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

[Artful Dodger]

He states he is HODling.

His avatar is diamond hands.

Art is amazing. He always seems to know when to buy and when the SP is shaky. He pinpoints bounce points before they are hit based on his TA. I have witnessed this multiple times. And he doesn’t get rattled.

But I don’t think he trades. I believe all he does is buy and hold.

Correct me if I wrong, Sir Dodger.

Lol, I last sold a 50 lot at $340ish. Silly move. Didn't make me sleep better, either. I simply do not care about catching the next WAVE; I'm here for the TSUNAMI.

Been reading this Forum daily since 2016, but I joined TMC after 'the 420 tweet' in Aug 2018. The FUD from the 'birds made it unreadable w/o the "Ignore" feature (still v.useful). My first TMC post was about the S&P 500 addition (2.5 yrs before it happened).

My situation may be unique, but I suspect there are many here at TMC in similar circumstances. I own my house, have 10+ yrs of living expenses in cash, and long before then my retirement income will mean I won't need to touch that cash.

Each year that passes, I am more and more convinced in the importance of The Tesla Mission. Climate Science shows us the threat. Wall St. denies it for short-term profits. That's why we fight FUD. That's why we HODL. That's how we WIN.

That's how we create a legacy for our heirs. Hedgies only have their "errors" to think about. Not a good way to waste a life. Except they would lay waste to our grandchildren's lives, indeed inflict needless misery upon the next 70 generations of humans. Let's not let that happen. HODL.

Cheers!

 

[goinfraftw]

In the 4th Q of 2019 I wrote a lot about how share prices have momentum and that it works in both directions. There is considerable downward momentum right now but it's pretty much impossible to say how far that could take it. But, my entire life spent watching stock prices tells me that even good stocks with bright futures can go lower than they have any business going before they turn around. Much of it will probably depend on the overall mood of the market. If that doesn't co-operate, look out below!

Since it's probably apparent even to casual observers that Tesla has a very high likelihood of a bright future, there is a good chance Tesla will be a leading indicator of market strength returning. Unfortunately, that doesn't tell us when this turnaround will happen and my intuition says this will not be as clean of a turnaround as it was in early 2020. Head fakes could confuse the issue unless this is nothing more than another "blip" which is certainly possible.

While I am not a big fan of technical chart analysis, I am a believer in "pretty charts". This just means that charts tend to look "right" and I can't define what "right" is, it's more of a feeling. This is what technical analysis tries to turn into a science (but, IMO, mostly fails). IMO, the chart is telling us there must be more downside to make the chart look "right" and that it will probably take more than a couple of weeks. I tend not to try to play these moves because they are just noise in the bigger picture and impactful news can blow everything I just said out of the water. If it were not for market moving news, I believe all charts would look "pretty" and "right". The "pretty" and "right" charts takes us downward and rightward. Then it breaks to the upside, either unexpectedly (by news) or at the proper "pretty" place because sentiment finally has a change that sticks.

A few months ago I said I don't mind if we hang out somewhere in the $500's to the $800's for the rest of the year and that's still where I stand. I still think we have a decent chance of breaking out into the four digits before the year is out (better than 50/50) but if I have to wait until next year, I won't lose any sleep over it.

Some thoughts to consider in terms of the environment:

May 2021 outlook: Warmth favored for southern half of contiguous U.S., wetter conditions for the East

The May 2021 outlook favors warmth for the southern half of the country and a wet East-dry West split.

climate.gov

IMO, I think September (the height of wildfire season in CA) is going to be telling to see how much money goes into clean tech companies (IMO again)...especially via Silicon Valley. My opinion, as it has changed over this year, is that I'm still bullish and there is going to be a 1-2 levels up trigger IMO. That is a little under 4 months away. What makes this all complicated is the ramification of COVID on the world (especially India) and it stress testing the resiliency of the supply chains in the world.

India's Covid-19 catastrophe could hurt global supplies of medicines, clothing and shoes

A terrifying and record-breaking wave of Covid-19 in India threatens to stall the country's economic recovery and send shockwaves through several important global industries.

www.cnn.com

Personally, I think we're all going to get waayyyy more reactionary as the year progresses based on the changes to the outer environment.

