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

[Runarbt]

If FSD is not possible, Tesla will fall 70% minimum. Tesla's valuation is dependent on them solving FSD.

Nope - market doesn't believe in FSD, yet.

Imho:

Tesla valuation is in its leadership in EVs.
Energy/battery production, which will transform the energy sector, along with its auto.bidder software.
It diversity into solar, insurance, and general innovation in manufacturing.

If you compare Tesla MCAP with Toyota/GM/VW mcap- you should add their debt and pension-obligations, which are huuuge. If you "remove" their debt and pension obligations, i.e. add this to macp, these companies will get a mcap pretty close to Teslas.
.

 

[Tslynk67]

To celebrate the entry into the S&P 500 our Norwegian friends decided to register 241 Teslas today. A record for this year.

Wow, 222 deliveries in Norway today (Saturday), that's incredible and implies this is going to continue until the end of the quarter. Already beaten 19Q4...

 

[BigPeePee]

You've just explained where you're wrong, congratulations.

None of those verticals will be as profitable or as big as their automotive division. Tesla's biggest potential is in robotaxis, and that is what the market is pricing in. Without the thought of FSD, investors can not justify its current valuation.

So much wrong with this statement and I would say if you really believe what you just wrote....you either have not done nearly enough research into the multiple markets Tesla is disrupting, how Tesla has been and is continuing to achieve margins that are exponentially higher than their competitors, or just basic valuation of a company based on forward P/E metrics, sales to price ratio's, etc...

I would suggest you do a lot of due diligence and research right now because you're bound to make some very costly financial mistakes with that lack of information

Without FSD, those margins will be driven down to current ICE vehicle margins.

 

[Singuy]

Tesla wont allow Uber or Lyft to use their Robotaxi FSD functions.

You can have a personal licensed FSD, drive the car yourself - or let it drive for Tesla Autonomy Robotaxi fleet, along with Tesla owned cars.

Why would Tesla share the profit with Uber or Lyft, when they can do it themselves and take all the profit? ;-) They wont.

Depending on they can work out. If Tesla can print as many cars as they promised, then it's not a bad idea to share profits with uber if uber also invest into tesla charging stations. And as competition comes, Uber will still stick with Tesla due to their deep partnership.

If there's a company with millions paying customers want to partner up to create a win win scenario, the company should take it. This creates a monopoly and squeeze waymo or mobile eye out. Because if Mobile eye partners with Uber, then there are customers lost to Tesla for being a competitor vs being the monopoly. Uber shouldn't be Tesla's competitor, it's the FSD Uber will eventually use ends up being Tesla's competitor. Either way Uber will get their robotaxies..so either Tesla pockets a portion of that cash while selling them the cars or Waymo/cruise/mobile eye gets it.

 

[Bet TSLA]

Well, I decided to open a much smaller position for next week. Near the close I wrote 25 Dec 18 TSLA 690 puts for $95.10. So breakeven is at TSLA $595 next Friday. If TSLA ends the week over 690 I make ~$237K. If TSLA rises dramatically, as I think is likely, this will provide a nice extra. My shares and 12/31 590 and 690 calls will provide the endless bounty if the stock does spike.

From Friday, my 25 puts are now at $63.85, so up $78K of their potential $237K. A little bit down today on TSLA's $6.58 drop.

Not much sign of "endless bounty" yet.

Meanwhile, my E*Trade account continues to provide no notion of how much my holdings are worth or what I get to keep. The options bid/ask numbers are mostly nonsensical. And surely since TSLA closed at 695, my 25 short 690 puts that expired today won't cause me to get 2500 shares put to me for $1.725M. Or will they? I guess I'll find out tomorrow. The pricing on NASDAQ's Tesla, Inc. Common Stock (TSLA) Option Chain certainly doesn't seem to reflect a 695 close at my strikes.

My TSLA options that expired today:
- short 690 puts
- short 670 puts
- short 610 puts
- long 680 call

Given a 695 close, all the short puts should expire worthless, and the call should be exercised. It's just a single call that I bought late today for $5 as an experiment, so I don't care too much either way. Losing $500 is what I expected, but I don't mind buying another 100 shares at 680.

Still in play:
- long 12/31 590 calls
- long 12/31 690 calls

The latter still require TSLA to go up some more by expiration to break even. But I can't tell what they're worth now due to the aforementioned nonsensical bid/ask pricing.

