Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Discoducky]

I hear ya. Here's how I think about it:

As @StealthP3D said, judging TSLA's "fair value" is kinda impossible because of all the unknowns. The best we can do is look at the size of Tesla's addressable markets, their technology lead over competitors, their rate of innovation and efficiency improvements, etc... and judge they will grow a shite-load in the next decade. So any price now will look cheap eventually. If I miss the bottom of a dip, so what. I will win anyway.

Agreed, I sold some shares (via a covered call) at $430 Friday and was a bit sad, but my cost for those shares was like $20 (split adjusted) so all is good and I'm happy.

Buying today at ~$500 will be similar to 5 years from now when the price should be ~10X to 20X. Just typing that gives a a bit of pause, but I just don't see another company which can even keep up with the pace of innovation (or said another way can't stop the gap from widening overtime).

Saturating the market share of private sale autos, autonomous ride share, private and commercial grid storage and generation...etc

 

[adiggs]

$52 for Jan 15th calls @ $500 strike seems a pretty darn good deal to me, and I almost never find TSLA call prices attractive. Therefore I think the combined effect of that attractiveness and an unwinding of last week's MM push-down will lead to a pretty fat pop Mon/Tues.

I'm pretty unsophisticated when it comes to call buying, and mostly don't do it. However, one of my indicators that it's time to buy calls is when I'm looking at calls I'd like to be selling, and it occurs to me that selling that call is insane(ly bad). If it's insane to sell the call, then maybe it's extremely sane to be buying it instead! As I said -unsophisticated, but I can at least use it as an indicator when to think about it.

That thinking has led to me having a call position between now and January, and then I'll be back out of buying calls; probably waiting for the next 50% drop in the stock, which I consider to be equally inevitable at some point this decade (if not several times).

 

[SOULPEDL]

Impromptu slogan contest for Cybertruck.

How about:

Ugly Piece of Unyielding Metal

Of Course I Still Love You 2

 

[SOULPEDL]

Definitely test drives will sky rocket during the holidays - kiss of death for ICE. There are discussions here about the best way to blow people's mind in a demo (don't need to rehash here, but a simple search maybe).

So my SP guess today was before we learned about the S&P inclusion. New SEC chair on the way as well, I might have to bump it up to $650 By the new year.

Reiterating my $650 by Jan 1st, based on Chrismas Presents and SP movement last Q4. (Got a better method?)

 

[FireMedic]

I hear what you are saying but I don't really think anyone can say what Tesla is worth at any given time. Look, TSLA is worth whatever someone is willing to pay you for it at any given moment. That doesn't mean someone with a perfect and complete understanding of everything going on behind Tesla's doors might not think it's worth more or less than the market price at any given time. And that might be an unusually informed opinion, but it's still an opinion.

Given that, it's impossible to say with certainty that TSLA is not "worth" $2500 right now. Personally, I think $500/share is a reasonable valuation that SHOULD grow at surprising rate. But that's still just one person's opinion. I'm pretty sure in June of last year you would have said TSLA was not worth $500/share (when it was trading under $200). And yet, if you could travel back to that time, knowing what you know now, you would buy as much as you could afford even if you had to pay $500/share. Because now it's worth $2500/share split adjusted.

Anyone who says TSLA is worth more or less than it's current market price is speculating - it's just someone's opinion. Everyone has an opinion and most opinions are wrong. The true value of any stock at any point in time can only be known in hindsight.

Thanks to our own Alex Voight @avoight, The CEO of VW Herbert Diess agrees. See his video/translation of this interview. It’s quite eye opening. Head over to YouTube and show him some love for his hard work.
The market valuation is appropriate and deserved.

 

[Blue horseshoe]

I want to hear from those with a strong or academic knowledge of market dynamics. As we dive deeper into this fascinating and unprecedented event, many here undoubtedly would like to understand things better on a theoretical and practical basis.

The central issue is institutional buying and its effect on the stock price. Take for example the runup on 11/18 at 11:30AM-12PM from $458 to $480. The volume was over 10 million shares. What can we interpret of this event? Can we assume the entire period was a block of institutional buying? Or, was it initiated by a large purchase and then algorithmic trading took over? Can we extrapolate and say that if someone wants again to buy several million shares in a half hour, it will probably cause a similar increase of about 5%? What if large purchases are spread over the day--can they be 'hidden', effectively tricking people into selling to you at lower prices? (Sort of the reverse of what we normally see--price suppression followed by loss of enthusiasm in the afternoons). Or does the cumulative effect of buying always appear in the price? At what % of the overall daily volume can institutional purchases (or to simplify, just index fund purchases) remain 'in the background'?