A couple more thoughts to consider:

Last year had the "Orange Day" and the remarkable 2020 wildfire season in CA and I really do think it had an effect on the stock price in the run-up on the latter part of the year (would enjoy hearing other theories if anyone wants to share on TSLA as it blew past $2k pre-split) -

Since it is the weekend, some fodder in regards to this increase in carbon emissions projection over the next few years:

Making Sense of ‘Climate Sensitivity'

New Study Narrows the Range of Uncertainty in Future Climate Projections Recently, an international research team published a comprehensive review in the journal Reviews of Geophysics on our state of understanding of Earth’s “climate sensitivity,” a key measure of how much our climate will...

climate.nasa.gov

IMO: The likelier for increase variance in climate sensitivity, the likelier need for policy towards renewables. I think that'll entail higher multiples for the company in order to fuel growth to reach its goals from investors. I do wonder what happens when we start seeing more scenarios, worldwide, like the CA Wildfires "Red Day" on 9/9/2020 where extrinsic turns into intrinsic. Since that day:

Day: $366.28
7-day (after): $441.76 on 9/16/2020
1-month (after): $425.30 on 10/7/2020
3-month (after): $568.82 on 12/2/2020
Latest: $654.87

Edit: Link to California "Orange Day"

‘The day the sun didn't rise’: People in Bay Area share surreal photos of orange skies

People took to social media Wednesday morning in the Bay Area to post about the glowing...

www.sfchronicle.com

View attachment 646589

Further, hurricane season was pretty exceptional too in 2020 as it was the most active on record.

2020 Atlantic hurricane season - Wikipedia

en.wikipedia.org

Though, this year is forecasted to be just as bad if not worse and that season is just beginning on the East Coast:

Forecasters expect another overactive hurricane season with 17 named storms | CNN

After last year's record-breaking hurricane season, forecasters are expecting another overactive season.

www.cnn.com

Even if you ignore climate change history and forecasting, that last year, 2020, could be considered an aberration and one-off. Two years weightens consistency and a trend even if its not a normative sample of 5 years...even though we're getting there if you really pull back from 2017-2018. With the exceptional drought occurring, again, in the Western United States...well, I think people will make decisions off the trend of climate change really changing things up in civilization...

Anyways, some food for thought.

 

[Chenkers]

Thank you.
Can I expand on this a bit to gather more information around this point?
This is for "Initial Margin Requirement".
In other words, assuming your account is all TSLA, if you already have margin beyond count * 165, "count" being your share count (not LEAPS as they don't give any margin), you will not be able to open new positions, but you likely won't get a margin call, right?
But, if maintenance margin requirement also changes similarly, margin call is to be expected. Is this correct?

I'm in a similar position where IB will be significantly reducing my initial margin requirements (equivalent to if the stock proce dropped to around $165). With IB the impact is complicated by the opaque way they calculate margin. Their Risk Navigator can be used to simulate the change against an individual portfolio, (which I haven't done yet but will do). For me I'm expecting to have my account locked out from withdrawing any cash or doing anything else that could increase margin requirements.

They have also signalled that they will be doing a similar move with maintenance margin. Once that goes through, expect liquidation of current positions until the portfolio is within maintenance margin limits (IB don't do margin calls). Under this scenario I'll be looking for a new broker as I get the feeling IBKR don't want anyone highly concentrated in growth stocks like TSLA. And unfortunately where I am, the alternative broker options are extremely limited.

 

[StarFoxisDown!]

I personally think this is unlikely to happen (that Tesla P/E will remain anywhere close to 300+ going into next year).

Tesla is entering the steepest part of the operating leverage S-curve over the next 12-18 months as net profit/EPS growth will most likely be the biggest in percentage terms that it will ever be going forward, after which profit growth in percentage terms will decrease substantially as operating expenses will already have been reduced to a fraction of gross income (down from the current ~75% level) and so net profit/EPS growth will more closely match gross profit percentage growth as time progresses (which will slow as Tesla grows from an ever growing larger existing revenue base).

The upshot of that eventuating is that Tesla will have grown into its current valuation and PE will appropriately fall from the current multi-hundreds zone into the 50-100 PE multiple zone while EPS growth moderates.

