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

[ggies07]

hahaha. Now this is an ad. These fools should have been hired by Tesla to do this. Would have been way cooler. I know I know, no ads from Tesla, yada yada yada, but come on....it's catchy.

 

[KarenRei]

"Some popular options trades have recently included bearish put options that would pay out if Tesla shares drop to less than half their current level and hit $200 over the next year, as well as bullish call options tied to a rally to as high as $1,015, Trade Alert data show."

Hmm, speaking of this....

Option pricing implies a probability distribution for the stock reaching various levels at various points in time, which would lend itself naturally to said probability distribution being graphed, with the Y axis being probability percentiles for the stock being at or below each stock price contour, and the X axis being time.

Does anyone know of a website where such graphs can be generated? I mean, I could make a tool to generate such graphs in Google Sheets, but it'd take days to code it.

 

[kbM3]

If we ignore the noise then the coronavirus news over the last 24-48 hours has been positive:

• Still all international coronavirus patients are listed as well and stable, several were released as healed, none died. The large majority of international patients showed mild symptoms.
  
• No trace of pre-incubation infections with international patients. It's up to around 100 people whose travel companions have been extensively examined, who sat on planes and in busy places and the infections so far were all in 'close contact', not through casual contact.
  
• China has not doubled down on their earlier thesis that the Wuhan virus is infectious during incubation (when patients don't have symptoms)

So based on current data I'm cautiously optimistic. It will take weeks until the peak in Wuhan is reached, and it's a wait-and-see whether and how fast it spreads within China to other provinces.



This effect is highly unlikely at this point.

The large negative margins of the Model 3 ramp-up were due to several factors:

• A large Model 3 specific workforce sitting idle or doing ineffective work,
• GF1 inefficiencies,
• low parts volumes, which reduced economies of scales with suppliers.
• high fixed costs and high depreciation costs due to inefficient capex use.

For the Model Y they have all of these factors fixed/improved:

• Since 76% of the components are shared with the Model Y, they can use Model 3 assembly crews during the initial phase of the Model Y ramp-up, before hiring new line workers at scale,
• GF1 efficiencies will further increase due to the extra battery packs used by the Model Y,
• parts volumes and economies of scale will further increase as well, as most parts are shared.
• I presume the Model Y line is based on the GF3 Model 3 line, which is a third of the capex rate of the original Model 3 lines. Depreciation costs and fixed costs should be much lower.

If Model Y negative gross margins are unlikely and presumably MIC Model 3 gross margins are positive what about Solar Roof gross margins in Q1? Electrek has mentioned hiring of roofing teams in dozens of cities and it certainly seems they could still be in learning mode in Q1?

 

[SageBrush]

We should not cheer for maximum cost this or even next year. Best case scenario the fees should be high enough to be a significant cost that ICE manufacturers can't ignore but not high enough that they can get workers and local politicians to revolt against it.

Good advice. They should double it

 

[KarenRei]

Newb question Karen: what is the X axis in your graphs? Time? In what increments? Just curious, as I have NO intention of going down the options rabbit hole.

Time. Evenly spaced increments over the course of 1 year. I don't remember what those increments were (I've closed the site used to generate the base graphs), but you could surely work it out if you counted up all of the columns

 

[SageBrush]

I'm more inclined to think it's the MM's trying to keep it down already for Friday.

700 contracts at $900

Wow. The dispersion of calls from $600 and up sure suggests almost unbridled optimism.

 

[Nocturnal]

700 contracts at $900

Wow. The dispersion of calls from $600 and up sure suggests almost unbridled optimism.

Yeah, just when you think you are a super bull, you see that. I think those numbers require a true squeeze.

 

[StarFoxisDown!]

If I didn't have work to do today and tomorrow, I'd go into a Netflix binge comatose for the next 24 hours straight until 1pm Wed(west coast). This trading bores me

 

[wipster]

I love it when over 3/4 of the comments on most SA articles now days are positive! Apparently the sky is not falling.

Can't wait until tomorrow afternoon!

 

[Nocturnal]

I love it when over 3/4 of the comments on most SA articles now days are positive! Apparently the sky is not falling.

Can't wait until tomorrow afternoon!

Media coverage is night and day. Last summer a casual friend from B-school reached out with questions about Tesla because he wanted to buy one. One of his friends was convinced that the company would go bankrupt, another liked Tesla and I guess I was the tie-breaker. Things were rough but I assured him that I saw bankruptcy as very unlikely, but even worst case somebody would acquire the company and continue servicing.

He bought it and still loves it. TLDR, I think some buyers were scared away by fears of bankruptcy or afraid of what their friends would say. That probably isn't happening much anymore.

