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

[farzyness]

In case you're interested, somebody just shared your model on r/teslainvestorsclub.

Thank you for the heads up!

 

[The Accountant]

I found it interesting that Troy is estimating 7.7k US produced vehicles sold in China in Q1 (2.4k S/X & 5.3k M3).
His total Fremont/GF3 China sales range is 15.7k - 20.7k units. That's more than I was expecting.

More than you were expecting Troy to say or more than you are expecting for delivery?

More than I was expecting for deliveries from Fremont.
If registrations in China are a good proxy for deliveries, then Tesla delivered 6.6k vehicles in Q4 2019 (all from Fremont except 15 to employess).
Exceeding these Q4 numbers with 7.7k vehicles from Fremont in Q1 2020 would be quite impressive....now that GF3 is up and running.

EDIT: Troy pointed out that I made a mistake with the numbers above. My estimate of Q4 shipments of 6.6k was actually the number for the month of Dec (not Q4). I now understand the estimate Troy provides.

 

[Mike Smith]

From 2018:

A Tesla Model X driver claims her car crashed into a gym after she hit the brakes — but similar incidents point to a different explanation (TSLA) | Markets Insider

"We investigate the vehicle diagnostic logs in every accident in which a driver claims their car 'suddenly' and 'unexpectedly' accelerated, and in every case the vehicle's diagnostic logs confirm that the vehicle operated as designed. Accidents involving 'pedal misapplication,' in which a driver presses the accelerator pedal by mistake, occur in all types of vehicles, not just Teslas. The accelerator pedals in Tesla vehicles have two redundant sensors that clearly show us when the pedal is physically pressed down, such as by the driver’s foot."

-Tesla, April 25 2018

After Tesla made this statement the stock rose every day for the next five days, from 280.46 to 301.15, after having fallen all of the previous four days from 300.08 to 280.69. I'm assuming they will make a similar statement now.

 

[StealthP3D]

I know I keep talking about Adam Jonas but I finally found the story I read about Jonas forecast for 2020 Tesla deliveries he made in early 2016. In his research report he published on Feb 1, 2016, Jonas said he expected Tesla total unit deliveries to be 246,000 by 2020. This was in contrast to 500,000 company own guidance for 2020. Jonas didn't believe Tesla would hit 500,000 units until 2025. So he lowered his price target at the time from $450 to $333. This was on Feb 1, 2016.

Tesla Projected To Hit 2020 Unit Guidance...By 2025

We're now in 2020. We can now look back and see how accurate Adam Jonas forecast model was back in 2016. Tesla delivered 245,240 vehicles in 2018, two years ahead of Adam Jonas schedule. Tesla will likely deliver 500,000 vehicles this year in 2020, five years ahead of Adam Jonas projection for 2025. Tesla is doing what they said they would do. Adam Jonas, not so much.

So let me get this straight. Adam Jonas had $333 price target on Tesla back in Feb 2016 after Tesla barely delivered 50,000 cars in 2015. Now in Jan 2020, he has $360 price target after raising it from $250 after Tesla delivered 367,200 cars in 2019. Could this dude be anymore wrong? Why is anyone listening to this bozo? Why should we trust his new forecast to 2030 when he was so wrong before? It's not like the old days before the internet where people couldn't search what you said and your history. Internet knows and records all. Bozo analysts can no longer hide after making stupid wrong calls.

Good find!

In 2016, Jonas predicted Tesla would only make 170,000 total cars in 2019. The actual figure was 367,000. More than twice as many as predicted.

In 2016, Jonas predicted Tesla would only make 5000 Model 3's in 2018. The actual number was 146,000. And that was with the "slow ramp-up" and delays the media couldn't stop roasting them for.

In 2016, Jonas predicted that in the years 2020-2025, each year's Model 3 production would be about 20% higher than combined S&X production for that year. This despite the fact that Tesla designated the Model 3 as their first mass-produced vehicle that would be manufactured and sold in numbers many times as large as S&X combined sales.

Clearly, as investors, we are better off with Tesla's guidance than Adam Jonas. It's obvious he doesn't have a clue what Tesla is actually doing and especially not what they will be doing a year or two down the road.

 

[Fact Checking]

(I found your wording to be a bit confusing at first, so I'm going to first restate what I understand.)

