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

[Steve m]

Ihor's reply (for a different stock):

Twitter

"Because there is much more $GOOS shares still available to borrow compared to $HEXO shares. Total available lendable shares vary from stock to stock - usually between 40% to 60% of float but sometimes higher, sometimes lower. That is why rates fluctuate between stocks."​

Basically the "tradeable float" of a stock is overestimating the true "shortable float" which is lower.

This, if true, also falsifies the "Tesla naked shorting" conspiracy theory: if market makers are able to short with impunity and can short arbitrary amounts of TSLA, why did the borrowing rate increase to 20% last May? Why is it below 1% today with a similar number of shares shorted?

The reason: there's a real supply of shortable shares, which can become constrained - but which expands (slowly) with more lendable shares.

There's over a dozen "market makers" for Tesla: if the naked short selling conspiracy was true they'd all have to conspire to artificially increase rates to 20%: just one market maker could outbid them with 19% rates and reap all the financing profits...

Sorry @Hock1, I'm with Ihor's explanation of market mechanics here.

I agree that the 3 day delivery requirement allows quick swing-shorting shenanigans, which can manipulate the price - until a bigger fish comes along and takes advantage of the MMD.

Naked shorting doesn't seem to exist for long term short positions of ~38 million TSLA shares short currently: they are all paired with real borrowable stock.

Believe what you will.

From the SEC data on fails to deliver 2nd half of August 2019

20190815 88160R101 TSLA 43041 TESLA INC COM STK (DE) 219.62
20190816 88160R101 TSLA 54297 TESLA INC COM STK (DE) 215.64
20190819 88160R101 TSLA 25687 TESLA INC COM STK (DE) 219.94
20190820 88160R101 TSLA 93490 TESLA INC COM STK (DE) 226.83
20190821 88160R101 TSLA 21323 TESLA INC COM STK (DE) 225.86
20190822 88160R101 TSLA 7655 TESLA INC COM STK (DE) 220.83
20190823 88160R101 TSLA 85210 TESLA INC COM STK (DE) 222.15
20190826 88160R101 TSLA 720 TESLA INC COM STK (DE) 211.4
20190827 88160R101 TSLA 250337 TESLA INC COM STK (DE) 215
20190828 88160R101 TSLA 6167 TESLA INC COM STK (DE) 214.08
20190829 88160R101 TSLA 12843 TESLA INC COM STK (DE) 215.59
20190830 88160R101 TSLA 1196 TESLA INC COM STK (DE) 221.71



for a total of 601966 shares so 2% of the short interest in 2 weeks of data.

TSLA is not on the list of threshold securities so the aggregate Naked Shorts should be below the 0.5% of the total shares.

www.nasdaqtrader.com/trader.aspx?id=RegSHOThreshold

www.sec.gov/investor/pubs/regsho.htm

• Rule 204 – Close-out Requirement. Rule 204 requires brokers and dealers that are participants of a registered clearing agency[8] to take action to close out failure to deliver positions. Closing out requires the broker or dealer to purchase or borrow securities of like kind and quantity. The participant must close out a failure to deliver for a short sale transaction by no later than the beginning of regular trading hours on the settlement day following the settlement date, referred to as T+4. If a participant has a failure to deliver that the participant can demonstrate on its books and records resulted from a long sale, or that is attributable to bona fide market making activities, the participant must close out the failure to deliver by no later than the beginning of regular trading hours on the third consecutive settlement day following the settlement date, referred to as T+6. If the position is not closed out, the broker or dealer and any broker or dealer for which it clears transactions (for example, an introducing broker)[9] may not effect further short sales in that security without borrowing or entering into a bona fide agreement to borrow the security (known as the “pre-borrowing” requirement) until the broker or dealer purchases shares to close out the position and the purchase clears and settles. In addition, Rule 203(b)(3) of Regulation SHO requires that participants of a registered clearing agency must immediately purchase shares to close out failures to deliver in securities with large and persistent failures to deliver, referred to as “threshold securities,” if the failures to deliver persist for 13 consecutive settlement days.[10] Threshold securities are equity securities[11] that have an aggregate fail to deliver position for five consecutive settlement days at a registered clearing agency (e.g., National Securities Clearing Corporation (NSCC)); totaling 10,000 shares or more; and equal to at least 0.5% of the issuer's total shares outstanding. As provided in Rule 203 of Regulation SHO, threshold securities are included on a list disseminated by a self-regulatory organization (“SRO”). Although as a result of compliance with Rule 204, generally a participant’s fail to deliver positions will not remain for 13 consecutive settlement days, if, for whatever reason, a participant of a registered clearing agency has a fail to deliver position at a registered clearing agency in a threshold security for 13 consecutive settlement days, the requirement to close-out such position under Rule 203(b)(3) remains in effect.

