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

[Doggydogworld]

They have ~500 million in reserves form delivered FSD features. This shows up in deposits I believe. Tesla will move about 25% of that reserve to earnings each quarter as new features are added.

The cash received for FSD goes into "Cash", until it is spent. Since Tesla has not delivered the functionality yet, they create an offsetting liability that's included in deferred revenue on the balance sheet. Deferred revenue also includes other stuff beisdes just FSD/EAP.

As they deliver FSD/EAP capabilities they recognize some of this deferred revenue, along with any associated deferred aka accrued costs (e.g. HW3 upgrades). Since FSD revenue should be much greater than the associated costs, this boosts net income. This revenue/cost recognition is just accounting, it does not free up any cash.

 

[Sancho]

There are going to be some pretty significant pullbacks of the SP, because this kind of action brings in a lot of momentum players who are very weak longs. They will run for the hills as soon as the wind blows.

But that's just typical volatility. The sentiment now is undeniably positive. Until the sentiment changes, the SP will only be ultimately constrained by the willingness of stronger longs to divest much of their position. But what is that number? $500? $700?, $1000?, $4000, more?

I can't recall another stock in my lifetime where most longs had such high expectations. That makes it extremely difficult to predict where the SP is going.

 

[humbaba]

so, is $433 the new 15-minutes of resistance?

 

[jerry33]

But what is that number? $4000 or more

Well, it's this one, but only as much as I need to do whatever it is that I want to do.

 

[ammulder]

I can't recall another stock in my lifetime where most longs had such high expectations. That makes it extremely difficult to predict where the SP is going.

So whether or not you think Tesla is comparable to Amazon... without the recent-ish examples like Amazon and Netflix, would we even believe a stock could take off like that? If nothing else, they've done us a favor by proving it's possible, and now I expect a lot of people want a piece of that action.

 

[AudubonB]

@Curt Renz posted while I was still catching up, so to back up his morning comments:

Yes, window dressing is a powerful AND reliably consistent phenomenon every ninety days. Pad your portfolio with winners and get rid of dogs. This way, you can hope your clients - and your management company superiors - pay less attention to your miserable returns and more for the acumen you showed by having such a sparkling good set of names in your portfolio.
It is, of course, a little bit self-reinforcing, as there is positive interference in such actions. This brings me to another point which has to do with just WHY it is fund managers can’t beat the market but I’m on the iPhone in bed and can’t type well right now.
Final point: strongest window dressing of all is right now, at year’s end. Who cares about some silly 3Q time zone when you’ve got 31 Dec coming up?

Much more action like this and TSLA will match the S&P for its year’s returns.

 

[Nocturnal]

It's really amazing that people still have money with people like Spiegel and Einhorn after these incredible losses. Really lends credence to the idea that it's just a marketing expense for fossil fuel/auto interests. Even a large dip would still leave them heavily underwater.

Their main thesis is still that Tesla is some giant fraud somehow. I don't even need to look at Tesla's books to know that is ridiculous. Does Elon behave in the manner we would expect a fraudster to? (arguably the going private thing I suppose but that ship has sailed)

 

[S3XY]

I just had to put this order in to taunt the shorts.

 

[wipster]

430 is old news. I'm waiting for 440 now.

440 six pack!

 

[Sancho]

I keep moving the goalposts back in terms of selling a little stock just to have cash to buy more when it re-visits the 300s. Maybe it'll go a leeetle bit higher and THEN I'll sell just a little.

How many others of you are doing the same thing?

I keep selling small pieces of my position on every major move up (which has been almost every other day in the last few weeks). I'm not doing that for the purpose of having dry powder when the SP goes lower, but to put the cash into safer investments.

TSLA is an amazing investment opportunity, but it is undeniably a risky asset. To me, the goal of investing is to make outsize returns on risky investment, and then convert those returns into safe assets.

Here are two things that couldn't be more obvious: 1) No single investment stays positive forever. 2) It's near impossible to time the top.

Given that, I think the prudent thing to do is not try to time the top, but rather take small pieces off the table as the investment rises.

I've been doing this for 30 years, folks, and there is only one thing I can say for certain: I have never regretted selling part of my winning position even when the SP continues to rise substantially, as long as I still have a significant stake to enjoy the ride. But I have deeply regretted the times when I failed to take some money off the table, and watched my entire winnings evaporate in front of my eyes.

Not advice, but this is what works for me.

 

[S3XY]

I keep selling small pieces of my position on every major move up (which has been almost every other day in the last few weeks). I'm not doing that for the purpose of having dry powder when the SP goes lower, but to put the cash into safer investments.

TSLA is an amazing investment opportunity, but it is undeniably a risky asset. To me, the goal of investing is to make outsize returns on risky investment, and then convert those returns into safe assets.

Here are two things that couldn't be more obvious: 1) No single investment stays positive forever. 2) It's near impossible to time the top.

Given that, I think the prudent thing to do is not try to time the top, but rather take small pieces off the table as the investment rises.

I've been doing this for 30 years, folks, and there is only one thing I can say for certain: I have never regretted selling part of my winning position even when the SP continues to rise substantially, as long as I still have a significant stake to enjoy the ride. But I have deeply regretted the times when I failed to take some money off the table, and watched my entire winnings evaporate in front of my eyes.

Not advice, but this is what works for me.

Paging @StealthP3D.

 

[sparcs]

Given that, I think the prudent thing to do is not try to time the top, but rather take small pieces off the table as the investment rises.

I keep telling myself this, but I can't figure out what has changed in my thesis on Tesla to actually sell any.

Q4 earnings should be positive. I guess production/delivery report for Q4 could be a "sell the news" type event since we've had so much of a run up in the last few months (and they only meet the bottom end of the guidance). Even if it drops, it's not going to be huge drop.