I, inexperienced trader, had a contract for $500 strike call options at close on Friday. You said "deep in the money" but the worst case is actually near closing price, because I now buy 100 shares of TSLA for $500 each. If I don't have $50,000 liquid in my account then yes, margin call hits over the weekend. But you always have some time to arrange to satisfy the margin call. My broker (ETrade) usually gives me three trading days to figure it out. One of the ways to meet the margin call is to wire funds from somewhere else, and this always takes a couple of days, and settlement of trades takes time too (although the margin account ignores this and assumes trades are going to work). So they won't do anything on Monday (or Tuesday in this case since Monday is a holiday). That's me I'm talking about, they know I'm good for it, because it has happened a number of times, and I have plenty of capital to meet the call by liquidating other stock, not to mention liquidating the actual TSLA stock I just bought. Now if I had an account worth only a couple of thousand, including that call, they might react differently, and I can't speak for other brokers. In my case, if I have spare cash somewhere else I would try to bring it in. Otherwise I'd just sell (some of) the stock on the first trading day. I guess it is a magnitude thing, if I had 100 contracts ($5M!) they might react differently to me too... but I would definitely have reduced that before close.

You mentioned "Deep in the money" and the incentive to exercise (or hold until automatically exercised) those calls is to get a lower cost basis in the account. This implies that you intend to keep them, so presumably you have the money to do that and won't get a margin call. Or maybe you sell half and keep half. Selling the stock at the next opportunity has the same US tax consequence as selling the option on Friday would have had. Note that recently, the stock has always opened higher after the weekend; if I had $510 calls last week I'd have definitely held them rather than take the $0.50 around closing time, hoping to sell the stock for $520 on Tuesday. (I'd probably put in a limit order over the weekend in case I accidentally slept in, but my aim would be to wake early for market open to evaluate what I thought would happen. I know I have to sell, but I still want it to be to my best advantage. This might be TMI.)

A gap up is not going to be a problem. A sufficiently large gap up would actually nullify the margin call, as the value of the stock would eventually be enough to cover the margin maintenance requirement. The real worry is that the stock goes back down, and you end up owing more than you can cover, when the options would have just expired if it happened on Friday.

Yeah, so I said deep in the money because last week there were a lot of deep in the money calls from LEAP lottery tickets gone right, and DITM calls have one big problem: they are rather illiquid. The more in the money, the more illiquid.

So it's quite plausible that someone less experienced had 50-100 contracts open yesterday, in the $300-$400 range and couldn't roll them over reasonably. If they misunderstood how their broker handles options expiry they could have gotten margin called.

For example Robinhood auto liquidates the contracts themselves 1-2 hours before the close on Fridays, if the account doesn't have enough margin to exercise - and the client might have moved to Schwab or any other bigger broker recently, and they might not realize that they could face a margin call.

Does this explain why I said DITM? Whether $400 or $500 doesn't matter to the magnitude of the margin call if you have 100 contracts, it's 10,000 shares and $4m-$5m of a jump in margin requirements.

And if this happens in an account with say $100k funds, the broker faces a big overnight risk by holding $4m-$5m in securities that will wipe out $100k in assets with just a -2.5% drop after the weekend.

This is the scenario where I think brokers might feel forced to net out the exposure on a Friday already - and selling a few ten thousand TSLA shares is exactly what created that small spike down this Friday.

I raised the "Buffett scenario" as a hypothetical where the client loses a big chunk of money due to the broker selling on a Friday. I asked whether the broker can legally net out the position on a Friday already, robbing the client of a $4m-$5m "Buffett gap-up in TSLA".

I.e. I was probing whether the original observation by @JBRR that these are options assignment hedges were done by brokers due to a margin shortfall, by option writers who got surprised by someone exercising a slightly out of money call, or by the holders of the call options themselves.

 

[Electroman]

@Electroman
Read science fiction for the last 60 years
“What if this then that”
Imagine the future
Whom else best mirrors _your_ vision of the future
Watch a lot of different technologies
(Federal Labs Consortium gives awards to what they see are best for instance)
Be active in biotech for 50 years and learn to sequence by hand for one
(3-4 years can be done in a lazy few hours)
Realize singularities are punctuated and not evenly distributed
Look at uptake curves of technologies
It’s like we are walking on an exponential curve, flat behind us, vertical ahead, yet it keeps going

This is getting out of hand, and I am hoping a moderator (@ggr) would help.

