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

[dgodfrey]

Without speaking for

Africa, South America, South Asia and Southeast Asia plus places like Alaska, Russia, almost all of the Middle East. Even though that was slightly tongue-in-cheek we do need to remember that roughly a third of the world new vehicles sales markets are not addressed at all by Tesla. Virtually all of those have pretty poor EV charging infrastructure, so the new Chinese Supercharger plant and others to come will be very busy for at leas a decade. By the EV adoption will be the norm so Tesla will need many, many more Supercharger, Destination Charger and residential charger equipment and installations.

What I find so refreshing in this position is that Superchargers are a key driver to Tesla's success. I've read claims on non-Tesla forums that the Superchargers were:

• A stupid idea
• Will be run out of town by EA
• Were only meant to keep Tesla's excusive
• Tesla has no intention of sharing
• It's a walled garden
• Having many portals at fewer stations is backwards
• Will be gobbled up by some conglomerate that really understands the needs of the EV community
• Should just admit defeat and move to CCS

 

[Nocturnal]

You know that you are getting resigned to a long slog through a flat period for SP when you forget to check the price in the morning. "meh, I'm sure it's about the same". I'd sell some calls but I know the moment I do Papa will roll out the button or something and blow me away.

 

[ZeApelido]

F Series is production constrained (by microchips among other components) not demand constrained.

A million refundable $100 Cybertruck reservations doesn't seem to be affecting demand for F Series so far.

Ford Q1 2021 Sales Up Thanks to F-Series, Bronco Sport - The News Wheel

Ford is off to a fast start in 2021 thanks to strong Q1 sales from heavy hitters like the Mustang Mach-E, F-150, and Bronco Sport.

thenewswheel.com

Most people who buy Ford trucks don't believe the Cybertruck is legit. Most might think it's a joke.

But when it's released and they see it in real life, expect that to quickly change.

The power of word-of-mouth will be strong.

 

[Artful Dodger]

This was claimed to have a very significant and rapid effect on warming. Is it overstated?

In any case, CH4 plumes can be detected from satellite with 50m resolution. Combined with wind profiles, these can pinpoint the culprits.

Understanding Global Warming Potentials | Greenhouse Gas | www.epa.gov

CH4 is 21x worse than CO2 over 100 years, but its over 100x worse over 20 years (which is the time frame that matters for action). So it all comes down to fugative emissions.

@Lycanthrope No, CH4 does not 'dissipate' after 10 years: that's it's 'half-life' of residency in the atmosphere.

But due to methane's much higher Global Warming Potential (GWP), both immediate and the overall effect of methane emissions is much worse:

TL;dr Natural Gas is a 'bridge to nowhere' for the climate. It's renewables, mainly wind and solar, with a bit of hydro and LOTS of batteries.

Cheers!

 

[CHGolferJim]

Further, from the Q1 10-Q:

• During the first quarter of 2021, all remaining market capitalization milestones except for the milestone relating to $650.0 billion were achieved
• During the first quarter of 2021, the operational milestone of annualized revenue of $55.0 billion became probable of being achieved and consequently, we recognized a catch-up expense of $116 million
• As of March 31, 2021, we had $129 million of total unrecognized stock-based compensation expense for the operational milestones that were considered probable of achievement, which will be recognized over a weighted-average period of 0.9 years
• As of March 31, 2021, we had unrecognized stock-based compensation expense of $548 million for the operational milestones that were considered not probable of achievement

So, less than two-more quarters-worth of large CEO comp expenses like Q1. Profits will zoom.

Cheers!

Is there discretion in that recognition (=earnings management), or is it basically GAAP-mandated?

 

[UncaNed]

You are not missing anything. Yes, you can 6x your money betting that the SP is 85% higher in March ‘23 than now.

I think that’s a pretty good deal — those March calls are cheap. As you note, the spread is the more conservative play of the two. Buying the naked calls would also give you the ability to sell shorter-term calls against them (but as that’s so far out of the money right now, the stock would first have to rise quite a bit so you could sell calls at similar strikes without using margin).