Tesla is just entering it's S curve. The steep part of the S-curve will last at least for the next 2-3 years, if not the next 5 years.. If you don't believe that then I guess you don't believe in the roadmap that Elon/Tesla have laid out and the fact that batteries are the bottleneck and thus, growth will stay high if not continue at the 75%+ rate once 4680 cell's are being ramped. Sorry but I don't think investors will be willing to sell Tesla shares at a 100 P/E when Berlin/Austin will be producing all throughout 2022 and thus leading to the same, it not higher growth in both revenue and earnings than 2021. Then combine that with the fact that sometime over the next 12 months, Tesla will start recognizing a lot more of their software revenue which is 90% profits.

But let's use your scenario, they drop it down to a P/E of 100. That'll only get them to Q4 earnings if the stock stayed at this share price. And then they're going to have to bid up the stock price by at least 25% every quarter.....because Tesla's earnings are not going to stall for many many years. Will Tesla be posting yoy 1,000% earnings growth next year? Of course not. But they'll still be increasing earnings by 25% at least per quarter throughout 2022. Probably through 2023 well. So Wall St can either get in front of the P/E and keep it higher or wait until the P/E is 100 and then have bid up the share price 25% every quarter, quarter after quarter, year after year. I don't see that happening.

It took 4-5 years for Amazon's P/E to drop once it got a P/E multiple. Tesla only got their P/E multiple like 3-4 quarters ago. Lots and lots of runway left to go there.

 

[StarFoxisDown!]

but with already gigantic profits at that stage the energy S-curve will be much flatter to overall company net income and will have dramatically less impact in percentage growth terms

The problem with how you're approaching this is that the percentage doesn't matter because in just a years times, Tesla's earnings will be so high, that them just growing earnings 50% per year (which is very easy considering their roadmap) for the next 5 years means that the actual earnings growth in dollars, not the percentage, will be huge and drastically cut the P/E multiple down with each earnings report. Wall St will have to continually bid up the share price every quarter. Wall St likes volatility. They want to have some buffer in the P/E to play both sides. In this scenario, they'd have no choice but to send the stock higher every quarter for years.

 

[goinfraftw]

The problem with how you're approaching this is that the percentage doesn't matter because in just a years times, Tesla's earnings will be so high, that them just growing earnings 50% per year (which is very easy considering their roadmap) for the next 5 years means that the actual earnings growth in dollars, not the percentage, will be huge and drastically cut the P/E multiple down with each earnings report. Wall St will have to continually bid up the share price every quarter. Wall St likes volatility. They want to have some buffer in the P/E to play both sides. In this scenario, they'd have no choice but to send the stock higher every quarter for years.

...unless valuation multiples have to diminish due to depression/recession levels on a macro basis, right? A lot of balls up in the air with these huge government stimulus' that haven't been passed.

 

[30seconds]

I'm focusing on deliveries. Seems like Q2 and Q3 will be flat to up, since Tesla seems to continue to expand Shanghi and Fremont output. I'm expecting the biggest jumps to be Q1-Q3 2022 where deliveries may double y/y with the ramp of Texas & Berlin & possible Shanghai part 2. I find it hard to think that this is reflected in the current price.

Of course there may be other catalysts before that - S & X, Semi deliveries, new factory announcements, FSD, batteries, energy,... but the factory production milestones are relatively easy to gauge and obviously come with huge revenue impact.

 

[Curt Renz]

The once high flying ARK Invest ETFs have been plummeting this year in pace with the growth stocks they hold. At more than 10% in each, TSLA remains easily the largest holding in three ARK ETFs that own it. Cathie's policy is to not buy more of a company that exceeds 10% of a fund. Hence, she has not traded in TSLA this month. But she has been heavily dumping ARK's AAPL and WKHS holdings, among others.

Tomorrow ARK will conduct its monthly webinar at 1:30 pm EDT. We here at TMC may want to know more about what they have to say about TSLA. One does not need to be an ARK shareholder to listen, watch slides or submit written questions: ARK Webinar Registration

 

[TheTalkingMule]

but with already gigantic profits at that stage the energy S-curve will be much flatter to overall company net income and will have dramatically less impact in percentage growth terms

True enough. If we see an avg of 85% growth the next two years, TSLA is already a $1T company and too much of a behemoth.