I have some Q1 questions due to seasonality and tax credits ending, but Shanghai should be ramping up. How "tough" could it be?

 

[M3Rider]

Why do I feel like I'm missing all the action?
I want to buy more, but I have no money.
And nothing to sell that is not TSLA .

 

[Nocturnal]

It is very interesting seeing how conservative analysts are. I suspect there is a lesson there that most price targets (even from bulls) are constantly trailing the SP.

Bloomberg - Are you a robot?

Recent data from China and Europe suggest to Wedbush that the turnaround in Tesla Inc. may be real.

Wedbush analyst Daniel Ives raised his price target on the stock to $370 from $270, saying Model 3 consumer demand and profitability are on an “upward trajectory for the fourth quarter.”

“Both U.S. consumer demand for Model 3 and most importantly European strength should likely drive upside this quarter and enable Tesla to comfortably hit its vehicle delivery guidance of 360,000 to 400,000 units for 2019,” Ives wrote in a note to clients. The analyst added that Tesla’s Shanghai Gigafactory is being built ahead of schedule and remains the fuel in the engine for the overall bullish China thesis.

“If Tesla is able to sustain this level of profitability and demand going forward, especially in Europe and China, then the stock will open up a new chapter of growth and multiple expansion,” Ives said. He maintains a hold-equivalent rating on the stock.

Tesla shares have been on a sharp upswing over the past few months after the electric-vehicle maker reported a surprise profit for the third quarter and said it was ahead of schedule on its China plant and launch of its Model Y crossover. The stock closed at a record $425.25 on Tuesday.

According to Ives, the rally was fueled by “massive short covering” in addition to improving fundamentals. S3 Partners said last week that a “significant amount of shorts have held their ground and taken their 2019 roller-coaster P/L ride in stride.” Short interest now accounts for about 20% of available shares, down from 36% in May, according to S3.

I keep telling myself this, but I can't figure out what has changed in my thesis on Tesla to actually sell any.

Q4 earnings should be positive. I guess production/delivery report for Q4 could be a "sell the news" type event since we've had so much of a run up in the last few months (and they only meet the bottom end of the guidance). Even if it drops, it's not going to be huge drop.

I have some Q1 questions due to seasonality and tax credits ending, but Shanghai should be ramping up. How "tough" could it be?

Nowhere near high enough for me to consider trimming. Especially with Q4 numbers, China ramp, battery day, and S&P inclusion coming. ​

 

[Chunky Jr.]

Down to 430. Think it's time to buy on the dip

 

[StealthP3D]

Presumably Norway will no longer be starved of product and Tesla is apparently expanding its European market reach, but will these changes make up for UK and Germany sitting on their hands and the end of the Netherlands rush?

What a weird question. Tesla's market for its Freemont production is not limited to Europe and a shortfall in one European country does not necessarily need to be offset in that region. Tesla has worldwide demand for their product that they STILL can't meet.

What a weird question.

 

[humbaba]

I keep telling myself this, but I can't figure out what has changed in my thesis on Tesla to actually sell any.

Q4 earnings should be positive. I guess production/delivery report for Q4 could be a "sell the news" type event since we've had so much of a run up in the last few months (and they only meet the bottom end of the guidance). Even if it drops, it's not going to be huge drop.

I have some Q1 questions due to seasonality and tax credits ending, but Shanghai should be ramping up. How "tough" could it be?

A year ago people had much the same feelings. Although the ATH hadn't been hit yet there was a clear path forward. Yes, its even more so now than it was then -- but the unthinkable can always happen. What if an earthquake took out GF1? There is always risk -- but for me the risk to my future is greater if I see any $TSLA so I'm just hanging tight until I get more dry powder.

TBH, I probably won't buy immediately in the new year and instead put the money elsewhere while waiting for what feels -- to me -- like a buying opportunity in $TSLA. Why? Well, I'm already >99% $TSLA so I feel like I can afford to bide my time a bit. And, if as @StealthP3D likes to point out can happen, the stock just runs away from me... well, I have the remaining 99% of the account in $TSLA. I don't see him at these levels

For me, every time I've goal set to sell off some $TSLA I've moved those goal posts a long time before they arrive. I have my own evolving understanding of my finances and the market and so I may change my tune later. Who knows.

But, in the end, I think it is up to each investor how they feel about their investments. Their individual situation, their goals.

 

[Pezpunk]

I keep moving the goalposts back in terms of selling a little stock just to have cash to buy more when it re-visits the 300s. Maybe it'll go a leeetle bit higher and THEN I'll sell just a little.

How many others of you are doing the same thing?

i'm done trying to game the timing of the market. in the short term, it's too irrational and unpredictable, and too influenced by day-to-day inanities. where my vision is clearest, is in the long term: Tesla has positioned itself as an unstoppable juggernaut that's going to change the world and practically own the future. but the monthly or quarterly specifics of when -- let alone the "when" of when Wall Street is going to accept what's going on -- are impossible for me to determine. So i hold, and i wait. fundamentally, it makes more sense to me to make long term bets i have near-100% confidence in than to make a bunch of (let's face it) hunch-based, relatively low-confidence bets in the short term.

 

[Tslynk67]

I keep moving the goalposts back in terms of selling a little stock just to have cash to buy more when it re-visits the 300s. Maybe it'll go a leeetle bit higher and THEN I'll sell just a little.

How many others of you are doing the same thing?

Not worth the risk IMO, it might drop to 300 or it might jump to 600, I prefer to hodl.

 

[wipster]

Not worth the risk IMO, it might drop to 300 or it might jump to 600, I prefer to hodl.

Is that an LOTR strategy?