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

[Sancho]

What happened is that after today's bear raid @12:19 ET, volume dried up:

• avg vol from 09:30 to 12:18 was 62,396 shares/min (10.48m trades in 168 min)
• avg vol from 12:19 to 16:00 was 36,216 shares/min (8.04m trades in 222 min)

VWAP for the day was $330.87 with $6.259B in total trades, reflecting early trading.

In the 3 mins from 12:19 to 12:21 there were 446,566 shares traded, or about 259K more than we'd expect based on the day's avg vol until then. Shorting had the effect of dropping the SP from $331.12 at 12:18 ET to $326.56 by 12:21 or a $4.56 drop.

Longs noticed and stopped buying on the way down. After lunch, SP recovered slightly to close $0.32 higher than the open and -$0.42 down vs Friday's close.

Low volume makes it much easier to manipulate the SP for the rest of the day, which was the goal of today's bear raid.

All in all, today was a show of strength and resolve by some very large bears, who emphatically demonstrated they will not go quietly into the night.

So I’ve been complaining about “manipulators” as loudly as anyone here, but today made me wonder whether I’m exaggerating the threat of manipulation.

Yes, there was some huge volume spikes at 12:19, but couldn’t that be due to traders (without an agenda other than to make money on which way the wind blows) sensing that the runup of the last few days had lost support and were either protecting their position or looking to make a quick buck by piling on?

The way I see it, the huge volume in the first 30 minutes quickly drove the momentum of the last few days up another $10. That stopped precisely when the SP breached $340, a natural resistance point that occurs with all stocks. The SP then just as quickly gave up half of its morning run and a battle ensued between bears and bulls for AN HOUR at around 335. And during this hour the volume dropped substantially from what it had been in the first 30 minutes.

What then happened at 12:19 is a bit of chicken and egg mystery to me. Was all the big selling then due to big hedge fund “manipulators” coming in to break the hour-long deadlock, or was the big selling a response to the stock dropping just a tad below the deadlocked range?

I know that I sold some of my position right at that moment. Losing the hour-long battle by even $1 was a sign to me that the big runup of the last few days was over, at least temporarily. Other traders with lots bigger stakes would have done the same.

I continue to believe, like you, that there are some big hedge funds trying to manipulate the SP (perhaps by selling calls and then selling short at opportune moments to protect their option position.) But I’m starting to wonder whether I’m exaggerating that, and that the SP movements are just bear vs bull contests that happen with all stocks.

 

[Singer3000]

Of all the info presented in the Q3 letter, this was the most interesting to me:

Raises a lot of questions though.

• What is the total overall limit of cars per year at Fremont?
• What's the combined 3&Y demand in China?
• Where does Fremont 3&Y production settle at when it's only there to satisfy demand in the Americas and non-China Asia Pacific?
• Semi is targeted for 2020 production, which presumably means it gets made at GF1. Surely it will also be produced in Shanghai and Europe or is this table an indication of cell scarcity in the next 3 years?
• What will determine the location decision for Pick Up and Roadster?

Contrary to the call, I'm of the view that Model Y will eat into both Model X and Model 3 demand. Come early 2022, I can imagine:

• Fremont churning out 400-600k a year of 3&Y (2:1 Model Y to Model 3?) and then up to 100k S/X/R under a combined new platform (with demand likely some level below this).
• Unknown number of Semi's for North America at Giga 1,
  
• Shanghai 300k-500k per year 3&Y depending on economy and incentives + unknown number of Semis
  
• Europe 300k per year of 3&Y and getting ready for Semi
• Pickup presumably at an entirely new North American location, given space constraints at Fremont and employment market constraints in Reno

So depending on demand for the Pickup and putting aside the blackbox of if/when FSD will materialise (and the fabled Model 2), you're likely somewhere above the 1.5 million per year rate for passenger vehicles in 2022?

 

[Sancho]

Thanks again Papafox for this great daily analysis. But I do wonder how much of what we are seeing in the SP movement is manipulation by big players, and how much of it is the push and pull of a combination of investors and day traders that happens with all stocks. Below is copied from my response to another poster in the main thread:



So I’ve been complaining about “manipulators” as loudly as anyone here, but today made me wonder whether I’m exaggerating the threat of manipulation.

