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

[KarenRei]

For people who are selling off half their shares, or considering doing so, as a deleveraging mechanism... Let us consider four options:

A) A person who sells half their shares at $490
B) A person who buys $400 Jun protective puts at an SP of $490 ($26x100), paid for by selling stock (5,3 shares per 100 shares covered)
C) #2, except that the puts are paid for by selling an equivalent number of $620 Jun covered calls.
D) No deleveraging

Let's check out your assets at some various SP scenarios at the end of June, for a total original number of shares X.

$0:
* A) $245 * X
* B) $379 * X
* C) $400 * X
* D) $0 * X

$100:
* A) $295 * X
* B) $379 * X
* C) $400 * X
* D) $100 * X

$200:
* A) $345 * X
* B) $379 * X
* C) $400 * X
* D) $200 * X

$300:
* A) $395 * X
* B) $379 * X
* C) $400 * X
* D) $300 * X

$400:
* A) $445 * X
* B) $379 * X
* C) $400 * X
* D) $400 * X

$500:
* A) $495 * X
* B) $474 * X
* C) $500 * X
* D) $500 * X

$600:
* A) $545 * X
* B) $568 * X
* C) $600 * X
* D) $600 * X

$700:
* A) $595 * X
* B) $663 * X
* C) $620 * X
* D) $700 * X

$800:
* A) $645 * X
* B) $758 * X
* C) $620 * X
* D) $800 * X

$900:
* A) $695 * X
* B) $852 * X
* C) $620 * X
* D) $900 * X

$1000:
* A) $745 * X
* B) $947 * X
* C) $620 * X
* D) $1000 * X

It of course gets more complicated when you're talking about scenarios where you'd buy back before expiry, but this complexity affects all choices. The real question, for people considering selling off shares as a means of deleveraging... do the expected returns for this strategy at different SPs really reflect your assumed probabilities for various events?

Remember that if your concerns are only about short-term events, protective puts get a lot cheaper.

ED: Minor error in the above... I forgot to account for the fact that in B), you have fewer shares that you need to protect due to selling some to pay for the puts, so the returns for (B) are slightly higher than listed above.

 

[Cirrus MS100D]

Curious, are you unaware of Musk statement this week's about Model Y advanced manufacuring technology, or are you discounting it because of production problems from 3 years ago?

The CEO did make an interesting comment about new manufacturing technologies being introduced with the Model Y program.

Musk said:

“Model Y will also have some advanced manufacturing technology that we will reveal in the future. I think it will be exciting to show the kind of manufacturing technology associated with the Model Y and it will be exciting to learn about these technologies.”​

If you do accept that the Fremont Model Y line will introduce new manufacturing tech, what alternative tech do you propose other than the two major changes already pending:

1. rear-subframe casting machine to replace 70 parts with 4
   
2. patented rigid wiring harness suitible for installation by robot

Cheers!

I think @sundaymorning summed it up better than I could:

My question here is has Elon seen the manufacturing equipment working in real life, putting a few actual Model Y together with it? Or is he basing his conclusions on his engineer’s theoretical applications who goes through different variations or renderings on a computer to justify such a comment?

Its difficult to imagine Elon making such a comment in Shanghai without actually already seeing his equipment executing in real life; however, Elon has also been known to be overly confident in the past, even stating that he’s certain Model 3 ramp was on track, then to go through another 6 months of production h4ll/delays with little to show until Grohmann was acquired.

I would be careful about what Elon says, although he’s overly optimistic, he’ll get the job done eventually. I don’t expect this time to be any different, especially considering it’s a new manufacturing technology.

 

[JRP3]

Its difficult to imagine Elon making such a comment in Shanghai without actually already seeing his equipment executing in real life; however, Elon has also been known to be overly confident in the past, even stating that he’s certain Model 3 ramp was on track, then to go through another 6 months of production h4ll/delays with little to show until Grohmann was acquired.

I think the second part of this explained quite well why it's not really difficult to imagine Elon making the comment Elon is often...optimistic.

 

[Tim S]

For people who are selling off half their shares, or considering doing so, as a deleveraging mechanism... Let us consider four options:

A) A person who sells half their shares at $490
B) A person who buys $400 Jun protective puts at an SP of $490 ($26x100), paid for by selling stock (5,3 shares per 100 shares covered)
C) #2, except that the puts are paid for by selling an equivalent number of $620 Jun covered calls.
D) No deleveraging

Let's check out your assets at some various SP scenarios at the end of June, for a total original number of shares X.