There is Electroman the wise - that is me

And then there is <lightning symbol>ELECTROMAN<lightning symbol>. People often don't realize that and I get tagged incorrectly. Worse, I got banned once mistakenly.

I don't even know how this forum software allows one to create handles with some crazy symbols like that?. Not sure if I should change my handle, or if the moderator would remove such crazy characters in the handle and force the other person to change..

In-post Mod comment: Looking into this will be occurring

 

[ggr]

Yeah, so I said deep in the money because last week there were a lot of deep in the money calls from LEAP lottery tickets gone right, and DITM calls have one big problem: they are rather illiquid. The more in the money, the more illiquid.

So it's quite plausible that someone less experienced had 50-100 contracts open yesterday, in the $300-$400 range and couldn't roll them over reasonably. If they misunderstood how their broker handles options expiry.

For example Robinhood auto liquidates the contracts themselves 1-2 hours before the close on Fridays, if the account doesn't have enough margin to exercise - and the client might have moved to Schwab or any other bigger broker, they might not realize that they could face a margin call.

Does this explain why I said DITM? Whether $400 or $500 doesn't matter to the magnitude of the margin call if you have 100 contracts, it's 10,000 shares and $4m-$5m of a jump in margin requirements.

And if this happens in an account with say $100k funds, the broker faces a big overnight risk by holding $4m-$5m in securities that will wipe out $100k in assets with just a -2.5% drop after the weekend.

This is the scenario where I think brokers might feel forced to net out the exposure on a Friday already - and selling a few ten thousand TSLA shares is exactly what created that small spike down this Friday.

I raised the "Buffett scenario" as a hypothetical where the client loses a big chunk of money due to the broker selling on a Friday. I asked whether the broker can legally net out the position on a Friday already, robbing the client of a $4m-$5m "Buffett gap-up in TSLA".

I.e. I was probing whether the original observation by @JBRR that these are options assignment hedges were done due to a margin shortfall, or by the holders of the call options themselves.

Got it, thanks. I was missing the backstory... too focused on moderator skimming.

 

[ggr]

This is getting out of hand, and I am hoping a moderator would help.

There is Electroman the wise - that is me

And then there is <lightning symbol>ELECTROMAN<lightning symbol>. People often don't realize that and I get tagged incorrectly. Worse, I got banned once mistakenly.

I don't even know how this forum software allows one to create handles with some crazy symbols like that?. Not sure if I should change my handle, or if the moderator would remove such crazy characters in the handle and force the other person to change..

Mod: we know the difference. --ggr.

Edit: it was one of my early and naive moderator actions that banned you back then, for which I again apologize.

 

[Troy]

More than I was expecting for deliveries from Fremont.
If registrations in China are a good proxy for deliveries, then Tesla delivered 6.6k vehicles in Q4 2019 (all from Fremont except 15 to employess).
Exceeding these Q4 numbers with 7.7k vehicles from Fremont in Q1 2020 would be quite impressive....now that GF3 is up and running.

To make it easier for others to follow, this is related to my estimates HERE where I said this:

Demand now exceeds prod in Q1 for Made in China Model 3 Standard Range. Tesla says new orders will be delivered in Q2. Assuming 8-13K prod in Shanghai, Q1 China deliveries would look like this:

2400 Model S/X (US)
5300 Model 3 LR/P (US)
8-13K Model 3 SR (MIC)
Total: 15700-20700

@The Accountant, you are mixing up Dec 2019 with Q4 2019. 6643 reported by Bloomberg HERE is the Dec number. Q4 China is 13,000 units. Model S/X was around 2900 units. Model S/X has been consistently between 2600-3000 units in the last 4 quarters. Therefore 2400 is actually a conservative estimate.

As for 5300 Model 3 LR AWD and Performance versions delivered from Fremont to China, here is my calculation: In my Model 3 Survey here, 69% of deliveries reported in Q4 2019 were Model 3 LR AWD or Performance version. These are Model 3 sales numbers in China:

7,750 in Q1 2019
8,500 in Q2 2019
7,600 in Q3 2019
10,100 in Q4 2019

If there was no Shanghai factory, a good estimate for Model 3 deliveries in China in Q1 would be 7700 units. Assuming 69% of those would be LR AWD/P, that means 7700*0.69= 5300 would be Model 3 LR AWD or P. The price of LR AWD/ P has not changed in Q1 compared to Q4 and these models don't qualify for government incentives and Tesla's China website shows that only the SR version will be made in China (at least for now). Therefore there is no reason to think that LR AWD/P sales will be any different than it was in the last few quarters. Therefore 5300 LR AWD/P looks like a good estimate to me.