Yes, there was some huge volume spikes at 12:19, but couldn’t that be due to traders (without an agenda other than to make money on which way the wind blows) sensing that the runup of the last few days had lost support and were either protecting their position or looking to make a quick buck by piling on?

The way I see it, the huge volume in the first 30 minutes quickly drove the momentum of the last few days up another $10. That stopped precisely when the SP breached $340, a natural resistance point that occurs with all stocks. The SP then just as quickly gave up half of its morning run and a battle ensued between bears and bulls for AN HOUR at around 335. And during this hour the volume dropped substantially from what it had been in the first 30 minutes.

What then happened at 12:19 is a bit of chicken and egg mystery to me. Was all the big selling then due to big hedge fund “manipulators” coming in to break the hour-long deadlock, or was the big selling a response to the stock dropping just a tad below the deadlocked range?

I know that I sold some of my position right at that moment. Losing the hour-long battle by even $1 was a sign to me that the big runup of the last few days was over, at least temporarily. Other traders with lots bigger stakes would have done the same.

I continue to believe, like you, that there are some big hedge funds trying to manipulate the SP (perhaps by selling calls and then selling short at opportune moments to protect their option position.) But I’m starting to wonder whether I’m exaggerating that, and that the SP movements are just bear vs bull contests that happen with all stocks.

 

[Tslynk67]

How is this worth listening to? These guys are delusional - I'd rather get financial advice from a toaster.

As I claw my way back in this thread (17 pages behind...) I'm parking each interesting looking video and podcast, but doubt I'll get the time to actually see/hear them. @Fact Checking did a great job summarising a few earlier on, so if anyone has listened to this and would like to give a few bullet-points, would be great...

 

[Artful Dodger]

Yes, there was some huge volume spikes at 12:19, but couldn’t that be due to traders (without an agenda other than to make money

No investor would sell that way. It had these purposes:

• to burn through the order book
• drive down the price
• dry up volume

That's the very SIGNATURE of a short seller's bear raid. If you can't see that, I can't help you.

Note also that this bear raid was triggered over the lunch hour in New York, which is also another common tactic of short sellers who try to take advantage of low volume moments to create sudden large dips in the SP.

 

[KarenRei]

My tweet on the media self-censorship on anything that helps Elon & Tesla

S Padival on Twitter



Note that Vern is not a cave diver though the media frequently misreports him as a diver. He never risked his life during the rescue while the actual divers did. So while he is not a “pedo guy”, it turns out he is piece of work after all.

View attachment 470974

I'm reading over the Court Listener link. Exhibit 7 is interesting:
https://www.courtlistener.com/recap/gov.uscourts.cacd.723137/gov.uscourts.cacd.723137.84.2_1.pdf

It looks like Vern lied under oath, earlier in the document claiming to not have an agent / representative, when in Exhibit 7 he describes in detail having an agent in a conversation with Thanet.

It's weird reading this conversation where they oscillate back and forth between serious topics related to the cave rescue, and how much money they could make selling their stories. And how much Vern apparently hates the divers. Repeated statements, not just that one. Also remember that it was the dive co-lead, Richard Stanton, who invited and encouraged Musk's work.

 

[KarenRei]

I think Gali is wrong about the range of the base model being 350 miles. I'm guessing 220 miles. That's enough for a contractor that works in one city with perhaps trips to nearby rural areas and is the only way to keep the price of the base model under $50K

I don't agree with any of this. Weird that I find myself agreeing with Gali and not you!

• In heavy work duty, a 220mi truck would be lucky to go 100mi and need to stop to charge every 75 miles or so. That's grossly insufficient. That would make the truck a mockery. Huge negative PR. Tesla would never do this.
• It's not even remotely the "only way to keep the base price under $50k". At, say, $130/kWh pack cost and 310Wh/mi, a 350mi SR truck would have a $14k pack. That'd be $4k more expensive than a Model 3 LR's pack and $7k more than a Model 3 SR+'s pack. How's that supposed to be a barrier?

I think Gali's estimate of 350mi for an SR version, and perhaps 550 for an LR version, sound reasonable. Non-work-duty ranges must be huge because work duty will slash them heavily. If they don't do this, the truck will be a joke, only suitable for in-town work.