 

[willow_hiller]

Hmm, speaking of this....

Option pricing implies a probability distribution for the stock reaching various levels at various points in time, which would lend itself naturally to said probability distribution being graphed, with the Y axis being probability percentiles for the stock being at or below each stock price contour, and the X axis being time.

Does anyone know of a website where such graphs can be generated? I mean, I could make a tool to generate such graphs in Google Sheets, but it'd take days to code it.

I've got a script that generates such a chart using Arrow-Debreu securities derived from the TSLA options chain. I'll re-run it for you based on Friday's options after work today; it involves inverting a couple thousand matrices so it can take a bit to calculate...

But you can see an example of one I posted on the trading forum back in July for options expiring in August 2019: trading

It's not as useful as a diagnostic tool as you might expect. Generally the options prices are determined by so many different traders with so many different strategies, you can't really derive one thesis. It does tend to end up with lumps of probability around long and short strategies, though.

 

[Nocturnal]

Smart balance sheet pessimists see a tsunami coming.

Big Debt conversion soon
Any kind of sales from China Made in Q1
Battery investor day (Elon hint at significant potential impact on cost and performance)
Inclusion in S&P500
Possible equity/bond mix raise at extremely favorable terms

My current option bets are in May or just after the ER. I figure it has to pop again during one of those times. A $900 SP seems magical so I don't let myself dream that much, even though it's not impossible.

 

[Tslynk67]

700 contracts at $900

Wow. The dispersion of calls from $600 and up sure suggests almost unbridled optimism.

Looks like 450 of them right now - bid 0.11, ask 0.16 - so trading for peanuts, but hey, you never know!

I've a couple of Feb 7th $650's which I do think have a realistic chance of being in the money, but I would offload them before expiration as I don't have the cash to buy $65k worth of shares and I don't use margin. I suppose I could quickly get $65k as my Jan 2021's would be rather valuable if that happened, but I prefer to sit on those a little longer yet.

Might all be zero by Friday anyway. Options, eh...?

 

[Curt Renz]

Electrek - hour ago: https://ww.electrek.co/2020/01/28/tesla-model-y-prototypes-boulder-colorado/

Excerpt:

Rumors are that Tesla is about to start Model Y production, but the automaker is still in the middle of its test program as two Model Y prototypes were spotted all the way in Boulder, Colorado.

 

[rsm287]

Surprisingly positive article from Bloomberg:

Wise Up, Stock Analysts. Tesla Is the Real Deal.
Bloomberg - Are you a robot?

 

[Fact Checking]

A quick reminder, this is how the last 2 days leading up to the Q4'2018 ER on 2019 January 29 were looking like on the 15-minutes chart:

​

(Earnings release is marked with 'E'.)

The last two days were low volume, range-bound trading - which I'd expect today and tomorrow to happen too, all other things equal. (Which they might not be: any significant Tesla specific or macro news might disturb the equilibrium.)

 

[Artful Dodger]

What I would love to hear: “We are sold out of Q1 inventory. production”

FTFY

 

[shrspeedblade]

Surprisingly positive article from Bloomberg:

Wise Up, Stock Analysts. Tesla Is the Real Deal.
Bloomberg - Are you a robot?

Michael B. must have gotten done accumulating shares!

 

[Curt Renz]

Surprisingly positive article from Bloomberg:

Wise Up, Stock Analysts. Tesla Is the Real Deal.
Bloomberg - Are you a robot?

Just as I did, most financial analysts learned standard algorithms in college for evaluating a company and its share price. These considerations "may" be somewhat appropriate for mature companies in established industries, but they fail regarding young innovative companies disrupting multiple industries.

Most analysts are conversant regarding only a single industry. They would be overwhelmed by a vertically integrated company producing cars (especially EVs), batteries for both EVs & storage, charging stations, and solar roofs/panels. An exception would be ARK Invest, which employs analysts working in teams that can cover all of the industries affected by Tesla, and are encouraged to think outside the box.

Nevertheless, most analysts must justify their stock ratings and price targets to their bosses, who want to see the numbers in a form they've long understood. Only a few analysts will stick out their necks, and apply some intuition in assessing the potential several years out for a company that appears to be successfully disrupting major industries.

 

[Tslynk67]

Surprisingly positive article from Bloomberg:

Wise Up, Stock Analysts. Tesla Is the Real Deal.
Bloomberg - Are you a robot?

Ha ha ha ha ha, that's a big nope! (even with the crappy psychology of trying to kid me that $1.99 per month is the bargain of the decade...)