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FredTMC
Model S VIN #4925
Great post. I agree with your conclusion too - that much of the near term price actrion will depend on Model 3 reception and reservation numbers. I wish we had the rep. system still, here, have a green bar
Yeah, the rep. System needs to be restored
FredTMC
Model S VIN #4925
It's possible.
There will be another panic when tesla reveals how many Model 3 reservations they've booked. This could happen anytime after the reveal.
There will likely be multiple snapshots of reservation tallies:
1). Within a few days of the launch
2). First week
3). First month
4). Quarterly
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Last night I received a notice saying that they are reducing the interest of my shares being loaned. I'd take that to mean that there are more shares available now - either through covering or more shareholders loaning their shares. If it's a result of short covering, then we should expect a lower "pop" from the model 3 reveal. My 2 cents.
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