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

[JRP3]

They do. I have seen A Tesla in a TV show and Deadpool 2.

Elon has specifically said they do not pay for product placement, and that if you see a Tesla product in a TV show or movie it was placed there by the owner, not Tesla.

 

[Nocturnal]

Hey twitter fans, noted clown and pump and dump man of the hour Jim Cramer was trying to taunt Elon into twitting back at him and calling Elon PT Barnum again. Please go out and provide Jim some feedback.
Clips to the John Stewart show of Jim manipulating the market, or just dump pictures of Jim looking like a clown. Who’s the real PT Barnum, the guy landing rockets and killing the EV and ICE competition or a tv charlatan?

Is it just me or is it crazy that the world's financial system is run by people who speak like this?

 

[Dan Detweiler]

How can the same share be shorted multiple times?

Broker sells shares to short...
Short eventually covers...
Broker then re-sells those shares to the same or different short.

It's a vicious cycle.

Dan

 

[Singuy]

There's pretty much only positive news from the meeting. Stock "dives." Drives home point that there's little we can do about the major forces in the world. We just need to deliver cars, be profitable, and be "masters of our own destiny."

Nope, not all positive. The meeting had Elon shared some concerns about the future of cell production and ability to be GAAP+. The bears are transitioning from demand problem to scalability problem/profit problem. I wrote about these concerns. But was buried under the celebration you guys had yesterday.

 

[Fact Checking]

How can the same share be shorted multiple times?

Every short position creates a new virtual share that the counterparty of the short sale gets - he (or his broker) can lend it out again, and again.

TSLA float is 130m shares, but with 45m shorted the real pool of tradeable shares is ~175m, diluted by the shorts.

There are historic examples of short interest higher than 100%.

 

[Dan Detweiler]

Nope, not all positive. The meeting had Elon shared some concerns about the future of cell production and ability to be GAAP+. The bears are transitioning from demand problem to scalability problem/profit problem. I wrote about these concerns. But was buried under the celebration you guys had yesterday.

Congratulations
You want an award? Why the holier than thow attitude?

Dan

 

[Nocturnal]

Nope, not all positive. The meeting had Elon shared some concerns about the future of cell production and ability to be GAAP+. The bears are transitioning from demand problem to scalability problem/profit problem. I wrote about these concerns. But was buried under the celebration you guys had yesterday.

I got that sense too. IMO, a cell production problem isn't all bad. If Tesla wins up being cell limited, then competitors will likely face the same hurdles. We are past the idea that EVs may not be here for good aren't we?

 

[wipster]

Just re-read this famous outstanding post Elon Musk vs. Short sellers by @jesselivenomore

It is just more accurate than ever.

Really would love to hear more discussions from Jesse.

I keep that thread open in my browser just so I never forget it. Scary, and accurate, as hell.

 

[jerry33]

Does anyone know why Democrat controlled states are now seemingly anti-EV? We're basically moving from having incentives to buy an EV, to disincentives. Recently, Illinois was looking at passing a $1000 yearly tax on EVs, but instead passed a $250 per year tax - still $100 more than the average on ICE vehicles.

Are Dems either THAT desperate for revenue or just simply getting paid off by big oil, dealerships, and legacy car manufacturers - similar to what happened in all the Republican states? I agree that EV owners should pay their fair share of road taxes, but MORE than ICE vehicles? (it's about the same in Georgia).

And I often wonder about the intelligence of these elected officials. One in Illinois was touting how much money they would take in if they raised the EV tax to $1000 yearly - NO YOU WON'T - you'll just kill the sales of EVs!! Doh!!

1. Many Dems do get contributions from big oil. (A very few don't accept them)
2. Some (not sure how many) Dem politicians are car dealers.
3. All Dems get contributions from car dealers (and so do all Republicans).

 

[Singer3000]

BTW., related macro news is that China is winning the Trump Trade War: their early 2019 stimulus is working and they are now healthily outgrowing the U.S.:

The Trump trade war is beneficial to China. This I believe explains why the trade talks broke down.

