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

[JustMe]

Looked after close and was shocked to $425. Even Jonas and the shorts combined can no longer take us down.

That gave me a vision of a possible future...
Adam Jonas, Jim Chanos, Mark Spiegel, and Lynette Lopez form a lounge act “Jonas and the Shorts” after the Tesla SP hits $10k. They sing lamentations and off-key blues in third rate casinos to help supplement their rent.

This is just one of many possible futures. There’s still time to change your ways!

 

[Mike Smith]

Today's 27m short interest report was the short interest from 11 days ago, on December 13, when TSLA closed at $358.

This was one trading day before the big breakout to $380 levels. We don't know to what extent shorts were covering since then, but I believe it's by significant levels. There's around ~500k shares worth of pre-market and after hours trading every day - which look like margin calls.

So I think a Tesla short squeeze might be in full swing, magnified by end of year loss taking tax advantages: long-short funds have a lot of S&P 500 gains this year and might have decided to take their TSLA losses, offsetting their other gains. Some of these funds might re-enter either early January, or at around January 30.

Ihor said it was 26.46M on Dec 11 and 25.13M today, so that's a pretty gentle squeeze. His numbers are always a bit off but rarely by a lot. I think what's happening is mostly trimming by shorts and front running by longs, knowing that shorts want to cover on this massive breakout and re-ranging of SP. I think many shorts have been waiting for a good pullback to cover, but they just haven't really got one since $250, so there's huge pent up short covering demand. That would explain the action we saw today - shorts now looking for even a small pullback to take advantage of. I think now the squeeze will get tighter and many shorts will start throwing in the towel instead of waiting for pullbacks.

 

[NakedLong]

Some additional thoughts on effect of FSD perception on valuation:

If Tesla ever gets to true FSD it will be able to sell a million cars per year with an additional $100,000 of profit. Thats an additional 100 billion dollars of profit per year. At a P/E ratio of 20, that would add... $11,000 to the share price. Lol.

Of course that assumes 100% chance of success. Right now it's probably more like 5%. Probabilistically, the expected value of the future contribution of FSD to share price would then be an additional $550.

Now the market is valuing Tesla FSD close to zilch. If feature complete FSD is deployed next year and shows improvement, I expect investors to begin modeling FSD contribution with higher probabilities.

Even if investors think there is a 5 or 10% chance, the share price could rocket to $1500 on FSD hype alone. Of course once at this level, any autonomous accident could sink the price 20%.

Thr volatility could be huge, but the potential returns in the next 2 years may be astronomical.

Why do you think it is as low as 5%. Elon is saying they are pretty much feature complete and end of 2020 will be unsupervised driving. This sounds more like 99% to me. It is a mistake to buy into the 'don't trust Elon' FUD, or that he is bad at predicting timelines. The historical over-prediction of FSD I put down to being further away from the goal and also having a 2 year setback with bringing it in-house from MobilEye. I have recalibrated my Elon to reality estimates and its not so dissimilar - maybe 6 months - 1 year later. But when he says it is possible, that they are way ahead of everyone else, that lidar is a crutch etc, I totally believe him. He is in a better position than almost anyone to know. A big advantage to investing in Tesla is Elon and his vision/engineering/execution. He has a track record of delivering amazing new tech at super cheap prices. He has already proven trustworthy give or take a year or so on delivery timelines.

 

[Mike Smith]

Nissan top executive Seki to resign in blow to turnaround plan

 

[theschnell]

You wrote this on October 28, 1.5 months ago, when TSLA closed at $327.

While options writers probably tried to control the stock price on certain days, I think @ReflexFunds's recent analysis that most market makers are delta hedging their options exposure is probably closer to reality.

If they didn't, if they expected to hold back this rally, then they'd have lost billions of dollars in this +$170 rally since the Q3 earnings - and much of that sum they'd have lost permanently, as hundreds of thousands of call option contracts expired during this rally already.

That clearly didn’t age well. Who knows, maybe that comment convinced a bunch of shorts to sell naked calls and now they are paying for it.

Regardless, I stand by my belief that investing is buying shares, and with the possible exception of very long dated options or sophisticated option strategies, buying options is gambling. Just because a bunch of people recently hit the jackpot doesn’t change that.

But I was clearly wrong about the market makers being able to control this. That is assuming they are trying to control.

It’s always possible that they noticed a bunch of naked calls hitting the market and decided to take shorts to the cleaners.

But more likely a bunch of new buyers coming in and MMs lost control and I was wrong. Not the first time I’ve been wrong and not the last.

 

[FrankSG]

Good rule in such cases is to sell half of them. Or sell enough to recoup original investment and let the rest ride.

I think you messed up the quote in this message. It says it was from me, but I never said that.