** Note: I'm posting these details because I think my experience may be useful to others. If it isn't useful to you, skip it. **

So what happened? As expected, the 610 and 670 short puts expired worthless (up $117K, positions taken in the last couple of days, history not posted). But the 690 short puts, despite being out of the money at expiration, were assigned to me, so I now have an extra 2500 TSLA shares (and yes, I had the cash in the account to cover the purchase). What E*Trade's web site has to say about this situation is:

Normally, you would not receive an assignment on an option that expires out of the money. However, even if a short position appears to be out of the money, it might still be assigned to you if the stock were to move against you just prior to expiration or in extended aftermarket or weekend trading hours. The only way to eliminate this risk is to buy-to-close the short option.

Bummer! So my potential $237K profit now enters a new phase as 2500 shares, at the moment theoretically up $250K with TSLA at 695. It's better than the 690 puts in that breakeven is still TSLA at $595, but there's now unlimited upside. It's worse in that I've committed the full amount of cash. I hate selling TSLA shares, but that's probably what I'll do on Monday since this was not the plan. So maybe I make more than $237K on this, but probably I make less.

There was no serious spike up, and I see it as unlikely to happen now, so "endless bounty" has not materialized. I think the 12/31 calls are doing well, but I won't really know much until Monday. The published bid/ask continues to be nonsensical.

 

[BigPeePee]

Nope - market doesn't believe in FSD, yet.

Imho:

Tesla valuation is in its leadership in EVs.
Energy/battery production, which will transform the energy sector, along with its auto.bidder software.
It diversity into solar, insurance, and general innovation in manufacturing.

If you compare Tesla MCAP with Toyota/GM/VW mcap- you should add their debt and pension-obligations, which are huuuge. If you "remove" their debt and pension obligations, i.e. add this to macp, these companies will get a mcap pretty close to Teslas.
.

What makes you think the market is pricing in energy storage/auto-bidder but not FSD? In fact, people are more likely to believe FSD is close since it already has a beta release that is improving. The energy business isn't proven yet.
Tesla's automotive margins can not be sustained without FSD in the long-run. Eventually, competitors will also scale and cut down on manufacturing costs and then undercut Tesla's price. This is why Tesla needs to have FSD, because that is harder to copy than EVs and the robotaxi network will have a bigger network effect than the vehicles or the brand themselves.

 

[ByeByeJohnny]

Well - you ignore than it isnt as simple as competition just pop up.

If Tesla solve FSD - they have won. There wont be a magical appearance of competition, just because Tesla make a bunch of money.

800% margin - is due to no driver.

Competition might be Uber drivers in EVs.. let them come. They have no chance of competing with Tesla Robotaxis as their drivers still need to eat and sleep. Waymo might solve a few cities - their cars are way expensive and limited in numbers.

Tesla has volume - cars, driven miles, brand name..

Waymo and its peers are no real competition to Tesla, just as GM, Ford and VW dont stand a chance in hell with regards to kill Tesla in the EV race.

When Tesla have a robotaxi fleet world wide, they will own the market, Robotaxi will equal Tesla.
Waymo may be a local niche player which will struggle with margins.

Others will come up with a working robotaxi a couple of years after Tesla, guaranteed. Once something is proved possible it will be copied. It always is. This will not be the first instance in world innovation when it's not. It may be expensive to do so but it will be done. No one is gonna let Tesla have 100% of a market and set their own prices.

Someone else will figure it out and if whoever does don't have the manufacturing capacity they will join with someone that does.

Once Tesla don't have 100% of the market prices will start to come down. If Tesla don't lower it's prices to reasonable margins they will start loosing market share. Enough people will taka a less luxurious vehicle to save even 10% on the price. Heck a large protion of robotaxi trips will probably eventually be taken in some type of tuk tuk vehicle even in most European cities because of price advantages.

I'm not saying Tesla can't have a significant part of the market as well as the best service. And make a sh*t ton of money. But it won't be with an 800% profit margin.

 

[Runarbt]

Depending on they can work out. If Tesla can print as many cars as they promised, then it's not a bad idea to share profits with uber if uber also invest into tesla charging stations. And as competition comes, Uber will still stick with Tesla due to their deep partnership.