I don't know tho. Always been of the opinion energy will dwarf automotive, just based on today's sector sizes and Tesla's potential share of each. Maybe energy takes TSLA to $10T faster than most think. If technological innovation is the new oil, hard to bet the under on something like 2030.

Tangent.......

I saw an employee award picture on LinkedIn the other day, it really made me stop and think about who will really push this thing forward. It was a group of LG workers that were given bags of coffee that LG likely got for free. They looked quite appropriately miserable and uninspired.

Its hard to think these entities will be anything more than the Android portion of energy, just like GM/Ford/Toyota will be the reluctant Androids of the automotive world.

Gaining an iPhone-esque share of energy profits when all of humanity is purchasing their next 40 years of energy in a 10 year period.....seems pretty bananas.

Why is that so easy for me to think now, when 18 short months ago I may have questioned a market cap 1/5 of today's..... admittedly unclear. But it seems quite rational.

 

[MC3OZ]

...unless valuation multiples have to diminish due to depression/recession levels on a macro basis, right? A lot of balls up in the air with these huge government stimulus' that haven't been passed.

The strongest trend always prevails and IMO that trend is the transition to clean energy and transport.

If anything, economic downturns accelerate change, reward strong companies, and punish weak companies, often to the point of extinction.

When there is a downturn, all are affected, but after a while the market starts to pick winners, you want to on a winner.

For a buy-and-hold investor the main thing is to avoid selling in the downturn.

With options or highly leverage, you need better information, and good risk management... that is the big league... I'm playing in the little league.

 

[Paul_SF]

So, them roaring twenties are going to roar?

 

[Cherry Wine]

You are receiving this notice as the Initial Margin Requirement for your account is projected to increase, effective with the May 12, 2021 close of the New York regular trading hours. This increase results from a new methodology identifying the inherent risk of a portfolio concentrated in two positions. This requirement will work as follows:

• A stress test which calculates the potential loss for each stock and its derivatives of, at minimum, a +/- 33% change in the price of the underlying stock or, for stocks that have significantly increased in value over the last year, a return in price to the lowest 20-day average price over the year.
• The sum of the two stocks' (and their derivatives') requirements, reflecting the maximum loss in the above scenarios, will be compared to the aggregate portfolio's margin requirement. The greater of the the two will be the initial margin requirement for the portfolio.

Note that this change will have no impact on your Maintenance Margin Requirement at this time. However, any increase to the Initial Margin Requirement will adversely affect your ability to open new margin increasing positions and withdraw funds. You will receive an additional notification detailing the schedule for a similar increase in the Maintenance Margin Requirement. At this time, the only impact will be on the Initial Margin.

Before implementation, you should review the result to the account and adjust your position or overall capital situation to address the anticipated increase in the Initial Margin Requirements since margin impact is portfolio dependent. To evaluate the effect of this proposed change on your initial margin requirements, please see KB Article 2957: Risk Navigator: Alternative Margin Calculator and utilize the margin mode setting in Risk Navigator by selecting "Margin 20210513."

Portfolio margin, I assume? I'm on Reg T through IBKR and have received no such message (the account is 100% TSLA).

 

[Artful Dodger]

Under this scenario I'll be looking for a new broker as I get the feeling IBKR don't want anyone highly concentrated in growth stocks like TSLA.

Hmm, to me it feels more like the first shoe to drop as a consequence of this change in policy from the SEC on Apr 16, 2021:

SEC.gov | Staff Statement on Fully Paid Lending

"Rule 15c3-3(b)(3) requires broker-dealers entering into agreements with their customers who lend the broker-dealers fully-paid or excess margin securities to provide the securities lenders with collateral that fully secures the loans."​

If so, I expect further "protections" to be applied to retail investors. No need to apply these rules to hedge funds though, since they already skirt any reporting requirements.

To me, this feels like publicly visible 'action' after the $GME / Robinhood embearassment.

Cheers!

 

[TheTalkingMule]

If so, I expect further "protections" to be applied to retail investors. No need to apply these rules to hedge funds though, since they already skirt any reporting requirements.

To me, this feels like publicly visible 'action' after the $GME / Robinhood embearassment.