 

[Ulmo]

This is the language of liars (screenshotted from my email box):

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You ask, what part of that text is the "language of liars"? Why, I'll tell you: the word "reportedly". If you don't already understand perfectly, then think: why use that word, in a "news" site? If a news site has to say they're reporting it, that's like saying studying Social topics is "Social Science", or studying political topics is "Political Science".

That's probably why clicking on the story caused this to happen:

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They play games. Integrity is an afterthought in their game, and not top priority. Then what is their top priority? Well, most of us already know a large part of that. Just more confirmation and lessons.

 

[humbaba]

Fred:

Tesla management has been keeping the actual progress numbers toward the goal secret, but sources say that they have communicated to employees last night that they were “a few thousands” short of the goal with a day left in the quarter.

For what its worth (which is less than you paid for it), I was at the Tesla store in St. Louis this morning and it was quiet. Over the course of an hour I saw:

- 1 delivery
- 1 service
- 1 person casually browse the lot and leave
- 1 couple in for a test drive

Now, this was St. Louis (not California) and I have no idea how many they averaged per hour for the month, but when I picked mine up it was mid-month last December and it was much busier.

Bullish? Tesla is unwinding the wave and not doing last minute "deliver everything" stunts like they were forced to in Q1

Bearish? Parking lot was full (well, full-ish) of new cars so obviously sales have hit demand cliff and they can't afford the shipping to dump them in the ocean

 

[ABCTG]

Another important consideration on Experience Curves/Wright's Law - certain engineering philosophies and corporate cultures can allow you to achieve significantly higher learning rates than the competition - and Elon has fully embraced these advantages.

The three mechanisms driving Wright's Law (R&D scaling, Learning from experience and Economies of scale) are all somewhat interrelated and the lines can be blurred at times.
The main thing they all have in common is that delivering on each works by eliminating the bottlenecks to cost reduction or production increases.
I’ll call this the Bottleneck Theory of Progress and I think it is the key engineering philosophy behind all of Elon’s companies. Elon solves these Bottlenecks by breaking every large goal/problem down into Physics First Principles and then re-writing every challenge in terms of smaller steps. This gives his teams smaller, clear and achievable goals and allows Elon to focus his resources (human and financial) on the key bottlenecks where the most progress can be made for a given number of resources. This engineering philosophy allows Elon to accelerate the mechanisms which drive Wright’s Law and achieve far higher learning rates than previously shown in the industries/product.

This First Principles and Bottleneck approach is completely different to how R&D and innovation normally works in the economy. Generally R&D teams are tasked with iterating the current technology with a 1-5% improvement one step at a time. This leaves most products dependent on sometimes arbitrary design decisions taken years or decades ago, using outdated science and engineering tools and a huge reluctance to pivot from sunk costs. Elon instead looks at every problem from the bottom up, ignoring previous design decisions and pulling in all current knowledge from all branches of technology and engineering. He will rapidly pivot strategies if a newly considered approach solves more cost/volume bottlenecks than the current one, regardless of sunk costs.

