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

[kyzhk]

You have to understand that once your rich, the mindset can be different for some. If you already have millions or tens of millions, you would never put that all in one place. Tesla will likely succeed, but there is no guarantee. Once you made it, so to say, the smart thing is to diversify. Why stress? Also we don't know why some of these folks are cashing in. As they say, insiders sell stocks/options for many reasons (tax, upcoming purchases, diversification, etc.), but they buy only for one. I really wouldn't read too much into these options sales. Many of the top executives, including Elon and JB still hold significant shares/options.

Well, while it's more likely its done for diversification / down payment for a nice house, one legitimate reason why one would exercise their options despite 100% confidence in tesla's success would simply be trying to maximize gain:

Exercise the vested options, use proceeds to buy 2x ~ 3x leverage leaps. They would come out ahead even after getting hit by tax initially.

(Not saying any reasonable person would do this, but I would.)

 

[defc0n]

Q2 still needs to be GAAP profitable (even if only $1) for S&P inclusion, as long as Q1 loss isn’t worse than $550M. And I’m not sure we can ever count on significant ZEV credit sales going forward unless the program is restructured so that OEMs can’t bank them as easily.

Starting to suspect they may let Q1 financials tank and then throw the kitchen sink for Q2 for a small profit and S&P inclusion? 10k deliveries in transit, possible ZEV credit hoarding, and then possible FCA monies.

 

[RobStark]

Elon reposted this video link of a M3P beating a Ferrari 458 in a drag race:

Tesla Model 3 Performance with OTA power boost humbles $200K+ Ferrari 458

I really can't wait until the Roadster 2.0 gets out in the wild, and we can see videos of it totally humiliating other cars...

Well, every big time teslatuber is getting 2 FREE ROADSTERS.

One to use and the other to pay the taxes on the first.

Youtube should be flooded with Tesla Roadster vids.

 

[SPadival]

I

• Instead the fine lawyers from Hueston Hennigan ate Cheryl Crumpton for breakfast, have gained the sympathy of the judge, and have now opened up a wide range of options to clarify or even invalidate the settlement.

Indeed. Given how amateurish Cheryl is, I won’t be surprised if the thought didn’t cross Elon’s mind of getting the settlement invalidated and daring the SEC to file suit. I especially like the part where Cheryl tried to ignore the earnings call transcript by hiding it in a footnote and calling it cryptic

 

[neroden]

And yet the most recent guidance is still for a loss in Q1... To be honest I don't care if the payment came in Q1 or comes in Q2 (e.g. "FCA agrees to pay within 60 days of the date of this agreement"), if we end up with the 4-quarters needed for S&P inclusion once June results are filed.

Also interesting is that Tesla must have hoarded A LOT of ZEV credits by now, with just $100m sold in 2018. Does anyone stateside have a feel for whether the buyers are sitting on their hands until they find out if the regime will survive, or some other reason? A lot of Model 3s were shifted in the applicable markets in Q3 (and Q4) and it doesn't look like many of those credits have been sold at all.

Based on history alone, one might expect that Q1 saw some substantial ZEV sales. Blue is the quarterly ZEV sales, green is the past four quarters divided by 4.


View attachment 394822

I don't see a pattern in ZEV sales. It must be a buyer's market... they sell when someone approaches them.

 

[neroden]

Well, while it's more likely its done for diversification / down payment for a nice house, one legitimate reason why one would exercise their options despite 100% confidence in tesla's success would simply be trying to maximize gain:

Exercise the vested options, use proceeds to buy 2x ~ 3x leverage leaps. They would come out ahead even after getting hit by tax initially.

(Not saying any reasonable person would do this, but I would.)

Funny. We'd know though; they're required to report that.

