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

[Curt Renz]

Barron's - 15 minutes ago: Wood's TSLA Target & Wall Street

Excerpt:

Cathie Wood’s Tesla (ticker: TSLA) target works out to a roughly 37% average annual return, should the stock hit $3,000 at the end of 2025. That’s three times what the NFL team earned Jones.

Stock targets farther out in the future, like Wood’s, can look surprising. But they aren’t comparable with traditional Wall Street price targets, which typically represent where analysts expect a stock to trade over the next year.

Turning Wood’s target into a year-end 2021 target, more comparable to the Street, requires a little math and an assumption. Tesla is a richly valued, high-growth stock—and a volatile one at that. That means risk to investors. And investors typically require higher returns for more risk, maybe 20% a year on average.

Taking that into consideration, Wood’s $3,000 target for 2025 translates to a roughly $1,400 year-end 2021 price target. Put another way: If an investor paid $1,400 for Tesla shares at the end of 2021 and Wood turned out to be correct about Tesla shares hitting $3,000 at the end of 2025, the investor would earn 20% a year on average.

The $1,400 figure is bullish but it isn’t way out there. Wedbush analyst Dan Ives has a bull-case price target on Tesla shares of $1,250 a share. Bull cases are Wall Street analysts’ most optimistic scenarios. Often, analysts will have a bear-case scenario too. Analyst’s price targets often sit somewhere in the middle. Ives rates Tesla shares Hold and his official target is $950 a share.

 

[Nocturnal]

Other than being (to a currently unknown but non zero degree) cheaper per mile (and presumably quieter with no driver) there is no substantive difference in NYC between Uber/Lyft today and RT tomorrow.

And we've already established COST isn't a factor here since these folks choose to spend massively large costs on car ownership in a place it's incredibly expensive to own a car.

I disagree. One of the reasons people avoid using taxis/uber is the human element. You have to get in some stranger's car, deal with their quirks, body odor, talking, bad driving etc. That last one get's me. If a driver isn't smooth I will get car sick, and most taxi drivers seem to have a problem with their legs and can't drive without constantly rocking the car forward and slowing down. Women also are often wary for several various reasons. Robotaxis should also be far more common so waiting times should be lower, at least in the mid-long term.

Of course some will still want their own car, but RT will open up a sizable chunk of the current market.

 

[TheTalkingMule]

But if you already have the shares the CC only costs you the assignment risk--- whereas writing a covered put locks up a bunch of cash.

You can sell naked puts of course (if you have the margin and level of option trading available)- but the math on that can be pretty screwy.... during the recent dip I got some odd option equity calls (NOT traditional margin calls) for weird amounts of a few thousand, while still having 6-figures of available margin due to some naked puts I've got out there.

I asked the broker if they could explain the formula they use for this and they said no they can't- they have a special calculator, not available to customers, they have to use, and some of the numbers vary depending on the stock underlying involved. (I know what the official "what the law says the margin requirements are" for naked puts but apparently some (or all) brokers have additional ones).

When TSLA has been floating and covered calls start looking like obvious free money......that's when you miss the boat.

Obviously we're all just guessing, just feels dangerous to sell CC right now

 

[asburgers]

Nothing mind blowing so far as expected.

TL;DW
Yellen 5 Min Summary Testimony Notes:
- Worried CARES act last year was not enough to stave off long term impacts of COVID economy
- May see return to full employment next year
- Treasury now has $12B to inject into community/minority institutions
- $350B in aid to state and local gov (implementing is more complicated than it sounds)

Powell 5 Min Summary Testimony Notes:
- Immediate challenge (last year) was to limit severity and duration of fallout to avoid longer run damage
- Recovery is far from complete (will provide support for as long as it takes)
- Service sector still lagging
- Housing sector has more than recovered
- Manufacturing has picked up
- Leisure sector has recovered 2/3 of jobs
- Unemployment rate still elevated at 6.2%
- Labor participation still well below pre-pandemic level
- Fed emergency lending programs served as a backstop supported by CARES act has now been closed and returned back equity as required by law
- Extended PPPLF for another quarter to support PPP

 

[Hrtme]

Any update on GF buffalo? Where are when are the solar roof tiles coming out? Can someone ask at the next CC about OEM partnership with new home construction companies-- it appears to me the easiest way to get the solar roof out.