If there's a company with millions paying customers want to partner up to create a win win scenario, the company should take it. This creates a monopoly and squeeze waymo or mobile eye out. Because if Mobile eye partners with Uber, then there are customers lost to Tesla for being a competitor vs being the monopoly. Uber shouldn't be Tesla's competitor, it's the FSD Uber will eventually use ends up being Tesla's competitor. Either way Uber will get their robotaxies..so either Tesla pockets a portion of that cash while selling them the cars or Waymo/cruise/mobile eye gets it.

Customers ain't that loyal - if Tesla can offer rides way cheaper than Uber - you can bet your shorts they will move one to Tesla Ride APP.

And its not just a lower price.

Robotaxi doesnt mind waiting - so you can have the ride waiting for you, and not need to hurry that much.. make it more like owning a car, than order a taxi. Say Robotaxis include a "15 minute free wait"-window.

I wouldnt want to live without a car - and rely on uber og taxis just because of this - I want to go when I am ready, not wait fro someone to arrive, or have a meeter ticking -while the kids find their stuff and get ready for school, and late as usual.

However - if I could have a warm car waiting for me - around the time we usually get ready +/- 10minutes, cheap ride, and without a meter ticking, that would work fine.

Winter time, I pre-heat my car through the app 10minutes ahead of departure, and we are then often 10 minutes late, so 20minutes.. if I could order a robotaxi instead, have it be on time, and have it wait for free - this would be just like owning the car. ;-)

 

[StarFoxisDown!]

None of those verticals will be as profitable or as big as their automotive division. Tesla's biggest potential is in robotaxis, and that is what the market is pricing in. Without the thought of FSD, investors can not justify its current valuation.



Without FSD, those margins will be driven down to current ICE vehicle margins.

Oh wow, I suggest you go and do some research into different margins that current ICE auto makers make - on the car level, operational level, and the net margin level.......and then go and look at Tesla's margins on those same levels over the past 1-2 years of earnings reports. Doesn't take a genius to see what's been happening and going to happen as Tesla's unit sales grows because Tesla is on another level when it comes to producing more vehicles without increasing operational costs and the percentage of any new operational costs for new levels of production increasingly becomes smaller and smaller. This is simply something that traditional auto cannot replicate in their current structure.

Man, I don't know why I'm writing this out. This is stuff that has been discussed many times on this forum over the years. Do your research and due diligence man

 

[st_lopes]

Friendly reminder, if you are considering investing money in a S&P 500 tracking fund now that Tesla is included (to diversify, 401k doesnt allow stocks, etc) consider buying SPYX, which is like SPY minus fossil fuel companies.

or XOUT

 

[Singuy]

None of those verticals will be as profitable or as big as their automotive division. Tesla's biggest potential is in robotaxis, and that is what the market is pricing in. Without the thought of FSD, investors can not justify its current valuation.



Without FSD, those margins will be driven down to current ICE vehicle margins.

Most car companies only get low multiples because they operate similarly. Sell cars at razor sharp margins while recouping some of the money back in parts from accidents and out of warranty cars. Well now they are also in the financial service earning peanuts on interest rates while taking a huge ass risk as the asset is not only depreciating faster than the interest they can earn, but also can be totaled or defaulted on. It's like a bank lending money out to RVs in which it can flip over from time to time on the high way. Those are not the bread and butter type of asset you want like a real house that appreciate in value and is not subjected to a fire every few years.

But not all car companies operate like so, Ferrari makes high margin cars and sell parts at high margin. They make their cars exclusive so most people pay cash for them..and if not their cars are APPRECIATING assets a lot of the time due to exclusivity. This is why with a minuscule revenue and delivers vs GM, they still hang with them in market cap.


Then we have Tesla, where Elon understands that EVs if made well should have no part replacement so the entire margin strategy needs to be reworked.

So they strive to sell cars are a high margin by dramatically dropping the manufacturing process, own the dealers, own the gas stations, and sell the software like FSD. They rely on high margin software, and getting rid out as many middle man as possible taking a cut out of the car to produce industry leading margins. So if Tesla can sell 10 million cars at Ferrari margins, they are suddenly undervalued.

Margin is everything..not "sector". Who cares if they all make cars. It's about who makes the most money from every car they make that takes the valuation crown.