It would be nice if one could mentally keep track of things as they progress, making estimates of how many tens of millions of shares have been bought up by funds -- or if this is simply impossible.

The entire portion of ten million shares is not just from the large block of institutional buying. It would also include a small portion of trades by momentum and algorithmic trades as they see a large buyer come in and they try to take advantage of that fact.

Not to get too deep into the weeds of technical analysis (some liken it to voodoo) but one of the important things to watch is volume. If a buyer has to open a large position they can try to spread out the purchases throughout the day, but there's nothing they can do to hide the volume from showing up (ignoring dark pool trading).

Another indicator would be if the price keeps bouncing off a "floor" price which could indicate a price at which a buyer keeps purchasing to accumulate shares.

Something to keep in mind is that there are two sides to this trade. You have the portfolio managers who have made the decision to start or increase their position and then you have their trade desk. Once the PMs have made the decision they'll let the trade desk know what accounts and how much to purchase. The traders will then spend the day (generally speaking) accumulating the shares using their preset metrics for buying and selling. Some institutions will utilize algorithms to implement the position, but in either case they can't hide the increase in volume.

On a side note I had friends who studied financial mathematics and they went on to be hired by an institution that had two separate teams. One would develop financial algorithms to increase or decrease positions and the second team would attempt to discover the first teams algorithm.

 

[jw934]

I'm pretty sure in June of last year you would have said TSLA was not worth $500/share (when it was trading under $200). And yet, if you could travel back to that time, knowing what you know now, you would buy as much as you could afford even if you had to pay $500/share. Because now it's worth $2500/share split adjusted.

Building on that, I tried to explain present value to some (non-financial) friends who bought shares but still can't get over how expensive Tesla shares are. Using your example, here is my response to several of them:
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There are still people who says since Toyota makes 20X as many cars as Tesla, and Toyota market capitalization is $200 Billion, Tesla market cap should be only 1/20 or $10Billion instead of $456 Billion as of Friday close.

This is incorrect.

One way to calculate what is the correct valuation for Tesla on Nov 21, 2020 is when you sell the stock some time in the future, what should be the market cap on Nov 21, 2020.

For example, looking back in June 2019, Tesla had a market capitalization of $40 Billion and shares were at $200 pre-split. Knowing it is at $456B in Nov 2020 with stock at $2450 pre-split, and given that nothing has fundamentally changed in Tesla since June 2019 as Tesla continued their 10 year annual growth rate of 50%/year, how much would you have been willing to sell your Tesla shares in June 2019? The amount you would have been willing to pay to buy/receive to sell is how much Tesla should have been worth in June 2019.

To determine how much Tesla should be worth TODAY, study Tesla's product and services lineup/potentials and Elon's aspirational goals/addressable market size, risks/competitors etc and work out for yourself the Tesla market cap for the timeframe you might want to sell. Using that value and work backwards using an inflation and discount rate to calculate how much Tesla should be worth today.

 

[Discoducky]

I like the discussion around Tesla starting to produce pure Robotaxi vehicles. While I think this is a certainty, it has a timeline and has a calculation to the financial health of the company as well as to the mission.

Simply put, what is the earliest Tesla could put cars on the road as pure Robotaxi's? Determined by regulation as well as software development. Which one comes first? Most likely software dev which proves a ~10X safety improvement. Could be 6 months from now (radically optimistic in my opinion even for certain locales) to 1 year (maybe in some areas like around Fremont) or 2 years (getting more certain...). When is it approved by regulators? Some places already allow it so lets just do the calculation.

How much does a normal Tesla drive per day? 40 miles to 60 miles?
How much would a Robotaxi drive per day? 400 to 600 miles? We could call it 10X as much and then talk about price to see if demand would be there.

How much does it cost someone on average to use just rideshare per day on average? $10? Maybe $300 per month average. How about $5/day and $150/month.
What if all of those trips could be in a Tesla Robotaxi? Cut it in half? Maybe down to a quarter? Let's say $50/month and be conservative.

Now, how much would that cost Tesla to provide that service? Electricity cost, maintenance cost, insurance cost? Hard to say, but what if that cost was $20 per month for the Robotaxi service to operate in a locale. But even if it was $50/month and no margin, there are so many other planet, grid balancing and traffic benefits that it potentially outweighs those costs that are important to Tesla's mission.

Thinking about all of this, the timeline is still based on the first milestone of software development. But I'm certain that once they hit that milestone, Tesla will send *enough* Robotaxi's to a given locale, where regulation allows, and start the service as it has a much bigger impact to the mission as opposed to being something that might financially hurt.