 

[mrdoubleb]

I'm thinking we might see a bit of delay. Was expecting a feature complete, but we got visualizations.

Not positive how much one is different from another in terms of progress, maybe they disabled actual driving to collect more data first before turning on the FSD, so could be the functionality is already there, just turned off temporary for better safety.
But still, it seems like we were given less than intended, so maybe extra steps will take extra time.

Anyways, if we get major progress by 1/22 call expiration and before I have to take CT delivery, I'll be happy .

Could be something like a bunch of youtube videos of supervised FSD that a lot of people get to see and make up their mind about how close that is to being ready or to Waymo...may start affecting the mood of new investors if not Wall Street.

My understanding was they are not going to turn it on for about another year of shadow mode. Once they do, people can use it the same way they use AP today, with supervision, and after a certain number of those miles/kilometers regulators will likely allow full FSD.

I always considered the "feature complete" designation as Tesla internally being ready with all big features of the puzzle, if you will, like highway driving, city driving, traffic signs and lights, road markings, navigation integration, obstacle detection etc, however they have decided to slice it. Then they can run it in shadow mode and refine it for about a year.

 

[MP3Mike]

Does anyone want to take a guess as to how much of the unrecognized FSD money will be able to be recognized from the FSD Sneak Preview that they released today, as well as the running a stop sign warning that was released earlier? (Remember that Smart Summon was only worth $30 million and there was ~$500 million left to recognize.)

Is it worth another $30 million?

 

[Artful Dodger]

But this isn’t the first example of the timing of a report that reeks of manipulation.

The data agrees with you. Today's non-FINRA reported volume was over 1 std dev above the mean (I have over 13 mths of daily data).

This has all the fingerprints of market-maker/large hedge fund manipulations. Didn't work though, did it?

Somebody B.I.G. greedily snapped up all those shorted shares, and went on to P.U.N.I.S.H. those short sellers with yet another close at the ATH, and right on the Upper-BB.

Merry Christmas, AJ!

 

[BenPrice]

Just a quick thanks for those who contributed to opining on my abnormal options situation.

Long story short, bought meme calls, 450C Jan17 when SP was ~330. Like $1,000 or so. Was hoping SP flirted with 380 and I could 2-5x.

Obviously they ballooned during the run (29x).

Considered all possibilities, elected to shave off 1/3 of the position and buy FSD for my M3 (and it’s capital gains cost).

Still rocking the remaining - but de-risked slightly and pushed a few thousands to much longer term.

Overall, still have half of my 450C position.

Hell - it was $1,000 I was hoping to catch a buzz on and turn into $3,000, not $30,000.

Won’t regret a sustained run and possible loss of a much larger amount of money - between IV crush, theta decay, and geopolitical uncertainty, I still have a very very sizable (for me) high risk reward position, but also my car will see stoplights.

And had to toss $1,000 into March OTM Boeing Puts because I can’t wait to see their financials, hehe.

 

[JustMe]

Does anyone want to take a guess as to how much of the unrecognized FSD money will be able to be recognized from the FSD Sneak Preview that they released today, as well as the running a stop sign warning that was released earlier? (Remember that Smart Summon was only worth $30 million and there was ~$500 million left to recognize.)

Is it worth another $30 million?

I don’t think Tesla would be justified in recognizing any deferred FSD revenue from the visualization on the screen. Stop sign warning is a stretch, unless it was connected to AEB. Self driving functionality needs to be actually implemented.

But - I think there’s a good chance that Tesla will roll out more advanced self-driving features next quarter, which, coincidentally is the Q that needs the most help, financially. That could include following traffic lights and stop signs with driver backup. Seems to me that could be worth $100m
But, what do I know.

 

[humbaba]

Unsupervised and robotaxi are synonymous afaic, so if Elon said end of 2020 for unsupervised then that is technically good enough for a robotaxi and just needs regulatory approval (I didn't remember his saying that though). I think they can have robotaxis which are geofenced and gradually roll them out as they are confident in them. Their approach has been incremental and will continue to be, even as the first robotaxis go into operation. So like you said, some rural roads might be really narrow and have to kind of communicate with oncoming traffic who to go first, which might be very difficult for a robotaxi to solve, but I don't see these rare situations stopping the general rollout. They only have to solve 99.9999% of cases, and just fail as gracefully as possible with human assistance on hand somewhere.

As for your sensor concern, it was asked to Elon at one point and he did not share the concern. His reply was that a water repellent coating would suffice. Interested to know if people have tried coating their lenses. Not sure about sleet or rarer weather conditions, but rare weather conditions do not stop robotaxis from operating on the whole.