$0:
* A) $245 * X
* B) $379 * X
* C) $400 * X
* D) $0 * X

$100:
* A) $295 * X
* B) $379 * X
* C) $400 * X
* D) $100 * X

$200:
* A) $345 * X
* B) $379 * X
* C) $400 * X
* D) $200 * X

$300:
* A) $395 * X
* B) $379 * X
* C) $400 * X
* D) $300 * X

$400:
* A) $445 * X
* B) $379 * X
* C) $400 * X
* D) $400 * X

$500:
* A) $495 * X
* B) $474 * X
* C) $500 * X
* D) $500 * X

$600:
* A) $545 * X
* B) $568 * X
* C) $600 * X
* D) $600 * X

$700:
* A) $595 * X
* B) $663 * X
* C) $620 * X
* D) $700 * X

$800:
* A) $645 * X
* B) $758 * X
* C) $620 * X
* D) $800 * X

$900:
* A) $695 * X
* B) $852 * X
* C) $620 * X
* D) $900 * X

$1000:
* A) $745 * X
* B) $947 * X
* C) $620 * X
* D) $1000 * X

It of course gets more complicated when you're talking about scenarios where you'd buy back before expiry, but this complexity affects all choices. The real question, for people considering selling off shares as a means of deleveraging... do the expected returns for this strategy at different SPs really reflect your assumed probabilities for various events?

Remember that if your concerns are only about short-term events, protective puts get a lot cheaper.

ED: Minor error in the above... I forgot to account for the fact that in B), you have fewer shares that you need to protect due to selling some to pay for the puts, so the returns for (B) are slightly higher than listed above.

This post illustrates why most people don't do B or C... it's too much work.

Edit: Fixed "B or C"

 

[Fredneck]

One of the things that's been steadily a mystery to me over the last 7-8 years of following Tesla - in order to buy a share, you have to find somebody will / eager to sell a share. I can understand why there were buyers for 33M shares yesterday - I just have a hard time wrapping my brain around their being sellers for 33M shares yesterday

That's easy. The way to make money in stocks is to buy low, sell high!

 

[woodisgood]

Thought this was a good read, hadn't seen it posted yet.

Tesla & Robotaxi Economics: The Network That Optimizes The Machine | CleanTechnica

 

[Fredneck]

Institutional clients will re-balance their portfolios if the value of one stock or sector gets too high. This is all automated, and algorithms are cold and objective and not influenced by Elon's dancing, so they dump the baby and the bathwater.

So, basically in a run like this, the market will be very fluid because some pension fund somewhere will want to diversify and shift the risk elsewhere - hence the large volumes.

Another way to look at this is the stock reached the goal of the investment, so it was cashed out.

 

[sparcs]

My question here is has Elon seen the manufacturing equipment working in real life, putting a few actual Model Y together with it? Or is he basing his conclusions on his engineer’s theoretical applications who goes through different variations or renderings on a computer to justify such a comment?

i'm hoping for some pictures of Model Y assembly in the Q4 report. Might be too optimistic on my part in terms of how far they are in getting Y production line up and running, but would be nice.

 

[Nocturnal]

Everyone is so spoiled. Stock dips 2% down from catastrophic ATHs and it's gloomy and people are talking about selling half. Were you not here when it was down to 180?

 

[hobbes]

i'm hoping for some pictures of Model Y assembly in the Q4 report. Might be too optimistic on my part in terms of how far they are in getting Y production line up and running, but would be nice.

Just accidentally found this on reddit, would only rate it as rumour so far even though the path of info is supposedly known: Tesla US Factory shut down according to rep, US deliveries pushed by +8 weeks : teslamotors So this guy waiting for his car says he was told the factory is shut down to focus on China production, if true could be a sign that Model Y production is being prepared.

 

[Todd Burch]

Everyone is so spoiled. Stock dips 2% down from catastrophic ATHs and it's gloomy and people are talking about selling half. Were you not here when it was down to 180?

Seriously. We're at the horribly low levels of....yesterday.

 

[Todd Burch]

Just accidentally found this on reddit, would only rate it as rumour so far even though the path of info is supposedly known: Tesla US Factory shut down according to rep, US deliveries pushed by +8 weeks : teslamotors So this guy waiting for his car says he was told the factory is shut down to focus on China production, if true could be a sign that Model Y production is being prepared.

Sounds unlikely.

 

[hoang51]

I'm wary of tomorrow too. MaxPain is indicated at $465, so MM might test that later towards close today, there's a load of $500 calls, and they'll fight tooth-and-nail to keep below that, It think.

@Curt Renz or @Fact Checking will likely give their thoughts on this at some point, they know better than I.

Thanks for pointing out that the max options pain is now at $465. Yesterday or so (can't exactly recall), it was sitting at $450. I'll time a buy back in around $465 or lower. I believe tomorrow has more options to expire than the rest of the month when I checked.