The impact to Tesla's business will be material when the software development milestone convergence becomes certain. As I'm in AI and know a bit about the topic, I'm patiently watching the latest builds coming out and seeing the improvements as well as regressions. I don't have enough data points to confidently predict convergence yet, but that day is coming and very exciting.

Did a bit more thinking on this and came up with a basic model. From conservative to a lot less conservative...

Some assumptions are...

Uber drivers typically drive about 1000/week How many miles do Uber and Lyft drivers put on their cars? - RideGuru.

 

[st_lopes]

Took possession of my Model Y this week. I thought I was a high conviction long until this point. I’m now a you’ll be prying these shares from my cold, dead hands conviction long.

Some abrasions to paint on driver side handle (likely service team member with rings), rear brake lights TINY misalignment (but service team indicated it was well within tolerance and trying to perfect them would likely misalign much larger side panels), and hood was TINY (even less than rear brake lights) bit misaligned (again within tolerance, but they’ll adjust that one since low risk to other panels).

They’ll touch up the paint and hood when I go in for winter tire change and window winterization this week. After a long drive for work and putting 500km on it, I’m committed to getting as many ICE drivers in to this vehicle as possible.

 

[PeterJA]

View attachment 610959

Took possession of my Model Y this week. I thought I was a high conviction long until this point. I’m now a you’ll be prying these shares from my cold, dead hands conviction long.

Some abrasions to paint on driver side handle (likely service team member with rings), rear brake lights TINY misalignment (but service team indicated it was well within tolerance and trying to perfect them would likely misalign much larger side panels), and hood was TINY (even less than rear brake lights) bit misaligned (again within tolerance, but they’ll adjust that one since low risk to other panels).

They’ll touch up the paint and hood when I go in for winter tire change and window winterization this week. After a long drive for work and putting 500km on it, I’m committed to getting as many ICE drivers in to this vehicle as possible.

Consumer Reports should add a few more questions to their owner survey:

1) Is your car a chick magnet?

2) Do chicks measure your panel gaps when you pick them up?

3) Has any chick, ever, in your lifetime with chicks, given half a shite about your panel gaps?

 

[OrthoSurg]

How Cathie Wood Beat Wall Street By Betting Tesla Is Worth More Than $1 Trillion

A lot of talk on Kathie Wood and ARK Investments on this thread. I do not recall this article having been posted before, it is a fresh read (Forbes article posted October 5th, 2020) on Kathie Wood and her career development.

"An optimist by nature, Wood nonetheless offers some unsettling predictions for the next five years. She expects a broad swath of large industries—banking, energy, transportation, health care—to be disrupted by technological change, with many workers displaced. The result, she believes, is that economic growth, inflation and broad market indexes will all fall persistently short of expectations, providing an opportunity for active managers to pick the innovative winners that will continue to drive market-cap gains."

I read the above as Tesla being one of the disruptors, in not the main disruptor.

"Does she think the market is now in a bubble? Nope. Uncertainty over the pandemic and the election (Wood supports President Trump “unabashedly”) means money has been flowing out of stocks and into the safety of bonds, she notes. “The fact that people are fearful now that we’re back at the S&P 500 trading at 25 times earnings tells me that we are not in a bubble at all.”

Expect more gains to come for disruptors.

I have 75% of my investments in disruptive new tech.

My “value investing” portfolio from my financial advisor is up 12% in 4 years.
My ETF are up 9% in 1 year.
My disruptive new tech portfolio is up 200% in 2 years.

That’s crazy

 

[Unpilot]

View attachment 610959

Took possession of my Model Y this week. I thought I was a high conviction long until this point. I’m now a you’ll be prying these shares from my cold, dead hands conviction long.

Some abrasions to paint on driver side handle (likely service team member with rings), rear brake lights TINY misalignment (but service team indicated it was well within tolerance and trying to perfect them would likely misalign much larger side panels), and hood was TINY (even less than rear brake lights) bit misaligned (again within tolerance, but they’ll adjust that one since low risk to other panels).

They’ll touch up the paint and hood when I go in for winter tire change and window winterization this week. After a long drive for work and putting 500km on it, I’m committed to getting as many ICE drivers in to this vehicle as possible.

First Tesla I assume?
They will do that to you.

Study the company....read the financials....watch all the interviews and you tube clips you want.
Once you buy one...BANG hooked for life.

The car's ARE JUST THAT GOOD.

