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

[PeterJA]

First we have to assume that intense TSLA buying by Blackrock has been a factor in the current run upward. If true, it may be wise for them to pause and allow a dip before they resume their buying.

During the final three days of this trading week, TSLA may be enduring strong winds related to the tactics of deep pocketed option writers and an army of call owners, before the expiration at low strike prices of a great many options. These were originally LEAPS started over a year ago for those who wanted to delay potential profits into a later tax year.

The big factor here is that options have expiration dates, while stock shares do not. This implies that knowledgeable shareholders can be calm and patient, while those involved with options are in a frenzy.

So any big accumulator of TSLA shares may want to temporarily stand aside before taking advantage of any panicked shareholders, fearful call owners or baited short sellers. Then rather soon without notice, the accumulator could swoop back in for bargains as they initiate another round of their buy program.

Curt, this makes a ton of sense, except I don't understand the part about call owners. (Apparently I'll never make it on Wall St because I still don't get it even after Karen's seminars about options). Why would call owners be fearful and selling shares when their calls are well in the money?

 

[theschnell]

Let me drop the silliness and explain what I'm poking at.

Why is over $540 trouble? Two issues arise as market cap goes above $100B.

1. Elon Musk hits a compensation milestone triggering vesting of a certain number of shares. Shorts will attack Musk on this level of compensation. They will also raise the spectre of stock dilution.

2. Tesla surpasses VW to become the second most valuable automaker by market cap. Shorts will launch also sorts of spurious comparisons with VW to talk down the value of Tesla.

So as the share price rise above $540 to $550 range, shorts go ape with a fresh pile of FUD to fling. I suspect they are waiting for this which could explain such little resistance in the recent run up. The need to let the price get high enough that they can talk it down as overhyped.

On the other hand, if we can hang out around $520 for another quarter or two. Shanghai production will come online and firmly established $520 as a floor value. Then we can safely sail to $600 later in the year.

But what the shorts will want to do is to hype Tesla into a circus so that they can drive the price down to $370 and below. This will mean a few years of massive price swings to frighten away fainthearted investors. The will lock in long lasting bearish sentiment.

So I would just as soon forego the volatility. I see no reason why longs should root for the share price to go any higher for a while. Keep in mind how the company is growing strongly in value and how much we don't really want the market to sour on the stock and fail to track that value growth over the next few years.

Your mama should have taught you, Nothing good happens after 2AM. So be patient for value to accumulate.

I couldn't care less what the shorts think or say. They've lost credibility anyway. My only concern with too far too fast is pulling too far away from the fundamentals in the short run.

But regardless, this stock will be volatile. Way too much short interest for it to just coast along. So if it's going to be volatile, I certainly wouldn't mind burning a few more shorts right now. It looks like we're about to have a battle for $500. I think we may temporarily lose that battle on Friday due to options expiration, but I think next week longs will take back over and we'll keep heading up. Hopefully $550 and beyond. But if the opposite happens, I'll just hold or if it goes down far enough, I have dry powder waiting to be deployed...

 

[Skryll]

Looks pretty normal this year vs Model 3 in the US only last year, number will probably go up as registration catches up.

[S, X, 3] chart View attachment 500665

Dyslexia is a thing

 

[ZsoZso]

Tencent's not an institutional investor and therefore doesn't have to report its ownership quarterly.

Fair enough.
I did some more digging to try to find a listing that reports more, not just institutional and found this: TSLA 13F Hedge Fund and Asset Management Owners

You can click on the table to order by descending $ value and get this kind of listing:

Clearly, this is more inclusive since it starts with Elon (not an institute!), but still no Tencent listed.
Unfortunately, the site requires subscription to query older data, so I can't look into 2017/2018 states to see if Tencent was listed back then...

ps: I have no clue how to interpret the option lines (PUT and CALL), could this be an indication of the largest shorts via PUT options ???

 

[Singer3000]

Am mega jetlagged today and was inspired by a fellow poster to rewatch Autonomy Day in the early hours instead of lying bored in the dark.

We’re getting on for a year now since (April 2019). Aside from the obvious, some things to look out for in the next 12 - 15 months:

- an update on Project Dojo, which I (probably mistakenly) took to be automated labelling of video rather than still frames
- Hardware 4 reveal (spoken of with a 2-year timeframe)
- secondary use case for retired / idle FSD computers

One key message that the passage of time had dulled: just as Roadster existed to birth Model S which existed to birth Model 3, Model3/Y seem to be seen internally as a cash generating mechanism to fund FSD research but more importantly to farm data miles.