Trump has a lot more to lose by risking a U.S. recession next (election) year: he is fighting to stay out of jail for another four years. Democrats have recently leaked that impeachment is too soft of a punishment for the crimes of Trump, they want imprisonment. "Lock him up!" might become real.

The Shanghai Gigafactory couldn't have come at a better time.

I know you have a sunny outlook tattooed to your heart and look for any data point possible to confirm your view that Trump is a stupid sausage. But I’d be interested to know when you last talked to a Chinese industrialist. Your conclusion is at odds from what many are seeing on the ground.

 

[ggr]

Broker sells shares to short...
Short eventually covers...
Broker then re-sells those shares to the same or different short.

It's a vicious cycle.

Dan

Not so much that. A's share gets loaned to B, who sells it to C. But now C's share can get loaned to D, who sells it to E.

But now think about what happens when B wants to cover...

 

[jerry33]

"Product placement" usually means the form of stealth advertising where a car company pays a major show or a blockbuster movie to put their cars on display. Such as the E-Tron displayed in the recent "Avengers: End Game" probably cost Audi a couple of million dollars.

Which is probably more than the profit they'll ever earn from E-Tron sales, they need to earn more than 2 billion euros, around 600,000 units for a break-even:

Tesla Model 3 cost surprised Porsche and Audi after reverse-engineering - Electrek​

I don't think Tesla is paying for displaying Teslas in movies or TV shows.

BTW., funniest ever product placement I saw was in the first "Jurassic Park" movie: there's at least 3 edited versions of the movie that are advertising the hardware and the OS used to control the theme park: "Silicon Graphics, Unix", "Thinking Machines, Unix" and "Microsoft, Windows NT" were all variants I've seen/heard, post-edited into the movie, as if it was an excited, authentic statement of one of the major movie characters, with the exact words depending on geographic region. (The true system used was probably Silicon Graphics/Irix, the rendering system du jour.)

Not only was the system Silicon Graphics, but the software visuals were also Silicon Graphics. Kind of funny because the software was SGI's financial software (used to combine income statements and balance sheets).

 

[Boomer19]

How can the same share be shorted multiple times?

Re-hypothecation of shares (maybe that’s it)

regardless...
so i agree with @ggr

however, brokers must ‘book’ stock lending contracts. the borrow on the books is offset by a short position or a loan of shares to another entity/broker, (borrowed shares can be pledged, but not equitable to do so, you’d just pledge other ‘owned’ collateral)

so in that sense, there are a finite number of shares you can borrow. basically the street can borrow the aggregate of shares bought on margin from brokers, plus fully paid shares owned by longs who engage in fully paid lending program, less those shares fully paid and segged (i.e. not enrolled in fully paid lending) by brokers (which is strict regulation - see MF global)

a simple version for broker ledger is

cust a: -300
cust b: 1,000 (cash, fully-paid)
cust c: 500 (margin)

depository position
1200
(consists of 1000 segged, 200 free excess position)

the broker only has 200 shares to lend out.
the other 300 from the 500 long margin shares are used to cover the 300 short customer

if cust b has engaged in the fully paid lending program, then the broker can lend out all 1200 shares


now take-
cust a: -300
cust b: 1,000 (cash, fully-paid)
cust c: - 500

depository account
1000 segged
0 free excess
borrow from counterparty of 800 shares

unless if cust b has engaged in the fully paid lending program, then the broker can lend out the 1000 shares, but will use 800 of it to ‘cover’ their short 800 customers position and lend the remaining 200 to street. (with no borrow needed)

 

[JRP3]

Nope, not all positive. The meeting had Elon shared some concerns about the future of cell production and ability to be GAAP+. The bears are transitioning from demand problem to scalability problem/profit problem. I wrote about these concerns. But was buried under the celebration you guys had yesterday.

Because it's old "news" and old bear talking points.

 

[Singuy]

Congratulations
You want an award? Why the holier than thow attitude?

Dan

Frustrated at the inability to have any real conversation about this due to the loudness of the echo chamber. I felt like I was the only one disappointed at the meeting yesterday. We already know about the demand being a non issue. Elon's new concerns were actually new. It was the first time he talked about cash flow +, from this point forward vs GAAP+. And that raw materials being a limiting step as the next road block.