One analogy to explain the differences between these approaches is to consider a person tasked with travelling from point A to point B without knowledge of the paths or terrain in between. On his journey he faces many decisions on which fork in the path to take. Some of these decisions are educated guesses while some are random. This person eventually finds themselves scaling a mountain with the route ahead getting gradually more and more difficult with progress getting slower and slower, but he keeps pushing on, one step at a time, refusing to ever turn back. This person is sadly the most common process of innovation in corporations today.
A second person on the other hand realises he can always turn backwards and attempt to find an easier route. He also realises many different people are trying to cross the same terrain (in the real world people pushing forward in different branches of technology/the economy) and that he can communicate with them to try to piece together a fuller picture of the terrain to better plan the route forward. Eventually he finds an alternative and far easier route around the side of the mountain. This person is Elon and this is the culture he has tried to instil in Tesla, SpaceX, Paypal, OpenAI, The Boring Company and Neuralink.

Great!

A little more insight to this from Elon during his SpaceX Question and answer;

Watch from 1:18:58

 

[Doggydogworld]

Reminder of Q2 at this time:

Tesla is 'VERY close' to record deliveries - Electrek

Deliveries in Q2 were 95,2k.

Yep, and Fred's source in Q2 were U.S. deliveries - his source was in the dark about international deliveries.

But, in Q2 they had a U.S. target of 30k deliveries, which they didn't entirely meet - and the leak was talking about how close U.S. deliveries were to the target - from which Fred extrapolated.

Just to be clear, the June North American delivery goal mentioned in the linked article was 33k. That said, @Fact Checking is correct that Fred's source proved accurate based on the best data we now have.

Fred did some bad math to extrapolate 33k for June NA to ~90k for Q2 global. But we knew at that point there were 61-63k of other deliveries (~30k NA April+May, ~23k Europe, ~8-10k China/ROW).

This recent article is not based on Fredmath. His source directly says a few thousand short of 100k with a day to go. Maybe his source is wrong this time, but it's a mistake to assume it's wrong and nothing from Q2's leak supports that assumption.

 

[Fact Checking]

For what its worth (which is less than you paid for it), I was at the Tesla store in St. Louis this morning and it was quiet.

It's a Monday, and Monday mornings are usually quiet in most dealerships (people are at work) - if they have deliveries queued up for today it's probably in the afternoon and evening, right? Which day did you visit back in December?

Another argument is that St. Louis is about 3-5 days of transport away from Fremont - so it's already outside the window of opportunity to ship fresh Fremont production to - almost all of the last few days worth of production goes to nearby locations on the west coast. With the tax credit reduction it would have been easier to convince people to accept different colors or slightly different configurations back in December. Today why say yes to a blue car today if you can get a white one in a week?

Do you remember the number of Pearl White Model 3's perhaps? Those would be the ones most likely to be matched to new owners so close to the end of the quarter.

 

[RichardL]

As another data point - I picked up my new 3 on Saturday in Kearny Mesa, San Diego - the place was packed with cars awaiting delivery (they have tags with the delivery appointment hanging from the mirror). It was also packed with people taking delivery - really really busy. There were 4 Model X's in the Lot to be delivered, in the small area nearest the store. There were cars parked and waiting all around the other nearby businesses - so lots and lots of deliveries there

 

[Ulmo]

Anybody see a way to break out income from Super Chargers? Just finished a road trip to NY (I95). While there are plenty of SC for lifers out there, The folks paying for SC are outnumbering us lifers and anecdotely, it appears to me that I am seeing folks at the SC that are paying for it.

So, I'm kinda wondering how close to break even/rev positive Tesla is getting on the network. Seems like we are getting close to plugging the SC whole and even enhancing the bottom line. I realize that SC is not meant to be a profit center but just paying for itself has multiple benefits to the rest of the biz.

Thoughts?

Fire Away!