With this in mind and further to Reflex Funds’ excellent post this weekend, I am firmly in the camp that in 2020 Tesla will go balls to the wall to boost sales by unit count rather than $. I’m not convinced yet they’ll need to but I think they’d sooner cut prices and gross margin to ensure a post-Y Fremont is maxed out rather than see Y cannibalise the 3. And I think the 2020 ramp in Shanghai is going to surprise to the upside, because Tesla will want as many data miles in the Chinese driving environment as possible.

So next steps:
- q4 call shows 6 runs for Tesla (or home run for those of a Western Atlantic persuasion). And an announcement for Battery Day either in the letter or on the call.
- Battery Day - show and tell of 1 million mile battery and plan to scale and vertically integrate to 5 million auto units by 2025 and 2TWh by 2030
- Q1 call in April might then announce Autonomy Day 2, which I expect to be show and tell of the coast to coast drive. Depends on progress of rolling NoA in cities to customers.

Exciting few months ahead.

 

[adiggs]

Used to be end of day, but these days, most, if not all of it computerized. So I'd think it's when it's going beyond some risk threshold, based on what your backtest tells you.

Also, these thresholds tend to be tight. So I don't buy the argument that they take huge exposures and manipulate share price close to expiry.

My belief, but not knowledge, is about the same as yours. The market makers are continuously updating their delta hedge so that they are neutral to ups and downs in the share price. Continuously meaning throughout the day when necessary (as you say, computerized).

 

[MC3OZ]

With this in mind and further to Reflex Funds’ excellent post this weekend, I am firmly in the camp that in 2020 Tesla will go balls to the wall to boost sales by unit count rather than $. I’m not convinced yet they’ll need to but I think they’d sooner cut prices and gross margin to ensure a post-Y Fremont is maxed out rather than see Y cannibalise the 3. And I think the 2020 ramp in Shanghai is going to surprise to the upside, because Tesla will want as many data miles in the Chinese driving environment as possible.


Exciting few months ahead.

What I am expecting is Model Y to initially be higher spec high margin models only and with combined parts volumes and a few others savings they can lower the price of the Model 3 perhaps get an SR back on menu in the US for an attractive price....

They also have 2 paint shops.... at Fremont which might both be up and running, and GF3 is making most/all of the Chinese Model 3s....

I don't think the Model Y will initially cannibalise the Model 3, as Model 3 will be lower priced and more available... performance Model 3 is also a unique car...

So customers wanting a Model Y may need to wait... initially..

At the right price, Model 3 will fly out the door.... demand for Model 3 hasn't been an issue so far...

I am also expecting the rebirth of Model S/X featuring the Plaid versions as promised in 2020 again these cars will have good margins, that gives a bit more room to move on Model 3 margins... high volumes also give room to move....

Model Y will also help fund the continuing expansion of service and supercharging, and that will also help drive demand...

I suspect Tesla stopped making 75D Model S/X for lots of reasons, Model 3 competition was perhaps one reason... but if we knew the full story, probably not the only reason..

 

[M3Rider]

Lol, those 1.5m shares bought at a high premium in a rising SP during the pre-Market yesterday WAS them covering, due to margin calls and forced covering by their brokers. Now Brokers will walk the price down to save themselves from the hoardes of LEAP holders who's assests expiry on Friday. Did I say Lol yet?

#LONG'N'STRONG #ZEROMARGIN

Cheers!

I'm wondering how that walking down will work if the volume picks up...

 

[ZeApelido]

Meh who cares we're going to $1,000 soon. It's like in Super Mario Bros for the NES, there's a secret passageway in the second level that lets you skip half the game, same concept

Damn kids and their Super Mario. Back in my day, we had jump over the 8-bit bricks and pipes to get to the secret passage in the original Mario Brothers

 

[Fact Checking]

- an update on Project Dojo, which I (probably mistakenly) took to be automated labelling of video rather than still frames

I believe Project Dojo is two things primarily:

• New, server class CPU designed for lightning fast training of immense amounts of data, with the goal to have one order of magnitude lower NN training costs than the most cost efficient training computers right now (which are GPU clusters). The key insight here is that an optimized computer for fast inference computing (HW3) has very different design requirements than a computer optimized to train NNs, but both classes of use-cases benefit enormously from a custom designed ASIC, compared to GPU clusters.
• A large cluster of custom "Dojo" CPUs allows the creation of much faster and less expensive training computer: less expensive in terms of hardware cost - high end GPUs are expensive, but also less expensive in terms of running power costs - clusters can use a lot of power.

This new NN training cluster will be used to implement a 'hands-off' tradining software: unsupervised or weakly supervised training where video sequences go in and trained NNs come out.

Karpathy called this "Vacation Mode".

And an announcement for Battery Day either in the letter or on the call.

- Battery Day - show and tell of 1 million mile battery and plan to scale and vertically integrate to 5 million auto units by 2025 and 2TWh by 2030

Maybe, but lately Tesla has been under-selling Battery Investor Day. Maybe they'll talk about it in the Q4 conference call, but I'd also not be surprised to see Elon dodge the question and delay Battery Investor Day to the summer - where they'll be able to talk about it in the glow of the (hopefully glorious) Model Y rollout.