One other point about robotaxis and FSD is that there is a positive feedback advantage for the first mover. Data is the key to training, and the first company (ie Tesla) to create a FSD fleet will sell more robotaxis thanks to better trained software from the data, leading to more data and more robotaxis in a circle.

More data -> more robotaxi sales -> more data

The other point about robotaxis is that the initial robotaxis might seem subhuman in many situations still, and superhuman in others. There will be a lot of room for improvement over the 1st gen robotaxis, meaning the data advantage 2-3 years after the first robotaxis appear will still be a competitive advantage for Tesla. For these snowball reasons the robotaxi market might be a monopoly owned by Tesla. ARK also said it was a winner takes all market, but I'm not sure what their reasoning was for saying that.

I think there are other less strong feedback loops in EVs.

Tesla produces the best EVs -> more sales/attract best talent/reduce cost from scaling -> even better EVs.

About FSD vs robotaxi -- if the taxi is driving for a pickup and it can't figure out the road (like one here that is four lanes: three one direction, one opposite, no lane lanes) and gets stuck. Its safe if it pulls to the side and puts on blinkers, but a human is going to have to get it out of there. If you have FSD driver assistance you get woken up and rescue the car. What happens for a robotaxi that gets stuck?

It may look the same, but robotaxi is harder

 

[sundaymorning]

Looks like the task of turning Nissan around is much harder than it looks:

Nissan top executive Seki to resign in blow to turnaround plan

 

[tschmidty]

Just a quick thanks for those who contributed to opining on my abnormal options situation.

Long story short, bought meme calls, 450C Jan17 when SP was ~330. Like $1,000 or so. Was hoping SP flirted with 380 and I could 2-5x.

Obviously they ballooned during the run (29x).

Considered all possibilities, elected to shave off 1/3 of the position and buy FSD for my M3 (and it’s capital gains cost).

Still rocking the remaining - but de-risked slightly and pushed a few thousands to much longer term.

Overall, still have half of my 450C position.

Hell - it was $1,000 I was hoping to catch a buzz on and turn into $3,000, not $30,000.

Won’t regret a sustained run and possible loss of a much larger amount of money - between IV crush, theta decay, and geopolitical uncertainty, I still have a very very sizable (for me) high risk reward position, but also my car will see stoplights.

And had to toss $1,000 into March OTM Boeing Puts because I can’t wait to see their financials, hehe.

Somebody else will certainly have a better opinions (and I didn't want to wade through the 40 pages I missed), but I'd be careful holding those, depending on how risk averse you are. But calls can drop precipitously and even more so the closer you get to the call date.

Personally, I would sell then and laugh about how you got 70 shares of Tesla for $1000.

 

[kengchang]

Does anyone want to take a guess as to how much of the unrecognized FSD money will be able to be recognized from the FSD Sneak Preview that they released today, as well as the running a stop sign warning that was released earlier? (Remember that Smart Summon was only worth $30 million and there was ~$500 million left to recognize.)

Is it worth another $30 million?

Smart Summon was only recognized in the USA, it is available now in China and Europe so those two regions would count in Q4

 

[FrankSG]

Thanks for reminding me on the premium and risk again! Really appreciate it. And super happy for you for the $400 call gain and those analysis in your blog paid off!

Yes I am still on the fence. I just bought some 2022 Jan $600 call today but I am totally open to adjust the trading strategy. Some of my situation and thoughts

One other thing to keep in mind is that there's quite a big spread on these options. Every time you sell and buy you'll be paying a few % to the market makers for offering liquidity. So you cannot actively trade these options effectively. You kind of have to buy and hold for the most part.

1. Almost all my investable money is in Tesla. We have enough saving for cost of living and expense.
2. So far the return is good and I am tempted to use the gain to buy options.

Usually you want to do the opposite of that. Leverage up and invest in options when the price is at a VERY low point, and then after the stock goes up leverage down and invest the profit from the options into stock if you are still bullish on that stock.

3. I worry that by the end of 2020 there will be less Call Option opportunity as more investors get into Tesla and Tesla shows stability in Revenue projection and profitability. (Is it true that if a company is more predictable there will be less market maker marking call options?)

There should always be liquidity for call options, but options pay off when there is higher than expected volatility. A more stable Tesla might be less volatile, and therefore call options might be less profitable. However, most bulls still expect Tesla to grow significantly over the long term even after 2020, and things like Tesla Network should significantly boost stock price. There will likely be other, better times to buy TSLA call options in the future.

Most importantly, you cannot have a FOMO mentality with any investment. Worrying that an opportunity may not present itself again in the future doesn't matter nearly as much as the risk/reward and profitability of the opportunity in question.

4. 2020 estimate is really strong with 60% revenue growth range.