I'll fire with this, written & posted Monday, November 7, 2016:

An Update to Our Supercharging Program

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And this, written & posted January 12, 2017:

Building the Supercharger Network for the Future

---

Strangely, after Inauguration Day, the word "profit" and "SuperCharger" didn't come up together in the same post in their blog posts about SuperChargers again, and hasn't been mentioned during the Model 3 release and ramp up in production and Model Y announcement. The foundation off-the-shelf guess is that not talking about how much SuperCharging costs will alleviate sales and legal concerns having to do with less expensive car models and jurisdictional political opposition to Tesla cars (such as anti-car regulations and anti-electric-vehicle regulations and anti-rich-people regulations that make selling electricity for expensive electric cars at SuperChargers difficult at best, and sometimes the outlandish taxes (often executed through ridiculous tariff systems) exacted on utility customers can make the baseline electricity costs so ominous that even a slight error in aligning costs to pricing can cause an accidental income or loss that can be difficult to smooth without raising some curious (albethey ridiculous) challenges). But that off-the-shelf guess could simply be what they want us to believe, and they might have other plans in stock.

 

[Fact Checking]

This recent article is not based on Fredmath. His source directly says a few thousand short of 100k with a day to go. Maybe his source is wrong this time, but it's a mistake to assume it's wrong and nothing from Q2's leak supports that assumption.

That's exactly the point I tried to make to @KarenRei, so thanks for spelling it out more clearly.

 

[Prime_Number]

For what its worth (which is less than you paid for it), I was at the Tesla store in St. Louis this morning and it was quiet. Over the course of an hour I saw:

- 1 delivery
- 1 service
- 1 person casually browse the lot and leave
- 1 couple in for a test drive

Now, this was St. Louis (not California) and I have no idea how many they averaged per hour for the month, but when I picked mine up it was mid-month last December and it was much busier.

Bullish? Tesla is unwinding the wave and not doing last minute "deliver everything" stunts like they were forced to in Q1

Bearish? Parking lot was full (well, full-ish) of new cars so obviously sales have hit demand cliff and they can't afford the shipping to dump them in the ocean

With over a hundred delivery centers in the USA alone and perhaps 150 to 200 worldwide, one only needs 1 delivery per hour to equal 1000 to 2000 deliveries in a day.

 

[Right_Said_Fred]

Yep, and Fred's source in Q2 were U.S. deliveries - his source was in the dark about international deliveries.

But, in Q2 they had a U.S. target of 30k deliveries, which they didn't entirely meet - and the leak was talking about how close U.S. deliveries were to the target - from which Fred extrapolated.

This Q3 leak specifically mentions 100k as the goal, with no U.S. target leaked, and said that they are within a few thousand of that 100k.

So it's possible that Elon sandbagged the 100k goal to motivate the team and to isolate/protect the real figures - but it's also possible that the real target leaked.

So this could play out either way: 98k is just as much of a possibility as 102k, IMHO.

I'll go with the 83k deliveries TMC consensus.

Not advice.

It doesn’t sound like Electrek’s source is very informed. Just like last quarter the source only seems to have information about the US market, and the only solid information seems to be the inventory number (3,000).

Tesla being ‘several thousand’ cars short of reaching the worldwide delivery goal (it is unknown what that goal is) with one day to go is a strange assertion for someone who doesn’t know the international numbers.

And if it is ‘several thousand’ cars, what does that imply? Tesla has been delivering on average 1,100 cars per day this quarter, Sundays included. The last few weeks it is more likely to have been 2,000 per day. So it doesn’t sound like an impossible task to deliver 3,000 cars on a Monday with all delivery centers worldwide making a last minute effort.

Impossible? Half of Q1’s 63,000 cars were delivered during the last 10 days: that is more than 3,000 per day.

 

[elasalle]

For what it's worth: (Tesla Inventory List - Find your next car) -- Model 3's
9/27 - 4PM - [ 903 with 18 new cars last 24 hours. Last car added: 1 day ago]
9/29 - ~ 1400 cars ... over week end this number was still growing
9/30 - 4pm :[ 695 with 1 new cars last 24 hours. Last car added: 1 day ago]

 

[ggr]

Mod: reminder that bashing Fred is a banned topic. We won't bother moving postings. --ggr.

 

[ggr]

I have this fantasy that Tesla will report deliveries tonight, just after the Hawaii stores close. 83,000 +/- 25%.