 

[Tslynk67]

I was confused, because 45 minutes from now is when it normally opens for me.

Then I re-read your post and realized you weren't talking about US daylight savings time, but European. Yes, most of Europe uses daylight savings time... but not all, and I'm in the "not all" section

It'd be totally pointless here. We lose 6 1/2 minutes of daylight per day this time of year. The "gain" would be gone after just nine days.

Indeed, this clock changing is complete BS and has European Union countries will stop it as of 2021.

 

[KarenRei]

Contrary to the call, I'm of the view that Model Y will eat into both Model X and Model 3 demand.

I'm also of this view, with the caveat that everything else remains the same. For example:

• How long does it take for Model Y to reach full production and go on sale in all markets? The overall global EV market averages significant growth every year.
• What sort of market expansion does Tesla do between now and then? All of eastern Europe? Russia? Saudi Arabia? Brazil? India? Some big auto markets remain untouched.
• What happens in the US in particular? If the Democrats take office and succeed in passing their proposed hundreds-of-billions-of-dollars-for-EVs-over-10-years proposal, Tesla will be production-limited on whatever they can make for years. There's not much potential governmental downside for Tesla in the US (current credits almost gone, not actually getting any ZEV revenue, etc), but massive potential governmental upside.

While I share your cannibalization concerns about the 3 (under the above caveats of all else remaining the same), I do however think that Model X is more resistant to cannibalization than Model S was to the 3. Model X is a dream car to many because it's cool. Robot car from the future, and looks the part. Or to put it another way:

Model 3 introduced a "very low cost option" to people who wanted "a Tesla", for the very first time. Many people who would have preferred an S or X and could have afforded them convinced themselves to get a 3 because the price difference was so dramatic. Model Y doesn't apply this impact a second time - it's actually a more expensive option than the 3.

There's also IMHO a larger difference in functional capabilities between Y and X than between 3 and S. We've all seen how small the rear seats on the 7-seat Y config are, for example. A person who has the money for an X and wants to transport a lot of people would really have to struggle to convince themselves to get the Y instead.

S and X are expected to get a boost next summer also with the release of the 'Plaid' variants - first the S, then the X. They'll be more expensive, but they'll have a halo effect on the downmarket variants.

So, in short, I think that cannibalization of the 3 by the Y is a real possibility, but that Tesla overcomes this by overall EV market growth, and specific-market expansions. But I don't think cannibalization of the X by the Y is much of a concern.

 

[KarenRei]

Huh. Can anyone verify this?

Not stEVe Jobs Ghost on Twitter

Is there a shortage of shares to short? If so.... um, WOW, this will be painful for them.

But this needs to be verified. One report isn't enough; the person could just be at margin limits or facing account restrictions or something.

 

[heltok]

Anyone else thinks Tesla intend to do two different Pickups? First one expensive to learn, halo and subsidize development of the second one. The second one more reasonable priced, easier to automate and less fancy. Like Roadster->S, S->3, X->Y, Cybertruck->Model P.

Unveil Cybertruck nov 2019, production 2021, Model P reveal 2021 production 2023.

 

[RobStark]

India and Brazil are closed markets and Tesla would need to build there in order to sell there.

Here is the skinny from an Indian author on the Indian Market.

Tesla Needs To Come To India | CleanTechnica

 

[KarenRei]

Anyone else thinks Tesla intend to do two different Pickups? First one expensive to learn, halo and subsidize development of the second one. The second one more reasonable priced, easier to automate and less fancy. Like Roadster->S, S->3, X->Y, Cybertruck->Model P.

Unveil Cybertruck nov 2019, production 2021, Model P reveal 2021 production 2023.

There is a market for high end "sports pickups", but it's comparably pretty small, and any Tesla pickup will be sporty regardless. Generally, the high-end market for pickups is of trucks that are even bigger and even more capable than the "mass market" F150-size.

 

[RobStark]

Anyone else thinks Tesla intend to do two different Pickups? First one expensive to learn, halo and subsidize development of the second one. The second one more reasonable priced, easier to automate and less fancy. Like Roadster->S, S->3, X->Y, Cybertruck->Model P.