Yes, I agree with that. And possible S&P inclusion etc.

5. Recession is unlikely in 2020 and trade war being stabilized.

I don't follow macros that closely, but I don't think you can say this with that much confidence. If recession is truly unlikely in 2020, this will already be priced in in the market, and if new information comes to light in a few months that increase the likelihood of a recession in 2020 or 2021, the market will absorb that information and react poorly like it did in August this year.

Overall I am thinking using 2022 call to capture the gain in 2020, then roll it to 2023 call after 1 year or take profit when recession risk grows in 2021. What do you think?

It might very well be profitable. I agree Tesla looks like it has a very strong 2020 ahead of it, BUT many people thought this a year ago about 2019, and things didn't quite turn out that way.

About some recent dip or correction:
- I am using average up method to slowly buy options from Jan to Mar.
- At each quarter timespan, I estimate that all quarter report will be strong in 2020. Q1 will be much better than 2019 Q1 due to China and Euro delivery to offset US seasonality. Q2 will be Model Y news and China fully ramp up. Q3 will be model Y half ramp up. Q4 model Y fully ramp up. We will see revenue growth each quarter and Tesla past performance shows when revenue grows in ER the stock goes up.

You mean average down method?

I'd definitely not be going all-in on options at current prices. If there's a dip to $350 or $300, then that'd be more reasonable. Even when I bought my options when SP was $220, I only put about 10% of my portfolio into them, and was only planning to go 'all-in' to ~20% if TSLA dropped back below $200 and if there was recession. If I held no options today, I would probably put <5% into them, and wait for a better opportunity before I invested more.

Again, none of this is investment advice, and just my opinion on things. This could be the start of a shift in how the market perceives TSLA, and with consistent profits + S&P inclusion we could see a further run up, and perhaps a SP of over $1000 in the next two years.

But, this run up could just as easily be for a large part because of various entities' need to delta hedge as @ReflexFunds has been theorizing, Tesla could miss some projections in the next two years, and the bears could take over and keep the stock price suppressed below where it needs to go for the Jan'22 $600s to pay off.

Make you own decision based on how likely you think various scenarios are, and based on the amount of risk you want to take on.

 

[sundaymorning]

He was pretty accurate on the way down. Very strong technical analysis skills from the looks of it but failed to price in a fundamental change. Wh8ch is what this rally is about.

The ways of a prophet is wrought with dead prophets that have 99% accuracy.

when the stock was ripping up from $250 to $315 I recalled @tivoboy warning bulls to sell. He stated something to the effect of “pigs get slaughtered..”

Anyone who listened to the guy’s m “technical analysis” would be kicking themselves in the foot and getting major fomo right now.

 

[JustMe]

About FSD vs robotaxi -- if the taxi is driving for a pickup and it can't figure out the road (like one here that is four lanes: three one direction, one opposite, no lane lanes) and gets stuck. Its safe if it pulls to the side and puts on blinkers, but a human is going to have to get it out of there. If you have FSD driver assistance you get woken up and rescue the car. What happens for a robotaxi that gets stuck?

It may look the same, but robotaxi is harder

This is a good point. Makes me wonder if Tesla will have a team on standby to remotely drive the robotaxis that end up stuck for whatever reason. If that’s legal?

 

[MP3Mike]

I don’t think Tesla would be justified in recognizing any deferred FSD revenue from the visualization on the screen. Stop sign warning is a stretch, unless it was connected to AEB. Self driving functionality needs to be actually implemented.

The text for the remaining Autopilot features is:

Coming later this year:

• Recognize and respond to traffic lights and stop signs.
• Automatic driving on city streets.

You don't think the "recognize" portion is worth anything?

You could break that up into:

• 10% Recognize traffic lights and stops signs.
• 30% Respond to traffic lights and stop signs.
• 60% Automatic driving on city streets.

Of course they could probably break that up into even smaller buckets. (And there is still the "Reverse" Smart Summon, or self-parking, feature that they have to release.)

 

[JustMe]

The text for the remaining Autopilot features is:



You don't think the "recognize" portion is worth anything?

You could break that up into:

• 10% Recognize traffic lights and stops signs.
• 30% Respond to traffic lights and stop signs.
• 60% Automatic driving on city streets.

Of course they could probably break that up into even smaller buckets. (And there is still the "Reverse" Smart Summon, or self-parking, feature that they have to release.)

Not necessarily. I think that the “recognize” part means “recognize traffic lights and stop signs 99.999% of the time”. Failure to do so can be deadly. The sneak peek shows its capability but not its reliability. So I think they really need to accomplish that whole line “Recognize and respond to” and they won’t do that until it is very reliable. For all we know they’re already there. IMHO!