 

[Curt Renz]

For what its worth (which is less than you paid for it), I was at the Tesla store in St. Louis this morning and it was quiet. Over the course of an hour I saw:

- 1 delivery
- 1 service
- 1 person casually browse the lot and leave
- 1 couple in for a test drive

Now, this was St. Louis (not California) and I have no idea how many they averaged per hour for the month, but when I picked mine up it was mid-month last December and it was much busier.

Bullish? Tesla is unwinding the wave and not doing last minute "deliver everything" stunts like they were forced to in Q1

Bearish? Parking lot was full (well, full-ish) of new cars so obviously sales have hit demand cliff and they can't afford the shipping to dump them in the ocean

Potential Tesla customers in St. Louis were likely spending Monday morning with coworkers celebrating their Cardinals' clinching of their division's championship yesterday, the last day of the regular MLB season.

My Cubs were the team they beat yesterday. The Cubs' front office was unhappy and let their manager go.

 

[humbaba]

It's a Monday, and Monday mornings are usually quiet in most dealerships (people are at work) - if they have deliveries queued up for today it's probably in the afternoon and evening, right? Which day did you visit back in December?

Another argument is that St. Louis is about 3-5 days of transport away from Fremont - so it's already outside the window of opportunity to ship fresh Fremont production to - almost all of the last few days worth of production goes to nearby locations on the west coast. With the tax credit reduction it would have been easier to convince people to accept different colors or slightly different configurations back in December. Today why say yes to a blue car today if you can get a white one in a week?

Do you remember the number of Pearl White Model 3's perhaps? Those would be the ones most likely to be matched to new owners so close to the end of the quarter.

Your reply reminded me: when I left I actually saw more cars being delivered to the store (they were just being brought in).

Good point about the timing of the visit. I think it was a Saturday that I picked my car, though I don't remember for sure. They might well have a full plate this afternoon and evening. FWIW, they were staffed to handle a far greater load than they were experiencing. Which I take to be bullish: if Tesla was hurting it would be a skeletal staff that was overworked. (Not that anyone was slacking, but they were very relaxed.)

I meant to take a picture of the lot, but forgot to. The model 3 that was being delivered was white, and one of the test drive cars was also white. But, qualitatively, there was a lot of color in the lot.

 

[FreqFlyer]

I feel like I am throwing a dead carcass to a shcool of Piranha, but here we go.

From Oilprice.com , 1 source for oil and energy news. Notice what is the breaking story on this site.

Report: Tesla Is Short Of Q3 Vehicle Delivery Target | OilPrice.com

 

[humbaba]

with respect to supercharging and associated costs: I hadn't realized (or had forgotten) that the St. Louis store moved since we bought the car. Given prior distance I didn't bother charging overnight as I had more than enough to get there. If only I'd known it was closer I could have avoided a supercharger visit: my first one that wasn't free. Still, for about the price of one gallon of gas I got >100 miles of range (I wasn't tracking things so I'm not certain just how many miles).

Yeah, sure, I paid for the rest of the electricity from home charging, but I only pay $0.089/kWh so it just doesn't add up to much.

[As to the inconvenience of having to visit a supercharger: driving out of my way to get to a supercharger has only happened twice (including today) whereas for gas I always had to drive out of my way -- so even though the distances were shorter it was a more frequent nuisance.]

 

[Lessmog]

I feel like I am throwing a dead carcass to a shcool of Piranha, but here we go.

From Oilprice.com , 1 source for oil and energy news. Notice what is the breaking story on this site.

Report: Tesla Is Short Of Q3 Vehicle Delivery Target | OilPrice.com

Yeah, it's dead, Fred. The source, I mean.

 

[HG Wells]

I feel like I am throwing a dead carcass to a shcool of Piranha, but here we go.

From Oilprice.com , 1 source for oil and energy news. Notice what is the breaking story on this site.

Report: Tesla Is Short Of Q3 Vehicle Delivery Target | OilPrice.com

Thank you. That was quite delicious.