Unveil Cybertruck nov 2019, production 2021, Model P reveal 2021 production 2023.

Elon said if there is "pushback" to cyberpunk truck it is easy enough to make a second conventional version.

If demand is limited for cyberpunk truck to less than 400k units per year I don't see why Tesla wouldn't make a conventional form factor truck.

 

[KarenRei]

India and Brazil are closed markets and Tesla would need to build there in order to sell there.

Here is the skinny from an Indian author on the Indian Market.

Tesla Needs To Come To India | CleanTechnica

That's not exactly true. Tesla could sell to India and Brazil today, but they'd face sizeable tariffs (if I remember right, 35% in Brazil and 60% in India). Once GF4 is in place, they can sell to Brazil from Europe without tariffs, because of the EU-Mercosur deal struck this summer. Not sure if there's any similar China deals with Brazil or India that might advantage exports from GF3. Meanwhile, Tesla will continue to work on striking individual deals with each country. Tesla has made it clear that they have plans to expand to both countries - if I remember right, they were hopeful of expanding to India in 2020.

As always, everything is about timing.

ED: Ref to Tesla hoping to enter the Indian market in 2020:
Tesla may run on Indian roads in 2020: Elon Musk

India has been trying to attract Tesla for quite some time. They want Tesla to build a Gigafactory there. Tesla wants them to do more to establish an EV market before they'd be willing to commit to a local Gigafactory. India has been inching in that direction. I think there's real potential for a negotiated solution. Something that will leave Tesla with a local employment presence making/doing something of significance, with plans to scale up as the Indian EV market scales.

 

[Carl Raymond]

everything else remains the same

I don’t think we can discount the Greta factor. I was worried the school strike movement would fatigue, but it seems to be growing stronger. “Save the world” is a pretty strong motivator. The nightly news now commonly contains a bushfire report, then a climate protest report, or vice versa. I like how our ABC puts them back to back, their subtle way of adding their stamp of approval to the movement.

Eventually, they get listened to, and legislation changes. Today our leader of the opposition Anthony Albanese was pushing lithium mining, painting himself as man of the future while not alienating miners. He’s clearly picked up the zeitgeist. I’ll let you know when the PM, coal loving Scott Morrison, blinks.

 

[RobStark]

That's not exactly true. Tesla could sell to India and Brazil today, but they'd face sizeable tariffs (if I remember right, 35% in Brazil and 60% in India). Once GF4 is in place, they can sell to Brazil from Europe without tariffs, because of the EU-Mercosur deal struck this summer. Not sure if there's any similar China deals with Brazil or India that might advantage exports from GF3. Meanwhile, Tesla will continue to work on striking individual deals with each country. Tesla has made it clear that they have plans to expand to both countries - if I remember right, they were hopeful of expanding to India in 2020.

As always, everything is about timing.

The base tariffs

That's not exactly true. Tesla could sell to India and Brazil today, but they'd face sizeable tariffs (if I remember right, 35% in Brazil and 60% in India). Once GF4 is in place, they can sell to Brazil from Europe without tariffs, because of the EU-Mercosur deal struck this summer. Not sure if there's any similar China deals with Brazil or India that might advantage exports from GF3. Meanwhile, Tesla will continue to work on striking individual deals with each country. Tesla has made it clear that they have plans to expand to both countries - if I remember right, they were hopeful of expanding to India in 2020.

As always, everything is about timing.

ED: Ref to Tesla hoping to enter the Indian market in 2020:
Tesla may run on Indian roads in 2020: Elon Musk

60% tax for cars below $40k and 100% tax for cars above $40k for India.

The base Brazilian import tax for cars is 35% and others may apply in their Byzantine import duty regime.

That effectively makes Tesla a boutique importer without local production.

They would not be a mainstream brand. That is exactly true.

France, Austria and perhaps others are threatening the EU-Mercosur trade treaty.

Because the way Brazil handled the Amazon rainforest fire.

After Europe destroyed much of their forest they don't like Brazil destroying their forest for cattle.

Because Europe doesn't like Bolsonaro.

 

[KarenRei]

The base tariffs


60% tax for cars below $40k and 100% tax for cars above $40k for India.