The spread is a set-it-and-forget-it trade. If you don’t need the money for 2 years and you don’t want to play around with the position, thats a hard return to beat. But if you need to cash it out before expiry, that will cost you, unless both calls are deep ITM.

Just keep in mind that both are worth zero in ‘23 with a SP under 1000. While that doesn‘t seem possible now, who knows. Shares don’t have that issue; hence the difference in a 85% vs a 500+% return.

With as flat as we’ve been for so long, the IV is very low and there are great long-term options to be had all over the board. Somewhat an advice.

AH! Thanks to you guys, now I'm FINALLY starting to understand CALL spreads! So after the market opens and the prices populate, could you guys please post the June 2023 version of that spread, or if it's better to stick with the March 2023's? Much thanks, @soundart2 and @Dancing Lemur !

 

[jbcarioca]

Nothing. Living in truck oriented farming area, nothing. Now that the suburbs are buying trucks, who knows. Ford is not run by the worst idiots like over at GM or FCA. They have launched a credible EV, needs work but for a first try it is every bit as good as an ID3/4 from VW. They have plans to go EV on the F150. The company that has the head stuck in the sand is FCA. If people move to EV trucks long term FCA has no answer.

I disagreed only because your post is entirely limited to US-centric views. Stellantis is making large strides with BEV urban delivery trucks (Peugeot the EU class leader) and cars as well:
The UK Peugeot offerings:

Electric car | Peugeot range of full electric vehicles

Discover Peugeot's range of electric vehicles: electric SUVs, electric city cars and other zero carbon emissions models, their range and charging stations

business.peugeot.co.uk

Then there is Iveco:

https://www.iveco.com/en-us/press-room/photo/pages/press-gallery.aspx?NodeId=66&Title=Challenge%20Bibendum%202011

I won't clutter up the thread with all the Stellantis brands and their progress.
Obviously they are just beginning, as are almost all manufacturers outside of China plus Tesla.
Remember that for Europe especially, urban commercial vehicles are a higher immediate priority than are private cars. That is largely due to the widespread prohibition of non-zero emission vehicles in city centers, mostly with quite short grace periods.

For the world the primary impediment is lack of batteries closely followed by integrated technologies including BMS and all vehicle electronics. Tesla is not likely to enter in these categories for a long time.

From London Taxi (Geely-owned):

LEVC | London Electric Vehicle Company

LEVC is a leading manufacturer and retailer of electric vehicles in the UK, including the iconic TX electric black cab.

www.levc.com

These are by far the most consequential pollution-reducing vehicle classes, precisely because they have such intense use.

Then there are all the EV busses, in very category from several builders.
We do need to avoid the myopia we all tend to have since we are all Tesla enthusiasts and most fo us drive Tesla while many of us power our dwellings with Tesla. The world is rather broader...just not very S3XY.

 

[UncaNed]

Understanding Global Warming Potentials | Greenhouse Gas | www.epa.gov

CH4 is 21x worse than CO2 over 100 years, but its over 100x worse over 20 years (which is the time frame that matters for action). So it all comes down to fugative emissions.

@Lycanthrope No, CH4 does not 'dissipate' after 10 years: that's it's 'half-life' of residency in the atmosphere.

But due to methane's much higher Global Warming Potential (GWP), both immediate and the overall effect of methane emissions is much worse:

TL;dr Natural Gas is a 'bridge to nowhere' for the climate. It's renewables, mainly wind and solar, with a bit of hydro and LOTS of batteries.

Cheers!

I always thought finding a way to burn off all the methane in the air would do more good faster than removing CO2.

...hypothetically, anyway.

 

[Drezil]

Understanding Global Warming Potentials | Greenhouse Gas | www.epa.gov

CH4 is 21x worse than CO2 over 100 years, but its over 100x worse over 20 years (which is the time frame that matters for action). So it all comes down to fugative emissions.

@Lycanthrope No, CH4 does not 'dissipate' after 10 years: that's it's 'half-life' of residency in the atmosphere.

