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

[Webeevdrivers]

Guess production is not running as expected for Rivian

WSJ News Exclusive | Rivian’s Chief Operating Officer Departed Amid Production Ramp-Up

Rod Copes retired in December, while the electric-truck maker ultimately produced more than 1,000 vehicles in 2021, in line with its lowered expectations.

www.wsj.com

Kinda sucks. I’m not an investor in Rivian but would still like to see another start up kick ass.

 

[Siksfive]

Likely has more to do with share price than production.

Very likely he’s been waiting for some time to cash out and now that the company is public and he can cash in on his shares he’s taking advantage. There might have even been some performance bonus involved to get production “started” in 2021.

Unless he has different lockup plan than I have, he can't cash out till 6 months after IPO. Would have loved to cash my options out to take advantage of the dip today, but unfortunately, patiently waiting and hoping they can have a not too hell of production ramp and SP stays somewhat buoyant

 

[WattsHappening]

Actually likely not. There's restrictions on lock up dates for insiders. It hasn't even been 3 months since IPO. Most lock up periods are until 6 months.

Also, he's only been at Rivian for under 2 years. He's not nearly all vested as they most likely have a 4 year vest structure.

Simply put, him choosing to leave a ton of money (half of his unvested options) + before lock up date expires = not a great sign at all about where he thinks the company is going. At least when it comes to Rivian's valuation and where it will be.

I was thinking the same thing about the lockup period.

The question I have is, what happens to the lockup period for insiders if they are no longer with the company? Is he still subjected to the 6 months? Or can he sell as soon as he terminates from the company? If the latter, that could be a sign that there are even bigger problems than on the surface.

 

[Tommy O]

That's just how much their chief operating officer believes in their mission. Saw some cash and bounced. Real winners they hire over there. If employees see retirement and bounced, then Tesla will lose half their work force.

There was another fairly prominent departure recently that I haven’t seen reported, according to my Rivian source. Not on production side and not in a position I would say is key to their success, but this person’s departure doesn’t inspire confidence in the company.

Maybe this person hasn’t updated their LinkedIn yet or maybe Rivian isn’t getting the same scrutiny Tesla did during their production ramps.

I mostly want to see Tesla crush every single other automaker, but I’d be okay with Rivian taking 0.1% of the market or so. Hopefully they can fix their problems quickly.

 

[RobDickinson]

I wonder if Amazon/Jeff is moving in harder? They seem to have pushed Ford of the board already.

 

[jerry33]

I was thinking only about the location, not the premises and their equipment. I assumed you could replace pumps with chargers (to clean cars while they charge) and use the store as a wharehouse for last mile delivery and even keep the kitchen for fast food ordering.

This is not so easy. There are massive clean up charges. Old gas stations are not desirable property.

 

[Ogre]

That's just how much their chief operating officer believes in their mission. Saw some cash and bounced. Real winners they hire over there. If employees see retirement and bounced, then Tesla will lose half their work force.

I’ve gotten quite cynical about Rivian since their IPO.

They spent months promoting the hell out of their product and talking about production starting in first summer, then September. Tons of media hype, tons of access to the press, lots of talk about getting production started in September… then after rolling one delivery out in September, it was October when customer deliveries would start. A few more truck trickle out, R1S will be in production “By year End”…

Then the IPO happened and the whole story changed.

No more media trips, production ramp is slowed down so they can “get it right”. Customers get delay notifications, R1S production is pushed way back.

They “delayed” the 400 mile extended range version, but looking at their cargo capacity, I think their 400 mile version doesn’t exist except on paper. How can they reasonably add hundreds of pounds of batteries when their truck only has 1200 pounds of cargo capacity?

No Ford has dropped out of the rest of their partnership and Amazon is talking about a partnership with Stellantis.

It’s a house of cards.

 

[Prunesquallor]

And yet another departure

https://www.washingtonpost.com/us-policy/2022/01/10/fed-clarida-resign/

Fed Vice Chair to resign over stock trading controversy

Richard Clarida, the Federal Reserve’s vice chair, announced Monday that he will resign, following more revelations of his stock trading in the beginning of the coronavirus pandemic.

…

He’s the third Federal Reserve official in recent months to resign over questionable trades during the pandemic, as the Federal Reserve began its tremendous intervention to support the financial system. These trades are now under review by an inspector general, as the officials were in a position to benefit from insider knowledge of economic conditions.

 

[aubreymcfato]

Do you remember the "5000$ fix instead of the 22000$ battery replacement" that made headlines few months ago?
Good thread here:

https://twitter.com/x/status/1480403593794621442

 

[Ogre]

Unless he has different lockup plan than I have, he can't cash out till 6 months after IPO. Would have loved to cash my options out to take advantage of the dip today, but unfortunately, patiently waiting and hoping they can have a not too hell of production ramp and SP stays somewhat buoyant

I’m not sure what the laws are about hedging a position if you are locked up. If I were in his shoes, I’d have bought a bunch of puts or outright shorted the stock when it was soaring. Seems like there should be some way to secure those gains.

 

[Phobi]

Actually likely not. There's restrictions on lock up dates for insiders. It hasn't even been 3 months since IPO. Most lock up periods are until 6 months.