The base Brazilian import tax for cars is 35% and others may apply in their Byzantine import duty regime.

That effectively makes Tesla a boutique importer without local production.

They would not be a mainstream brand. That is exactly true.

To highlight everything I wrote which was left unaddressed by this post, with boldface:

-------------------
That's not exactly true. Tesla could sell to India and Brazil today, but they'd face sizeable tariffs (if I remember right, 35% in Brazil and 60% in India). Once GF4 is in place, they can sell to Brazil from Europe without tariffs, because of the EU-Mercosur deal struck this summer. Not sure if there's any similar China deals with Brazil or India that might advantage exports from GF3. Meanwhile, Tesla will continue to work on striking individual deals with each country. Tesla has made it clear that they have plans to expand to both countries - if I remember right, they were hopeful of expanding to India in 2020.

As always, everything is about timing.

ED: Ref to Tesla hoping to enter the Indian market in 2020:
Tesla may run on Indian roads in 2020: Elon Musk

India has been trying to attract Tesla for quite some time. They want Tesla to build a Gigafactory there. Tesla wants them to do more to establish an EV market before they'd be willing to commit to a local Gigafactory. India has been inching in that direction. I think there's real potential for a negotiated solution. Something that will leave Tesla with a local employment presence making/doing something of significance, with plans to scale up as the Indian EV market scales.
-------------------

Huh, I ended up having to boldface the entire post except for the first line.

Also: $39k *1,35 is only $52,6k. Expensive, yes, but so are most foreign cars in Brazil, and people still buy them. Audi alone sells 9-10k imported cars in Brazil every year. Also, knockdown kits are apparently a popular way to evade Brazilian tariffs, as many types of parts face only 2% tariffs - classified as “No Tarifarios” due to not being locally produced. But again, don't let the fact that I'm making this side point let the boldfaced text above get ignored.

To reiterate the main point: it's only a matter of time. The question is the timing.

ED: Interesting: the basic tariff on truck imports to India is only 20% (as per the last link above), in contrast to the 60% rate for cars. Knockdowns are also cheaper in India than complete units. It also says that there's a EU trade agreement, but doesn't list the details.

The short of it, however, is that Elon says that Tesla expects to expand to India and Brazil in the mid-term future - and I see no reason to doubt that.

 

[Tslynk67]

I am acutely aware of the fact that my TSLA gains is someone else's loss, but to make one's gains by manipulating unsuspecting traders into only seeing the information you want them to see, that must require a very disturbed moral compass.

I used to think this before I started investing and by association understanding the markets a bit. IMO it's not correct, at least for common shares where you're just buying at a price someone is prepared to sell for - it's perfectly possible, although improbable, that all shares traded in Company X are profitable.

Even in the case where people sell after a large drop you can't assume they've lost money, they may have bought the shares on a cheaper basis that the Current price.

Derivatives and shorting are another matter, of course.

 

[CorneliusXX]

I don't agree with any of this. Weird that I find myself agreeing with Gali and not you!

• In heavy work duty, a 220mi truck would be lucky to go 100mi and need to stop to charge every 75 miles or so. That's grossly insufficient. That would make the truck a mockery. Huge negative PR. Tesla would never do this.
• It's not even remotely the "only way to keep the base price under $50k". At, say, $130/kWh pack cost and 310Wh/mi, a 350mi SR truck would have a $14k pack. That'd be $4k more expensive than a Model 3 LR's pack and $7k more than a Model 3 SR+'s pack. How's that supposed to be a barrier?

I think Gali's estimate of 350mi for an SR version, and perhaps 550 for an LR version, sound reasonable. Non-work-duty ranges must be huge because work duty will slash them heavily. If they don't do this, the truck will be a joke, only suitable for in-town work.

What are your thoughts on additional drop in modules (E.g. connectors at the front of the tray or in the equivalent of Rivian's gear tunnel where extra modules can be plugged in to increase overall capacity)?

To me, it seems the flexibility demands of the truck would support this kind of solution. One day you might be just driving on paved roads, another you might be towing a bunch of steel out to a remote location and welding all day while using flood lights in the evening to see what you are doing.

That way you can choose a relatively small pack and upgrade as necessary (not precluding the option of just getting a high capacity pack at the time of purchase)