To make this easier, the second table below shows what we know so far about Q4.

 

[Boomer19]

Yeah, so I said deep in the money because last week there were a lot of deep in the money calls from LEAP lottery tickets gone right, and DITM calls have one big problem: they are rather illiquid. The more in the money, the more illiquid.

So it's quite plausible that someone less experienced had 50-100 contracts open yesterday, in the $300-$400 range and couldn't roll them over reasonably. If they misunderstood how their broker handles options expiry they could have gotten margin called.

For example Robinhood auto liquidates the contracts themselves 1-2 hours before the close on Fridays, if the account doesn't have enough margin to exercise - and the client might have moved to Schwab or any other bigger broker recently, and they might not realize that they could face a margin call.

Does this explain why I said DITM? Whether $400 or $500 doesn't matter to the magnitude of the margin call if you have 100 contracts, it's 10,000 shares and $4m-$5m of a jump in margin requirements.

And if this happens in an account with say $100k funds, the broker faces a big overnight risk by holding $4m-$5m in securities that will wipe out $100k in assets with just a -2.5% drop after the weekend.

This is the scenario where I think brokers might feel forced to net out the exposure on a Friday already - and selling a few ten thousand TSLA shares is exactly what created that small spike down this Friday.

I raised the "Buffett scenario" as a hypothetical where the client loses a big chunk of money due to the broker selling on a Friday. I asked whether the broker can legally net out the position on a Friday already, robbing the client of a $4m-$5m "Buffett gap-up in TSLA".

I.e. I was probing whether the original observation by @JBRR that these are options assignment hedges were done due to a margin shortfall, or by the holders of the call options themselves.

so inexperienced traders would own enough options contracts to impact the price that much, after hours or not?

i dunno. seems unlikely.

 

[The Accountant]

To make it easier for others to follow, this is related to my estimates HERE where I said this:



@The Accountant, you are mixing up Dec 2019 with Q4 2019. 6643 reported by Bloomberg HERE is the Dec number. Q4 China is 13,000 units. Model S/X was around 2900 units. Model S/X has been consistently between 2600-3000 units in the last 4 quarters. Therefore 2400 is actually a conservative estimate.

As for 5300 Model 3 LR AWD and Performance versions delivered from Fremont to China, here is my calculation: In my Model 3 Survey here, 69% of deliveries reported in Q4 2019 were Model 3 LR AWD or Performance version. These are Model 3 sales numbers in China:

7,750 in Q1 2019
8,500 in Q2 2019
7,600 in Q3 2019
10,100 in Q4 2019

If there was no Shanghai factory, a good estimate for Model 3 deliveries in China in Q1 would be 7700 units. Assuming 69% of those would be LR AWD/P, that means 7700*0.69= 5300 would be Model 3 LR AWD or P. The price of LR AWD/ P has not changed in Q1 compared to Q4 and these models don't qualify for government incentives and Tesla's China website shows that only the SR version will be made in China (at least for now). Therefore there is no reason to think that LR AWD/P sales will be any different than it was in the last few quarters. Therefore 5300 LR AWD/P looks like a good estimate to me.

To make this easier, the second table below shows what we know so far about Q4.

I see my error - thanks for pointing that out. I edited my original post to reflect your correction.... and thanks for the additional details on China Q1.

 

[Remus]

The motivation was that Buffet has (had?) a large stake in BYD motors, a potential Tesla competitor).

I vividly remember the interview right after the byd investment news and their investment thesis is that byd is a battery tech leader with great potential in energy storage and EVs.

None of those are true anymore.

And buffet didn't invest in Apple when it was really on the explosive expansion. He invested in IBM.

He still believe in moats, where old brand can easily raise price and get oversized profit. And that was the reason he bought IBM. Because "nobody got fired buying IBM".

With the internet, it's getting harder for the buffet brand to do that.