Also, he's only been at Rivian for under 2 years. He's not nearly all vested as they most likely have a 4 year vest structure.

Simply put, him choosing to leave a ton of money (half of his unvested options) + before lock up date expires = not a great sign at all about where he thinks the company is going. At least when it comes to Rivian's valuation and where it will be.

I'm sure he had his reasons...


But seriously...how lucky are we?

 

[bkp_duke]

This is not so easy. There are massive clean up charges. Old gas stations are not desirable property.

Spot on. I have a customer that is in this business ("environmental remediation" they call it). The costs for cleaning up one gas station location in southern California typically range in the mid-six figures.

 

[bkp_duke]

I’m not sure what the laws are about hedging a position if you are locked up. If I were in his shoes, I’d have bought a bunch of puts or outright shorted the stock when it was soaring. Seems like there should be some way to secure those gains.

Most options contracts specifically prevent you from owning any derivatives of stock of the company you are employed with.

 

[Ogre]

Actually likely not. There's restrictions on lock up dates for insiders. It hasn't even been 3 months since IPO. Most lock up periods are until 6 months.

Also, he's only been at Rivian for under 2 years. He's not nearly all vested as they most likely have a 4 year vest structure.

Simply put, him choosing to leave a ton of money (half of his unvested options) + before lock up date expires = not a great sign at all about where he thinks the company is going. At least when it comes to Rivian's valuation and where it will be.

Fair enough.

Either way… executives ”Retiring” when the company is just about to hit it’s stride is a bad sign.

 

[Gigapress]

I'm not following his reasoning on Tesla being unable to deploy a robotaxi fleet. I understand it requires a large headcount but, a few ideas to workaround that:
1. it could make sense for Tesla to acquire a single renting co in order to have a foot in the market. I doubt the acquisition would cost a lot as technology becomes the main differentiator for robotaxi networks, and the first mover could well be the last survivor (any renting co not finding a tech partner might go bankrupt fast)
2. Tesla could partner with networks of gas and service stations, to turn them into robotaxi centers (where cars are cleaned up while being recharged)
3. AFAIK all recently leased Tesla are to be returned to the company (no purchase option) so when Tesla will be ready to release true FSD, it may have a large enough fleet ready to deploy in the biggest cities

Either competing OEM will have to retrofit vehicles with 3rd party FSD tech faster than Tesla can pump out cars (which I doubt) or they'll manage to design and build FSD vehicles faster. If Tesla can get gigafactories up and running in ~a year, and they have the cash to build them, I doubt other OEMs will be able to move faster than Tesla. I'm surprised that Pierre disagree, as he's been able to recognize Tesla's lead for some time now.

Tesla robotaxi fleet probably will start in the Boring Co Loops in Vegas and Ft Lauderdale and then gradually expand beyond that locally before going to the whole US and then globally.

Starting in the tunnels is safer. No weather, no human drivers, no large animals, good lighting, and well marked lanes.

It's also simpler because the first iteration of Tesla Network wouldn't need to solve for passenger pickup/dropoff challenges, charging, and cleaning since Loop already has equipment and employees for all that.

 

[woodisgood]

Being reported AJ raised his price target to 1300 from 1200. Probably accounts for the jump AH.

 

[Tes La Ferrari]

Further, the highest open interest PUT strike is $1, which mainly indicates that there exists somewhere a matching long CALL option purchased on margin, and the PUT was opened simply to reduce the margin requirement, and/or increase leverage on the long call.

Thanks for your - as usual - very interesting & helpful post; @Artful Dodger

While I understand how a sold put for $1K, and how a $1 put would drop the "Average" Max pain number. Can someone explain how the $1 put impacts margin requirements ?

ie Selling a $1,000 Put for Jan 21/22 right now is pays me approximately a $25 premium X 100 = $2500, but locks in $100K of my margin less the $2500 premium = margin reduced by $97,500. So if I sold a $1 PUT, I would get $1.00 (.01 X 100), but what impact would that have on margin, and is there any impact to Max pain beyond dropping the average by throwing a $1 number into the mix ?

 

[MikeC]

Remember, Hertz Monday wasn't just about Hertz - it also followed the MS upgrade to 1200 over that weekend.

 

[Krugerrand]

Fair enough.

Either way… executives ”Retiring” when the company is just about to hit it’s stride is a bad sign.

So, here’s the thing about that. It’s likely a lie.

 

[tivoboy]

I was thinking the same thing about the lockup period.

The question I have is, what happens to the lockup period for insiders if they are no longer with the company? Is he still subjected to the 6 months? Or can he sell as soon as he terminates from the company? If the latter, that could be a sign that there are even bigger problems than on the surface.

I don’t think their lockup period was 6 months at least not for the ex officers and directors, I seem to recall it was closer to 90 days. this number has varied greatly in the past few years. I put the question out there this morning but haven’t received an answer yet, but as well many exec did sell in the IPO so he, others may have sold a fair bit of stock last year. Also, the officers and directors held very little stock, like 1% at the IPO so it wouldn’t move anything much at all. It’s when Amazon (%20+ post IPO), Ford (10%) and the other either trust or holdng companies want to sell that the big moves may happen, that won’t happen till ~May 22.