But due to methane's much higher Global Warming Potential (GWP), both immediate and the overall effect of methane emissions is much worse:

TL;dr Natural Gas is a 'bridge to nowhere' for the climate. It's renewables, mainly wind and solar, with a bit of hydro and LOTS of batteries.

Cheers!

AND lets not forget that every CH4 turns into 2 CO2 under the use of oxygen.. which is then also active for a long time ..

 

[dl003]

AH! Thanks to you guys, now I'm FINALLY starting to understand CALL spreads! So after the market opens and the prices populate, could you guys please post the June 2023 version of that spread, or if it's better to stick with the March 2023's? Much thanks, @soundart2 and @Dancing Lemur !

It depends on your prediction for the stock price. The same spread exp 6/2023 will cost more than the on exp 3/2023 in exchange for more time for the stock price to reach your target. If you're too bearish then you'll end up paying more than necessary.

 

[The Accountant]

Based on ship load, are we on par or exceeding other quarters so far? You don't see any production issues right?

The ship loads (per ship) look lower this Qtr but I think we will have more ships this quarter than Q1.
In Q2 as of today - 29 days into the Qtr, 9 ships have departed from Fremont and Shanghai
In Q1 at 29 days into the Qtr, 5 ships had departed

Total Loading time of the first 9 ships through April 29 = 17.5 hours
Total Loading time of the first 5 ships through Jan 29 = 12.6 hours

 

[nativewolf]

GM recently announced they're investing in a second battery factory and have sold so many EVs they're the only company other than Tesla to have burned through the original US credit already.

Ford recently announced they're forming a group to "study" the idea of building a first battery factory, and only in the last few months finally launched a real BEV- that they're unable to produce in really large numbers, and most of which have to go to Europe since the fines are worse there.

I'm gonna have to disagree with you about which one is run by the worst idiots.

Well one went bankrupt in 08 and one saw it coming and did what had to be done to keep from going bankrupt. The US govt bailed out GM which is allowed that investment in the Volt/Bolt to keep going but instead of treating it as the gift that it was GM spent all the EV credits capability on cars that did not develop any capability on the EV powertrain, it all went to LG chem. Shame on GM, why bother. Really...why? Burning through the tax credits with literally nothing to show for it is something I'd call idiotic.

Ford spent nothing on EVs for 12 years but then again both generated the same amount of profit from EVs. NONE. Only Ford did not wasted investments.

For a first EV the Mach e was a better product than the volt and reflects a serious commitment by leveraging the only car brand they have to the EV effort. It would be as if GM only made an electric Corvette or Cadillac.

Ford committed to owning the truck world and as someone that uses trucks there is no comparison. Dodge has a second place effort and GM is..just useless as a work truck. A ford diesel work truck is a serious piece of equipment and they literally can't make enough, forget the chip issues. Even before that they could not keep up with demand. So, yes. Not run by idiots. They saw the shift away from cars and shifted. They saw the move to efficiency in trucks and moved. They created an aluminum truck! I mean that took some huge gonads in Detroit.

GM is floundering around with no serious truck offering and partnered with a fraudster on trucks (they have to pray the whole hummer thing works out) and Ford placed bets on best in class diesel tech, lightweight truck body/frames, and superior transmissions for towing. In fact the ford diesel engines are better than competitors such as Cummins. It is simply a world class engine and it took a lot of pain to get there. Think growing efforts that dwarfed the model 3. I see no comparison, one company has a shot of still being alive in 2026. The ford pickup will still do things that GM can't and Tesla wont. They may have to downsize but they have a product that is differentiated. In the mean time they backed Rivian. They did not waste battery efforts when it was a steep curve. Now that the investment curve is flattening it looks like a good time to invest so they are studying. Tesla won the first mover in battery tech. Ford spent that money elsewhere. GM partnered with Milton. I really don't know what else there is to say about that.

 

[Christine69420]

For those of us who follow the drone videos - looks like Tesla started clearing more land at the north end of Giga Texas. As can be seen from about 28:53 and onwards in Randy's latest video. What will it be used for? No idea!