 

[Antares Nebula]

"The @WSJ did an article on the future of the screen in your car and didn’t include Tesla. Is this a joke? The “screens” included are like Vtech children’s toys. Really. Great article theme but forgot to include the one that matters. TESLA. $tsla"
Ross Gerber on Twitter

The screen, i.e., the carOS is probably one of the biggest contributors to the future value of Tesla. Think iOS, Android. How much is that carOS ecosystem worth? Movies, games, ads, apps, etc. And the more autonomous the cars get, more and bigger screens they will have. How much is all the screen real estate worth? I estimate at least 200-500B. This is why, IMO, Apple and Google are getting into it. Not for the taxi or the hardware itself, but for value of the OS. Just like smartphones are not really valued for the ability to make phone calls, but for the value add of the phone OS.

 

[ZachF]

So, um, have they managed to make wind turbines which don't get knocked over by the Icelandic wind?

Iceland has so much cheap Geothermal and hydro power that they've become a major aluminum smelter.

IEA Sankey Diagram
IEA Sankey Diagram

 

[bhtooefr]

My understanding is that the truck is made by Chrysler.

Freightliner's been mentioned elsewhere - they used to be part of DaimlerChrysler, but they're on the Daimler side of that split.

I don't like swing trading because of (a) taxes and (b) FOMO, so I instead do options sales to harvest the volatility.

Annoyingly, options being in units of 100 shares makes selling them incredibly risky for small fish like myself...

It will be interesting (and MUCH safer) when we get to a type of ADSB communication between cars. Currently not only do very few people honk when going around a blind corner....most drive over the speed limit....drive distracted (cell phone use,putting on makeup)..and for some reason a lot of people also feel they need to be first no matter the cost. In short people drive stupid.
Motor vehicle fatality rate in U.S. by year - Wikipedia

At some point the cars while maybe not Full self driving will "talk" to each other and that will mitigate a lot of deaths.

This is something that Tesla could do, but I haven't heard any noise from them on it.

AFAIK Toyota is the automaker doing the most with V2V and V2X at this point, mostly in Japan?

So I'll ask again: are there actually enough Tesla customers there to justify a service centre? Yes, geographic distribution is a factor, but you can't ignore quantities either. Should there be a service centre in the Ross Ice Shelf too? Because of "geographic coverage"?

Ultimately this is irrelevant given that the service center isn't closing, but... The Ross Ice Shelf doesn't sit along the route between major population centers, though.

The story states that EU rules allow the pooling of fleets from different companies.

Basically, this is a similar thing to automakers being able to trade CAFE credits in the US (not ZEV credits, because there's no specific requirement to produce EVs).

Relax. It’ll be fine and not your problem since you’ll be worm food by then.

Careful assuming that, technological changes can happen fast lately. 10 years ago, smartphones had only barely broken out of being playthings for rich nerds, now they're nearly a necessity to participate in society. 10 years before that, the internet was still novel for many people.

P.S. FCA's HQ is in London, UK so Brexit risks exist

They have dual headquarters between Amsterdam and London...

Based on the attached EU chart from the tweet, it looks like FCA is also partnering with Tesla in the US, possibly for CARB ZEV credits. There's another large pile of cash right there, since it includes Dodge brand minivans.

View attachment 394577

AFAIK, that is purely what's sold in the EU, it's just that FCA sells cars from FCA US in Europe. AFAIK this is mostly Jeep. (I'm not sure if the Dodge/Ram products that third-party importers bring in count against FCA US's European emissions, if they count against the importers (AGT, AEC, and KWA), or if they're just written off.)

I GUARANTEE that NOBODY will take more climate action with that money than Tesla.

Mass transit development could eliminate more emissions than Tesla, just saying...

Toyota gets .9 ZEVs for each Prius Prime sold.

Honda gets 1.3 ZEVs for each Clarity PHEV sold, because it has longer electric range.

Caveat: IIRC, those are TZEV credits, which can only make up a certain percentage of the ZEV credits that an automaker needs. So, Toyota and Honda still need true ZEV credits from somewhere. (For Toyota, the Mirai, and for Honda, the Clarity Fuel Cell are ZEV credit generating machines, and then Honda also has the Clarity Electric, which generates some (not much due to short range) credits.)

I would say this if I were the General Counsel for Tesla: How about the SEC investigates certain suspicious options activity worth 10s of millions of dollars on the day before the announcement of certain SEC actions against Tesla.