Cheers!

Funny I could've sworn someone resembling the CEO of IB was on TV just a couple months ago explaining it was the hedge fund's inability to pay that caused all these ripples and trading shutdowns.

Good thing we're tightening up on retail. Wouldn't want these hedge funds to go through that(actual organic market dynamics) again.

 

[Thekiwi]

The problem with how you're approaching this is that the percentage doesn't matter because in just a years times, Tesla's earnings will be so high, that them just growing earnings 50% per year (which is very easy considering their roadmap) for the next 5 years means that the actual earnings growth in dollars, not the percentage, will be huge and drastically cut the P/E multiple down with each earnings report. Wall St will have to continually bid up the share price every quarter. Wall St likes volatility. They want to have some buffer in the P/E to play both sides. In this scenario, they'd have no choice but to send the stock higher every quarter for years.

"the actual earnings growth in dollars, not the percentage, will be huge and drastically cut the P/E multiple down with each earnings report"

I dont disagree - that is the reason I said the PE multiple won't stay at the multi hundreds level and that Tesla will grow into the current valuation at a PE multiple somewhere between 50-100x in 2022.

 

[Criscmt]

He states he is HODling.

His avatar is diamond hands.

Art is amazing. He always seems to know when to buy and when the SP is shaky. He pinpoints bounce points before they are hit based on his TA. I have witnessed this multiple times. And he doesn’t get rattled.

But I don’t think he trades. I believe all he does is buy and hold.

Correct me if I wrong, Sir Dodger.

EDIT: I see Art has already clarified for you.

Of course, I have been following @Artful Dodger for a while, and it's very clear he's a HODLer.
I myself a few times witnessed his estimates/predictions come true.
And I wasn't implying he's trading or suggesting others take steps based on his view. I was trying to clarify what "his" buy point would be.

 

[Artful Dodger]

Funny I could've sworn someone resembling the CEO of IB was on TV just a couple months ago explaining it was the hedge fund's inability to pay that caused all these ripples and trading shutdowns.

Good thing we're tightening up on retail. Wouldn't want these hedge funds to go through that(actual organic market dynamics) again.

I swore too: (Thu, Jan 28, 2021 09:26 AM EST)

Interactive Brokers Takes Action on Actively Traded Symbols

Interactive Brokers announced it put AMC, BB, EXPR, GME, and KOSS option trading into liquidation due to extraordinary volatility in the markets.

www.businesswire.com

 

[2daMoon]

Portfolio margin, I assume? I'm on Reg T through IBKR and have received no such message (the account is 100% TSLA).

I moved about half my shares to IBKR for the interest rate and have a margin account which I'm into for about 4% taken as cash withdrawal.
Plan is to not exceed 25%, over how ever long it takes the market to send TSLA higher.
Likewise, no notification like others have reported.

 

[printf42]

With the risk of jinx it, I want to call out the bottom is near, maybe not tomorrow, maybe not next week, but won’t be longer than few months.

Wall Street want to convince us TSLA would be range bound again for the next five years. And try to convince the paper hands that now is the best time to cash out and look for the next meme.

Only problem is, Tesla is very different now than in 2014. Company now has no chance of going BK whatsoever. Model 3/Y had already reached price parity with ICE, let alone the coming 25k car.

With 50% YoY growth for the foreseeable future, Tesla is entering a period of forced profitability, all while they invest as much as responsibly possible.

With that, TSLA would go from now more like AMZN did since 2014, steady clime to stratosphere. Even bean counters won’t be able to find excuses to discount the growth and hold the SP back.

And, this is without considering the wild card called FSD, if Tesla is able to pull it off before 2025, all bets are off now. I am actually wondering who has the guts to sell leap calls now without fully delta hedge them right away.

TL;DR:
If you can afford to set your investment horizon to be 5+ years away, any dip is a gift, actually, just buy whenever you got new funds and don’t wait for a dip, you won’t regret after 5 years.

Not advice.

 

[Artful Dodger]

With the risk of jinx it, I want to call out the bottom is near, maybe not tomorrow, maybe not next week, but won’t be longer than few months.
[...]
And, this is without considering the wild card called FSD

Great job! Now do FSD.

Cheers!