Also not one person questioned him what was wrong with v1 and v2 of the roof. And if v3 is marktable. He also talked about FSD is totally not ready today...but his team is guiding it'll be ready in 6 months time due to an exponential growth model. We know Elon is really bad at predicting time points in an exponential growth model based on his past predictions with the S curve and total car output.

We should talk about concerns as well and not bathe in "shorts are so stupid, they will get squeezed hard" all day.

 

[Nocturnal]

1. Many Dems do get contributions from big oil. (A very few don't accept them)
2. Some (not sure how many) Dem politicians are car dealers.
3. All Dems get contributions from car dealers (and so do all Republicans).

And let's be honest. Most Dems can only say that they are "a little better than Republicans" on these types of issues. They are politicians. Until their local constituents demand something then they will focus their efforts elsewhere. Even the average person who claims to care about climate change isn't beating down the door of their state government to demand that EVs pay less in registration fees.

Frustrated at the inability to have any real conversation about this due to the loudness of the echo chamber. I felt like I was the only one disappointed at the meeting yesterday. We already know about the demand being a non issue. Elon's new concerns were actually new. It was the first time he talked about cash flow +, from this point forward vs GAAP+. And that raw materials being a limiting step as the next road block.

Also not one person questioned him what was wrong with v1 and v2 of the roof. And if v3 is marktable. He also talked about FSD is totally not ready today...but his team is guiding it'll be ready in 6 months time due to an exponential growth model. We know Elon is really bad at predicting time points in an exponential growth model based on his past predictions with the S curve and total car output.

We should talk about concerns as well and not bathe in "shorts are so stupid, they will get squeezed hard" all day.

We know demand isn't an issue, the investment community doesn't. Personally I think that Tesla's concerns moving upstream into supply of materials and real GAAP profit are good signs. A company heading towards bankruptcy does not have the ability to look upstream. They scaled the model 3, people still want to buy it, they are expanding, now they can take a breath and figure out how to expand even more.

I would have loved more info on the solar roof. I need a new roof in the next 5 years and I'd much prefer one of those over a regular roof with traditional panels. ​

 

[Remus]

Frustrated at the inability to have any real conversation about this due to the loudness of the echo chamber. I felt like I was the only one disappointed at the meeting yesterday. We already know about the demand being a non issue. Elon's new concerns were actually new. It was the first time he talked about cash flow +, from this point forward vs GAAP+. And that raw materials being a limiting step as the next road block.

Also not one person questioned him what was wrong with v1 and v2 of the roof. And if v3 is marktable. He also talked about FSD is totally not ready today...but his team is guiding it'll be ready in 6 months time due to an exponential growth model. We know Elon is really bad at predicting time points in an exponential growth model based on his past predictions with the S curve and total car output.

We should talk about concerns as well and not bathe in "shorts are so stupid, they will get squeezed hard" all day.

The battery limitation talk on this thread has been going on for a while. I don't get how you get to the conclusion this is new.

Comparing that to Elon's "orders are outpacing production, and production is pretty good". This sounds stronger than any of the guesses and estimates we had before.

 

[MP3Mike]

Not so much that. A's share gets loaned to B, who sells it to C. But now C's share can get loaned to D, who sells it to E.

But now think about what happens when B wants to cover...

B just buys any old share and returns it to A. He doesn't have to return the specific share he received from A. So it wouldn't impact D's, or anyone else's short position directly.

Of course it can be more insidious. A loans share to B, B sells it to A, A loans it to B, B sells it to A, lather, rinse, repeat.

 

[StealthP3D]

Congratulations
You want an award? Why the holier than thow attitude?

I think he just wants to have his own mini-celebration.

Celebrating is fun.

 

[Mike Smith]

Not so much that. A's share gets loaned to B, who sells it to C. But now C's share can get loaned to D, who sells it to E.

But now think about what happens when B wants to cover...

I don't think any of this would have much of an effect anyway. What matters is the interest rates being charged, and they will spike exponentially as we near the limit of available shares no matter how or to whom they are lent out.