 

[Singuy]

The ship loads (per ship) look lower this Qtr but I think we will have more ships this quarter than Q1.
In Q2 as of today - 29 days into the Qtr, 9 ships have departed from Fremont and Shanghai
In Q1 at 29 days into the Qtr, 5 ships had departed

Total Loading time of the first 9 ships through April 29 = 17.5 hours
Total Loading time of the first 5 ships through Jan 29 = 12.6 hours

That's interesting. Smaller ships or they up their efficiency at loading? Seems kind of weird to load them at 85% capacity given that Tesla wants to save money every where they can given logistics issues.

 

[Artful Dodger]

Is there discretion in that recognition (=earnings management), or is it basically GAAP-mandated?

Well sure, everything is judgement, but it is based on trends toward individual milestones and (as stated in the 10-Q) Monte Carlo simulation of the most likely outcome.

That's why the two new 'probable' milestones are now scheduled to be expensed over the next 4 quarters (0.9 years, except the 10-Q was filed about 0.1 year into Q2).

So the real art IMO is not this judgement, it's when they will start to claim the Valuation Allowance (VA). It was up to $2.9B per the 2020 10-K (but I haven't looked for it yet in the latest 10-Q).

If they claim the VA in a lump (as GAAP says they should do, but they may choose to spread out), and the accummulated deferred revenue FSD (~$500M) is also recognised all in the same quarter, then it'll be 'well-doggy'...

Cheers!

 

[Singuy]

Wallstreet has become a culture of profit takers. Every pop after earnings are being walked down unless there was a short squeeze. If short squeeze is not triggered then walk it down all day after.

 

[saniflash]

we have seen TSLA price being impacted by changes in the 10yr treasury yield. what are we thinking about inflation? I'm seeing iron price increasing, cardboard prices increasing, trans-pacific shipping seems to have a snag because containers are in the wrong location, and price increases in restaurant menus as they're opening up again and are fully booked. All of that stuff has to translate into higher prices eventually, which might trigger the yield to increase

this is really one thing I'm concerned about short-/mid-term wrt $TSLA price. What do you all think?

https://twitter.com/x/status/1387762420089827331

 

[Artful Dodger]

AND lets not forget that every CH4 turns into 2 CO2 under the use of oxygen.. which is then also active for a long time ..

OT:

Spoiler

lol, no. Stochiometry says:

CH4 + 2 O2 > CO2 + 2 H20​

But I know what you're getting at. Methane doesn't just disappear, it is converted into Carbon Dioxide which then sticks around for hundreds of years (effectively forever wrt the current ill-conceived climate experiment)

Cheers!

P.S. Water vapor (H2O above) is also a potent GHG, but its resident time in the atmosphere averages only 2 weeks)

 

[Singuy]

we have seen TSLA price being impacted by changes in the 10yr treasury yield. what are we thinking about inflation? I'm seeing iron price increasing, cardboard prices increasing, trans-pacific shipping seems to have a snag because containers are in the wrong location, and price increases in restaurant menus as they're opening up again and are fully booked. All of that stuff has to translate into higher prices eventually, which might trigger the yield to increase

this is really one thing I'm concerned about short-/mid-term wrt $TSLA price. What do you all think?

https://twitter.com/x/status/1387762420089827331

Inflation is caused by covid dropping production of commodities, causing inflation of housing due to new house construction grinding to a halt, oil, and we all know about chip shortages.

This is what they mean by transitory..because production is being ramped way up and will flood the market soon enough. So those looking at inflation going straight up unless they raise rates without thinking about the nuance of production issues last year is like looking at Tesla being only profitable thanks to reg credits and btc sales.

 

[UncaNed]

It depends on your prediction for the stock price. The same spread exp 6/2023 will cost more than the on exp 3/2023 in exchange for more time for the stock price to reach your target. If you're too bearish then you'll end up paying more than necessary.

What about the comparative RISK of this spread vs. just buying the CALL?

(FYI yes, I'm asking this DESPITE already having worked on some of the great online tutorials out there)