I think they are staying quiet about solar until fed investigations have wrapped up. Best to not talk about it vs discuss the details and admit they had some bad connections or whatever it was.

Feds Include Ex-Tesla Energy Worker's Fire Complaint In Investigation

Tesla Energy is under investigation by the CPSC (Consumer Product Safety Commission) due to fire risks, CNBC has discovered.

insideevs.com

 

[uujjj2]

One thing I don't understand is that some Tesla bulls (Gary Black, Emmet Peppers, others) think that other companies such as Xpeng/Nio/Rivian will be able to bring Robotaxis to market within a short time period after Tesla. On the other hand, there are many people who believe that FSD will never be achieved by anyone.
There will be other companies (perhaps just 1 or a couple) that do crack FSD and do it in a way that is actually scalable and profitable, but I don't see them catching up to Telsa quite that fast. The only real advantage for the laggards will be that Tesla will spearhead the regulations and grow positive public sentiment. The flip side to this is that as the first mover, Tesla will have a very safe system by the time anyone else is even close. At that point I don't believe many people will be keen to risk using a newer software package if instead they could just use Tesla's FSD. Why be a beta tester/crash dummy if you don't have to be?

Count Elon Musk in the "short period of time after Tesla" group. Elon has said that eventually everyone will have full self driving and robotaxis, and that Tesla's edge in self driving will only be temporary. So will Tesla's edge in batteries, powertrains, and charging networks. In fact, Elon says any edge in specific technology is temporary, and that the only durable advantage is for a company to innovate faster than competitors. "Moats are lame"

The investment case for Tesla is not that Tesla has a lead in FSD. It is that Tesla has the corporate culture, structure, and resources that gave it the lead in FSD.

 

[StarFoxisDown!]

Count Elon Musk in the "short period of time after Tesla" group. Elon has said that eventually everyone will have full self driving and robotaxis, and that Tesla's edge in self driving will only be temporary. So will Tesla's edge in batteries, powertrains, and charging networks. In fact, Elon says any edge in specific technology is temporary, and that the only durable advantage is for a company to innovate faster than competitors. "Moats are lame"

The investment case for Tesla is not that Tesla has a lead in FSD. It is that Tesla has the corporate culture, structure, and resources that gave it the lead in FSD.

The correct way to think of it is by the time competitors catch up to Tesla's FSD, Tesla will be using Autonomy and Vision for applications and purpose far beyond cars.

 

[WattsHappening]

Taking a step back, would you say we're at short/medium term high or low? Simply looking at the 5yr chart and the piles of stimulus should be enough to scare you off selling covered calls IMO.

Selling June $800c nets you $4.1k a contract, selling June $540p nets you $3.6k, I think one is far more likely to happen than the other. Considering our current position.

I agree selling a OTM put is a better play. But most of my shares are in my IRA. No margin allowed and I don't have free/available cash to sell puts (it's all in TSLA shares). Even in my taxable account, I don't use margin. To your point about long term outlook, I think a better use of my cash is to be long TSLA rather than having it be used to cover short puts.

I'm not looking out at June. Rather weeklies or at most, two weeks out. Write OTM CCs on a small portion of owned shares. If the SP rises to where the calls may get exercised, I still win as my portfolio has increased in value. And I can roll the CCs out to a future date with higher strike price. Sorry, I know this strategy has been discussed here many times.

 

[Mo City]

...Finally energy is more than stationary storage, ARK do not model solar which is known to be ramping up rapidly.

Correct, but I'm still not convinced Tesla's profits from solar will be significant compared to what will carry TSLA's valuation into orbit: 1 vehicles, 2 energy storage and 3 software (which includes AI beyond autopilot).

We all agree mass adoption of solar is essential to closing the loop on Tesla's mission. Until convinced otherwise, I discount its contribution to TSLA.