They'll also be able to better calibrate how much capital they are earning themselves, from having data from the GF3 and Model Y ramp-up already, and how much capital they'll need to attract externally.

- Q1 call in April might then announce Autonomy Day 2, which I expect to be show and tell of the coast to coast drive. Depends on progress of rolling NoA in cities to customers.

They have been trying to fly under the radar in this area too. Last April was a fundraising round where they talked more about their future plans, to attract capital. Maybe you are right and they'll disclose more, but this April there will be no capital raise pressure, so I'm not sure they will be that forthcoming.

What I'll also be watching out for is their first moves to establish the Tesla Network:

• Tesla app functionality to organize small trips within closed groups of friends and family, for no payment, but integrated both on the app and on the car side. Of course driver supervised.
• Possibly a Tesla organized car rental service - with cars initially not driving to pick up customers yet, but at selected pick-up points. Extended Sentry Mode and a customer rating system would ensure that the cars are clean and undamaged.

Uber is not just an app, but also a back-end, and I'd expect Tesla to build out the back-end before FSD can legally drive the car without a driver.

Plus the quarterly Autopilot safety statistics give us a sense of how quickly their NN training is converging the 9's ...

Exciting few months ahead.

That's sure - and if there are negative news I'd also expect volatility, to everyone take care.

 

[Aeon]

~497$

Probably due to the stupid California "data"?

 

[KarenRei]

View attachment 500697 View attachment 500698

Not going to take the bait.

 

[kengchang]

~497$

Probably due to the stupid California "data"?


View attachment 500736

It is down 3.67% in the US today though, so this is reflecting that?

 

[ev-enthusiast]

It is down 3.67% in the US today though, so this is reflecting that?

No this is in addition to yesterday's trading in the US.
Now down more than 5% in Europe.

 

[DrMazeppa]

This is how we started the day here in Europe..

As an economist, I was taught people are 'rational'. I have updated my models with the idea that people are stupid. Works much better.

 

[Fact Checking]

It is down 3.67% in the US today though, so this is reflecting that?

No, this is an additional drop to below $500, at least in European trading.

Highlighted in this post, tomorrow is a huge options expiry day of 2-year old LEAP contracts expiring, so volatility could be significant in both directions even without any market-maker shenanigans: the days closest to large expiry feature significant roll-over activities (which changes the delta hedge calculation of market makers, usually reducing the delta and thus reducing the inventory of TSLA shares they need), plus the actual delta is the most sensitive to the price of the stock, due to the closeness of expiry.

A bear raid spiking it down in European trading to set a negative sentiment for the end of the week is also a possibility. The Reuters report was clearly timed to options expiry. If I was working at the SEC I'd be taking a close look at that data analytics firm that posted a misleading report about Tesla's California registrations.

 

[kengchang]

No this is in addition to yesterday's trading in the US.
Now down more than 5% in Europe.

But isn't European market closed when the US is trading?

 

[Fact Checking]

But isn't European market closed when the US is trading?

No, there's an overlap, and the EUR denominated TSLA opens to trading at 8am local time, which is two hours before NASDAQ pre-market trading opens.

Low liquidity often (but not always!) exaggerates the magnitude of the move though.

 

[Aeon]

.. If I was working at the SEC I'd be taking a close look at that data analytics firm that posted a misleading report about California registrations.

And if the sell off yesterday was dominated by new stocks sold short due to prior knowledge about that report dropping.

Tesla should release actual California sales data and start lawsuits ASAP!

 

[KarenRei]

No, this is an additional drop to below $500, at least in European trading.

Highlighted in this post, tomorrow is a huge options expiry day of 2-year old LEAP contracts expiring, so volatility could be significant in both directions even without any market-maker shenanigans: the days closest to large expiry feature significant roll-over activities (which changes the delta hedge calculation of market makers, usually reducing the delta and thus reducing the inventory of TSLA shares they need), plus the actual delta is the most sensitive to the price of the stock, due to the closeness of expiry.

A bear raid spiking it down in European trading to set a negative sentiment for the end of the week is also a possibility. The Reuters report was clearly timed to options expiry. If I was working at the SEC I'd be taking a close look at that data analytics firm that posted a misleading report about Tesla's California registrations.

Indeed - they know that the quarterly registrations are delayed and that they've left off the end-of-quarter rush; it's in their own freaking graphs:

Cross-Sell on Twitter

I cannot see how this is an accident.

What I don't get is why this is supposed to even matter. What, are they implying that Tesla's delivery numbers will be bad in Q4? We already have delivery data for Q4 data, they weren't.