 

[Cherry Wine]

For people who are selling off half their shares, or considering doing so, as a deleveraging mechanism... Let us consider four options:

A) A person who sells half their shares at $490
B) A person who buys $400 Jun protective puts at an SP of $490 ($26x100), paid for by selling stock (5,3 shares per 100 shares covered)
C) #2, except that the puts are paid for by selling an equivalent number of $620 Jun covered calls.
D) No deleveraging

Let's check out your assets at some various SP scenarios at the end of June, for a total original number of shares X.

$0:
* A) $245 * X
* B) $379 * X
* C) $400 * X
* D) $0 * X

$100:
* A) $295 * X
* B) $379 * X
* C) $400 * X
* D) $100 * X

$200:
* A) $345 * X
* B) $379 * X
* C) $400 * X
* D) $200 * X

$300:
* A) $395 * X
* B) $379 * X
* C) $400 * X
* D) $300 * X

$400:
* A) $445 * X
* B) $379 * X
* C) $400 * X
* D) $400 * X

$500:
* A) $495 * X
* B) $474 * X
* C) $500 * X
* D) $500 * X

$600:
* A) $545 * X
* B) $568 * X
* C) $600 * X
* D) $600 * X

$700:
* A) $595 * X
* B) $663 * X
* C) $620 * X
* D) $700 * X

$800:
* A) $645 * X
* B) $758 * X
* C) $620 * X
* D) $800 * X

$900:
* A) $695 * X
* B) $852 * X
* C) $620 * X
* D) $900 * X

$1000:
* A) $745 * X
* B) $947 * X
* C) $620 * X
* D) $1000 * X

It of course gets more complicated when you're talking about scenarios where you'd buy back before expiry, but this complexity affects all choices. The real question, for people considering selling off shares as a means of deleveraging... do the expected returns for this strategy at different SPs really reflect your assumed probabilities for various events?

Remember that if your concerns are only about short-term events, protective puts get a lot cheaper.

ED: Minor error in the above... I forgot to account for the fact that in B), you have fewer shares that you need to protect due to selling some to pay for the puts, so the returns for (B) are slightly higher than listed above.

So to sum up:

If you think the stock will be at $400, A.
If you think the stock will be below $400 or above $500 and no higher than $620, C.
If you think the stock will be above $620 and have hands of steel, D. Otherwise, B.

That about right?

 

[Cirrus MS100D]

EDIT: Looks like I was posting after others already noted it up-thread, sorry!

///////////
Nearly had a heart-attack seeing this headline:
Tesla US Factory shut down according to rep, US deliveries pushed by +8 weeks : teslamotors

Turns out the dumbass was told they'd need to wait 8+ weeks for a new USA spec car because Tesla is "focusing on China and Germany..." (OPs words, not mine.)

Thankfully most folks have already blasted OP for a wildly misleading title who seems clueless and under the impression "If they're not making *my* car, then they're shut down!!11111"

 

[Thekiwi]

Just accidentally found this on reddit, would only rate it as rumour so far even though the path of info is supposedly known: Tesla US Factory shut down according to rep, US deliveries pushed by +8 weeks : teslamotors So this guy waiting for his car says he was told the factory is shut down to focus on China production, if true could be a sign that Model Y production is being prepared.

absolute nonsense.

 

[Curt Renz]

Video of interview with Oppenheimer analyst Colin Rusch who has an Outperform rating on Tesla

CNBC - hour ago: How to trade Tesla during rebound

 

[Nocturnal]

I’m also hoping that some sort of new battery tech is being implemented as well.

Is this why they sold every car in the showrooms, to clear the way for the updated cars?

I assumed they just wanted to maximize the remaining credits and have a blowout quarter.

 

[sparcs]

Just accidentally found this on reddit, would only rate it as rumour so far even though the path of info is supposedly known: Tesla US Factory shut down according to rep, US deliveries pushed by +8 weeks : teslamotors So this guy waiting for his car says he was told the factory is shut down to focus on China production, if true could be a sign that Model Y production is being prepared.

that sounds like the same pattern for the last few quarters. Get early production out to Europe and China on ships and mad scramble in the last month of quarter for USA.

 

[StarFoxisDown!]

Just accidentally found this on reddit, would only rate it as rumour so far even though the path of info is supposedly known: Tesla US Factory shut down according to rep, US deliveries pushed by +8 weeks : teslamotors So this guy waiting for his car says he was told the factory is shut down to focus on China production, if true could be a sign that Model Y production is being prepared.

Sounds like 100% the guy is confused about the what the Tesla rep said or the Tesla rep was confused because there's no way they could shut down Freemont to focus on China AND Germany when all Euro-made Model 3's come out of Freemont. They will never come out of Giga 3. The rep was clearly talking about fact that they focus all production on China(AWD/P) and Euro Model 3's at this time in the quarter