Vehicles drive TSLA's profits and value now. Tesla Energy profits will explode over the next 10 years and may even exceed vehicles. Finally, perhaps in the early 2030s, Tesla will mature as a company and TSLA will be driven by software.

Tesla will use the massive profits generated by the Big 3 to push the deployment of solar. If solar ends up being slightly profitable, fine and well. If not, Elon won't care because any red ink generated by pushing max deployment of solar would barely nick profits and is a tiny price to pay for choking the life out of fossil fuels. This is war!

Just my 2 cents.

 

[Maarten]

I disagree. One of the reasons people avoid using taxis/uber is the human element.

Agree with @Nocturnal . It is really a multidimensional thing.
One way is to look at the cost, but thinking humans will only look at that is hugely oversimplifying.
Remember, we all come from the plains of Africa with brains that evolved from how to avoid those nasty lions.

Other, just as important (or sometimes more important) factors (that differ greatly for one person to another) are:
- Feeling more safe and/or independent when owning a car;
- Being able to show status with a car;
- Spending less time travelling including time/money to find parking space at work/home;
- Being able to show beliefs with a car (or very clearly showing beliefs with not owning a car).
Etc. etc., just look in your heart and think how you personally feel about owning/not owning your Tesla.

 

[insaneoctane]

So I really like the idea of Tesla owning and operating Megapack installations for a guaranteed recurring revenue stream and not just an upfront sale. I really think this could be a huge driver of Tesla's growth if they can get past battery manufacturing restraints.

Me too. Sorry for not recognizing the OP here, but if Tesla just got into the trucking business and applied their technical prowess to the logistics and price per lbs per mile, IMO, they could find a very lucrative method to remove significant ICE/carbon emissions...which certainly supports the mission. The megachargers are ridiculously capital intensive when including promised kWh rates. If Tesla only put them where TESLA would financially benefit, I’d feel better as a stockholde. Tesla could likely get the $/mi fully loaded to such a low number, just due to the economics of EV, it would be fairly crazy not to use them. Then roll in FSD for semi in a few years and your customer list grows even bigger because without paying a driver, the $/mi just got even lower!

One thing I don't understand is that some Tesla bulls (Gary Black, Emmet Peppers, others) think that other companies such as Xpeng/Nio/Rivian will be able to bring Robotaxis to market within a short time period after Tesla. On the other hand, there are many people who believe that FSD will never be achieved by anyone.

There will be other companies (perhaps just 1 or a couple) that do crack FSD and do it in a way that is actually scalable and profitable, but I don't see them catching up to Telsa quite that fast. The only real advantage for the laggards will be that Tesla will spearhead the regulations and grow positive public sentiment. The flip side to this is that as the first mover, Tesla will have a very safe system by the time anyone else is even close. At that point I don't believe many people will be keen to risk using a newer software package if instead they could just use Tesla's FSD. Why be a beta tester/crash dummy if you don't have to be?

Conceptually, Tesla has more or less shared their entire treasure map on how to get to vision-based FSD. It’s easy to imagine that anyone could throw serious $ to setup a team to build the NN/ML to do exactly what Tesla is doing, except for one little bitty thing....THE FLEET. Now that Tesla’s fleet gains them access to 30M-40M miles of data EVERY DAY, that little detail to their strategy doesn’t seem readily easy to reproduce. BTW, I think Tesla is swimming in data. These beta FSD vehicles are each uploading Gigabytes of data daily, look at the fleet size and tell me, how is that manageable? If it is...Tesla will figure it out!

 

[Knightshade]

I disagree. One of the reasons people avoid using taxis/uber is the human element. You have to get in some stranger's car, deal with their quirks, body odor, talking, bad driving etc. That last one get's me. If a driver isn't smooth I will get car sick, and most taxi drivers seem to have a problem with their legs and can't drive without constantly rocking the car forward and slowing down. Women also are often wary for several various reasons. Robotaxis should also be far more common so waiting times should be lower, at least in the mid-long term.

Of course some will still want their own car, but RT will open up a sizable chunk of the current market.