Hell even Gordon 58 dollar J. would change his tune if he had enough money to buy one.

 

[st_lopes]

First Tesla I assume?
They will do that to you.

Study the company....read the financials....watch all the interviews and you tube clips you want.
Once you buy one...BANG hooked for life.

The car's ARE JUST THAT GOOD.

Hell even Gordon 58 dollar J. would change his tune if he had enough money to buy one.

Other than the Model S we had on our wedding day, this is the first to officially join the family.

 

[CHGolferJim]

View attachment 609097

If only there was some more newsworthy headline for Google to push me at 6:12 PM regarding Tesla

If they buy the shares in an actively managed fund, and xfer them to the index fund and don't sell them to the index fund for a profit, then the shareholders of the actively managed fund are being shafted. Sounds like failure of fiduciary responsibilities to me and therefore grounds for a lawsuit (I am NOT a lawyer).

This is why shares won't be purchased in one fund to avoid the front running the index dynamic, for the benefit of the index.


I suppose the fund management company itself might have enough cash lying around to buy early, and then transfer later. If so, then they would be transferring the fund management's money into the pockets of their index fund investors, which they won't want to do.

If anything, the fund management company trading on it's own account (assuming that is even a thing), and the actively managed funds, will use the opportunity to front their (and all other) index funds to juice their returns.

Aren’t the individual mutual funds in a family, e.g., Vanguard, separate corporate entities, so any shares transferred between funds have to be done at market prices, otherwise there are tax implications? I would think the active funds would want to capture the profits or appreciation for their performance reports whereas the index funds just work to meet the index.

 

[Artful Dodger]

I’m now a you’ll be prying these shares from my cold, dead hands conviction long.

Yeah, about that. See your lawyer and tax accountant. There may be some way to take them with you (or at least see them safely in the hands of some other 'just-as-long'.

Congrats on the new Model Y. Long may you run...

Cheers!

 

[dgodfrey]

Consumer Reports should add a few more questions to their owner survey:

1) Is your car a chick magnet?

2) Do chicks measure your panel gaps when you pick them up?

3) Has any chick, ever, in your lifetime with chicks, given half a shite about your panel gaps?

Not to mention putting more emphasis on paint swirls over safest car in the world. Pretty much destroys any credibility as consumer watchdog.

 

[scaesare]

The cars already feed traffic data back to the mothership and it's used for routing on the whole fleet...

Assuming aren't just talking Google maps, do you have a citation for this?

 

[MC3OZ]

Citation for this?

If there is a good technical thread that digs into maps and traffic, it would be handy to know.

IMO things like stop signs are marked on maps and updated by vision with cars reporting mismatches?

Map updates can be pushed independent of software updates or Neural Net updates?

Traffic must be dynamic, but I don't know the information source...

It isn't a topic for this thread, but it is an interesting topic, and an area where our knowledge may significantly lag reality.

 

[mejojo]

Of Course I Still Love You 2

My 2020 Model S is named Of Course I Still Love You and the CA vanity plate ordered is OCISLVU

 

[Knightshade]

Depends on the decouple. If Tesla hits over 1k due to Volkswagen like squeeze then yes do expect it to drop down..

VWs squeeze happened because Porsche announced "Oh hey we secretly bought up most of the company- and saxony owns almost all the rest... FYI the total float on the entire market is only like half of the current amount shorted...have fun!"

That's not even remotely remotely remotely like the situation with Tesla and the S&P.

That doesn't mean the price won't go up from it- but it's not going to behave anything like VW did in the famous incident to which you refer.

Assuming aren't just talking Google maps, do you have a citation for this?

Tesla doesn't use google maps for anything other than the base map on the display. They don't use them for traffic, or for navigation or routing or more specific map data (they use Mapbox for the map data and their Valhalla engine for routing/nav.)- source on Mapbox/Valhala here
Elon Musk Says Tesla Will Build Its Own Maps From GPS & Fleet Data



If you're asking for a citation that Tesla sends traffic data back to the mothership the source would be... Tesla... in the release notes when it was added to the car:

The Model S navigation system now takes real-time traffic conditions into account when determining a route for you. Estimated travel times are adjusted to reflect traffic and your car will continuously monitor traffic while navigating and re-routing you if warranted.

In order for these features to work, Tesla measures the road segment data of all participating vehicles but in a way that doesn’t identify you or your car

Now up until June this year, they used Inrix traffic data to supplement their own, but Firmware 2020.24 removed it, so since then it's been Teslas own fleet data only.

Source on that change here:

https://twitter.com/greentheonly/status/1275605730406682626