 

[Joe F]

*BIDEN SPEAKS AT EVENT NAMING ENVIRONMENT AND ENERGY NOMINEES
*BIDEN SAYS HE WILL REJOIN THE PARIS CLIMATE ACCORD
*BIDEN CALLS CLIMATE CHANGE 'EXISTENTIAL THREAT OF OUR TIME'
*BIDEN CALLS FOR THE FEDERAL GOVERNMENT TO BUY ELECTRIC VEHICLES
*BIDENS CALLS FOR 1.5 MILLION ENERGY-EFFICIENT HOMES
*PROMISES 500,000 ELECTRIC VEHICLE CHARGING STATIONS

Forbes - this afternoon: Taking A Look At Biden’s Climate Plan For Cars And Trucks

Excerpts:

President-Elect Joe Biden has unveiled a plan for building a modern sustainable infrastructure and an equitable clean energy future. It’s a vision based largely on the assumption of a massive wave of investment in electric vehicles...

So given the Biden Administration’s will to boost EV fortunes, we can expect Biden to push for generous incentives on EVs alongside a rollback of Trump’s rollback (to 40 mpg) of Obama’s fuel economy standards (54.5 mpg)...

Tesla of course is the most famous brand. In the Tesla factory is the Cybertruck, where the single-motor version looks like a stylistic pickup, billed to come out in 2021 with a starting price of $40,000...

The long-haul semi-trailers are another step up. With 4 independent motors on rear axles, the Tesla Semi is aiming for an acceleration of 0-60 mph in 20 seconds, for a fully-loaded vehicle.

I watched Biden live on CNN. He stated EV’s made by union workers.

Hopefully that idea is not set in stone...

 

[2daMoon]

Well - you ignore than it isnt as simple as competition just pop up.

If Tesla solve FSD - they have won. There wont be a magical appearance of competition, just because Tesla make a bunch of money.

800% margin - is due to no driver.

Competition might be Uber drivers in EVs.. let them come. They have no chance of competing with Tesla Robotaxis as their drivers still need to eat and sleep. Waymo might solve a few cities - their cars are way expensive and limited in numbers.

Tesla has volume - cars, driven miles, brand name..

Waymo and its peers are no real competition to Tesla, just as GM, Ford and VW dont stand a chance in hell with regards to kill Tesla in the EV race.

When Tesla have a robotaxi fleet world wide, they will own the market, Robotaxi will equal Tesla.
Waymo may be a local niche player which will struggle with margins.

There is also nothing stopping Tesla from licensing FSD to be installed in other manufacturers product. If that happens the 35M cars may be a low ball number.

 

[Sudre]

*BIDEN SPEAKS AT EVENT NAMING ENVIRONMENT AND ENERGY NOMINEES
*BIDEN SAYS HE WILL REJOIN THE PARIS CLIMATE ACCORD
*BIDEN CALLS CLIMATE CHANGE 'EXISTENTIAL THREAT OF OUR TIME'
*BIDEN CALLS FOR THE FEDERAL GOVERNMENT TO BUY ELECTRIC VEHICLES
*BIDENS CALLS FOR 1.5 MILLION ENERGY-EFFICIENT HOMES
*PROMISES 500,000 ELECTRIC VEHICLE CHARGING STATIONS

And some people thunk the only reason TSLA stock is up would be the SP500 inclusion. Looks like Tesla's future is on the rocks... SELL...
/s

 

[Runarbt]

What makes you think the market is pricing in energy storage/auto-bidder but not FSD? In fact, people are more likely to believe FSD is close since it already has a beta release that is improving. The energy business isn't proven yet.
Tesla's automotive margins can not be sustained without FSD in the long-run. Eventually, competitors will also scale and cut down on manufacturing costs and then undercut Tesla's price. This is why Tesla needs to have FSD, because that is harder to copy than EVs and the robotaxi network will have a bigger network effect than the vehicles or the brand themselves.

-Auto-bidder is live, making money now.
-Energy storage - popping up huge projects around the world.
-80-100% energy growth in earnings past quarters

vs.


FSD - Elon promised coast-to-coast drive in 2019 = Elon missed again
FSD Beta arrived - I at least was awed. Market shrugged. Media - nothing, except for electrek and cleantechnica.
Self driving - Tesla is placed at the bottom in every statistics/overview

TMC and Tesla owners know about FSD Beta. Face it - we are special.
Market? Blissfully ignorant for now.

I conclude = FSD is not priced in at ALL.

 

[Runarbt]

There is also nothing stopping Tesla from licensing FSD to be installed in other manufacturers product. If that happens the 35M cars may be a low ball number.

Well - just the facts that:

You need a proper EV, long range, volume car.
Tesla make cars themselves - why license something, which will hinder your own products.

Do Tesla want inferior EVs to be associated with it Robotaxi fleet?