I agree that's a reason folks might avoid current human rideshares (in fact- I listed it as one in the post to which you're replying).

I just don't believe that's the PRIMARY reason that MOST folks have a car instead of using rideshares, so I don't think it's a compelling reason most folks would suddenly stop owning cars and just use RTs.

 

[Mo City]

One thing I don't understand is that some Tesla bulls (Gary Black, Emmet Peppers, others) think that other companies such as Xpeng/Nio/Rivian will be able to bring Robotaxis to market within a short time period after Tesla. On the other hand, there are many people who believe that FSD will never be achieved by anyone.

There will be other companies (perhaps just 1 or a couple) that do crack FSD and do it in a way that is actually scalable and profitable, but I don't see them catching up to Telsa quite that fast. The only real advantage for the laggards will be that Tesla will spearhead the regulations and grow positive public sentiment. The flip side to this is that as the first mover, Tesla will have a very safe system by the time anyone else is even close. At that point I don't believe many people will be keen to risk using a newer software package if instead they could just use Tesla's FSD. Why be a beta tester/crash dummy if you don't have to be?

What some people don't understand is it isn't about being the "first mover". The real issue is mass deployment. Tesla is the only OEM capable of it, instantaneously.

This is why if FSD reaches Level 5 within a couple of years, the game is over. Tesla becomes to the auto industry what SpaceX is to the rocket industry.

Scalability is just as important in the autonomy race as actually reaching Level 5. One more point: Because Tesla is taking a completely different route than most others, copying them could take a very long time.

 

[asburgers]

TL;DW: US Policy Makers Suffer Challenges With Mute Button Functionality.

Yellen/Powell Testimony Q&A:

Inflation:
Powell - committed to price stability; expect surge in spending after vaccination; effects will not be particularly large and transitory; expects pickup due to base effects and debottlenecking; has tools to anchor inflation at 2% and will use them.

Treasury Market:
Powell - Treasury market was experiencing significant dysfunction (Fed bought a lot of treasuries to restore function), hard to say what effect it had.

SLR:
Difficult to say how helpful SLR exemption was (expect to put something out for comment relatively soon). Due to substantial increase in treasuries - leverage ratio is becoming the binding constraint on banking (not Fed's intent - they prefer risk based capital to be binding constraint to force banks to manage risk appropriately).

Tax Policy:
Yellen - Current plans are not funded with increases in taxes; longer term plan will require tax increases


Getting pointless...going to watch this at 2x speed later.

 

[Mo City]

Two lines of evidence:

1. Battery day had 100 GWh in 2022 and 3 TWh by 2030 or perhaps a year earlier (if everything goes well), assuming an S curve that would put 2025 production at about 1TWh.

2. Also we know that Berlin and Austin are aiming for 200-250 GWh each, Shanghai will probably also get a cell factory, they should be fully ramped up before 2025, there is the probability of one or two more gigafactories by then as well, plus whatever Sparks produces (on the Tesla side).

I have to believe battery production at Austin will far exceed 250 GWh/year down the line. Call me crazy, but I think it might become a legit tera-factory.

What Tesla accomplishes on that massive 2,500 acre property (which could grow bigger) is going blow away our expectations.

 

[insaneoctane]

This was referenced, but for non Twitter folks:

https://twitter.com/x/status/1373646122548301833

The thing that irks me here is how they can “reference“ the media to make their BS point and far too many people will believe them because “the media“....

 

[saniflash]

observing a substantial IV deflation in my Jan 2022 450 Calls. Was yesterday ~76%, now ~69%

 

[asburgers]

This was referenced, but for non Twitter folks:

https://twitter.com/x/status/1373646122548301833

The thing that irks me here is how they can “reference“ the media to make their BS point and far too many people will believe them because “the media“....

All I read from that is that the dealerships control the company in this archaic business model.

 

[MTL_HABS1909]

Buy at $667, sell at $673. Rinse & repeat.

 

[johnm6875]

And, it is written, on March 23rd Thou shalt not go above 670. As above this level is a sin punishable by pushdown.