Show that there were no leaks from the SEC, and that this overnight winfall wasn't the result of Insider trading based on tips from inside the SEC.

That's the real harm being done to Investors. And it has happened repeatedly.

The question is, how to actually implement that without suffering nasty PR hits? The SEC has to consent to being sued, and trying to bring it up in a court action against Tesla isn't the point because the SEC isn't on trial (although maybe discovery of that could be part of a prejudicial treatment defense, which is a weak defense anyway)... but then, also, there's not an action against Tesla right now, just against Musk, so Tesla's general counsel isn't even part of it.

 

[capster]

Shorts are pretty baffled by this price action

It's clear that this is not the work of retail investors.

Granted, but why don’t the herring evolve to escape a bubble-net?

Baffling.

 

[Antares Nebula]

Folks, remember this? (See attachment):

UNITED STATES SECURITIES AND EXCHANGE COMMISSION February 25, 2019
ORDER GRANTING CONFIDENTIAL TREATMENT UNDER THE SECURITIES EXCHANGE ACT OF 1934
Tesla, Inc.

FIAT deal was also on the 25th, right? Bears are complaining that this deal is material enough to file an 8k and are complaining that Tesla did not. A bullish poster on SA pointed out the confidential SEC filing, which I guess the bears missed.

But I don't understand why Tesla would want to keep it concealed. What would be the competitive advantage?

 

[SPadival]

Ahhhhaaa

ES on Twitter

 

[Fact Checking]

And yet the most recent guidance is still for a loss in Q1..

Can you quote that guidance?

 

[RobStark]

The Tesla-FCA deal would also be FCA material info as well.

They should also file with the SEC ?

 

[oneday]

Can you quote that guidance?

Last time that I can recall there was any guidance towards Q1 profitability/lack there of was Feb. 19 during the Ark interview. This is obviously before the Feb. 25 deal. My opinion FWIW (not very much FYI) is that it will still be a GAAP loss, but I would love to be proven wrong, especially because we will all most likely get some chuckles from seeing @anthonyj streak down Wall St.

Edit: Corrected as per the post below mine. I think that was the call I was thinking of and that Elon actually made no reference to profitability during the Ark interview.

 

[Singer3000]

Can you quote that guidance?

I can.

Elon Musk, Thurs 28th Feb on call to media for launch of Standard Range Model 3:
“Given that there is a lot happening in Q1, and we are taking a lot of one time charges, there are a lot of challenges getting cars to China and Europe, we do not expect to be profitable. We do think that profitability in Q2 is likely,”.

Last time that I can recall there was any guidance towards Q1 profitability/lack there of was Feb. 19 during the Ark interview. This is obviously before the Feb. 25 deal. My opinion FWIW (not very much FYI) is that it will still be a GAAP loss, but I would love to be proven wrong, especially because we will all most likely get some chuckles from seeing @anthonyj streak down Wall St.

The above statement was after the FCA deal on 25 Feb.

 

[Remus]

Drive in movie are coming back baby, in your local super chargers!

Elon Musk on Twitter

 

[Buckminster]

Only just got around to watch this today - still haven't finished. Random points.
Munro spends 1/4 of the year in China.
Lots on the Tesla motor.
M3 cheaper than Munro first thought in several areas including motor. Needs to update his report.
He rates NIO.
Batteries and magnets are basically interchangeable....
If you understand stuff that he doesn't - you are "wicked smart".

 

[shrspeedblade]

Drive in movie are coming back baby, in your local super chargers!

Elon Musk on Twitter

I love this company!

 

[Fact Checking]

Linda Rice appears to be selling *all* of her shares on her 10b5-1 plan, which is probably a monumental investment mistake on her part. All the others are hanging onto large core positions.

It makes sense for key non-founder employees to sell all that comes in via RSU plans and vested options (i.e. they treat equity compensation as a variable cash income stream), she will probably still be abundantly rewarded if the company succeeds, and the divestment reduces the imbalance of her portfolio and employment choices risks otherwise.

We should remember that to many (I'd say most) employees investment and being exposed to financial risks is a distraction, a source of stress.