 

[TheTalkingMule]

** Note: I'm posting these details because I think my experience may be useful to others. If it isn't useful to you, skip it. **

So what happened? As expected, the 610 and 670 short puts expired worthless (up $117K, positions taken in the last couple of days, history not posted). But the 690 short puts, despite being out of the money at expiration, were assigned to me, so I now have an extra 2500 TSLA shares (and yes, I had the cash in the account to cover the purchase). What E*Trade's web site has to say about this situation is:

Normally, you would not receive an assignment on an option that expires out of the money. However, even if a short position appears to be out of the money, it might still be assigned to you if the stock were to move against you just prior to expiration or in extended aftermarket or weekend trading hours. The only way to eliminate this risk is to buy-to-close the short option.

Bummer! So my potential $237K profit now enters a new phase as 2500 shares, at the moment theoretically up $250K with TSLA at 695. It's better than the 690 puts in that breakeven is still TSLA at $595, but there's now unlimited upside. It's worse in that I've committed the full amount of cash. I hate selling TSLA shares, but that's probably what I'll do on Monday since this was not the plan. So maybe I make more than $237K on this, but probably I make less.

There was no serious spike up, and I see it as unlikely to happen now, so "endless bounty" has not materialized. I think the 12/31 calls are doing well, but I won't really know much until Monday. The published bid/ask continues to be nonsensical.

Thanks for sharing, should make for an even more interesting week ahead. I think you'll do quite well selling Monday. I'm waiting til tomorrow to start writing up my thoughts on where things are headed from here, still a bit of Heineken-brain from last night's celebrations. But my rough guess as of last night was that the opening cross Monday should be real interesting.

I don't know enough to be remotely sure about that, but it makes sense to me that Friday's closing cross was index buying(obviously), but the 40M AH was basically traders sucking up shares from weak longs to sell to indexers at opening cross Monday. So there's still a LOT of shares that need to change hands, and most parties seem to think they can do that at $695 Monday. That feels unlikely to me.

We shall see. Looking forward to the detailed debate here tomorrow.

 

[cusetownusa]

I watched Biden live on CNN. He stated EV’s made by union workers.

Hopefully that idea is not set in stone...

Would be extremely frustrating if they somehow pass EV incentives but have them not apply to Tesla.

 

[Singuy]

Would be extremely frustrating if they somehow pass EV incentives but have them not apply to Tesla.

Will be extremely expected. Legacy automakers lobby, it's what they do. Elon Musk could care less.

However, as the tension between US and Russia escalate, Musk holds a lot of power having the most reliable and cheapest rocket on earth.

 

[AudubonB]

...This is now a $650 billion company. How much further do people think it will go? Tesla is a much safer investment now with boomers looking to get in. The risk is no longer there. It's obvious to everyone that Tesla will be the #1 auto manufacturer in the world and will have a near monopoly on robotaxis. The market is already pricing some of that in.
I think if you're expecting a 6-8X increase with dividends in the future, that is fine. Anyone expecting a 50X increase from here should look elsewhere.
A 50-100X investment is when everyone thinks the company will go bankrupt. You don't get 50-100X returns when you invest in something everyone thinks will succeed.

Careful of making absolute statements. As I had shared here back in February, when one figures in the 32:1 series of stock splits XOM had had just since July of 1976 (there had been many before that), yet at the same time also neglecting the very hefty dividends it always had paid, then its 4/1970 price of $0.55 rose more than 186 times when I sold it on June 20, 2014 at $101.80 (its all-time high was $104.38 three days later). Adding back the dividends would increase that multiple manifold. BUT - those shares had been in the family, as also I've mentioned, for generations (Those 1970 & 1976 #s are in here only because that was as far back as I could get price & dividend data on the internet).

The real base price of those shares was a few pennies.....and that from the time that Standard Oil NJ (===>Esso===>Exxon===>ExxonMobil) ALREADY WAS one of or the single largest US company, by sales, profits, market cap, pollution...just about in every category. Yet it did indeed enjoy many decades of growth thereafter, thus far exceeding a 100 times multiple.

Included: my 20 Jun 2014 trades, whereby I expunged some of the last exposure to energy firms, and with care for those of you with sensitive eyes I have incorporated the latest technology to make invisible the # of shares in the transactions.....

Very serious edit: PLEASE take the above into consideration when you read any number of the regular posters to HOLD YOUR SHARES.