Happily report my personal portfolio handily beats berkshire in the past 5 years. And I can see I am not a successful investor comparing to many others here.

My friends, don't sell yourself short. In the past year you showed great insight into the technology and social trend, much better than buffet. I would trust you guys much more than buffet. The day buffet begin to invest in Tesla, is the day I seriously consider taking profit and slowly getting out.

 

[Mike Smith]

I vividly remember the interview right after the byd investment news and their investment thesis is that byd is a battery tech leader with great potential in energy storage and EVs.

None of those are true anymore.

And buffet didn't invest in Apple when it was really on the explosive expansion. He invested in IBM.

He still believe in moats, where old brand can easily raise price and get oversized profit. And that was the reason he bought IBM. Because "nobody got fired buying IBM".

With the internet, it's getting harder for the buffet brand to do that.

Happily report my personal portfolio handily beats berkshire in the past 5 years. And I can see I am not a successful investor comparing to many others here.

My friends, don't sell yourself short. In the past year you showed great insight into the technology and social trend, much better than buffet. I would trust you guys much more than buffet. The day buffet begin to invest in Tesla, is the day I seriously consider taking profit and slowly getting out.

I think Tesla Battery and Powertrain Investor Day will show Buffett that Tesla doesn't just have a moat, they're on an island in the middle of the ocean.

 

[HG Wells]

This could be a dark gray swan event with the new year travel planes.

Coronavirus cases could be grossly underestimated, study says - CNN
Three U.S. Airports to Check Passengers for a Deadly Chinese Coronavirus

 

[MTL_HABS1909]

Jordan John Szeliga was arrested on Jan 8 for reckless driving while test-driving a Tesla in Troy (Photo: Oakland County Jail)

"A Lake Orion man is facing multiple charges after allegedly going 130 mph while test-driving a Tesla."
"As they searched for the vehicle, police received more calls that the Tesla was racing down Big Beaver Road in Troy and doing doughnuts in a parking lot located at 755 W. Big Beaver Road, according to WDIV."
Lake Orion man arrested after taking Tesla on 130-mph test drive on I-75

Posted just because the picture is funny.

Unintended Acceleration

 

[EVMeister]

Braking bad(ly)?

 

[AlMc]

While Buffet buying Tesla shares is technically possible, Buffet put in legislation that would have prevented Tesla from having Service Centres in Texas. That clause got removed from the legislation, but certainly Buffet is no Tesla fan.

Doubt BH is buying TSLA at this point..But...He did not 'like' AAPL, until he did.

 

[Causalien]

This could be a dark gray swan event with the new year travel planes.

Coronavirus cases could be grossly underestimated, study says - CNN
Three U.S. Airports to Check Passengers for a Deadly Chinese Coronavirus

The thing about the coronavirus is this.

The virus has been going on for a while. You hear of the virus arriving in other countries. Yet the Chinese never confirmed the virus appearing anywhere else other than Wuhan.

The logical conclusion to infer from this is that it has already spread to other places in China and the government is suppressing the info out of economic concern.

Or you can always believe that they manage to contain all the people. Like they did with the African swine fever.

The airports should be monitoring all flights from China for the virus.

 

[Lessmog]

Lol, Shortzes don't need the right STANKIN' investigatation. Poor shortzes stayin' after work on a Holiday Friday and readin' this forum blew $561K after 18:45 hrs shorting TSLA into the close of the After-hrs session (notice no change in the macros? QQQ)

View attachment 501642

Don't worry about it. Volume in their 'short' spree was HALF what it was before 18:45 hrs. ROFLMAO. Nobody cares. VWAP b4 18:45 hrs $510.63 18:45 and $505 afterward. What a waste of money.

They're jus' tryin' to piss you off and ruin you long weekend. Don't let 'em. They're nothings, pissants*. Water buoys while the bozz is off at a fancy NYC restauant. Sad losers, ho!

Cheers!

*Advice for Shortzes: When you're in a hole, first rule is 'stop digging'. The other rules, well you're gonna learn the hard way...

Not too sure I'm abreast of all that terminology, but I like!

 

[Lessmog]

The weird thing is it was 500,000 cars suddenly accelerating at the same time.

Aha! That must be the Stellar Cellar Seller Notwork hard at work. QED. Or TSLAQ-ed maybe?